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 Money Market
THE PIERPONT SHORT TERM BOND FUND 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 NOVEMBER 30, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>

LETTER TO THE SHAREHOLDERS OF THE PIERPONT MONEY MARKET FUND

January 11, 1995

Dear Shareholder:

During the Fund's fiscal year, maturity management, asset allocation, and focus
on high quality issues helped the Fund outperform the IBC/Donoghue's Taxable
Money Fund Average. For the 12 months ended November 30, 1994, the Fund had a
total return of 3.73%, outperforming its benchmark return of 3.49%.

The Fund's net asset value remained constant at $1.00 per share. The Fund's net
assets were approximately $2.0 billion on November 30, 1994, compared to $2.6
billion at the end of November 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 five additional rate hikes
by the end of November.

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 rose across the maturity
spectrum. For example, the yield on the three-month Treasury bill increased by
217 basis points from January to November, rising from 2.97% to 5.14%. To keep
pace, money market fund average maturities significantly decreased over the year
as interest rates rose. According to IBC/Donoghue's MONEY FUND REPORT, assets in
money market funds steadily increased.

ANNUAL REVIEW
Morgan draws upon proprietary research to control the maturity structure and
asset allocation of the Fund's Portfolio. Our portfolio managers invest in a
range of fixed income instruments to increase the potential for higher Fund
returns.

- --------------------------------------------------------------------------------
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>

Given our expectations for rising interest rates, we positioned the Portfolio
defensively with a short target average life of 25 to 35 days for most of the
period, compared with an average of about 38 days for its benchmark. In general,
shorter-maturity securities outperformed longer-term instruments in the rising
rate environment, which helped boost Fund returns. To take advantage of further
rate increases, 16% of Portfolio assets were invested in floating rate notes of
government agencies and other high-quality issuers. Reflecting tighter yield
spreads versus governments, the Portfolio's 37% allocation in commercial paper
at the end of November was reduced from earlier in the year.

INVESTMENT OUTLOOK
While the Federal Reserve did not act in December, our forecast calls for
further increases in short-term interest rates, at least for the first half of
1995. In light of this outlook, we plan to keep the Portfolio's target maturity
at about 30 days until rates 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 Money Market Fund seeks to provide current income, maintain a high
level of liquidity, and preserve capital. It is designed for investors who seek
to preserve capital and earn current income from a portfolio of high-quality
money market instruments.

- --------------------------------------------------------------------------------
INCEPTION DATE
10/01/82

- --------------------------------------------------------------------------------
NET ASSETS AS OF 11/30/94
$2,003,689,722

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

- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/15/94

EXPENSE RATIO
The Fund's annual expense ratio of 0.43% 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 NOVEMBER 30, 1994

PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)

[GRAPH]

AVERAGE 7-DAY YIELD
5.20%

AVERAGE MATURITY
29.4 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 a fund's value over various time periods, typically 1, 5, or 10
years (or since inception). Total returns for periods of less than one year
provide a picture of how a fund has performed over the short term.

<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------
THREE YEAR ONE THREE FIVE TEN
AS OF NOVEMBER 30, 1994 MONTHS TO DATE YEAR YEARS YEARS YEARS
- ------------------------------------------------------------------ ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Pierpont Money Market Fund 1.16% 3.48% 3.73% 3.48% 4.95% 6.22%
IBC/Donoghue's Taxable Money Fund Average 1.08% 3.26% 3.49% 3.21% 4.59% 5.77%

AS OF SEPTEMBER 30, 1994
- ------------------------------------------------------------------ ----------------------------------------
The Pierpont Money Market Fund 1.05% 2.67% 3.43% 3.51% 5.08% 6.31%
IBC/Donoghue's Taxable Money Fund Average 0.98% 2.51% 3.19% 3.24% 4.71% 5.85%
</TABLE>

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ARE NET OF
FEES AND ASSUME THE REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF
CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS.
IBC/DONOGHUE'S TAXABLE MONEY FUND AVERAGE IS AN AVERAGE OF ALL TAXABLE MAJOR
MONEY MARKET FUND RETURNS. THIS COMPARATIVE INFORMATION IS AVAILABLE TO THE
PUBLIC FROM THE IBC/DONOGHUE ORGANIZATION, INC. NO REPRESENTATION IS MADE THAT
THE INFORMATION GATHERED FROM THIS SOURCE IS ACCURATE OR COMPLETE. THE PIERPONT
MONEY MARKET FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN THE MONEY MARKET
PORTFOLIO, A SEPARATELY REGISTERED INVESTMENT COMPANY WHICH IS NOT AVAILABLE TO
THE PUBLIC BUT ONLY TO OTHER COLLECTIVE INVESTMENT VEHICLES SUCH AS THE FUND.

<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. 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.

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 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 income and reflect the
reimbursement of certain Fund and Portfolio expenses as described in the
Prospectus.
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 MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The Money Market Portfolio ("Portfolio"), at value $2,013,438,483
Receivable for Expense Reimbursements 62,228
Prepaid Expenses 25,253
-------------
Total Assets 2,013,525,964
-------------

LIABILITIES
Dividends Payable to Shareholders (Note 1c) 8,141,398
Shareholder Servicing Fee Payable (Note 2c) 1,067,596
Shareholder Servicing and Fund Accounting Services Fee Payable (Note 2b) 528,473
Administration Fee Payable (Note 2a) 47,120
Fund Services Fee Payable (Note 2d) 15,325
Trustees' Fees and Expenses Payable (Note 2e) 1,000
Accrued Expenses 35,330
-------------
Total Liabilities 9,836,242
-------------

NET ASSETS
Applicable to 2,003,390,083 Shares of Beneficial Interest Outstanding $2,003,689,722
(unlimited shares authorized, par value $0.001)
-------------
-------------
Net Asset Value, Offering and Redemption Price Per Share $1.00
-------------
-------------

ANALYSIS OF NET ASSETS
Paid-In Capital $2,003,740,899
Accumulated Net Realized Loss on Investment (51,177)
-------------
Net Assets $2,003,689,722
-------------
-------------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE 1B)
$88,124,619
Allocated Interest Income
(4,306,709)
Allocated Portfolio Expenses (Net of Reimbursement of $25,112)
----------
83,817,910
Net Investment Income Allocated from Portfolio

FUND EXPENSES
Shareholder Servicing Fee (Note 2c) $3,701,260
Administration Fee (Note 2a) 631,683
Fund Services Fee (Note 2d) 302,195
Transfer Agent Fee 133,581
Trustees' Fees and Expenses (Note 2e) 61,434
Printing 51,990
Registration Fees 36,330
Professional Fees 9,521
Miscellaneous 99,910
---------
Total Fund Expenses 5,027,904
Less: Reimbursement of Expenses (Note 2b) (92,422)
---------
Net Fund Expenses 4,935,482
----------

NET INVESTMENT INCOME 78,882,428

NET REALIZED LOSS ON INVESTMENTS ALLOCATED
FROM PORTFOLIO (51,177)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $78,831,251
----------
----------
</TABLE>

See Accompanying Notes.

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

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED NOVEMBER 30,
--------------------------------------
1994 1993
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS
Net Investment Income $ 78,882,428 $ 73,458,444
Net Realized Gain (Loss) on Investments Allocated from Portfolio (51,177) 842,379
------------------ ------------------
Net Increase in Net Assets Resulting from Operations 78,831,251 74,300,823
------------------ ------------------

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (78,882,428) (73,458,444)
Net Realized Gain on Investments 0 (842,379)
------------------ ------------------
Total Distributions to Shareholders (78,882,428) (74,300,823)
------------------ ------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (AT A CONSTANT $1.00 PER
SHARE)
Proceeds from Shares of Beneficial Interest Sold 11,776,268,715 15,062,704,884
Reinvestment of Dividends and Distributions 73,195,486 72,041,048
Cost of Shares of Beneficial Interest Redeemed (12,408,436,546) (15,272,424,497)
------------------ ------------------
Net Decrease from Transactions in Shares of Beneficial Interest (558,972,345) (137,678,565)
------------------ ------------------
Total Decrease in Net Assets (559,023,522) (137,678,565)
NET ASSETS
Beginning of Year 2,562,713,244 2,700,391,809
------------------ ------------------
End of Year $ 2,003,689,722 $ 2,562,713,244
------------------ ------------------
------------------ ------------------
</TABLE>

See Accompanying Notes.

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

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED NOVEMBER 30,
--------------------------------------------------------------------
1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------

INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.0367 0.0281 0.0371 0.0612 0.0780
Net Realized Gain (Loss) from Portfolio (0.0000 (a) 0.0003 0.0006 0.0002 0.0000
------------ ------------ ------------ ------------ ------------
Total from Investmemt Operations 0.0367 0.0284 0.0377 0.0614 0.0780
------------ ------------ ------------ ------------ ------------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.0367) (0.0281) (0.0371) (0.0612) (0.0780)
Net Realized Gain 0.00 (0.0003) (0.0006) (0.0002) 0.00
------------ ------------ ------------ ------------ ------------
Total Distribution to Shareholders (0.0367) (0.0284) (0.0377) (0.0614) (0.0780)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------
Total Return 3.73% 2.89%+ 3.83%+ 6.31%+ 8.09%+
RATIOS AND SUPPLEMENTAL DATA:
Net Assets at end of Year (in thousands) $ 2,003,690 $ 2,562,713 $ 2,700,392 $ 3,058,559 $ 2,355,980
Ratios to Average Net Assets:
Expenses 0.43% 0.43% 0.43% 0.43% 0.47%
Net Investment Income 3.64% 2.82% 3.74% 6.10% 7.80%
Decrease reflected in above Expense
Ratios due to Reimbursements .01% 0.01% 0.01% 0.01% -0-
<FN>

(a) less than $0.0001
+ Total return has been restated to reflect dividend reinvestment.
</TABLE>

See Accompanying Notes.

10
<PAGE>
THE PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Pierpont Money Market Fund (the "Fund") is a separate series of The Pierpont
Funds (the "Trust"), a Massachusetts business trust. 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").

The Fund invests all of its investable assets in The Money Market Portfolio (the
"Portfolio"), a diversified, open-end management investment company having the
same investment objectives as the Fund. The value of such investment included in
the Statement of Assets and Liabilities reflects the Fund's proportionate
beneficial interest in the net assets of the Portfolio (76.0% at November 30,
1994). 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) 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 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.

g) For United States Federal income tax purposes the Fund had a capital
loss carryforward at November 30, 1994 of $51,177 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.

h) 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 related to shareholder
distributions are reclassified to paid-in capital.

11
<PAGE>
THE PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 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 November 30, 1994, Signature's fee for these services
amounted to $631,683.

Prior to conversion on July 11, 1993, the Fund had a Shareholder
Servicing and Fund Accounting Services Agreement with Morgan. Fees
amounting to $528,473 were payable to Morgan under this agreement at
November 30, 1994.

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 November 30, 1994, the fee for these services
amounted to $3,701,260.

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 $302,195 for the fiscal year ended November 30, 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 and 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 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 Money Market Fund (the "Fund") at November 30, 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 November 30, 1992
were audited by other independent accountants whose report dated December 31,
1992 expressed an unqualified opinion on those statements.

PRICE WATERHOUSE LLP
New York, New York
January 25, 1995

13
<PAGE>
THE MONEY MARKET PORTFOLIO
ANNUAL REPORT NOVEMBER 30, 1994

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

14
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
NOVEMBER 30,1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/ VALUE
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE (NOTE 1A)
-------- --------------------------------------- ------------------- ----------- ---------------
<C> <S> <C> <C> <C>
BANKERS ACCEPTANCE (1.1%)
$ 18,000 Republic Bank of New York.............. 12/08/94 4.80 $ 17,983,200
11,000 Societe Generale....................... 12/30/94 5.65 11,000,000
---------------
Total Bankers Acceptances 28,983,200
---------------
CERTIFICATES OF DEPOSIT -- FOREIGN (9.1%)
68,000 Canadian Imperial Bank of Commerce..... 12/05/94 - 12/30/94 5.00 - 5.53 67,999,189
50,000 ABN - AMRO Bank NV..................... 12/21/94 - 02/21/95 4.98 - 5.87 49,997,708
28,000 Credit Suisse.......................... 02/10/95 - 06/26/95 5.53 - 5.60 28,000,895
25,000 Swiss Bank Corp........................ 01/13/95 5.50 25,000,883
20,000 Dai ichi Kangyo Bank................... 03/20/95 5.38 19,983,359
15,000 Sumitomo Bank Ltd...................... 12/12/94 5.37 15,000,636
13,000 Commerzbank U.S. Finance Inc........... 03/24/95 5.62 12,994,385
12,000 Sanwa Bank Ltd......................... 12/27/94 5.59 12,000,086
8,000 Rabobank Nederland, N.V................ 09/05/95 5.85 7,984,895
1,000 Fuji Bank Ltd.......................... 12/30/94 5.26 1,000,024
---------------
Total Certificates of Deposit - Foreign 239,962,060
---------------
COMMERCIAL PAPER (32.8%)
131,965 Ford Motor Corp........................ 12/02/94 - 12/19/94 5.48 - 5.53 131,763,216
75,000 General Electric Capital Corp.......... 12/02/94 - 12/06/94 5.33 - 5.48 74,958,243
70,000 Unilever Capital Corp.................. 12/01/94 5.65 70,000,000
67,899 American Express Credit Corp........... 12/05/94 - 12/06/94 5.50 - 5.55 67,849,768
58,000 Pfizer Inc............................. 12/19/94 - 12/21/94 5.49 - 5.50 57,832,094
50,000 Exxon Asset Management................. 12/05/94 5.58 49,969,000
45,778 Dow Chemical Corp...................... 12/01/94 5.70 45,778,000
40,008 Wal-Mart Stores Inc.................... 12/02/94 - 12/05/94 5.40 - 5.50 40,000,766
37,473 Melville Corp.......................... 12/13/94 5.50 37,404,299
36,881 Raytheon Co............................ 12/12/94 5.52 36,818,794
33,893 Chevron Oil Finance Co................. 12/06/94 5.50 33,867,110
30,000 American Telephone and Telegraph Co.... 01/25/95 5.46 29,749,750
27,017 McDonalds Corp......................... 12/05/94 - 12/13/94 5.48 - 5.65 26,994,045
23,640 Southwestern Bell Capital Corp......... 12/05/94 5.50 23,625,553
20,000 Republic National Bank................. 03/08/95 4.30 19,958,173
18,000 Pepsico Inc............................ 12/14/94 5.25 17,965,875
17,000 Colgate Palmolive Corp................. 12/05/94 5.16 16,990,253
16,921 Walt Disney Corp....................... 12/05/94 5.50 16,910,659
10,000 Chevron Transport Corp................. 12/01/94 5.36 10,000,000
10,000 PNC Bank Ohio.......................... 01/31/95 3.50 9,974,059
10,000 Bankers Trust Corp..................... 04/19/95 5.67 9,781,075
9,076 Xerox Credit Corp...................... 12/07/94 5.50 9,067,680
8,000 Koch Industries Inc.................... 12/01/94 5.75 8,000,000
8,000 Cooper Industries Inc.................. 12/19/94 5.53 7,977,880
6,597 Lilly Eli & Co......................... 12/06/94 5.50 6,591,961
6,060 Exxon Funding B.V...................... 12/05/94 5.48 6,056,310
3,546 JC Penney Funding Corp................. 02/01/95 5.80 3,510,579
</TABLE>

See Accompanying Notes.

15
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/ VALUE
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE (NOTE 1A)
-------- --------------------------------------- ------------------- ----------- ---------------
<S> <S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
$ 305 US West Communications Co.............. 12/06/94 5.18 $ 304,781
---------------
Total Commercial Paper 869,699,923
---------------
COMMERCIAL PAPER -- FOREIGN (4.3%)
43,000 Dresdner US Finance.................... 12/01/94 5.48 43,000,000
26,500 Canadian Wheat Board................... 04/28/95 5.72 25,876,838
15,000 Elecricite de France................... 12/27/94 4.93 14,946,592
10,000 National Westminster Bank.............. 12/16/94 5.30 9,977,917
9,610 Export Development..................... 12/01/94 5.48 9,610,000
7,740 Deutsche Bank.......................... 12/12/94 5.30 7,727,466
3,000 Rabobank Nederland, N.V................ 12/16/94 5.49 2,993,138
---------------
Total Foreign - Commercial Paper 114,131,951
---------------
CORPORATE NOTES (1.1%)
30,000 NationsBank Corp....................... 05/19/95 5.40 29,984,725
---------------
EURO DOLLAR CERTIFICATES OF DEPOSIT (0.1%)
4,000 Toronto Dominion Bank.................. 12/08/94 4.21 3,999,976
---------------
FLOATING RATE NOTES (15.5%)(A)
50,000 Federal National Mortgage Association
(resets daily to Federal Funds Rate +
5 basis points)...................... 10/16/95 5.59 49,991,308
50,000 General Electric Capital Corp. (resets
daily to 30 Day Merrill Lynch
Commercial Paper Composite - 15 basis
points).............................. 05/04/95 5.51 49,989,605
50,000 Bankers Trust New York Corp. (resets
daily to Federal Funds Rate + 18
basis points)........................ 06/20/95 5.72 49,986,846
50,000 PNC Bank Pittsburgh (resets weekly on
Thursdays, to Federal Funds Weekly
Effective Rate + 10 basis points).... 08/04/95 5.61 49,966,683
50,000 Federal Home Loan Bank (resets daily to
Federal Funds Rate + 2 basis
points).............................. 10/20/95 5.56 49,965,443
35,000 Abbey National Treasury Services, PLC
(resets weekly on Tuesdays, to three
month Treasury Bill Rate + 12 basis
points) (144A)....................... 04/27/95 5.71 34,996,476
34,000 Boatmans First National Bank, (resets
daily to Federal Funds Rate + 17
basis points)........................ 06/16/95 5.71 33,986,825
25,000 PepsiCo Inc. (resets daily to 30 Day
Merrill Lynch Commercial Paper
Composite Rate
- 15 basis points)................... 05/16/95 5.51 24,994,417
24,000 Royal Bank of Canada, (resets daily to
Federal Funds Rate + 14 basis
points).............................. 04/13/95 5.68 24,000,000
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

144A -- Securities restricted for resale to institutional investors.

(a) The coupon rate shown on floating or adjustable rate securities represents
the rate at period end. The due date on these types of securities reflects
the final maturity date.
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value (Note 1a) $2,651,580,421
Cash 108
Interest Receivable 6,913,266
Receivable for Expense Reimbursements 28,018
Prepaid Insurance 23,041
-------------
Total Assets 2,658,544,854
-------------

LIABILITIES
Payable for Investments Purchased 9,859,961
Financial and Fund Accounting Services Fee Payable (Note 2c) 385,012
Advisory Fee Payable (Note 2a) 374,434
Custody Fee Payable 146,582
Fund Services Fee Payable (Note 2d) 18,581
Administration Fee Payable (Note 2b) 13,917
Trustees' Fees and Expenses Payable (Note 2e) 1,250
Accrued Expenses 71,238
-------------
Total Liabilities 10,870,975
-------------

NET ASSETS
Applicable to Investors' Beneficial Interests $2,647,673,879
-------------
-------------
</TABLE>

See Accompanying Notes.

18
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B)
$99,093,092
Interest

EXPENSES
Advisory Fee (Note 2a) $3,423,576
Custodian Fees and Expenses 436,244
Financial and Fund Accounting Services Fee (Note 2c) 385,012
Fund Services Fee (Note 2d) 246,089
Administration Fee (Note 2b) 165,519
Professional Fees 75,280
Trustees' Fees and Expenses (Note 2e) 64,275
Miscellaneous 36,987
----------
Total Expenses 4,832,982
Less: Reimbursement of Expenses (Note 2c) (28,018)
----------

4,804,964
Net Expenses
----------

94,288,128
NET INVESTMENT INCOME

(57,650)
NET REALIZED LOSS ON INVESTMENTS
----------
$94,230,478
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
----------
----------
</TABLE>

See Accompanying Notes.

19
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 12, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
NOVEMBER 30, 1994 NOVEMBER 30, 1993
-------------------- ------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

OPERATIONS:
Net Investment Income $ 94,288,128 $ 29,297,930
Net Realized Gain (Loss) on Investments (57,650) 261,152
-------------------- -------------------
Net Increase in Net Assets Resulting from Operations 94,230,478 29,559,082
-------------------- -------------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 13,334,979,866 8,110,140,956
Withdrawals (13,481,612,327) (5,439,724,276)
-------------------- -------------------
Net Increase (Decrease) from Investors' Transactions (146,632,461) 2,670,416,680
-------------------- -------------------
Total Increase (Decrease) in Net Assets (52,401,983) 2,699,975,762

NET ASSETS
Beginning of Period 2,700,075,862 100,100
-------------------- -------------------
End of Period $ 2,647,673,879 $ 2,700,075,862
-------------------- -------------------
-------------------- -------------------
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------

FOR THE PERIOD
JULY 12, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
NOVEMBER 30, 1994 NOVEMBER 30, 1993
-------------------- ------------------------------
<S> <C> <C>
Ratios:
Expenses to Average Net Assets 0.20% .19(a)
Net Investment Income to Average Net Assets 3.90% 2.98(a)
Decrease reflected in above Expense Ratios due to
Reimbursements by Morgan 0.00%(b) --

<FN>
- ------------------------
(a) Annualized.
(b) Less than .01%.
</TABLE>

See Accompanying Notes.

20
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Money Market Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended, (the "Act") as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on November 4, 1992. The Portfolio commenced operations on
July 12, 1993. The Declaration of Trust permits the Trustees to issue an
unlimited number of beneficial interests in the Portfolio.

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

2. TRANSACTIONS WITH AFFILIATES

a) The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the 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
any excess over $1 billion. For the fiscal year ended November 30, 1994,
this fee amounted to $3,423,576.

21
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
b) The Portfolio has retained 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
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 November 30, 1994, Signature's fee
for these services amounted to $165,519.

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 0.03% 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 November 30, 1994, Morgan will receive a fee of
$385,012. In addition to the expenses that Morgan assumes under the
Services Agreement, effective April 12, 1994 Morgan has voluntarily
agreed to reimburse the Portfolio to the extent necessary to maintain
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 12, 1994
to November 30, 1994 Morgan has agreed to reimburse the Portfolio
$28,018.

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 $246,089 for the period January
15, 1994 to November 30, 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.

22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Investors of
The 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 Money Market Portfolio (the "Portfolio")
at November 30, 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 November
30, 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
November 30, 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
January 25, 1995

23
<PAGE>
THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND Equity 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 SEMI-ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL NOVEMBER 30, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>
LETTER TO THE SHAREHOLDERS OF THE PIERPONT EQUITY FUND

January 11, 1995

Dear Shareholder:

The Pierpont Equity Fund's sound investment strategy has enabled it to produce
strong historical returns for its shareholders. In fact, the Fund has
outperformed its peer group, as measured by the Morningstar Growth & Income Fund
Average, since its inception in 1985 and for the past one-, three-, and
five-year periods. These returns are a direct result of Morgan's disciplined
investment process consistently applied through the most volatile of markets. We
believe that the Fund's solid performance record makes a strong case for
"staying the course" over the long term.

For the six-months ended November 30, 1994, the Fund returned -2.54% versus
0.81% for the S&P 500, a result of the volatility in the markets over the last
several months. At the end of the current reporting period, the Fund's net asset
value was $17.87, compared with $19.38 on May 31, 1994. In addition, the Fund's
net assets grew from $231 million to end the period at $235 million.

ECONOMIC ENVIRONMENT
During the six months ended November 30, 1994, the Federal Reserve continued to
raise short-term interest rates. Stock prices declined in June as the dollar
suddenly weakened and bond prices fell. While the stock market staged a summer
rally, it declined again in September as investors were confronted with evidence
of economic strength, causing fears of inflation and further rate hikes. The
market rose modestly in October, but further inflation worries and a
higher-than-expected 75 basis point increase in the Fed Funds rate in November
produced negative returns. Adding to this weakness were concerns that equity
markets were overvalued.

In spite of the economic recovery, consumer cyclical stocks fared poorly during
the period, as many companies saw dramatic stock price declines on even slightly
negative news. Technology led all sectors, as many investors expected continued
growth. Utilities, which are usually very sensitive to interest rate changes,
rose as bonds rallied and many fund managers added them as defensive stocks. As
the Clinton reform plan faded, healthcare stocks strengthened.

- --------------------------------------------------------------------------------
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>

SEMI-ANNUAL REVIEW
The Pierpont Equity Fund employs a value-oriented approach to stock selection.
This means that Morgan's team of research professionals analyzes stocks on a
sector-by-sector basis, searching out high-quality companies that are
undervalued relative to our forecast of their long-term earnings and
dividend-payouts. Our investment process revolves around three key elements:
fundamental research, systematic valuation, and disciplined portfolio
construction.

Much of the volatility during the period under review was related to the
market's fixation on short-term events. For example, Portfolio holding BAUSCH &
LOMB INC., a healthcare company, fell almost 33% based on lingering inventory
issues, principally in their sunglasses business. Through meetings with the
company's management, we were convinced that the company's long-term outlook
remained positive. Since the end of the reporting period, several Wall Street
analysts have issued favorable reports about BAUSCH & LOMB INC.'S price
appreciation potential, and its price has begun to recover.

Another holding, GENERAL MOTORS CORP., declined during the period, falling 10%
in one day after reporting a profit shortfall for their North American
operations. This caused many investors to conclude that GM failed in its
attempts to improve margins. We believe their operational improvements will be
beneficial to the company in the long term and continue to maintain our position
in GM. GEORGIA GULF CORP., a recent purchase, is a commodity chemical company.
At purchase, GEORGIA GULF CORP. was undervalued due to investor concerns about
the economy and the company's leveraged balance sheet. Very strong earnings over
the summer, however, caused the company's price to rise, making it one of the
Portfolio's top-performing stocks.

INVESTMENT OUTLOOK
We expect continued volatility in 1995, as the market acclimates to 1994's rate
increases and anticipates further rate hikes. Our view is that the market is
fairly valued at current levels, but opportunities to invest remain. For the
first time in many years, many of the world's leading economies are expanding.
Inflationary pressures exist, but are currently benign. Corporate restructurings
have left many companies with stronger balance sheets and the ability to
withstand increasing competition and rising rates. Our approach to stock
selection helps us seek out those companies that are positioned to take
advantage of the current economic cycle. We continue to hold stocks that we
believe have long-term prospects for growth, despite the market's short-term
fluctuations.

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 Equity Fund seeks to provide a high total return from a portfolio
of selected equity securities. It is designed for investors who want an actively
managed portfolio of selected equity securities that seeks to outperform the S&P
500 Index.

- --------------------------------------------------------------------------------
INCEPTION DATE
6/27/85

- --------------------------------------------------------------------------------
NET ASSETS AS OF 11/30/94
$235,072,569

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

EXPENSE RATIO
The Fund's annual expense ratio of 0.90% 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 NOVEMBER 30, 1994

PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)

[GRAPH]

LARGEST EQUITY HOLDINGS % OF PORTFOLIO
- --------------------------------------------------------------------------------
BANKAMERICA CORP. 2.4
BAUSCH & LOMB INC. 2.3
OCCIDENTAL PETROLEUM CORP. 2.2
TYCO INTERNATIONAL LTD. 2.2
GENERAL MOTORS CORP. 2.1

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 Equity Fund's inception would
have grown to $31,778 at November 30, 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 a fund's value over various time periods, typically 1, 5, or 10
years (or since inception). Total returns for periods of less than one year
provide a picture of how a fund has performed over the short term.

GROWTH OF $10,000 SINCE INCEPTION*
JUNE 27, 1985 - NOVEMBER 30, 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 27, 1985 (inception) to November 30, 1994; the second line represents the
growth of a ten thousand dollar investment in a portfolio of securities
reflecting the composition of the S&P 500 index for the same time period; the
third line represents the growth of a ten thousand dollar investment in a
portfolio of securities reflecting the composition of the Morningstar Growth
& Income Fund Average for the same time period. The graph points are as
follows:

Year Fund S&P 500 Morningstar
<S> <C> <C> <C>

0 $ 10,000 $ 10,000 $ 10,000
1 13,096 13,361 12,924
2 15,195 16,187 14,872
3 12,968 15,133 14,138
4 17,476 19,189 17,266
5 20,753 22,376 19,055
6 23,826 25,014 21,025
7 27,305 27,478 23,205
8 30,041 30,668 25,881
9 32,607 31,975 27,019
10 31,778 32,234 26,752
</TABLE>

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------
THREE YEAR ONE THREE FIVE SINCE
AS OF NOVEMBER 30, 1994 MONTHS TO DATE YEAR YEARS YEARS INCEPTION*
- ------------------------------------------------------------------ ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Pierpont Equity Fund -6.10% -1.61% 0.37% 10.06% 10.52% 13.05%
S&P 500 -3.89% -0.16% 1.05% 9.64% 8.89% 13.23%
Morningstar Growth & Income Fund Avg. -4.77% -2.44% -0.37% 8.79% 7.77% 11.02%

AS OF SEPTEMBER 30, 1994
- ------------------------------------------------------------------ ------------------------------------------
The Pierpont Equity Fund 4.46% 2.30% 7.18% 11.08% 11.77% 13.78%
S&P 500 4.89% 1.34% 3.69% 9.17% 9.15% 13.67%
Morningstar Growth & Income Fund Avg. 4.14% 0.07% 2.53% 8.88% 8.05% 11.54%
<FN>
*6/27/85
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ARE NET OF
FEES AND ASSUME THE REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF
CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE
MORNINGSTAR MUTUAL FUND RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND
DATA. ALTHOUGH GATHERED FROM RELIABLE SOURCES, DATA ACCURACY AND COMPLETENESS
CANNOT BE GUARANTEED. THE PIERPONT EQUITY FUND INVESTS ALL OF ITS INVESTABLE
ASSETS IN THE SELECTED U.S. EQUITY PORTFOLIO, A SEPARATELY REGISTERED INVESTMENT
COMPANY WHICH IS NOT AVAILABLE TO THE PUBLIC BUT ONLY TO OTHER COLLECTIVE
INVESTMENT VEHICLES SUCH AS THE FUND.
</TABLE>

<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. 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.

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 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.
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 EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The Selected U.S. Equity Portfolio
("Portfolio"), at value $235,576,383
Receivable for Fund Shares Sold 166,850
Tax Reclaim Receivable 33,949
Receivable for Expense Reimbursement 14,325
Prepaid Expenses 8,156
------------
Total Assets 235,799,663
------------

LIABILITIES
Shareholder Servicing Fee Payable (Note 2c) 346,824
Financial and Fund Accounting Services Fee Payable (Note 2b) 88,792
Payable for Fund Shares Redeemed 61,801
Administration Fee Payable (Note 2a) 5,462
Fund Services Fee Payable (Note 2d) 1,824
Other Accrued Expenses 222,391
------------
Total Liabilities 727,094
------------

NET ASSETS
Applicable to 13,155,308 Shares of Beneficial Interest
Outstanding (unlimited shares authorized, par value $0.001) $235,072,569
------------
------------
Net Asset Value, Offering and Redemption Price Per Share $17.87
------------
------------

ANALYSIS OF NET ASSETS
Paid-in Capital $228,066,918
Undistributed Net Investment Income 2,056,531
Accumulated Net Realized Gain on Investment 14,859,439
Net Unrealized Depreciation of Investment (9,910,319)
------------
Net Assets $235,072,569
------------
------------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
(NOTE 1B)
Allocated Dividend Income (Net of Withholding
Tax of $20,766) $ 2,867,525
Allocated Interest Income 257,098
Allocated Portfolio Expenses (608,265)
-------------
Net Investment Income Allocated from
Portfolio 2,516,358

FUND EXPENSES
Shareholder Servicing Fee (Note 2c) $ 296,723
Financial and Fund Accounting Services Fee
(Note 2b) 76,792
Administration Fee (Note 2a) 33,988
Printing 23,026
Fund Services Fee (Note 2d) 13,105
Transfer Agent Fees 11,617
Registration Fees 10,268
Professional Fees 3,529
Trustees' Fees and Expenses (Note 2e) 2,604
Miscellaneous 2,500
----------
Total Fund Expenses 474,152
Less: Reimbursement of Expenses (Note 2b) (14,325)
----------
NET FUND EXPENSES 459,827
-------------

NET INVESTMENT INCOME 2,056,531

NET REALIZED GAIN ON INVESTMENTS ALLOCATED
FROM PORTFOLIO 10,209,306

NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS ALLOCATED FROM PORTFOLIO (18,460,955)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (6,195,118)
-------------
-------------
</TABLE>

See Accompanying Notes.

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

<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED FISCAL
NOVEMBER 30, 1994 YEAR ENDED
(UNAUDITED) MAY 31, 1994
----------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS
Net Investment Income $ 2,056,531 $ 3,293,862
Net Realized Gain Allocated from
Portfolio 10,209,306 25,357,179
Net Change in Unrealized Appreciation
(Depreciation) Allocated from Portfolio (18,460,955) (9,386,402)
----------------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (6,195,118) 19,264,639
----------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (902,617) (3,378,475)
Net Realized Gain on Investments (11,308,079) (14,144,189)
----------------- ------------
Total Distributions to Shareholders (12,210,696) (17,522,664)
----------------- ------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST (NOTE 3)
Proceeds from Shares of Beneficial
Interest Sold 41,189,447 105,772,531
Reinvestment of Dividends and
Distributions 11,439,111 16,672,694
Cost of Shares of Beneficial Interest
Redeemed (30,456,155) (95,355,027)
----------------- ------------
Net Increase from Transactions in
Shares of Beneficial Interest 22,172,403 27,090,198
----------------- ------------
Total Increase in Net Assets 3,766,589 28,832,173
NET ASSETS
Beginning of Period 231,305,980 202,473,807
----------------- ------------
End of Period (including undistributed
net investment income of $2,056,531 and
$902,617, respectively) $235,072,569 $231,305,980
----------------- ------------
----------------- ------------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT EQUITY FUND
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ARE AS FOLLOWS:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
NOVEMBER 30, FOR THE FISCAL YEAR ENDED MAY 31,
1994 ----------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
---------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.38 $ 19.30 $ 19.02 $ 18.21 $ 16.51 $ 14.54
-------- -------- -------- -------- ------- -------

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.16 0.27 0.38 0.37 0.44 0.44
Net Realized and Unrealized Gain (Loss) on
Investment (0.64) 1.32 1.35 2.13 1.90 2.20
-------- -------- -------- -------- ------- -------
Total from Investment Operations (0.48) 1.59 1.73 2.50 2.34 2.64
-------- -------- -------- -------- ------- -------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.08) (0.29) (0.36) (0.40) (0.45) (0.44)
Net Realized Gain (0.95) (1.22) (1.09) (1.29) (0.19) (0.23)
-------- -------- -------- -------- ------- -------
Total Distributions to Shareholders (1.03) (1.51) (1.45) (1.69) (0.64) (0.67)
-------- -------- -------- -------- ------- -------

NET ASSET VALUE, END OF PERIOD $ 17.87 $ 19.38 $ 19.30 $ 19.02 $ 18.21 $ 16.51
-------- -------- -------- -------- ------- -------
-------- -------- -------- -------- ------- -------
Total Return -2.54%* 8.54% 10.02% 14.60% 14.81% 18.75%

RATIOS AND SUPPLEMENTAL DATA
Net Assets at end of Period (in thousands) $235,073 $231,306 $202,474 $109,246 $55,144 $40,032
Ratios to Average Net Assets
Expenses 0.90%(a) 0.90% 0.90% 0.90% 0.91% 0.93%
Net Investment Income 1.73%(a) 1.43% 2.20% 2.16% 2.81% 2.97%
Decrease reflected in above Expense Ratio
due to Expense Reimbursements 0.01%(a) 0.03% 0.08% 0.19% 0.38% 0.41%
Portfolio Turnover (b) - 10% 60% 99% 43% 23%

<FN>
* Not annualized
(a) Annualized
(b) 1994 Portfolio Turnover reflects the period June 1, 1993 to July 18, 1993.
After July 18, 1993, all Fund's investable assets are invested in The
Selected U.S. Equity Portfolio.
</TABLE>
See Accompanying Notes.

10
<PAGE>
THE PIERPONT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Pierpont 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 July 18, 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 Selected U.S. Equity
Portfolio (the "Portfolio"), a diversified open-end management investment
company having the same investment objectives as the Fund. The value of such
investment reflects the Fund's proportionate interest in the net assets of the
Portfolio (48% at November 30, 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 and paid semi-annually. Distributions of realized net capital
gains, if any, are declared and paid annually.

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.

2. TRANSACTIONS WITH AFFILIATES

11
<PAGE>
THE PIERPONT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
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 act 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 six months ended November 30,
1994, Signature's fee for these services amounted to $33,988.

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 and
the Fund Services fee, exceed the expense limit of 0.15% of the Fund's
average daily net assets up to and including $100 million and 0.13% 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
six months ended November 30, 1994, Morgan's fee amounted to $76,792. 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 0.90% of the
average daily net assets of the Fund through at least May 31, 1995. For
the six months ended November 30, 1994, Morgan has agreed to reimburse the
Fund $14,325 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
six months ended November 30, 1994, the fee for these services amounted to
$296,723.

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
$13,105 for the six months ended November 30, 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.

12
<PAGE>
THE PIERPONT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest of one or more series.
Transactions in shares of beneficial interest of the Fund were as follows:

<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED FISCAL
NOVEMBER 30, 1994 YEAR ENDED
(UNAUDITED) MAY 31, 1994
------------------ ------------
<S> <C> <C>
Shares sold 2,220,473 5,488,627
Reinvestment of dividends and distributions 633,395 875,510
Shares redeemed (1,633,959) (4,920,083)
---------- ------------
Net increase 1,219,909 1,444,054
---------- ------------
---------- ------------
</TABLE>

13
<PAGE>
The Selected U.S. Equity Portfolio
Semi-Annual Report November 30, 1994
(unaudited)

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

<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1A)
------- ------------
<S> <C> <C>
COMMON STOCKS (95.86%)
BASIC INDUSTRIES (6.58%)
CHEMICALS (2.06%)
Du Pont (E.I.) de Nemours & Co., Inc.............. 101,455 $ 5,465,888
Ethyl Corp........................................ 80,100 821,025
Georgia Gulf Corp. (a)............................ 3,800 134,900
Wellman Inc....................................... 145,700 3,697,138
------------
10,118,951
------------
METALS & MINING (3.46%)
Crown Cork & Seal Co., Inc, (a)................... 183,200 6,915,800
Freeport McMoRan Copper & Gold Inc., Cl. A........ 184,762 3,718,335
Phelps Dodge Corp................................. 24,600 1,408,350
Reynolds Metals Co................................ 104,500 4,924,563
------------
16,967,048
------------
PAPER & FOREST PRODUCTS (1.06%)
Bowater Inc....................................... 77,300 1,961,487
Champion International Corp....................... 93,000 3,231,750
------------
5,193,237
------------
Total Basic Industries 32,279,236
------------
CONSUMER GOODS & SERVICES (25.75%)
AUTOMOTIVE (2.07%)
General Motors Corp............................... 266,300 10,152,688
------------
BEVERAGES, FOOD, SOAP & TOBACCO (7.26%)
Archer-Daniels-Midland Co......................... 338,610 9,354,101
Coca-Cola (The) Co................................ 83,800 4,284,275
CPC International, Inc............................ 69,800 3,577,250
Kellogg Co........................................ 73,400 4,174,625
PepsiCo., Inc..................................... 216,860 7,671,422
Philip Morris Cos., Inc........................... 110,400 6,596,400
------------
35,658,073
------------
</TABLE>

See Accompanying Notes.

15
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1A)
------- ------------
<S> <C> <C>
CONSUMER GOODS & SERVICES (CONTINUED)
ENTERTAINMENT, LEISURE & MEDIA (4.54%)
Circus Circus Enterprises Inc..................... 225,000 $ 4,725,000
CBS Inc........................................... 126,410 7,015,755
International Game Technology..................... 265,000 4,405,625
Tele-Communications Inc., Cl. A (a)............... 260,000 6,158,750
------------
22,305,130
------------
FOOTWEAR APPAREL (0.25%)
Converse Inc. (a)................................. 87,633 963,966
Florsheim Shoe Co. (a)............................ 43,816 262,899
------------
1,226,865
------------
HOUSEHOLD PRODUCTS (2.48%)
Black & Decker Corp............................... 116,300 2,791,200
First Brands Corp. (a)............................ 110,000 3,767,500
Interco Inc....................................... 262,900 1,906,025
Procter & Gamble Co............................... 59,760 3,735,000
------------
12,199,725
------------
MERCHANDISING (5.08%)
Charming Shoppes, Inc............................. 322,000 2,133,250
Hechinger Co., Cl. A.............................. 130,000 1,316,250
Limited Inc....................................... 354,700 6,872,313
Melville Corp..................................... 312,900 9,856,350
Price Costco Inc. (a)............................. 312,900 4,791,281
------------
24,969,444
------------
PERSONAL CARE (1.39%)
Avon Products Inc................................. 110,000 6,806,250
------------
PERSONAL SERVICES (1.50%)
Service Corp. International....................... 286,600 7,344,125
------------
TEXTILE MANUFACTURING (1.18%)
Fruit of the Loom Inc., Cl. A (a)................. 212,000 5,803,500
------------
Total Consumer Goods & Services............... 126,465,800
------------
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1A)
------- ------------
<S> <C> <C>
ENERGY (11.08%)
OIL-PRODUCTION (8.36%)
Exxon Corp........................................ 77,200 $ 4,660,950
Mobil Corp........................................ 55,310 4,715,177
Occidental Petroleum Corp......................... 300,000 5,887,500
Oryx Energy Co. (a)............................... 300,000 3,637,500
Repsol S.A. (ADR)................................. 131,900 3,808,612
Royal Dutch Petroleum Co. (ADR)................... 58,320 6,335,010
Sun Inc........................................... 135,000 3,931,875
Texaco Inc........................................ 130,000 8,076,250
------------
41,052,874
------------
OIL-SERVICES (2.72%)
Schlumberger Ltd.................................. 133,000 7,065,625
Transcanada Pipelines Ltd......................... 354,700 4,478,088
Western Co. of North America (a).................. 107,000 1,819,000
------------
13,362,713
------------
Total Energy.................................. 54,415,587
------------
FINANCE (11.09%)
BANKING (6.83%)
BankAmerica Corp.................................. 285,115 11,689,715
Bankers Trust New York Corp....................... 83,000 4,917,750
Golden West Financial Corp........................ 79,100 2,768,500
Great Western Financial Corp...................... 120,200 2,043,400
NationsBank Corp.................................. 120,572 5,410,669
PNC Bank Corp..................................... 175,000 3,631,250
Republic New York Corp............................ 72,600 3,103,650
------------
33,564,934
------------
INSURANCE (3.75%)
AMBAC Inc......................................... 112,000 3,878,000
Allstate Corp..................................... 45,100 1,065,487
American International Group, Inc................. 38,500 3,527,563
Providian Corp.................................... 281,600 8,518,400
USLIFE Corp....................................... 43,600 1,406,100
------------
18,395,550
------------
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1A)
------- ------------
<S> <C> <C>
FINANCE (CONTINUED)
FINANCIAL SERVICES (0.51%)
Dean Witter Discover & Co......................... 71,800 $ 2,513,000
------------
Total Finance................................. 54,473,484
------------
HEALTHCARE (7.26%)
HOSPITAL SERVICES & SUPPLIES (0.33%)
Manor Care Inc.................................... 56,700 1,608,863
------------
PHARMACEUTICALS (6.93%)
Abbott Laboratories............................... 243,600 7,764,750
Alza Corp. Cl. A (a).............................. 239,800 4,616,150
American Home Products Corp....................... 115,000 7,489,375
Bausch & Lomb Inc................................. 336,200 11,220,675
Gensia Inc. (a)................................... 75,100 370,806
Merck & Co. Inc................................... 69,587 2,592,116
------------
34,053,872
------------
Total Healthcare.............................. 35,662,735
------------
INDUSTRIAL PRODUCTS & SERVICES (17.82%)
COMMERCIAL PRINTING (0.99%)
R.R. Donnelley & Sons Co.......................... 169,600 4,854,800
------------
DIVERSIFIED MANUFACTURING (12.68%)
Allied Signal, Inc................................ 210,700 6,874,087
Coltec Industries Inc. (a)........................ 431,500 7,065,812
Cooper Industries, Inc............................ 229,500 7,975,125
Cooper Tire & Rubber Co........................... 297,600 6,956,400
General Electric Co............................... 195,356 8,986,376
ITT Corp.......................................... 112,900 8,989,663
Manville Corp. (a)................................ 524,600 4,721,400
Tyco International Ltd............................ 232,000 10,672,000
------------
62,240,863
------------
ELECTRONICS (1.90%)
Harris Corp....................................... 176,400 7,232,400
Magnetek Inc. (a)................................. 155,600 2,100,600
------------
9,333,000
------------
</TABLE>

See Accompanying Notes.

18
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1A)
------- ------------
<S> <C> <C>
INDUSTRIAL PRODUCTS & SERVICES (CONTINUED)
ENVIRONMENTAL CONTROL (0.43%)
Chemical Waste Management Inc. (a)................ 230,000 $ 2,127,500
------------
MACHINERY (1.11%)
General Signal Corp............................... 76,900 2,480,025
Tenneco Inc....................................... 77,000 2,993,375
------------
5,473,400
------------
POLLUTION CONTROL (0.71%)
Laidlaw Inc., Cl. B............................... 470,000 3,466,250
------------
Total Industrial Products & Services.......... 87,495,813
------------
TECHNOLOGY (5.72%)
COMPUTERS-PERIPHERALS (2.31%)
Conner Peripherals Inc. (a)....................... 270,700 3,316,075
Harris Computer Systems Inc. (a).................. 2,890 33,596
International Business Machines................... 54,500 3,855,875
Read Rite Corp. (a)............................... 253,300 4,131,956
------------
11,337,502
------------
INFORMATION PROCESSING (1.40%)
Novell, Inc. (a).................................. 346,100 6,900,369
------------
TELECOMMUNICATIONS-EQUIPMENT (2.01%)
Bay Networks Inc.................................. 384,000 9,864,000
------------
Total Technology.................................. 28,101,871
------------
TRANSPORTATION (1.36%)
AIRLINES (0.56%)
AMR Corp. (a)..................................... 54,600 2,770,950
------------
RAILROADS (0.80%)
Union Pacific Corp................................ 84,200 3,915,300
------------
Total Transportation.............................. 6,686,250
------------
UTILITIES (9.20%)
ELECTRIC (1.86%)
Entergy Corp...................................... 231,500 5,208,750
Scecorp........................................... 280,000 3,920,000
------------
9,128,750
------------
</TABLE>

See Accompanying Notes.

19
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1A)
------- ------------
<S> <C> <C>
UTILITIES (CONTINUED)
TELEPHONE (7.34%)
American Telegraph & Telephone 123,426 $ 6,063,302
BellSouth Corp.................................... 73,200 3,797,250
GTE Corp.......................................... 199,900 6,121,937
MCI Communications Corp........................... 458,100 8,990,212
Northern Telecom Ltd.............................. 147,600 4,723,200
U.S. West, Inc.................................... 180,100 6,348,525
------------
36,044,426
------------
Total Utilities................................... 45,173,176
------------
TOTAL COMMON STOCKS (COST $495,054,703)........... 470,753,952
------------

CONVERTIBLE PREFERRED STOCKS (1.64%)
ENERGY (1.25%)
OIL-PRODUCTION (1.01%)
Occidental Petroleum Corp., $3.00................. 100,000 4,962,500
------------
OIL-SERVICES (0.24%)
Noble Drilling Corp., $1.50....................... 32,500 710,938
Reading & Bates Corp., $1.625..................... 20,000 442,500
------------
1,153,438
------------
Total Energy...................................... 6,115,938
------------
HEALTHCARE (0.39%)
HOSPITAL SERVICES & SUPPLIES (0.34%)
United States Surgical Corp., $9.76............... 64,600 1,679,600
------------
PHARMACEUTICALS (0.05%)
Gensia Inc., $3.75 (144A) 20,000 260,000
------------
Total Healthcare.................................. 1,939,600
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $8,340,955)............................... 8,055,538
------------
</TABLE>

See Accompanying Notes.

20
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1A)
------------ ------------
<S> <C> <C>
CONVERTIBLE BONDS (0.85%)
BASIC INDUSTRIES (0.08%)
PAPER & FOREST PRODUCTS (0.08%)
Champion International Corp. 6.50% Subordinated Debentures due 04/15/11...............
$ 350,000 $ 367,938
------------
TECHNOLOGY (0.46%)
COMPUTERS-PERIPHERALS (0.46%)
Conner Peripherals Inc. 6.50% Subordinated Debentures due 03/01/02....................
2,900,000 2,262,000
------------
TRANSPORTATION (0.31%)
AIRLINES (0.31%)
AMR Corp. 6.125% Subordinated Debentures due 11/01/24 (144A)..........................
1,900,000 1,515,250
------------
TOTAL CONVERTIBLE BONDS
(COST $4,200,904)...................................................................
4,145,188
------------
SHORT-TERM INVESTMENTS (1.85%)
REPURCHASE AGREEMENT (0.41%)
Goldman Sachs 5.65% dated 11/30/94 due 12/01/94, proceeds $2,039,320
(collaterized by U.S. Treasury Bill, due 05/15/97, valued at
$2,039,772)....................................................... 2,039,000 2,039,000
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (0.16%)
Federal Home Loan Mortgage Corp., 5.38% due 12/01/94................ 790,000 790,000
-----------
U.S. GOVERNMENT TREASURY OBLIGATIONS (1.28%)
U.S. Treasury Bills 4.50%-5.18% due 12/22/94-04/06/95............... 6,303,000 6,268,118
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $9,097,118)................................................. 9,097,118
-----------
TOTAL INVESTMENTS (COST $516,693,680) (100.2%)...................... 492,051,796
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.20%)...................... (979,776)
-----------
NET ASSETS (100.0%)................................................. $491,072,020
-----------
-----------
<FN>
(a) Non-income-producing security.

Note: The cost of investments for Federal Income Tax purposes at November 30,
1994, was $516,693,680, the aggregate gross unrealized appreciation and
depreciation was $17,046,534 and $41,688,418, respectively, resulting in net
unrealized depreciation of $24,641,884.

(ADR) - Securities whose value is determined or significantly influenced by
trading on exchanges not located in the United States or Canada. ADR after the
name of a foreign holdings stands for American Depository Receipt, representing
ownership of foreign securities on deposit with a domestic custodian bank.

(144A) - Securities restricted for resale to institutional investors.
</TABLE>
See Accompanying Notes.

21
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $516,693,680) (Note 1a & 1b) $492,051,796
Cash 721
Receivable for Investments Sold 7,899,116
Dividends and Interest Receivable (Note 1c) 1,464,861
Other Assets 6,088
-----------
Total Assets 501,422,582
-----------

LIABILITIES
Payable for Investments Purchased 9,348,292
Advisory Fee Payable (Note 2a) 591,616
Financial and Fund Accounting Services Fee Payable (Note 2c) 114,665
Custody Fee Payable 99,182
Fund Services Fee Payable (Note 2d) 3,888
Administration Fee Payable (Note 2b) 2,693
Accrued Expenses 190,226
-----------
Total Liabilities 10,350,562
-----------

NET ASSETS
Applicable to Investors' Beneficial Interests $491,072,020
-----------
-----------
</TABLE>

See Accompanying Notes.

22
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1C)
Dividends (Net of Withholding Tax of $72,524) $5,786,438
Interest 525,987
---------
$ 6,312,425
Investment Income

EXPENSES
Advisory Fee (Note 2a) 966,962
Financial and Fund Accounting Services Fees (Note 2c) 114,665
Custodian Fees and Expenses 80,775
Fund Services Fee (Note 2d) 26,390
Professional Fees 22,558
Administration Fee (Note 2b) 16,272
Trustees' Fees and Expenses (Note 2e) 5,296
Miscellaneous 3,978
---------
1,236,896
Total Expenses
-----------

5,075,529
NET INVESTMENT INCOME

16,142,531
NET REALIZED GAIN ON INVESTMENTS (INCLUDING $193,172 LOSS ON
FUTURES CONTRACTS)

(34,357,855)
NET CHANGE IN UNREALIZED APPRECIATION
-----------

$(13,139,795)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
-----------
-----------
</TABLE>

See Accompanying Notes.

23
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD JULY
FOR THE SIX 19, 1993
MONTHS ENDED (COMMENCEMENT OF
NOVEMBER 30, 1994 OPERATIONS) TO MAY
(UNAUDITED) 31, 1994
------------------ -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS
Net Investment Income $ 5,075,529 $ 5,655,363
Net Realized Gain on Investments 16,142,531 26,272,769
Net Change in Unrealized Appreciation (Depreciation) (34,357,855) (2,323,580)
------------------ -------------------
Net Increase (Decrease) in Net Assets Resulting from Operations (13,139,795) 29,604,552
------------------ -------------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 139,904,484 585,309,492
Withdrawals (73,439,829) (177,266,984)
------------------ -------------------
Net Increase from Investors' Transactions 66,464,655 408,042,508
------------------ -------------------
Total Increase in Net Assets 53,324,860 437,647,060

NET ASSETS
Beginning of Period 437,747,160 100,100
------------------ -------------------
End of Period $ 491,072,020 $ 437,747,160
------------------ -------------------
------------------ -------------------
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------

FOR THE PERIOD JULY
FOR THE SIX 19, 1993
MONTHS ENDED (COMMENCEMENT OF
NOVEMBER 30, 1994 OPERATIONS) TO MAY
(UNAUDITED) 31, 1994
------------------ -------------------
<S> <C> <C>
Ratios to Average Net Assets
Expenses 0.51%* 0.53%*
Net Investment Income 2.10%* 1.79%*
Portfolio Turnover 33% 76%(a)

<FN>
- ------------------------
* Annualized

(a) Portfolio turnover is for the twelve month period ended May 31, 1994, and
includes the portfolio activity of the Portfolio's predecessor entity, the
Pierpont Equity Fund, for the period June 1, 1993 to July 18, 1993.
</TABLE>
See Accompanying Notes.

<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Selected U.S. Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, (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 July 19, 1993 and received a contribution of certain assets and
liabilities, including securities, with a value of $209,477,219 on that date
from The Pierpont Equity Fund, Inc. in exchange for a beneficial interest in the
Portfolio. At that date, net unrealized appreciation of $12,039,552 was included
in the contributed securities. The Declaration of Trust permits the Trustees to
issue an unlimited number of beneficial interests in the Portfolio.

The following is a summary of the significant accounting policies of the
Portfolio:

a)The value of each security for which readily available market quotations
exists is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the average of the readily available closing
bid and ask prices on such exchanges, or at the average quoted bid and ask
prices 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.

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. S&P 500
futures transactions during the six months ended November 30, 1994 are
summarized as follows:

<TABLE>
<CAPTION>
SALES OF FUTURES CONTRACTS
--------------------------------------------
PRINCIPAL AMOUNT
NUMBER OF CONTRACTS OF CONTRACTS
------------------------- -----------------
<S> <C> <C>
Contracts opened 41 $9,752,325
Contracts closed 41 9,752,325
-
--------------
Open at end of period 0 $ 0
-
-
---------------
---------------
</TABLE>

25
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

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 will 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 custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the Portfolio. It is the
policy of the Portfolio to value the underlying collateral daily on a
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. TRANSACTIONS WITH AFFILIATES

a)The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the investment
advisory agreement, the Portfolio pays Morgan at an annual rate of 0.40%
of the Portfolio's average daily net assets. For the six months ended
November 30, 1994 such fees amounted to $966,962.

b)The Portfolio retains Signature Broker-Dealer Services, Inc. ("Signature")
to serve as Administrator and exclusive placement agent. Signature
provides administrative services necessary for the operations of the
Portfolio, furnishes office space and facilities required for conducting
the business of the Portfolio and pays the compensation of the Portfolio's
officers affiliated with Signature. The agreement provides for a fee to be
paid to Signature at an annual rate determined by the following schedule:
0.01% of the first $1 billion of the aggregate average daily net assets of
the Portfolio and the other portfolios subject to the Administrative
Services Agreement, 0.008% of the next $2 billion of such net assets,
0.006% of the next $2 billion of such net assets, and 0.004% of such net
assets in excess of $5 billion. The daily equivalent of the fee rate is
applied to the daily net assets of the Portfolio. For the six months ended
November 30, 1994 such expenses amounted to $16,272.

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 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 the fee calculated under
the Services Agreements. For the six months ended November 30, 1994,
Morgan's fee amounted to $114,665.

26
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $26,390 for the six months ended November 30, 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 period were
as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- ------------- --------------
<S> <C>
$231,128,208 $154,526,655
</TABLE>

27
<PAGE>
THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND Capital
THE PIERPONT SHORT TERM BOND FUND Appreciation
THE PIERPONT BOND FUND 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 SEMI-ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL NOVEMBER 30, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>
LETTER TO THE SHAREHOLDERS OF THE PIERPONT CAPITAL APPRECIATION FUND

January 11, 1995

Dear Shareholder:

The Pierpont Capital Appreciation Fund adheres to a disciplined stock selection
process designed to identify companies with outstanding long-term earnings
potential. The market's recent shortsightedness - and accompanying volatility -
has meant that the Fund's disciplined approach has been "out of sync" with
current market conditions, thus contributing to its recent underperformance.
When more favorable markets prevail, the Fund's performance should improve as
the small company stocks we have selected reach their full performance
potential.

For the six months ended November 30, 1994, the Fund returned -1.81% versus
- -0.50% for the Russell 2500 Index. The Fund's net asset value was $20.16 at the
end of November, versus $21.40 on May 31, 1994. In addition, the Fund's net
assets declined from $204 million to end the period at $177 million.

ECONOMIC ENVIRONMENT
Investors faced a difficult market environment throughout most of the six-month
period ended November 30, 1994 as the Federal Reserve's continued rate increases
caused stock and bond market volatility. Stock prices declined in June as the
dollar suddenly weakened and bond prices fell. The stock market staged a summer
rally, but declined in September as investors were again confronted with
evidence of economic strength, fueling fears of inflation and further rate
hikes. The market rose modestly in October, but continued inflation worries and
a higher-than-expected 75 basis point increase in the Fed Funds rate produced
negative returns in November. Adding to this weakness were concerns that equity
markets were overvalued. Based on fears they would be hit the hardest, however,
small cap stocks, which had seen three years of good returns before declining,
experienced a higher level of selling than large cap stocks.

Despite the economic recovery, cyclical stocks began to underperform during the
period, with the largest declines coming from the transportation and consumer
cyclical sectors. Even in light of the six interest rate increases during the
year, the utilities sector did relatively well. Technology led all sectors, as
many investors expected continued growth. Health care, as measured by the
Russell 2500, also posted gains for the period as prospects for radical reform
legislation diminished.

- --------------------------------------------------------------------------------
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>

SEMI-ANNUAL REVIEW
Much of the volatility during the period was related to the market's fixation on
short-term events. For example, MESA AIRLINES, which we started buying in 1993,
declined during the second and third quarters as the market reacted strongly to
negative news about the company. As its stock price was driven down
dramatically, we added to our position in MESA, believing that its fundamentals
were strong. In our view, the company has a strong management team, a good
operating plan, a sound competitive strategy, and sufficient cash flow. As the
market realized the summer issues were temporary, MESA led the portfolio in
October and November, rising 36% for these months.

Portfolio holdings that are currently undergoing similar short-term pressures
include ONE PRICE CLOTHING STORES and CHARMING SHOPPES, INC. The recent
promotional values offered by many department stores have hurt these two
discount stores. Again, we view this as a temporary environment and are holding
the stocks based on their quality of management and their ability to ride out
these issues.

INVESTMENT OUTLOOK
Going forward, 1995 will likely continue to exhibit market volatility. As
companies absorb the rate increases of last year and potential new increases,
there will be additional pressure on capital. The good news is that for the
first time in many years, most of the world's leading economies are expanding.
We look to invest in companies that are positioned to capitalize on this
growth.

Morgan's experienced research professionals will continue to perform fundamental
proprietary company research to identify attractively priced stocks of small cap
companies with superior 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 Capital Appreciation Fund seeks to provide a high total return from
a portfolio of equity securities of small companies. It is designed for
investors who are willing to assume the somewhat higher risk of investing in
small companies in order to seek a higher total return over time than might be
expected from a portfolio of stocks of large companies.

- --------------------------------------------------------------------------------
INCEPTION DATE
6/27/85

- --------------------------------------------------------------------------------
NET ASSETS AS OF 11/30/94
$177,252,306

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

FUND HIGHLIGHTS
ALL DATA AS OF NOVEMBER 30, 1994

PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)

[GRAPH]

LARGEST EQUITY HOLDINGS % OF PORTFOLIO
- --------------------------------------------------------------------------------
BAY NETWORKS, INC. 2.2
ALLEGHENY LUDLUM CORP. 1.7
HEALTH CARE & RETIREMENT CORP. 1.6
SBARRO, INC. 1.6
MESA AIRLINES, INC. 1.5

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 Capital Appreciation Fund's
inception would have grown to $26,924 at November 30, 1994.

GROWTH OF $10,000 SINCE INCEPTION*
JUNE 27, 1985 - NOVEMBER 30, 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 27, 1985 (inception) to November 30, 1994; the second line represents the
growth of a ten thousand dollar investment in a portfolio of securities
reflecting the composition of the Russell 2500 index for the same time period;
the third line represents the growth of a ten thousand dollar investment in a
portfolio of securities reflecting the composition of the Morningstar Small
Company Fund Average for the same time period. The graph points are as
follows:

Year Fund Russell 2500 Morningstar
<S> <C> <C> <C>

0 $ 10,000 $ 10,000 $ 10,000
1 14,386 13,471 13,478
2 15,944 14,803 14,653
3 13,672 13,686 13,742
4 17,823 17,096 17,129
5 19,782 17,522 18,830
6 19,406 19,328 20,943
7 21,618 22,332 23,954
8 27,111 26,624 28,662
9 27,420 28,538 30,611
10 26,924 28,396 31,091
</TABLE>

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------
THREE YEAR ONE THREE FIVE SINCE
AS OF NOVEMBER 30, 1994 MONTHS TO DATE YEAR YEARS YEARS INCEPTION*
- ------------------------------------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Pierpont Capital Appreciation Fund -4.64% -7.92% -5.03% 10.90% 7.77% 11.06%
Russell 2500 -5.15% -3.15% 0.64% 12.95% 10.47% 11.72%
Morningstar Small Company Fund Average -1.91% -2.85% 1.40% 12.33% 11.39% 12.80%

AS OF SEPTEMBER 30, 1994
- ------------------------------------------------------------------ --------------------------------------------
The Pierpont Capital Appreciation Fund 5.94% -4.27% -2.46% 12.22% 8.18% 11.74%
Russell 2500 7.17% 1.08% 2.89% 13.87% 10.41% 12.46%
Morningstar Small Company Fund Average 8.17% -0.60% 2.36% 12.88% 11.09% 13.35%
<FN>
*6/27/85
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ARE NET OF
FEES AND ASSUME THE REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF
CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE
MORNINGSTAR MUTUAL FUND RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND
DATA. ALTHOUGH GATHERED FROM RELIABLE SOURCES, DATA ACCURACY AND COMPLETENESS
CANNOT BE GUARANTEED. THE PIERPONT CAPITAL APPRECIATION FUND INVESTS ALL OF ITS
INVESTABLE ASSETS IN THE U.S. SMALL COMPANY 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.

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 CAPITAL APPRECIATION 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 and Portfolio expenses as described in the
Prospectus. Had expenses not been subsidized, returns would have been lower.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN A COPY OF THE PROSPECTUS BY CALLING (800) 521-5411.

<PAGE>
THE PIERPONT CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The U.S. Small Company Portfolio ("Portfolio"), at value $177,690,808
Receivable for Expense Reimbursement 162,849
Receivable for Shares of Beneficial Interest Sold 39,862
Other Assets 6,354
-----------
Total Assets 177,899,873
-----------

LIABILITIES
Shareholder Servicing Fee Payable (Note 2c) 404,943
Payable for Shares of Beneficial Interest Redeemed 40,361
Administration Fee Payable (Note 2a) 27,453
Trustees' Fees and Expenses Payable (Note 2e) 3,586
Fund Services Fee Payable (Note 2d) 1,421
Accrued Expenses 169,803
-----------
Total Liabilities 647,567
-----------

NET ASSETS
Applicable to 8,790,183 Shares of Beneficial Interest Outstanding $177,252,306
(par value $0.001, unlimited shares authorized)
-----------
-----------
Net Asset Value, Offering and Redemption Price Per Share $20.16
-----------
-----------

ANALYSIS OF NET ASSETS
Paid-in Capital $175,651,483
Undistributed Net Investment Income 1,059,479
Accumulated Net Realized Gain on Investment 8,900,651
Net Unrealized Depreciation of Investment (8,359,307)
-----------
Net Assets $177,252,306
-----------
-----------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE 1B)
Allocated Dividend Income (Net of Withholding Tax of $3,326) $1,660,402
Allocated Interest Income 178,916
Allocated Portfolio Expense (688,804)
----------
1,150,514
Net Investment Income Allocated from Portfolio

FUND EXPENSES
Shareholder Servicing Fee (Note 2c) $ 239,505
Financial and Fund Accounting Services Fee (Note 2b) 48,554
Administration Fee (Note 2a) 27,453
Printing 26,992
Transfer Agent Fees 11,957
Fund Services Fee (Note 2d) 10,741
Insurance 6,143
Registration Fees 5,567
Trustees' Fees and Expenses (Note 2e) 3,586
Professional Fees 3,524
Miscellaneous 794
---------
Total Fund Expenses 384,816
Less: Reimbursement of Expenses (Note 2b) (211,403)
---------
NET FUND EXPENSES 173,413
----------

NET INVESTMENT INCOME 977,101

NET REALIZED GAIN ON INVESTMENTS ALLOCATED FROM PORTFOLIO 180,027

NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS ALLOCATED (4,516,252)
FROM PORTFOLIO ----------

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,359,124)
----------
----------
</TABLE>

See Accompanying Notes.

8
<PAGE>
THE PIERPONT CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
NOVEMBER 30, 1994 YEAR ENDED
(UNAUDITED) MAY 31, 1994
------------------ --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS
Net Investment Income $ 977,101 $ 1,673,669
Net Realized Gain on Investments Allocated from Portfolio 180,027 42,446,498
Net Change in Unrealized Depreciation of Investments Allocated from
Portfolio (4,516,252) (41,697,248)
------------------ --------------
Net Increase (Decrease) in Net Assets Resulting from Operations (3,359,124) 2,422,919
------------------ --------------

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (730,381) (860,910)
Net Realized Gain on Investments (6,868,027) (35,050,363)
------------------ --------------
Total Distributions to Shareholders (7,598,408) (35,911,273)
------------------ --------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 3)
Proceeds from Shares of Beneficial Interest Sold 18,686,973 101,912,727
Reinvestment of Dividends and Distributions 7,301,995 34,976,004
Cost of Shares of Beneficial Interest Redeemed (42,224,068) (85,842,095)
------------------ --------------
Net Increase (Decrease) from Transactions in Shares of Beneficial
Interest (16,235,100) 51,046,636
------------------ --------------
Total Increase (Decrease) in Net Assets (27,192,632) 17,558,282

NET ASSETS
Beginning of Period 204,444,938 186,886,656
------------------ --------------
End of Period (including undistributed net investment income of $1,059,479
and $812,759, respectively) $ 177,252,306 $ 204,444,938
------------------ --------------
------------------ --------------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ARE AS FOLLOWS:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL YEAR ENDED MAY 31,
NOVEMBER 30, 1994 -------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------------------ ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.40 $ 25.12 $ 20.03 $ 17.98 $ 18.68 $ 16.83
-------- ---------- ---------- --------- --------- ---------

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.11 0.20 (0.01) (0.04) (0.02) (0.03)
Net Realized and Unrealized Gain (Loss) on
Investments (0.51) 0.19 5.10 2.09 (0.33) 1.88
-------- ---------- ---------- --------- --------- ---------
Total from Investment Operations (0.40) 0.39 5.09 2.05 (0.35) 1.85
-------- ---------- ---------- --------- --------- ---------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.08) (0.09) - - - -
Net Realized Gains (0.76) (4.02) - - (0.35) -
-------- ---------- ---------- --------- --------- ---------
Total Distributions (0.84) (4.11) - - (0.35) -
-------- ---------- ---------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 20.16 $ 21.40 $ 25.12 $ 20.03 $ 17.98 $ 18.68
-------- ---------- ---------- --------- --------- ---------
-------- ---------- ---------- --------- --------- ---------
Total Return (1.81)%+ 1.14% 25.41% 11.40% (1.90)% 10.99%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands) $ 177,252 $ 204,445 $ 186,887 $ 97,548 $ 58,859 $ 47,921
Ratios to Average Net Assets:
Expenses 0.90(a) 0.90% 0.90% 0.90% 0.91% 0.93%
Net Investment Income 1.02(a) 0.75% (0.06)% (0.25)% (0.15)% (0.18)%
Decrease Reflected in above Expense
Ratio due to Reimbursements 0.22%(a) 0.20% 0.05% 0.13% 0.31% 0.32%
Portfolio Turnover - 14%* 50% 58% 56% 66%
<FN>

(a) Annualized
+ Not Annualized
* 1994 Portfolio Turnover reflects the period June 1, 1993 to July 18, 1993.
After July 18, 1993, all the Fund's investable assets were invested in The U.S.
Small Company Portfolio.
</TABLE>

See Accompanying Notes.

10
<PAGE>
THE PIERPONT CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Pierpont Capital Appreciation Fund (the "Fund") is a separate series of The
Pierpont Funds, a Massachusetts business trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company. The Fund, prior to its tax-
free reorganization on July 18, 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. Small Company
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 November 30, 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)Substantially all the Fund's net investment income is declared as
dividends and paid semi-annually. Distributions to shareholders of net
realized capital gain, if any, are declared and paid annually.

d)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 CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
distributions are reclassified to paid-in capital. For the fiscal year
ended May 31, 1994, the Fund reclassified $540,120 to undistributed net
investment income from paid-in capital. 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 six months ended November 30,
1994, Signature's fee for these services amounted to $27,453.

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 0.15% of the first $100 million of the Fund's average
daily net assets and 0.13% 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 six months ended November
30, 1994, Morgan was entitled to a fee of $48,554. 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 0.90% of the average daily net
assets of the Fund through at least May 31, 1995. For the six months ended
November 30, 1994, Morgan has agreed to reimburse the Fund $211,403 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
six months ended November 30, 1994, the fee for these services amounted to
$239,505.

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 CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
Trust's affairs. The Trustees of the Trust represent all the existing
shareholders of Group. For the for the six months ended November 30, 1994,
the Fund's allocated portion of Group's costs in performing its services
amounted to $10,741.

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 SIX FOR THE
MONTHS ENDED FISCAL YEAR
NOVEMBER 30, ENDED MAY
1994 31,
(UNAUDITED) 1994
-------------- ------------
<S> <C> <C>
Shares sold 904,466 4,220,665
Reinvestment of dividends and distributions 365,646 1,541,447
Shares redeemed (2,035,256) (3,645,483)
-------------- ------------
Net increase (decrease) (765,144) 2,116,629
-------------- ------------
-------------- ------------
</TABLE>

13
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SEMI-ANNUAL REPORT NOVEMBER 30, 1994

(UNAUDITED)

(The following pages should be read in conjunction
with The Pierpont Capital Appreciation Fund
Semi-Annual Financial Statements)

14
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
COMMON STOCKS (95.8%)
BASIC INDUSTRIES (7.7%)
AGRICULTURE (0.3%)
Dekalb Genetics Corp........................................................... 60,400 $ 1,728,950
----------------
CHEMICALS (2.6%)
Albemarle Corp................................................................. 168,800 2,278,800
Ethyl Corp..................................................................... 24,100 247,025
Georgia Gulf Corp. (a)......................................................... 145,800 5,175,900
Wellman, Inc................................................................... 287,000 7,282,625
----------------
14,984,350
----------------
METALS & MINING (4.8%)
Allegheny Ludlum Corp.......................................................... 501,100 9,520,900
Commercial Metals Co........................................................... 211,866 5,296,650
Freeport McMoRan Copper & Gold Inc. Class A.................................... 163,900 3,298,488
Gibraltar Steel Corp. (a)...................................................... 22,900 246,175
Maverick Tube Corp. (a)........................................................ 125,300 1,151,194
Minera Rayrock, Inc. (a)....................................................... 838,700 1,585,560
Oregon Steel Mills, Inc........................................................ 91,000 1,319,500
Pegasus Gold, Inc.............................................................. 93,300 1,154,588
Steel Technologies, Inc........................................................ 317,700 3,494,700
----------------
27,067,755
----------------
Total Basic Industries......................................................... 43,781,055
----------------
CONSUMER GOODS & SERVICES (19.5%)
AUTOMOTIVE SUPPLIES (2.8%)
Banta Corp..................................................................... 112,300 3,551,487
Cooper Tire & Rubber Co........................................................ 264,000 6,171,000
Excel Industries, Inc.......................................................... 195,800 2,790,150
Simpson Industries, Inc........................................................ 340,200 3,444,525
----------------
15,957,162
----------------
</TABLE>

See Accompanying Notes.

15
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
CONSUMER GOODS & SERVICES (CONTINUED)
BEVERAGES, FOOD, SOAP & TOBACCO (0.6%)
Bush Boake Allen, Inc. (a)..................................................... 84,400 $ 1,920,100
Dreyer's Grand Ice Cream, Inc.................................................. 39,600 1,009,800
J & J Snack Foods Corp. (a).................................................... 36,700 442,694
----------------
3,372,594
----------------
ENTERTAINMENT, LEISURE & MEDIA (2.0%)
Boyd Gaming Corp. (a).......................................................... 252,500 2,935,313
Cinergi Pictures Entertainment, Inc. (a)....................................... 71,000 452,625
Comcast UK Cable Partners Ltd. (a)............................................. 29,200 503,700
Heritage Media Corp. (a)....................................................... 61,200 1,468,800
Lottery Enterprises, Inc....................................................... 136,205 629,948
Meridian Sports, Inc. (a)...................................................... 43,900 411,563
Paging Network, Inc. (a)....................................................... 46,900 1,465,625
People's Choice TV Corp. (a)................................................... 60,800 1,170,400
Sports Club Company, Inc. (a).................................................. 44,100 325,238
Starbucks Corp. (a)............................................................ 30,400 813,200
Telewest Communications PLC (a)................................................ 45,000 1,313,437
----------------
11,489,849
----------------
HOME CONSTRUCTION (0.4%)
Bush Industries, Inc........................................................... 20,100 399,488
D.R. Horton, Inc............................................................... 167,500 1,821,563
----------------
2,221,051
----------------
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
CONSUMER GOODS & SERVICES (CONTINUED)
MERCHANDISING (6.1%)
Arbor Drugs, Inc............................................................... 71,600 $ 1,521,500
Brauns Fashions Corp. (a)...................................................... 104,700 333,731
Catherines Stores Corp. (a).................................................... 190,600 1,477,150
Central Tractor Farm & Country, Inc. (a)....................................... 11,800 182,900
Charming Shoppes, Inc.......................................................... 812,700 5,384,138
Fruit of the Loom, Inc. Class A (a)............................................ 162,300 4,442,963
HMG Worldwide Corp. (a)........................................................ 49,500 253,687
Holson Burnes Group, Inc. (a).................................................. 100,000 656,250
K-Swiss, Inc. Class A.......................................................... 111,400 2,339,400
Lechters, Inc. (a)............................................................. 33,900 567,825
Liz Claiborne, Inc............................................................. 77,300 1,748,913
Nine West Group, Inc. (a)...................................................... 72,400 1,791,900
One Price Clothing Stores, Inc................................................. 294,700 2,652,300
Penn Traffic Co. (a)........................................................... 72,900 2,879,550
Safety 1st, Inc. (a)........................................................... 45,800 1,242,325
The Sports Authority, Inc. (a)................................................. 17,400 395,850
TJX Companies, Inc............................................................. 285,600 4,319,700
Trans World Entertainment (a).................................................. 207,400 2,255,475
----------------
34,445,557
----------------
MISCELLANEOUS (0.8%)
Baker (Michael) Corp. (a)...................................................... 81,400 325,600
DeVRY, Inc. (a)................................................................ 52,400 1,486,850
Johnson Worldwide Associates, Inc. (a)......................................... 135,979 2,736,577
----------------
4,549,027
----------------
PERSONAL SECURITY (1.9%)
ADT Ltd. (a)................................................................... 732,900 8,153,512
Pinkerton's, Inc. (a).......................................................... 128,100 2,305,800
Pittway Corp................................................................... 7,700 297,412
----------------
10,756,724
----------------
PERSONAL SERVICES (1.1%)
Service Corp. International.................................................... 235,500 6,034,688
----------------
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------

<S> <C> <C>
CONSUMER GOODS & SERVICES (CONTINUED)
RESTAURANTS & HOTELS (3.8%)
Argosy Gaming Corp. (a)........................................................ 52,000 $ 627,250
Cracker Barrel Old Country Store, Inc.......................................... 264,500 4,992,438
Equity Inns Inc................................................................ 64,600 654,075
O'Charleys, Inc................................................................ 20,800 226,200
Players International, Inc. (a)................................................ 78,400 1,602,300
Royal Caribbean Cruises Ltd.................................................... 112,400 3,091,000
Sbarro, Inc.................................................................... 398,400 8,914,200
Taco Cabana (a)................................................................ 150,500 1,298,063
----------------
21,405,526
----------------
Total Consumer Goods & Services................................................ 110,232,178
----------------
ENERGY (4.7%)
OIL-PRODUCTION (2.4%)
Devon Energy Corp.............................................................. 109,600 2,109,800
Oryx Energy Co. (a)............................................................ 357,800 4,338,325
TransCanada Pipelines Ltd...................................................... 339,100 4,281,138
Vintage Petroleum, Inc......................................................... 189,100 3,096,513
----------------
13,825,776
----------------
OIL-SERVICES (2.3%)
Dreco Energy Services Ltd. Class A (a)......................................... 111,700 963,413
Global Marine, Inc. (a)........................................................ 1,045,400 4,181,600
Holly Corp..................................................................... 92,800 2,389,600
Noble Drilling Corp. (a)....................................................... 418,100 2,613,125
Oceaneering International, Inc. (a)............................................ 194,200 2,281,850
Tesoro Petroleum Corp. (a)..................................................... 59,900 546,588
----------------
12,976,176
----------------
Total Energy................................................................... 26,801,952
----------------
</TABLE>

See Accompanying Notes.

18
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
FINANCE (19.0%)
BANKING (8.6%)
Alabama National BanCorporation (a)............................................ 22,600 $ 228,825
BankcorpSouth, Inc............................................................. 8,600 274,125
Banknorth Group, Inc........................................................... 92,600 2,210,825
Bay View Capital Corp.......................................................... 196,900 3,814,937
BB&T Financial Corp............................................................ 44,000 1,223,750
Charter One Financial Inc...................................................... 173,200 3,215,025
Collective Bancorp, Inc........................................................ 9,500 166,844
Colonial Bancgroup, Inc. Class A............................................... 75,700 1,570,775
Commerce Bancorp, Inc.......................................................... 49,300 875,075
Commercial Bank of New York.................................................... 26,000 221,000
Community First Bankshares, Inc................................................ 55,300 760,375
First Commercial Corp.......................................................... 20,100 450,994
First Commerce Corp............................................................ 379,700 8,590,712
FirstFed Financial Corp. (a)................................................... 64,500 806,250
First National Bancorp-Gainesville............................................. 90,200 1,539,038
Firstar Corp................................................................... 92,700 2,433,375
First Virginia Banks, Inc...................................................... 36,800 1,209,800
HUBCO, Inc..................................................................... 76,800 1,459,200
Mississippi Valley Bankshares, Inc............................................. 48,500 842,688
National Commerce Bancorporation............................................... 23,800 532,525
Roosevelt Financial Group, Inc................................................. 97,700 1,422,756
Seacoast Banking Corp. of Florida Class A...................................... 49,100 840,838
Shawmut National Corp.......................................................... 119,000 2,112,250
Silicon Valley Bancshares (a).................................................. 63,300 775,425
SouthTrust Corp................................................................ 147,000 2,682,750
Sterling Bancshares, Inc....................................................... 34,200 560,025
Sterling Financial Corp........................................................ 54,010 567,105
Trustco Bank Corp. of New York................................................. 76,100 1,460,169
Victoria Bankshares, Inc....................................................... 4,900 114,533
Westamerica Bancorporation..................................................... 71,400 2,168,775
Wilmington Trust Corp.......................................................... 150,000 3,543,750
----------------
48,674,514
----------------
</TABLE>

See Accompanying Notes.

19
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
FINANCE (CONTINUED)
FINANCIAL SERVICES (2.1%)
Eagle Finance Corp. (a)........................................................ 50,800 $ 698,500
First Merchants Acceptance Corp. (a)........................................... 32,700 302,475
First USA, Inc................................................................. 64,900 2,084,912
Painewebber Group, Inc......................................................... 200,000 2,725,000
Payco American Corp. (a)....................................................... 75,800 596,925
SPS Transaction Services, Inc.................................................. 144,600 3,687,300
Southwest Securities Group, Inc................................................ 182,200 1,207,075
Waterhouse Investor Services, Inc.............................................. 30,900 440,325
----------------
11,742,512
----------------
INSURANCE (4.5%)
AMBAC Inc...................................................................... 126,000 4,362,750
CMAC Investment Corp........................................................... 67,600 1,859,000
Capital Re Corp................................................................ 241,400 5,431,500
First Colony Corp.............................................................. 196,800 3,788,400
Fremont General Corp........................................................... 87,400 2,021,125
Hilb, Rogal & Hamilton Co...................................................... 60,700 682,875
MMI Companies, Inc............................................................. 193,500 2,854,125
The Navigators Group, Inc. (a)................................................. 14,500 217,500
Providian Corp................................................................. 134,900 4,080,725
----------------
25,298,000
----------------
</TABLE>

See Accompanying Notes.

20
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------

<S> <C> <C>
FINANCE (CONTINUED)
REAL ESTATE (3.8%)
Capstone Capital Trust Inc..................................................... 71,800 $ 1,148,800
Carr Realty Corp............................................................... 36,600 649,650
Chelsea GCA Realty, Inc........................................................ 59,900 1,407,650
Developers Diversified Realty Corp............................................. 54,300 1,486,463
Gables Residential Trust....................................................... 39,000 765,375
Health & Retirement Property Trust............................................. 380,600 5,138,100
Healthcare Realty Trust, Inc................................................... 125,200 2,316,200
Home Properties of New York, Inc............................................... 57,100 1,077,763
Liberty Property Trust......................................................... 39,100 689,138
MerryLand & Investment Company, Inc............................................ 57,700 1,074,663
RFS Hotel Investments, Inc..................................................... 88,100 1,222,388
Storage Trust Realty (a)....................................................... 34,000 595,000
ROC Communities, Inc........................................................... 91,500 1,772,813
Southwest Property Trust....................................................... 108,200 1,217,250
Tucker Properties Corp......................................................... 42,500 531,250
Wellsford Residential Property Trust........................................... 44,900 841,875
----------------
21,934,378
----------------
Total Finance.................................................................. 107,649,404
----------------
HEALTHCARE (8.8%)
BIOTECHNOLOGY (2.0%)
Affymax N.V. (a)............................................................... 68,400 1,282,500
Amylin Pharmaceuticals, Inc. (a)............................................... 92,900 569,012
Athena Neurosciences, Inc. (a)................................................. 118,600 852,437
Cephalon, Inc. (a)............................................................. 40,900 342,537
Inhale Therapeutic Systems (a)................................................. 78,100 712,663
Northfield Laboratories, Inc. (a).............................................. 104,200 1,217,837
Oncor, Inc. (a)................................................................ 316,500 1,424,250
Perseptive Biosystems, Inc. (a)................................................ 214,100 1,485,319
Targeted Genetics Corp. (a).................................................... 105,800 423,200
Univax Biologics, Inc. (a)..................................................... 127,000 730,250
Vertex Pharmaceuticals, Inc. (a)............................................... 101,600 1,422,400
Vical, Inc. (a)................................................................ 57,900 477,675
----------------
10,940,080
----------------
</TABLE>

See Accompanying Notes.

21
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------

<S> <C> <C>
HEALTHCARE (CONTINUED)
HEALTH SERVICES (4.7%)
Abbey Healthcare Group, Inc. (a)............................................... 207,600 $ 4,878,600
Advocat, Inc. (a).............................................................. 156,300 1,660,687
Health Care & Retirement Corp.................................................. 331,400 9,072,075
Health Management Associates, Inc. Class A..................................... 355,900 8,185,700
Mariner Health Group, Inc. (a)................................................. 90,400 1,994,450
OncorMed, Inc. (a)............................................................. 10,400 81,900
Summit Care Corp. (a).......................................................... 57,000 1,054,500
----------------
26,927,912
----------------
HOSPITAL SUPPLIES (2.1%)
Biocircuits Corp. (a).......................................................... 183,800 172,312
Bioject Medical Technologies, Inc. (a)......................................... 58,400 206,225
CellPro, Inc. (a).............................................................. 192,100 3,601,875
Corvita Corp. (a).............................................................. 55,000 268,125
Fresenius USA, Inc. (a)........................................................ 200,200 1,626,625
Owens & Minor, Inc. Holding Co................................................. 196,600 2,973,575
Protocol Systems, Inc. (a)..................................................... 94,700 852,300
Vital Signs, Inc. (a).......................................................... 193,900 2,132,900
----------------
11,833,937
----------------
Total Healthcare............................................................... 49,701,929
----------------
INDUSTRIAL PRODUCTS & SERVICES (11.6%)
CAPITAL GOODS (0.2%)
Gardner Denver Machinery, Inc. (a)............................................. 133,800 1,237,650
----------------
COMMERCIAL SERVICES (1.1%)
Advo, Inc...................................................................... 142,500 2,547,187
Consolidated Graphics, Inc. (a)................................................ 45,100 800,525
Emmis Broadcasting Corp. Class A (a)........................................... 27,200 401,200
Hooper Holmes, Inc............................................................. 119,100 744,375
Leasing Solutions, Inc......................................................... 19,200 134,400
Nu-Kote Holding, Inc. (a)...................................................... 33,800 752,050
Robert Half International, Inc................................................. 29,000 721,375
----------------
6,101,112
----------------
</TABLE>

See Accompanying Notes.

22
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
INDUSTRIAL PRODUCTS & SERVICES (CONTINUED)
DIVERSIFIED MANUFACTURING (3.1%)
Apogee Enterprises, Inc........................................................ 131,300 $ 2,396,225
Brady (WH) Co., Class A Non-Voting............................................. 133,700 6,384,175
Collins & Aikman Corp. (a)..................................................... 66,200 587,525
Greenfield Industries, Inc..................................................... 29,800 596,000
Kaydon Corp.................................................................... 253,827 5,774,564
Libbey, Inc.................................................................... 109,400 1,654,675
Worldtex, Inc. (a)............................................................. 48,200 210,875
----------------
17,604,039
----------------
ELECTRICAL EQUIPMENT (0.3%)
Charter Power Systems, Inc..................................................... 83,000 1,442,125
Encore Wire Corp. (a).......................................................... 24,800 353,400
----------------
1,795,525
----------------
MACHINERY (4.6%)
Applied Power, Inc............................................................. 133,200 2,930,400
Black & Decker Corp............................................................ 278,000 6,672,000
Coltec Industries, Inc. (a).................................................... 282,300 4,622,662
General Signal Corp............................................................ 113,200 3,650,700
Intermet Corp. (a)............................................................. 401,100 2,306,325
Measurex Corp.................................................................. 51,000 1,090,125
Regal-Beloit Corp.............................................................. 119,600 1,509,950
Sundstrand Corp................................................................ 87,100 3,723,525
----------------
26,505,687
----------------
PACKAGING (0.3%)
Paxar Corp..................................................................... 166,600 1,707,650
----------------
POLLUTION CONTROL (2.0%)
Dames & Moore, Inc............................................................. 391,400 5,283,900
Emcon, Inc. (a)................................................................ 186,800 840,600
Matrix Service Co. (a)......................................................... 107,600 746,475
Mid-American Waste Systems, Inc................................................ 280,200 1,891,350
Tetra Technologies, Inc. (a)................................................... 255,100 2,407,506
----------------
11,169,831
----------------
Total Industrial Products & Services........................................... 66,121,494
----------------
</TABLE>

See Accompanying Notes.

23
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
TECHNOLOGY (14.8%)
AEROSPACE (0.6%)
Orbital Sciences Corp. (a)..................................................... 78,000 $ 1,550,250
Rohr Industries, Inc. (a)...................................................... 226,900 2,070,463
----------------
3,620,713
----------------
COMPUTER-PERIPHERALS (1.4%)
Pinnacle Systems, Inc. (a)..................................................... 52,800 574,200
Quantum Corp. (a).............................................................. 245,100 3,875,644
Radius, Inc.................................................................... 78,300 734,063
Read-Rite Corp. (a)............................................................ 172,200 2,809,012
----------------
7,992,919
----------------
COMPUTER-SOFTWARE (5.4%)
Alias Research Inc. (a)........................................................ 96,100 2,246,337
Compuware Corp................................................................. 178,500 6,582,188
Davidson & Associates, Inc. (a)................................................ 50,900 1,692,425
Delrina Corp. (a).............................................................. 159,400 2,341,187
Electronic Arts, Inc. (a)...................................................... 110,200 2,197,112
Informix Corp. (a)............................................................. 30,600 877,838
InfoSoft International, Inc. (a)............................................... 34,700 1,058,350
Intersolv (a).................................................................. 92,000 1,529,500
Macromedia Inc. (a)............................................................ 41,000 809,750
Phoenix Technologies Ltd. (a).................................................. 25,500 181,688
Progress Software Corp. (a).................................................... 55,500 2,011,875
Project Software & Development, Inc. (a)....................................... 115,300 1,859,213
S3, Inc. (a)................................................................... 289,800 4,020,975
Software Professionals, Inc. (a)............................................... 46,500 212,156
Symantec Corp. (a)............................................................. 125,700 2,325,450
Tripos, Inc. (a)............................................................... 25,500 116,344
Wavefront Technologies, Inc. (a)............................................... 26,600 315,875
----------------
30,378,263
----------------
ELECTRONICS (0.2%)
Dynamics Corp. of America...................................................... 51,800 945,350
----------------
</TABLE>

See Accompanying Notes.

24
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
INFORMATION PROCESSING (0.5%)
NetFRAME Systems, Inc. (a)..................................................... 131,900 $ 1,063,444
Network Computing Devices, Inc. (a)............................................ 153,200 679,825
Tandem Computers, Inc. (a)..................................................... 47,800 812,600
----------------
2,555,869
----------------
SEMICONDUCTORS (3.4%)
Advanced Technology Materials, Inc. (a)........................................ 142,500 810,469
Alliance Semiconductor Corp. (a)............................................... 32,400 1,065,150
Asyst Technologies, Inc. (a)................................................... 114,100 1,982,487
Brooktree Corp. (a)............................................................ 323,000 2,826,250
Credence Systems Corp. (a)..................................................... 97,500 2,595,938
Helix Technology Corp.......................................................... 92,600 1,400,575
Micrion Corp. (a).............................................................. 85,500 1,026,000
Quickturn Design System, Inc. (a).............................................. 47,900 577,794
Xilinx, Inc. (a)............................................................... 116,100 6,806,363
----------------
19,091,026
----------------
TELECOMMUNICATIONS-EQUIPMENT (3.3%)
Applied Signal Technology, Inc. (a)............................................ 18,700 78,306
Alantec Corp. (a).............................................................. 32,900 682,675
Bay Networks Inc............................................................... 498,800 12,812,925
Brooktrout Technology, Inc. (a)................................................ 42,500 488,750
Network Equipment Technologies, Inc. (a)....................................... 106,500 2,209,875
Picturetel Corp. (a)........................................................... 121,100 2,702,044
XcelleNet, Inc. (a)............................................................ 29,400 444,675
----------------
19,419,250
----------------
Total Technology............................................................... 84,003,390
----------------
TRANSPORTATION (2.7%)
AIRLINES (1.5%)
Mesa Airlines, Inc. (a)........................................................ 935,900 8,598,581
----------------
</TABLE>

See Accompanying Notes.

25
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
TRANSPORTATION (CONTINUED)
TRUCKING & FREIGHT CARRIERS (1.2%)
Harper Group, Inc.............................................................. 84,100 $ 1,240,475
Interpool, Inc. (a)............................................................ 81,700 1,123,375
Intertrans Corp................................................................ 65,700 862,312
Rollins Truck Leasing Co....................................................... 50,000 575,000
Werner Enterprises, Inc........................................................ 140,000 3,202,500
----------------
7,003,662
----------------
Total Transportation........................................................... 15,602,243
----------------
UTILITIES (7.0%)
ELECTRIC (4.5%)
Allegheny Power Systems, Inc................................................... 155,100 3,373,425
Central Hudson Gas & Electric Corp............................................. 133,200 3,230,100
Green Mountain Power Corp...................................................... 31,200 830,700
Illinova Corp.................................................................. 126,200 2,524,000
Maine Public Service Co........................................................ 38,100 852,487
New England Electric System.................................................... 56,600 1,775,825
Pinnacle West Capital Corp..................................................... 192,500 3,729,687
Potomac Electric Power Co...................................................... 195,100 3,658,125
Western Resources, Inc......................................................... 73,700 2,072,812
Washington Water Power Co...................................................... 240,900 3,402,712
----------------
25,449,873
----------------
NATURAL GAS (1.3%)
Atlanta Gas Light Co........................................................... 71,900 2,130,037
Chesapeake Utilities Corp...................................................... 37,900 478,487
EnergyNorth, Inc............................................................... 20,700 341,550
Panhandle Eastern Corp......................................................... 140,900 2,976,513
Providence Energy Corp......................................................... 71,700 1,102,387
United Cities Gas Co........................................................... 39,800 626,850
----------------
7,655,824
----------------
</TABLE>

See Accompanying Notes.

26
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SHARES NOTE (1A)
--------------- ----------------
<S> <C> <C>
UTILITIES (CONTINUED)
WATER (1.2%)
American Water Works Inc....................................................... 112,400 $ 2,950,500
Aquarion Co.................................................................... 56,600 1,245,200
Connecticut Water Service, Inc................................................. 13,100 307,850
E'Town Corp.................................................................... 53,100 1,347,412
SJW Corp....................................................................... 1,100 38,500
Southern California Water Co................................................... 44,800 711,200
United Water Resources, Inc.................................................... 23,228 301,964
----------------
6,902,626
----------------
Total Utilities................................................................ 40,008,323
----------------
TOTAL COMMON STOCKS
(COST $586,231,041).......................................................... 543,901,968
----------------
CONVERTIBLE PREFERRED STOCK (0.0%)
TECHNOLOGY - ELECTRONICS (0.0%)
Comptronix Corp., Series A (a) (cost $723)..................................... 445 779
----------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C> <C>
CORPORATE OBLIGATIONS (0.2%)
Boston Chicken, Inc., 4.50% due 02/01/04, callable 02/01/96
(cost $1,507,721).......................................................... $ 1,782,000 1,274,130
----------------
SHORT TERM INVESTMENTS (4.8%)
REPURCHASE AGREEMENT (0.1%)
409,000
Goldman Sachs Repurchase Agreement, 5.65% dated 11/30/94, due 12/01/94,
proceeds $409,064 (collateralized by U.S. Treasury Note, 4.25% due
05/15/96, valued at $417,396).............................................. 409,000
----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (2.1%)
Federal National Mortgage Association,
discount notes 5.38%++ due 12/01/94.......................................... 3,465,000 3,465,000
discount notes 5.39%++ due 12/01/94.......................................... 3,510,000 3,510,000
discount notes 4.82%++ due 12/14/94.......................................... 5,000,000 4,991,297
----------------
Total U.S. Government Agency Obligations..................................... 11,966,297
----------------
</TABLE>

See Accompanying Notes.

27
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
PRINCIPAL AMOUNT NOTE (1A)
---------------- ----------------
<S> <C> <C>
U.S. GOVERNMENT TREASURY OBLIGATIONS (2.6%)
U.S. Treasury Bills
4.95% due 12/22/94........................................................... $ 5,000,000 $ 4,985,563
5.00% due 12/22/94........................................................... 3,635,000 3,624,398
5.10% due 12/22/94........................................................... 31,000 30,908
5.15% due 12/22/94........................................................... 5,000,000 4,985,052
5.16% due 12/22/94........................................................... 261,000 260,214
5.18% due 12/22/94........................................................... 965,000 962,084
----------------

Total U.S. Government Treasury Obligations................................... 14,848,219
----------------
TOTAL SHORT TERM INVESTMENTS
(COST $27,223,516)........................................................... 27,223,516
----------------
TOTAL INVESTMENTS (100.8%) (COST $614,963,001)............................... 572,400,393
LIABILITIES NET OF OTHER ASSETS (-0.8%)...................................... (4,614,353)
----------------
NET ASSETS (100.0%).......................................................... $567,786,040
----------------
----------------
<FN>

(a) Non-income-producing security.

(++) Bond equivalent yield

</TABLE>

Note: Based on the cost of investments of $614,963,001 for Federal Income Tax
purposes at November 30, 1994, the aggregate gross unrealized appreciation and
depreciation was $29,885,116 and $72,447,724 respectively, resulting in net
unrealized depreciation of $42,562,608.

See Accompanying Notes.

<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $614,963,001) (Note 1a) $572,400,393
Cash 811
Receivable for Investments Sold 2,509,750
Dividends Receivable 834,273
Interest Receivable 26,649
Prepaid Insurance 4,123
-----------
Total Assets 575,775,999
-----------

LIABILITIES
Payable for Securities Purchased 6,277,984
Advisory Fee Payable (Note 2a) 1,178,988
Custody Fee Payable 178,042
Financial and Fund Accounting Services Fee Payable (Note 2c) 131,378
Fund Services Fee Payable (Note 2d) 4,486
Administration Fee Payable (Note 2b) 3,112
Accrued Expenses 215,969
-----------
Total Liabilities 7,989,959
-----------

NET ASSETS
Applicable to Investors' Beneficial Interests $567,786,040
-----------
-----------
</TABLE>

See Accompanying Notes.

29
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B)

Dividend Income (Net of Withholding Tax of $17,324) $ 5,081,986
Interest Income 557,904
-----------
Investment Income 5,639,890

EXPENSES
Advisory Fee (Note 2a) $1,784,606
Custodian Fees and Expenses 139,865
Financial and Fund Accounting Services Fees (Note 2c) 131,378
Fund Services Fee (Note 2d) 33,350
Administration Fee (Note 2b) 20,044
Professional Fees 16,074
Trustees' Fees and Expenses (Note 2e) 7,704
Insurance 4,277
---------
Total Expenses 2,137,298
-----------

NET INVESTMENT INCOME 3,502,592

NET REALIZED GAIN ON INVESTMENTS 3,622,038

NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS (16,647,242)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(9,522,612)
-----------
-----------
</TABLE>

See Accompanying Notes.

30
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 19, 1993
MONTHS ENDED (COMMENCEMENT OF
NOVEMBER 30, 1994 OPERATIONS) TO
(UNAUDITED) MAY 31, 1994
-------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS
Net Investment Income $ 3,502,592 $ 4,807,224
Net Realized Gain on Investments 3,622,038 33,091,201
Net Change in Unrealized Depreciation of Investments (16,647,242) (55,373,439)
-------------------- -------------------
Net Decrease in Net Assets Resulting from Operations (9,522,612) (17,475,014)
-------------------- -------------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 76,690,437 903,848,399
Withdrawals (133,928,809) (251,926,461)
-------------------- -------------------
Net Increase (Decrease) from Investors' Transactions (57,238,372) 651,921,938
-------------------- -------------------
Total Increase (Decrease) in Net Assets (66,760,984) 634,446,924

NET ASSETS
Beginning of Period 634,547,024 100,100
-------------------- -------------------
End of Period $ 567,786,040 $ 634,547,024
-------------------- -------------------
-------------------- -------------------
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------

FOR THE PERIOD
FOR THE SIX JULY 19, 1993
MONTHS ENDED (COMMENCEMENT OF
NOVEMBER 30, 1994 OPERATIONS) TO
(UNAUDITED) MAY 31, 1994
-------------------- -------------------
<S> <C> <C>
Ratios to Average Net Assets:
Net Investment Income 1.18%(a) 0.72%(a)
Expenses 0.72(a) 0.99%(a)
Portfolio Turnover 40% 97%(+)

<FN>

- ------------------------
(a) Annualized.

(+) Portfolio turnover is for the twelve month period ended May 31, 1994, and
includes the portfolio activity of the Portfolio's predecessor entity, The
Pierpont Capital Appreciation Fund, for the period June 1, 1993 to July 18,
1993.
</TABLE>

See Accompanying Notes.
31

<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The U.S. Small Company Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Portfolio commenced operations on July 19, 1993 and
received a contribution of certain assets and liabilities, including securities,
with a value of $200,358,103 on that date from The Pierpont Capital Appreciation
Fund in exchange for a beneficial interest in the Portfolio. At that date, net
unrealized appreciation of $29,458,073 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 securties with a remaining
maturity of less than 60 days are valued at amortized cost.

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

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.

d)The Portfolio's custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the Portfolio. It is the
policy of the Portfolio to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the Portfolio has
the right to liquidate the collateral and apply the proceeds in

32
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
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. 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 six months ended
November 30, 1994, this fee amounted to $1,784,606.

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 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 six months ended November
30, 1994, Signature's fee for these services amounted to $20,044.

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 six months ended November
30, 1994, this fee amounted to $131,378.

33
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 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 six months
ended November 30, 1994 were as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- -------------- --------------
<S> <C>
$225,966,687 $257,294,310
</TABLE>