<PAGE>
LETTER TO THE SHAREHOLDERS OF THE PIERPONT MONEY MARKET FUND
January 15, 1996
Dear Shareholder:
We are pleased to report that The Pierpont Money Market Fund produced a total
return of 5.71% for its fiscal year ended November 30, 1995, outperforming the
5.47% return of its benchmark, IBC/Donoghue's Taxable Money Fund Average. In the
changing interest rate environment, active management of the Portfolio's average
maturity as well as its security and sector allocations were the reasons for the
Fund's relative success during the period. As seen in the accompanying chart,
the Fund has also produced competitive returns over the long term, outperforming
its benchmark for the three- , five- , and ten-year periods ended November 30,
1995.
AVERAGE ANNUAL TOTAL RETURNS (PP)
AS OF NOVEMBER 30, 1995
The Pierpont Money IBC/Donoghue's
Market Fund Taxable Money Fund Average
1 yr. 5.71 5.47
3 yr. 4.1 3.91
5 yr. 4.49 4.23
10 yr. 5.98 5.71
INTEREST RATES CHANGE DIRECTION
The Fund's fiscal year was marked by a shift in Federal Reserve monetary policy,
from raising rates to slow economic growth early in the year to easing rates in
an effort to stimulate growth later. After the Fed's final rate increase on
February 4, 1995, it appeared the U.S. economy had reached a "soft landing" --
i.e., moderate growth with low inflation. As a result, Treasury rates began to
move lower, providing a steadily improving environment for money market
investments.
During the period, the yield on the one-year Treasury went from 6.88% on
November 30, 1994 to 5.36% at the end of the period. The accompanying graph on
page 2 illustrates the dramatic decline in money market yields during the Fund's
fiscal year.
ACTIVE MANAGEMENT ADDS VALUE
In the changing interest rate environment, active maturity management was key to
the Fund's outperformance. When rates were rising, The Money Market Portfolio in
which the Fund invests maintained a defensive short
----------------------------------------------------------------------
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS. . . . . 1 SPECIAL FUND-BASED SERVICES. .5
FUND FACTS AND HIGHLIGHTS . . . . . 3 FINANCIAL STATEMENTS . . . . .7
FUND PERFORMANCE. . . . . . . . . . 4
----------------------------------------------------------------------
1
<PAGE>
average maturity relative to the benchmark. As it became clear that economic
growth had slowed to sustainable levels, the Portfolio's average maturity was
gradually extended beyond the benchmark. This position helped the Portfolio to
capture additional yield as rates declined.
The Fund was also able to capture additional yield through sector allocation.
For example, in October 1995, the Portfolio bought short-term paper from high-
quality Japanese banks, which offered attractive yields relative to those of
U.S. banks and U.S. Treasury securities. At the same time, the Portfolio kept
its allocation to U.S. Treasuries and agencies relatively low because these
sectors appeared expensive compared with other types of high quality short-term
instruments.
1-YEAR U.S. TREASURY YIELDS
NOVEMBER 30, 1994 - NOVEMBER 30, 1995
11/94 6.881
12/94 7.178
1/95 6.786
2/95 6.415
3/95 6.476
4/95 6.309
5/95 5.786
6/95 5.629
7/95 5.65
8/95 5.637
9/95 5.68
10/95 5.546
11/95 5.368
THIS GRAPH IS FOR ILLUSTRATIVE PURPOSES ONLY AND DOES NOT REFLECT THE
PERFORMANCE OF ANY SPECIFIC SECURITY HELD IN THE PORTFOLIO.
ATTRACTIVE RETURNS WITH A HIGH QUALITY FOCUS
It is important to note that while the Portfolio sought a yield advantage over
the benchmark average, it was able to do so without compromising its goal of
maintaining a high level of liquidity and preserving capital. The Portfolio
accomplished this by continuing to focus on high-quality money market
instruments.
WHAT LIES AHEAD
Given our expectation of further Fed easing of monetary policy, we plan to
maintain a target life for the Portfolio slightly higher than that of the
benchmark, focusing its maturities within six months. Investments in Japanese
bank securities will be reduced, as the premium they offered has drastically
declined.
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.
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
10/01/82
- --------------------------------------------------------------------------------
NET ASSETS AS OF 11/30/95
$2,153,468,718
- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/18/95
EXPENSE RATIO
The Fund's annualized expense ratio of 0.41% 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, 1995
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[pie chart]
- COMMERCIAL PAPER 35.0%
- CERTIFICATES OF DEPOSIT 30.2%
- FLOATING RATE NOTES 11.6%
- U.S. GOVERNMENT AGENCIES 16.5%
- CORPORATE BONDS 1.9%
- OTHER 4.8%
AVERAGE 7-DAY YIELD
5.53%
AVERAGE MATURITY
54 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 in a fund's value over various time periods, typically 1, 5, or 10
years (or since inception). Total returns for periods of less than one year are
not annualized and provide a picture of how a fund has performed over the short
term.
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
-------------------- -----------------------------------------
THREE SIX ONE THREE FIVE TEN
AS OF NOVEMBER 30, 1995 MONTHS MONTHS YEAR YEARS YEARS YEARS
- ----------------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Pierpont Money Market Fund 1.38% 2.81% 5.71% 4.10% 4.49% 5.98%
IBC/Donoghue's Taxable Money Fund Avg. 1.31% 2.68% 5.47% 3.91% 4.23% 5.71%
AS OF SEPTEMBER 30, 1995
- ----------------------------------------------------------------- ------------------------------------------
The Pierpont Money Market Fund 1.40% 2.86% 5.58% 3.98% 4.56% 6.01%
IBC/Donoghue's Taxable Money Fund Avg. 1.33% 2.73% 5.34% 3.77% 4.31% 5.74%
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL FUND RETURNS ARE NET
OF FEES AND ASSUME THE REINVESTMENT OF DISTRIBUTIONS. 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 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.
4
<PAGE>
SPECIAL FUND-BASED SERVICES
PIERPONT ASSET ALLOCATION SERVICE (PAAS)
For many investors, a diversified portfolio -- including short-term instruments,
bonds, and stocks -- can offer an excellent opportunityto 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.
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.
KEOGH
In early 1995, Morgan introduced 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 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.
5
<PAGE>
SIGNATURE BROKER-DEALER SERVICES, INC. IS THE DISTRIBUTOR OF THE PIERPONT MONEY
MARKET FUND (THE "FUND").
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MORGAN")SERVES AS PORTFOLIO
INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS
SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN OR ANY OTHER
BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. ALTHOUGH THE FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE, THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO CONTINUE TO DO SO.
Performance data quoted herein represent past performance. Please remember that
past performance is not a guarantee of future performance. Fund returns are net
of fees and assume the reinvestment of income.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS
BY CALLING J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
6
<PAGE>
THE PIERPONT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Money Market Portfolio ("Portfolio") at value $2,163,439,371
Prepaid Expenses 16,109
--------------
Total Assets 2,163,455,480
--------------
LIABILITIES
Dividends Payable 9,258,574
Shareholder Servicing Fee Payable 537,972
Administration Fee Payable 43,498
Fund Services Fee Payable 8,794
Accrued Expenses 137,924
--------------
Total Liabilities 9,986,762
--------------
NET ASSETS
Applicable to 2,152,017,160 Shares of Beneficial Interest Outstanding $2,153,468,718
(unlimited authorized shares, par value $0.001)
--------------
--------------
Net Asset Value, Offering and Redemption Price Per Share $1.00
ANALYSIS OF NET ASSETS
Paid-In Capital $2,152,367,976
Accumulated Net Realized Gain on Investment 1,100,742
--------------
Net Assets $2,153,468,718
--------------
--------------
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
7
<PAGE>
THE PIERPONT MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM
PORTFOLIO
$ 126,644,297
Allocated Interest Income
(3,987,872)
Allocated Portfolio Expenses
-------------
122,656,425
Net Investment Income Allocated
from Portfolio
FUND EXPENSES
Shareholder Servicing Fee $3,629,031
Administration Fee 565,438
Fund Services Fee 193,838
Transfer Agent Fees 178,161
Registration Fees 63,573
Trustees' Fees and Expenses 47,304
Professional Fees and Expenses 34,519
Printing Expenses 24,000
Miscellaneous 91,506
----------
Total Fund Expenses 4,827,370
Less: Reimbursement of Expenses (74,259)
----------
(4,753,111)
NET FUND EXPENSES
-------------
117,903,314
NET INVESTMENT INCOME
1,151,919
NET REALIZED GAIN ON INVESTMENT
ALLOCATED
FROM PORTFOLIO
-------------
$ 119,055,233
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
-------------
-------------
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
8
<PAGE>
THE PIERPONT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED NOVEMBER 30,
--------------------------------------
1995 1994
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 117,903,314 $ 78,882,428
Net Realized Gain (Loss) on Investment Allocated from Portfolio 1,151,919 (51,177)
------------------ ------------------
Net Increase in Net Assets Resulting from Operations 119,055,233 78,831,251
------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (117,903,314) (78,882,428)
------------------ ------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (AT A CONSTANT $1.00 PER
SHARE)
Proceeds from Shares of Beneficial Interest Sold 13,845,812,899 11,776,268,715
Reinvestment of Dividends 109,754,767 73,195,486
Cost of Shares of Beneficial Interest Redeemed (13,806,940,589) (12,408,436,546)
------------------ ------------------
Net Increase (Decrease) from Transactions in Shares of Beneficial
Interest 148,627,077 (558,972,345)
------------------ ------------------
Total Increase (Decrease) in Net Assets 149,778,996 (559,023,522)
NET ASSETS
Beginning of Fiscal Year 2,003,689,722 2,562,713,244
------------------ ------------------
End of Fiscal Year $ 2,153,468,718 $ 2,003,689,722
------------------ ------------------
------------------ ------------------
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
9
<PAGE>
THE PIERPONT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each year are as follows:
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED NOVEMBER 30,
---------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
FISCAL YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0557 0.0367 0.0281 0.0371 0.0612
Net Realized Gain (Loss) on
Investment Allocated from
Portfolio 0.0005 (0.0000)(a) 0.0003 0.0006 0.0002
--------- --------- --------- --------- ---------
Total from Investment Operations 0.0562 0.0367 0.0284 0.0377 0.0614
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS TO SHAREHOLDERS
FROM
Net Investment Income (0.0557) (0.0367) (0.0281) (0.0371) (0.0612)
Net Realized Gain -- -- (0.0003) (0.0006) (0.0002)
--------- --------- --------- --------- ---------
Total Distributions to Shareholders (0.0557) (0.0367) (0.0284) (0.0377) (0.0614)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF FISCAL YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total Return 5.71% 3.73% 2.89% 3.83% 6.31%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
RATIOS AND SUPPLEMENTAL DATA
Net Assets at end of Fiscal Year
(in thousands) $2,153,469 $2,003,690 $2,562,713 $2,700,392 $3,058,559
Expenses 0.41% 0.43% 0.43% 0.43% 0.43%
Net Investment Income 5.56% 3.64% 2.82% 3.74% 6.10%
Decrease reflected in Expense
ratio due to Expense
Reimbursements by Morgan 0.00%(b) 0.01% 0.01% 0.01% 0.01%
</TABLE>
- ------------------------
(a) Less than $0.0001
(b) Less than 0.01%
The Accompanying Notes Are an Integral Part of the Financial Statements.
10
<PAGE>
THE PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
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 (65% at November 30,
1995). 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 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) For United States federal income tax purposes, the Fund utilized a
capital loss carryforward of $51,177 during the fiscal year ended
November 30, 1995.
2. TRANSACTIONS WITH AFFILIATES
a) The Trust retains Signature Broker-Dealer Services, Inc. ("Signature")
to serve as Administrator and Distributor. Signature provides
administrative services necessary for the operations of the
11
<PAGE>
THE PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
Fund, furnishes office space and facilities required for conducting the
business of the Fund and pays the compensation of the Fund's officers
affiliated with Signature. The agreement provides for a fee to be paid
to Signature at an annual rate determined by the following schedule:
0.04% of the first $1 billion of the aggregate average daily net assets
of the Trust, as well as two other affiliated fund families for which
Signature acts as administrator, 0.032% of the next $2 billion of such
net assets, 0.024% of the next $2 billion of such net assets, and 0.016%
of such net assets in excess of $5 billion. The daily equivalent of the
fee rate is applied each day to the net assets of the Fund. For the
fiscal year ended November 30, 1995, Signature's fee for these services
amounted to $565,438.
Effective December 29, 1995, the Administration Agreement was amended
such that the fee charged would be equal to the Fund's proportionate
share of a complex-wide fee based on the following annual schedule:
0.03% on the first $7 billion of the aggregate average daily net assets
of the Portfolio and the other portfolios (the "Master Portfolios") in
which series of the Trust, The JPM Institutional Funds or The JPM
Advisor Funds invest and 0.01% on the aggregate average daily net assets
of the Master Portfolios in excess of $7 billion. The portion of this
charge payable by the Fund is determined by the proportionate share its
net assets bear to the total net assets of the Trust, The JPM
Institutional Funds, The JPM Advisor Funds and the Master Portfolios.
b) Until August 31, 1995, the Trust, on behalf of the Fund, had a Financial
and Fund Accounting Services Agreement with Morgan under which Morgan
received a fee for overseeing certain aspects of the administration and
operation of the Fund and which was also designed to provide an expense
limit for certain expenses of the Fund. This fee was calculated at
0.043% of the Fund's average daily net assets. For the nine month period
ended August 31, 1995, Morgan agreed to reimburse the Fund $74,259 for
expenses that exceeded this limit. From September 1, 1995 until December
28, 1995, an interim agreement between the Trust, on behalf of the Fund,
and Morgan provided for the continuation of the oversight functions that
were outlined under the prior agreement and that Morgan should bear all
of its expenses incurred in connection with these services.
Effective December 29, 1995, the Trust, on behalf of the Fund, entered
into an Administrative Services Agreement with Morgan under which Morgan
is responsible for certain aspects of the administration and operation
of the Fund. Under the Agreement, the Fund has agreed to pay Morgan a
fee equal to its proportionate share of an annual complex-wide charge.
This charge is calculated daily based on the aggregate net assets of the
Master Portfolios in accordance with the following annual schedule:
0.06% on the first $7 billion of the Master Portfolios' aggregate net
assets and 0.03% of the aggregate net assets in excess of $7 billion.
The portion of this charge payable by the Fund is determined by the
proportionate share that the Fund's net assets bear to the net assets of
the Trust, the Master Portfolios and other investors in the Master
Portfolios for which Morgan provides similar services.
12
<PAGE>
THE PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
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, 1995, the fee for these services
amounted to $3,629,031.
Effective December 29, 1995, the Shareholder Servicing Agreement was
amended such that the annual rate for providing these services was
changed to 0.15% on the first $2 billion of average daily net assets and
0.10% on average daily net assets in excess of $2 billion.
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 $193,838 for the fiscal year ended November 30, 1995.
e) An aggregate annual fee of $65,000 is paid to each Trustee for serving
as a Trustee of The Pierpont Funds, The JPM Institutional Funds and
their corresponding Portfolios. The Trustees' Fees and Expenses shown in
the financial statements represent the Fund's allocated portion of the
total fees and expenses. Prior to April 1, 1995, the aggregate annual
Trustee Fee was $55,000. The Trustee who serves as Chairman and Chief
Executive Officer of these Funds and Portfolios also serves as Chairman
of Group and received compensation and employee benefits from Group in
his role as Group's Chairman. The allocated portion of such compensation
and benefits included in the Fund Services Fee shown in the financial
statements was $24,900.
13
<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 (one of the series constituting part of The
Pierpont Funds, hereafter referred to as the "Fund") at November 30, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the three 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 two 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 23, 1996
14
<PAGE>
The Money Market Portfolio
Annual Report November 30, 1995
(The following pages should be read in conjunction
with The Pierpont Money Market Fund
Annual Financial Statements)
15
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN YIELD TO MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------- ----------------------------------- -------------------- -------------------- --------------
<C> <S> <C> <C> <C>
ASSET-BACKED SECURITY (0.1%)
$ 3,573 Bank One Auto Trust, Series 1995-A,
Class A-1........................ 04/15/96 6.362% $ 3,572,937
--------------
CERTIFICATE OF DEPOSIT -- DOMESTIC (0.7%)
25,000 Wachovia Bank & Trust Co., N.A..... 02/09/96 7.070 25,000,906
--------------
CERTIFICATES OF DEPOSIT -- FOREIGN (30.7%)
39,500 Bank of Montreal (Chicago)......... 12/05/95 5.770 39,500,043
101,891 Bank of Montreal (New York)........ 12/01/95 5.937 101,891,000
31,000 Bank of Nova Scotia................ 02/06/96 5.750 31,000,000
160,000 Banque National de Paris Ltd....... 12/07/95 - 03/25/96 5.740 - 5.790 160,000,000
29,000 Commerzbank U.S. Finance Inc....... 12/01/95 5.760 29,000,000
125,000 Dai-ichi Kangyo Bank Ltd........... 12/05/95 - 02/02/96 5.990 - 6.260 125,016,993
150,000 Fuji Bank Ltd...................... 12/06/95 - 01/12/96 6.000 - 6.180 150,000,935
112,000 Industrial Bank of Japan Ltd....... 01/16/96 - 02/14/96 6.120 - 6.310 112,005,520
110,000 Mitsubishi Bank Ltd................ 12/27/95 5.900 110,000,000
21,000 National Bank, Australia........... 10/02/96 5.750 20,978,104
7,000 Sanwa Bank Ltd..................... 01/16/96 6.080 7,000,000
86,000 Societe Generale N.Y............... 12/18/95 - 04/12/96 5.750 - 6.600 86,010,561
50,000 Sumitomo Bank Ltd.................. 01/26/96 6.100 50,000,000
--------------
Total Certificates of Deposit -
Foreign 1,022,403,156
--------------
COMMERCIAL PAPER -- DOMESTIC (19.1%)
31,000 Ameritech Corp..................... 12/28/95 5.590 30,870,033
86,400 AT&T Corp.......................... 12/01/95 5.620 86,400,000
25,000 Associate Corp. of North America... 12/01/95 5.910 25,000,000
32,000 Bankers Trust Corp................. 03/13/96 5.670 31,480,880
50,000 C.I.T. Group Holdings Inc.......... 03/18/96 5.620 49,157,000
21,215 Campbell Soup Co................... 02/01/96 5.900 20,999,432
39,775 Chevron Transportation Corp........ 12/06/95 - 12/19/95 5.700 - 5.730 39,700,761
17,200 Dupont (E.I.) de Nemours & Co.,
Inc.............................. 07/24/96 5.500 16,579,844
29,200 Exxon Asset Management............. 12/08/95 5.710 29,167,580
50,000 First Chicago Corp................. 12/05/95 5.770 49,967,944
85,500 Ford Motor Corp.................... 12/15/95 5.620 85,313,135
153,000 General Electric Capital Corp...... 12/04/95 - 12/29/95 5.710 - 5.760 152,698,789
3,755 Georgia Municipal Electric Co...... 12/08/95 5.710 3,750,831
4,720 Koch Industries Inc................ 12/01/95 5.900 4,720,000
7,160 Lilly, Eli & Co.................... 12/04/95 5.620 7,156,647
5,000 Raytheon Co........................ 12/12/95 5.750 4,991,215
--------------
Total Commercial Paper - Domestic 637,954,091
--------------
COMMERCIAL PAPER -- FOREIGN (17.5%)
56,737 ABN - AMRO Bank N.V................ 12/05/95 5.700 56,701,067
97,000 Abbey National, North America...... 12/22/95 5.610 96,682,568
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
16
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN YIELD TO MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------- ----------------------------------- -------------------- -------------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER -- FOREIGN (CONTINUED)
$ 70,985 Bayerische Vereinsbank............. 12/01/95 5.930% $ 70,985,000
4,500 BFCE U.S. Finance Corp............. 02/20/96 5.690 4,442,389
82,000 Commonwealth Bank of Australia..... 12/20/95 5.600 81,757,644
127,500 Deutsche Bank Financial, Inc....... 12/05/95 - 02/02/96 5.665 - 5.750 127,163,964
20,000 Electricite De France.............. 04/04/96 5.610 19,610,417
23,000 Ontario Hydro...................... 04/09/96 5.620 22,533,228
40,000 Royal Bank of Canada............... 03/28/96 5.654 39,258,698
62,828 UBS Finance (Delaware), Inc........ 12/05/95 5.750 62,787,860
--------------
Total Commercial Paper - Foreign 581,922,835
--------------
CORPORATE BONDS (2.0%)
15,000 Abbey National Treasury Services
PLC.............................. 12/20/95 7.350 14,998,777
52,000 Ford Motor Credit Co............... 12/11/95 - 03/25/96 5.000 - 6.125 51,931,711
--------------
Total Corporate Bonds 66,930,488
--------------
EURO DOLLAR CERTIFICATES OF DEPOSIT (0.1%)
4,000 Mitsubishi Trust & Banking Corp.... 01/16/96 6.140 4,000,051
--------------
FLOATING RATE NOTES (12.1%) (A)
25,000 Boatmens First National Bank,
(resets monthly to one month
LIBOR Rate -1 basis point)....... 06/12/96 5.802 25,000,000
15,000 Colorado National Bank, (resets
monthly to one month LIBOR Rate
-2 basis points)................. 04/17/96 5.792 14,998,859
175,000 Federal National Mortgage
Association, (resets daily to one
month LIBOR Rate -19 basis
points).......................... 10/11/96 5.622 174,835,927
50,000 First Bank N.A., (resets monthly to
one month LIBOR Rate -3 basis
points).......................... 03/08/96 5.782 49,998,736
140,000 Student Loan Marketing Association,
(resets monthly to one month
LIBOR Rate -17 basis points)..... 07/01/96 5.662 139,941,677
--------------
Total Floating Rate Notes 404,775,199
--------------
TIME DEPOSITS -- FOREIGN (3.0%)
100,000 Dresdner Bank, Grand Cayman........ 12/01/95 5.937 100,000,000
--------------
U.S. TREASURY OBLIGATIONS (1.7%)
6,772 United States Treasury Bills....... 12/14/95 - 03/21/96 5.160 - 5.590 6,708,660
50,000 United States Treasury Notes....... 04/15/96 - 05/15/96 7.375 - 9.375 50,513,279
--------------
Total U.S. Treasury Obligations 57,221,939
--------------
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
17
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN YIELD TO MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------- ----------------------------------- -------------------- -------------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (17.3%)
$ 36,941 Federal Farm Credit Bank........... 12/02/96 5.400% $ 36,940,800
5,000 Federal Home Loan Bank............. 04/24/96 6.420 5,007,303
139,923 Federal Home Loan Mortgage Corp.... 12/01/95 - 12/20/95 5.690 - 5.800 139,820,551
394,970 Federal National Mortgage
Association...................... 12/05/95 - 12/06/96 5.390 - 6.460 393,432,114
--------------
Total U.S. Government Agency
Obligations 575,200,768
--------------
REPURCHASE AGREEMENT (0.1%)
2,470 Goldman Sachs Repurchase Agreement
dated 11/30/95 due 12/01/95,
proceeds $2,470,401
(collateralized by $2,263,000
U.S. Treasury Notes 9.125%, due
05/15/99 valued at $2,519,872)
(cost $2,470,000)................ 12/01/95 5.850 2,470,000
--------------
TOTAL INVESTMENTS (104.4%)
3,481,452,370
LIABILITIES IN EXCESS OF OTHER ASSETS (-4.4%)
(146,496,954)
--------------
NET ASSETS (100.0%) $3,334,955,416
--------------
--------------
</TABLE>
(a) The coupon rate shown on floating or adjustable rate securities represents
the rate at the end of the reporting period. The due date on these types of
securities reflects the final maturity date.
The Accompanying Notes Are an Integral Part of the Financial Statements.
18
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and $3,481,452,370
Value
Cash 1,788
Receivable for Investments Sold 29,211,142
Interest Receivable 11,598,272
Prepaid Expenses 24,736
--------------
Total Assets 3,522,288,308
--------------
LIABILITIES
Payable for Investments Purchased 186,732,650
Advisory Fee Payable 420,879
Custody Fee Payable 83,329
Administration Fee Payable 15,676
Fund Services Fee Payable 12,892
Accrued Expenses 67,466
--------------
Total Liabilities 187,332,892
--------------
NET ASSETS
Applicable to Investors' Beneficial $3,334,955,416
Interests
--------------
--------------
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
19
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
$ 173,636,796
Interest
EXPENSES
Advisory Fee $3,913,479
Custodian Fees and Expenses 545,910
Financial and Fund Accounting 373,077
Services Fee
Fund Services Fee 261,045
Administration Fee 176,717
Professional Fees and Expenses 71,200
Trustees' Fees and Expenses 66,978
Miscellaneous 47,677
----------
(5,456,083)
Total Expenses
-------------
168,180,713
NET INVESTMENT INCOME
1,573,477
NET REALIZED GAIN ON INVESTMENTS
-------------
$ 169,754,190
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
-------------
-------------
</TABLE>
The Accompanying Notes Are an Integral Part of the Financial Statements.
20
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED NOVEMBER
30,
-----------------------------------
1995 1994
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 168,180,713 $ 94,288,128
Net Realized Gain (Loss) on
Investments 1,573,477 (57,650)
---------------- ----------------
Net Increase in Net Assets
Resulting from Operations 169,754,190 94,230,478
---------------- ----------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS
Contributions 17,654,676,133 13,334,979,866
Withdrawals (17,137,148,786) (13,481,612,327)
---------------- ----------------
Net Increase (Decrease) from
Investors' Transactions 517,527,347 (146,632,461)
---------------- ----------------
Total Increase (Decrease) in Net
Assets 687,281,537 (52,401,983)
NET ASSETS
Beginning of Fiscal Year 2,647,673,879 2,700,075,862
---------------- ----------------
End of Fiscal Year $ 3,334,955,416 $ 2,647,673,879
---------------- ----------------
---------------- ----------------
- ------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FISCAL YEAR ENDED NOVEMBER JULY 12, 1993
30, (COMMENCEMENT
----------------------------------- OF OPERATIONS) THROUGH
1995 1994 NOVEMBER 30, 1993
---------------- ---------------- ----------------------
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.19% 0.20% 0.19%(a)
Net Investment Income 5.77% 3.90% 2.98%(a)
Decrease Reflected in Expense Ratio
due to Expense Reimbursements by
Morgan - 0.00%(b) -
</TABLE>
- ------------------------
(a) Annualized
(b) Less than 0.01%
The Accompanying Notes Are an Integral Part of the Financial Statements.
21
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended, (the "Act") as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Portfolio 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 intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be subject to
taxation on its share of the Portfolio's ordinary income and capital
gains. It is intended that the Portfolio's assets will be managed in such
a way that an investor in the Portfolio will be able to satisfy the
requirements of Subchapter M of the Internal Revenue Code. The cost of
securities is the same for book and tax purposes.
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the 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, 1995,
this fee amounted to $3,913,479.
22
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
b)The Portfolio has retained Signature Broker - Dealer Services, Inc.
("Signature") to serve as Administrator and exclusive placement agent.
Signature provides administrative services necessary for the operations of
the Portfolio, furnishes office space and facilities required for
conducting the business of the Portfolio and pays the compensation of the
Portfolio's officers affiliated with Signature. The agreement provides for
a fee to be paid to Signature at an annual fee rate determined by the
following schedule: 0.01% of the first $1 billion of the aggregate average
daily net assets of the Portfolio and the other portfolios subject to the
Administration Agreement, 0.008% of the next $2 billion of such net
assets, 0.006% of the next $2 billion of such net assets, and 0.004% of
such net assets in excess of $5 billion. The daily equivalent of the fee
rate is applied each day to the net assets of the Portfolio. For the
fiscal year ended November 30, 1995, Signature's fee for these services
amounted to $176,717.
Effective December 29, 1995, the Administration Agreement was amended such
that the fee charged would be equal to the Portfolio's proportionate share
of a complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios subject to this agreement (the "Master
Portfolios") and 0.01% on the aggregate average daily net assets of the
Master Portfolios in excess of $7 billion. The portion of this charge
payable by the Portfolio is determined by the proportionate share its net
assets bear to the total net assets of The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds and the Master Portfolios.
c)Until August 31, 1995, the Portfolio had a Financial and Fund Accounting
Services Agreement with Morgan under which Morgan received a fee for
overseeing certain aspects of the administration and operation of the
Portfolio and which was also designed to provide an expense limit for
certain expenses of the Portfolio. This fee was calculated at 0.03% of the
Portfolio's average daily net assets. For the nine month period ended
August 31, 1995, the fee for these services amounted to $373,077. From
September 1, 1995 until December 28, 1995, an interim agreement between
the Portfolio and Morgan provided for the continuation of the oversight
functions that were outlined under the prior agreement and that Morgan
should bear all of its expenses incurred in connection with these
services.
Effective December 29, 1995, the Portfolio entered into an Administrative
Services Agreement with Morgan under which Morgan is responsible for
overseeing certain aspects of the administration and operation of the
Portfolio. Under the Agreement, the Portfolio has agreed to pay Morgan a
fee equal to its proportionate share of an annual complex-wide charge.
This charge is calculated daily based on the aggregate net assets of the
Master Portfolios in accordance with the following annual schedule: 0.06%
on the first $7 billion of the Master Portfolios' aggregate net assets and
0.03% of the aggregate net assets in excess of $7 billion. The portion of
this charge payable by the Portfolio is determined by the proportionate
share that the Portfolio's net assets bear to the net assets of the Master
Portfolios and other investors in the Master Portfolios for which Morgan
provides similar services.
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
23
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
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 $261,045 for the fiscal year ended November 30,
1995.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds and their
corresponding Portfolios. The Trustees' Fees and Expenses shown in the
financial statements represent the Portfolio's allocated portion of the
total fees and expenses. Prior to April 1, 1995, the aggregate annual
Trustee Fee was $55,000. The Trustee who serves as Chairman and Chief
Executive Officer of these Funds and Portfolios also serves as Chairman of
Group and received compensation and employee benefits from Group in his
role as Group's Chairman. The allocated portion of such compensation and
benefits included in the Fund Services Fee shown in the financial
statements was $33,500.
24
<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, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the supplementary data for each of the two years in the period 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, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
January 23, 1996
25
<PAGE>
THE PIERPONT MONEY MARKET FUND
THE PIERPONT TAX EXEMPT MONEY MARKET FUND THE
THE PIERPONT TREASURY MONEY MARKET FUND PIERPONT
THE PIERPONT SHORT TERM BOND FUND MONEY MARKET
THE PIERPONT BOND FUND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFED 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 OF FUNDS
CAN HELP YOU PLAN FOR YOUR FUTURE, CALL J.P. MORGAN FUNDS ANNUAL REPORT
SERVICES AT (800) 521-5411. NOVEMBER 30, 1995
