<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM PIERPONT FEDERAL MONEY MARKET FUND
June 15, 1997
Dear Shareholder:
We are pleased to report that The JPM Pierpont Federal Money Market Fund
outperformed its benchmark, the IBC/Donoghue U.S. Government & Agency Money
Market Fund Average,* for the six months ended April 30, 1997. The Fund returned
2.49% for the period versus a benchmark return of 2.32%. We believe that
security selection and active maturity management contributed to the Fund's
return for the period and that these investment decisions have helped the Fund
to consistently outperform its benchmark since its inception on January 4, 1993
(see table on page 2).
The Fund's net asset value remained $1.00 per share. The Fund's net assets were
approximately $218.4 million while the net assets of The Federal Money Market
Portfolio, in which the Fund invests, totaled approximately $319.9 million on
April 30, 1997, the end of the reporting period.
Shareholders will be pleased to learn that The JPM Pierpont Federal Money Market
Fund was rated AAA by Standard & Poor's and Moody's in May and June,
respectively, the highest rating these agencies assign to money market funds. In
another development, the Trustees recently broadened the list of allowable
agency holdings to include offerings from the Tennessee Valley Authority and the
Student Loan Marketing Association, both of which offer the tax-advantaged
status of the Portfolio's other investments. We anticipate that shareholders
will be pleased with the results of this expanded mandate.
We also call your attention to the Portfolio Manager Q&A on page 3, where Skip
Johnson, the lead Portfolio manager, discusses some of the events affecting the
government money market and how the Portfolio was positioned to respond to them.
As always, we welcome your comments, questions, or any suggestions on how we can
further improve your financial reports. Please call J.P. Morgan Funds Services,
toll free, at (800) 521-5411.
Sincerely yours,
/s/ Evelyn E. Guernsey
Evelyn E. Guernsey
J.P. Morgan Funds Services
* Represents the IBC/Donoghue U.S. Treasury & Repo Money Market Fund Average
through 12/31/95 and the IBC/Donoghue U.S. Government & Agency Money Market
Fund Average thereafter.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to the shareholders. . . . 1 Fund facts and highlights . . . . 5
Fund performance. . . . . . . . . 2 Special fund-based services . . . 6
Portfolio manager Q&A . . . . . . 3 Financial statements. . . . . . . 8
- --------------------------------------------------------------------------------
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes a fund's actual (or cumulative) return and shows what
constant annual return would have produced that cumulative return. Average
annual total returns represent the average yearly change of a fund's value over
a specified time period, 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 SINCE
AS OF APRIL 30, 1997 MONTHS MONTHS YEAR YEARS INCEPTION*
- -------------------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C>
The JPM Pierpont Federal
Money Market Fund 1.20% 2.49% 4.99% 5.02% 4.32%
IBC/Donoghue U.S. Government & Agency
Money Market Fund Average** 1.16% 2.32% 4.68% 4.68% 4.05%
Lipper Retail U.S. Treasury
Money Market Fund Average 1.13% 2.32% 4.70% 4.74% 4.11%
AS OF MARCH 31, 1997
- -------------------------------------------------------------- -----------------------------------------
The JPM Pierpont Federal
Money Market Fund 1.20% 2.49% 4.98% 4.97% 4.30%
IBC/Donoghue U.S. Government & Agency
Money Market Fund Average** 1.15% 2.31% 4.66% 4.63% 4.04%
Lipper Retail U.S. Treasury
Money Market Fund Average 1.14% 2.32% 4.69% 4.69% 4.10%
</TABLE>
*1/4/93 -- COMMENCEMENT OF OPERATIONS (AVERAGE ANNUAL TOTAL RETURNS BASED ON
MONTH END FOLLOWING INCEPTION). THE FUND'S AVERAGE ANNUAL TOTAL RETURN SINCE ITS
COMMENCEMENT OF OPERATIONS OF 1/4/93 IS 4.29%.
**REPRESENTS THE IBC/DONOGHUE U.S. TREASURY & REPO MONEY MARKET FUND AVERAGE
THROUGH 12/31/95 AND THE IBC/DONOGHUE U.S. GOVERNMENT & AGENCY MONEY MARKET FUND
AVERAGE THEREAFTER.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES, ASSUME THE REINVESTMENT OF DISTRIBUTIONS, AND REFLECT REIMBURSEMENT OF
CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. PERFORMANCE
OF THE IBC/DONOGHUE U.S. GOVERNMENT & AGENCY MONEY MARKET FUND AVERAGE IS THAT
OF AN AVERAGE OF FUNDS MANAGED SIMILARLY TO THE FUND. IBC/DONOGHUE IS A
NATIONALLY-RECOGNIZED SOURCE OF MONEY MARKET FUND DATA. LIPPER ANALYTICAL
SERVICES, INC. IS A LEADING RESOURCE FOR MUTUAL FUND DATA. NO REPRESENTATION IS
MADE THAT INFORMATION GATHERED FROM THESE SOURCES IS ACCURATE OR COMPLETE. THE
FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN THE FEDERAL MONEY MARKET PORTFOLIO,
A SEPARATELY REGISTERED COMPANY WHICH IS NOT AVAILABLE TO THE PUBLIC BUT ONLY TO
OTHER COLLECTIVE INVESTMENT VEHICLES SUCH AS THE FUND.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
Following is an interview with ROBERT R. ("SKIP") JOHNSON, a member of the
portfolio management team for The Federal Money Market Portfolio, in which the
Fund invests. Prior to joining Morgan in 1988, he held senior positions with the
Bank of Montreal and U.S. Steel. This interview was conducted on June 4, 1997
and reflects Skip's views on that date.
FIXED INCOME MARKETS OVER THE LAST SIX MONTHS HAVE BEEN DOMINATED BY THE
QUESTIONS OF WHETHER -- AND WHEN -- THE FEDERAL RESERVE WOULD INCREASE THE
FEDERAL FUNDS RATE; AND CONFLICTING ECONOMIC DATA PRODUCED A FAIR AMOUNT OF
MARKET VOLATILITY. (THE FED DID, OF COURSE, FINALLY TIGHTEN ON MARCH 25, RAISING
THE FED FUNDS RATE FROM 5.25% TO 5.50%.) HOW DID WE POSITION THE PORTFOLIO IN
RESPONSE TO ALL OF THIS UNCERTAINTY?
RRJ: Although the economy has been showing moderate growth after a strong
fourth quarter, the economic data over the previous six months has been somewhat
ambiguous as to the direction of the economy. While inflation remained low, and
other indicators, such as durable goods orders, suggested no surge in the
economy, unemployment fell to historically low levels, raising fears of wage
pressures. Other signs of economic strengthening included a big fourth quarter
GDP figure (originally reported at 4.7% then revised to 3.9%), strong housing
numbers and rising measures of consumer confidence. With such ambiguous data,
the market vacillated, rising one month and falling the next. Our response was
to keep the Portfolio in a relatively conservative 50 to 60 day maturity range,
which helped preserve values as interest rates rose. By the end of March,
following the Fed tightening, yields had become so attractive that we lengthened
average maturity somewhat to take advantage of them, then got some benefit from
this when rates fell in April. Overall, it was a period when being conservative
was helpful.
AS NOTED IN THE LETTER TO SHAREHOLDERS ON THE COVER OF THIS REPORT, THE BOARD OF
TRUSTEES APPROVED A CHANGE IN THE PORTFOLIO'S INVESTMENT GUIDELINES TO EXPAND
THE USE OF AGENCY SECURITIES TO INCLUDE INSTRUMENTS ISSUED BY THE TENNESSEE
VALLEY AUTHORITY AND THE STUDENT LOAN MARKETING ASSOCIATION. (THE PORTFOLIO WAS
ALREADY AUTHORIZED TO INVEST IN CREDITS OF THE FEDERAL FARM CREDIT BANK AND THE
FEDERAL HOME LOAN BANKS.) WHAT CRITERIA DO WE USE TO DECIDE WHICH AGENCIES ARE
APPROPRIATE FOR THIS PORTFOLIO? WILL THIS CHANGE RESULT IN A SHIFT IN PORTFOLIO
STRATEGY?
RRJ: Agencies are attractive because they generally offer a slight yield
advantage over straight Treasuries with a level of risk very near that of
Treasuries. As a result, a money market portfolio that can use agencies should
slightly outperform a pure Treasury money market portfolio.
One of the advantages of a Treasury portfolio, however, is that income from
it is exempt from state and local taxes. Investors who choose a Treasury fund
for its tax preferred status will generally prefer that any
3
<PAGE>
non-Treasury holdings also be tax exempt. Thus, the primary criterion for
selection of an agency for inclusion in this Fund is that the income from the
instrument be accepted as exempt from state and local taxes in as many states as
possible, similar to the status now enjoyed by Treasury issues. The addition of
Tennessee Valley Authority and Student Loan Marketing Association paper
substantially increases our exposure to tax preferred agency instruments, and
this is expected to be beneficial for our shareholders.
It should also be noted that as of May 12 the Portfolio's 35% limit on
agency holdings was removed. We expect that the ability to commit a substantial
portion of the Portfolio to agencies should enhance the Portfolio's yield.
WHAT HAVE BEEN THE MOST CHALLENGING ASPECTS OF THE GOVERNMENT MONEY MARKET OVER
THE PAST SIX MONTHS?
RRJ: The volatility in the markets, while you like to see it, makes it a little
difficult to judge a portfolio's maturity level. We were a little surprised to
see the economic growth continue so strong in the first quarter. It looks to be
declining somewhat right now in the second quarter. But as always, what we do is
driven by what the Fed intends to do and the market's perception of what the Fed
intends to do, and that guessing game is always challenging.
THE JPM PIERPONT FEDERAL MONEY MARKET FUND AGAIN OUTPERFORMED ITS BENCHMARK, THE
IBC/DONOGHUE U.S. GOVERNMENT & AGENCY MONEY MARKET FUND AVERAGE, AND ALSO ITS
LIPPER COMPETITIVE UNIVERSE FOR THE REPORTING PERIOD. IN YOUR OPINION, WHAT
FACTORS WERE RESPONSIBLE FOR THIS STRONG SHOWING?
RRJ: I think the chief contributor to outperforming the benchmark was our
management of the Portfolio's maturity through the period. When we saw
strengthening economic numbers in the first part of the year, we shortened the
Portfolio's average maturity and kept it in the 50 to 60 day range for most of
the period. Our duration committee has been helpful in this. It reviews Fed
policy and the spread between Fed funds and the two-year Treasury, along with
real short-term rates and other technical and fundamental analysis in the front
end of the yield curve.
NOW THAT THE FED TIGHTENING HAS FINALLY OCCURRED, DO YOU EXPECT THE MARKETS TO
SETTLE DOWN A BIT? DO SUMMER AND FALL PRESENT ANY SPECIAL ISSUES FOR THIS KIND
OF PORTFOLIO?
RRJ: I don't think there will be much in the way of seasonal pressures. The
economy continues to be strong, and some Fed tightening is anticipated. Whether
it will be at the July meeting or the follow-up meeting at the end of August is
not clear, but it looks to us that there will be a need for 25 to 50 basis
points of further tightening by the Fed to slow the economy. It remains to be
seen what the economic data in the interim will show. It appears that things are
slowing a bit, but I think any slowdown in the second quarter is likely to be
followed by strength in the third quarter. The 12-month GDP growth is about 4%
for the 12 months ended March 31, and that's too strong for the Fed. If this
kind of strength persists, the Fed will move to slow things down. The
unemployment rate alone -- at a very low 4.9% just preceding the FOMC meeting --
was almost sufficient to provoke the Fed to move. We're a little surprised that
they did not. However, there appears still to be reason for them to move,
perhaps preemptively, before they see evidence of a slowdown.
4
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPM Pierpont Federal Money Market Fund seeks to provide current income,
maintain a high level of liquidity, and preserve capital. It is designed for
investors who seek to preserve capital and earn current income from a portfolio
of direct obligations of the U.S. Treasury and obligations of certain U.S.
government agencies.
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
1/4/93
- --------------------------------------------------------------------------------
NET ASSETS AS OF 4/30/97
$218,351,983
- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/19/97
EXPENSE RATIO
The Fund's annualized expense ratio of 0.40% covers shareholders' expenses for
custody, tax reporting, investment advisory, and shareholder
services, after reimbursement. The Fund is no-load and does not charge any
sales, redemption, or exchange fees. There are no additional charges for buying,
selling, or safekeeping Fund shares, or for wiring redemption proceeds from the
Fund.
FUND HIGHLIGHTS
ALL DATA AS OF APRIL 30, 1997
DAYS TO MATURITY
(PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
0-30 DAYS 78.3%
31-60 DAYS 0.0%
61-90 DAYS 0.0%
90+ DAYS 21.7%
AVERAGE 7-DAY YIELD
4.97%
AVERAGE LIFE
60 days
5
<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 JPM Pierpont Funds, a family of diversified
mutual funds.
PAAS is available to clients who invest a minimum of $500,000 in The JPM
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 JPM 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 JPM Pierpont Funds
can help you build a comprehensive investment program designed to
maximize the retirement dollars in your Keogh account.
6
<PAGE>
FUNDS DISTRIBUTOR, INC. IS THE DISTRIBUTOR OF THE JPM PIERPONT FEDERAL 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 IS 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, assume the reinvestment of Fund distributions, and reflect the
reimbursement of Fund expenses. Had expenses not been subsidized, returns would
have been lower. The Fund invests all of its investable assets in The Federal
Money Market Portfolio, a separately registered investment company which is not
available to the public but only to other collective investment vehicles such as
the Fund.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS
BY CALLING J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
7
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Federal Money Market Portfolio
("Portfolio"), at value $218,578,840
Deferred Organization Expenses 9,961
Receivable for Expense Reimbursements 7,216
Prepaid Trustees' Fees 943
Prepaid Expenses and Other Assets 375
------------
Total Assets 218,597,335
------------
LIABILITIES
Dividends Payable to Shareholders 181,219
Shareholder Servicing Fee Payable 27,219
Administrative Services Fee Payable 5,406
Administration Fee Payable 1,190
Fund Services Fee Payable 465
Accrued Expenses 29,853
------------
Total Liabilities 245,352
------------
NET ASSETS
Applicable to 218,361,135 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $218,351,983
------------
------------
Net Asset Value, Offering and Redemption Price
Per Share $1.00
----
----
ANALYSIS OF NET ASSETS
Paid-in Capital $218,361,135
Accumulated Net Realized Loss on Investment (9,152)
------------
Net Assets $218,351,983
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Interest Income $5,736,510
Allocated Portfolio Expenses (Net of
Reimbursement of $77,771) (218,985)
----------
Net Investment Income Allocated from
Portfolio 5,517,525
FUND EXPENSES
Shareholder Servicing Fee $163,188
Administrative Services Fee 34,068
Registration Fees 17,385
Transfer Agent Fees 15,769
Amortization of Organization Expenses 7,271
Professional Fees 6,445
Fund Services Fee 3,946
Administration Fee 3,706
Trustees' Fees and Expenses 1,725
Miscellaneous 8,574
--------
Total Fund Expenses 262,077
Less: Reimbursement of Expenses (45,894)
--------
NET FUND EXPENSES 216,183
----------
NET INVESTMENT INCOME 5,301,342
NET REALIZED LOSS ON INVESTMENT ALLOCATED FROM
PORTFOLIO (10,209)
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $5,291,133
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
APRIL 30, FOR THE FISCAL
1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
------------ ----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 5,301,342 $ 9,908,995
Net Realized Gain (Loss) on Investment Allocated
from Portfolio (10,209) 107,166
------------ ----------------
Net Increase in Net Assets Resulting from
Operations 5,291,133 10,016,161
------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (5,301,342) (9,908,995)
Net Realized Gain (105,151) (60,045)
------------ ----------------
Total Distributions to Shareholders (5,406,493) (9,969,040)
------------ ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (AT
A CONSTANT $1.00 PER SHARE)
Proceeds from Shares of Beneficial Interest Sold 927,099,767 1,610,576,005
Reinvestment of Dividends and Distributions 4,164,588 9,126,097
Cost of Shares of Beneficial Interest Redeemed (898,220,975) (1,605,445,109)
------------ ----------------
Net Increase from Transactions in Shares of
Beneficial Interest 33,043,380 14,256,993
------------ ----------------
Total Increase in Net Assets 32,928,020 14,304,114
NET ASSETS
Beginning of Period 185,423,963 171,119,849
------------ ----------------
End of Period $218,351,983 $ 185,423,963
------------ ----------------
------------ ----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FOR THE FISCAL YEAR ENDED JANUARY 4, 1993
SIX MONTHS ENDED OCTOBER 31, (COMMENCEMENT OF
APRIL 30, 1997 ------------------------------ OPERATIONS) TO
(UNAUDITED) 1996 1995 1994 OCTOBER 31, 1993
---------------- -------- -------- -------- ----------------
<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 0.0241 0.0489 0.0536 0.0333 0.0208
Net Realized Gain (Loss) on Investment (0.0000)(a) 0.0006 0.0004 (0.0000)(a) 0.0002
---------------- -------- -------- -------- ----------------
Total from Investment Operations 0.0241 0.0495 0.0540 0.0333 0.0210
---------------- -------- -------- -------- ----------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.0241) (0.0489) (0.0536) (0.0333) (0.0208)
Net Realized Gain (0.0005) (0.0003) -- (0.0002) --
---------------- -------- -------- -------- ----------------
Total Distributions to Shareholders (0.0246) (0.0492) (0.0536) (0.0335) (0.0208)
---------------- -------- -------- -------- ----------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------- -------- -------- -------- ----------------
---------------- -------- -------- -------- ----------------
Total Return 2.49%(b) 5.03% 5.49% 3.41% 2.10%(b)
---------------- -------- -------- -------- ----------------
---------------- -------- -------- -------- ----------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands) $ 218,352 $185,424 $171,120 $118,631 $ 83,097
Ratios to Average Net Assets
Expenses 0.40%(c) 0.40% 0.40% 0.40% 0.48%(c)
Net Investment Income 4.87%(c) 4.89% 5.36% 3.40% 2.53%(c)
Decrease Reflected in Expense Ratio due to
Expense Reimbursement 0.11%(c) 0.13% 0.15% 0.22% 0.26%(c)
</TABLE>
- ------------------------
(a) Less than $0.0001.
(b) Not Annualized.
(c) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Pierpont Federal Money Market Fund (the "Fund") is a separate series of
The JPM Pierpont Funds, a Massachusetts business trust (the "Trust"). The Trust
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund commenced operations on January
4, 1993. Prior to January 9, 1997, the Fund's name was The JPM Pierpont Treasury
Money Market Fund, and prior to October 10, 1996, the Trust's and the Fund's
names were The Pierpont Funds and the Pierpont Treasury Money Market Fund,
respectively.
The Fund invests all of its investable assets in The Federal Money Market
Portfolio (the "Portfolio"), a diversified open-end management investment
company having the same investment objective as the Fund. The value of such
investment included in the Statement of Assets and Liabilities reflects the
Fund's proportionate interest in the net assets of the Portfolio (68% at April
30, 1997). The performance of the Fund is directly affected by the performance
of the Portfolio. The financial statements of the Portfolio, including the
Schedule of Investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Fund:
a)Valuation of securities by the Portfolio is discussed in Note 1 of the
Portfolio's Notes to Financial Statements which are included elsewhere in
this report.
b)The Fund records its share of net investment income, realized gain and
loss and adjusts its investment in the Portfolio each day. All the net
investment income and realized gain and loss of the Portfolio is allocated
pro rata among the Fund and other investors in the Portfolio at the time
of such determination.
c)All the Fund's net investment income is declared as dividends daily and
paid monthly. Distributions to shareholders of net realized capital gain,
if any, are declared and paid annually.
d)The Fund incurred organization expenses in the amount of $73,309. These
costs were deferred and are being amortized on a straight-line basis over
a five-year period from the commencement of operations.
e)Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to comply with the provisions of the
Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income,
including net realized capital gains, if any, within the prescribed time
periods. Accordingly, no provision for federal income or excise tax is
necessary.
f)Expenses incurred by the Trust with respect to any two or more funds in
the Trust are allocated in proportion to the net assets of each fund in
the Trust, except where allocations of direct expenses to each fund can
otherwise be made fairly. Expenses directly attributable to a fund are
charged to that fund.
12
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Trust has retained Funds Distributor, Inc. ("FDI"), a registered
broker-dealer, to serve as co-administrator and distributor. Under a
Co-Administration Agreement between FDI and the Trust on behalf of the
Fund, FDI 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 FDI. The Fund has agreed to pay FDI fees equal to its
allocable share of an annual complex-wide charge of $425,000 plus FDI's
out-of-pocket expenses. The amount allocable to the Fund is based on the
ratio of the Fund's net assets to the aggregate net assets of the Trust,
The JPM Institutional Funds, The JPM Advisor Funds, the Portfolio and
other portfolios (the "Master Portfolios") in which the Trust, The JPM
Institutional Funds and the JPM Advisor Funds invest, JPM Series Trust and
JPM Series Trust II. For the six months ended April 30, 1997, the fee for
these services amounted to $3,706.
On November 15, 1996, The JPM Advisor Funds terminated operations and were
liquidated. Subsequent to that date, the net assets of the JPM Advisor
Funds were no longer included in the calculation of the allocation of
FDI's fees.
b)The Trust, on behalf of the Fund, has an Administrative Services Agreement
(the "Services Agreement") with Morgan Guaranty Trust Company of New York
("Morgan") under which Morgan is responsible for certain aspects of the
administration and operation of the Fund. Under the Services Agreement,
the Fund had agreed to pay Morgan a fee equal to its allocable share of an
annual complex-wide charge. This charge is calculated daily based on the
aggregate net assets of the Master Portfolios and JPM Series Trust in
accordance with the following annual schedule: 0.09% on the first $7
billion of their aggregate average daily net assets and 0.04% of their
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The portion of this charge payable by
the Fund is determined by the proportionate share that its net assets bear
to the net assets of the Trust, The JPM Institutional Funds, the Master
Portfolios, other investors in the Master Portfolios for which Morgan
provides similar services, and JPM Series Trust. For the six months ended
April 30, 1997, the fee for these services amounted to $34,068.
In addition, Morgan has agreed to reimburse the Fund to the extent
necessary to maintain the total operating expenses of the Fund, including
the expenses allocated to the Fund from the Portfolio, at no more than
0.40% of the average daily net assets of the Fund through February 28,
1998. For the six months ended April 30, 1997, Morgan has agreed to
reimburse the Fund $45,894 for expenses under this agreement.
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 paid monthly at an annual rate
of 0.15% of the average daily net assets of the Fund up to and including
$2 billion and 0.10% on any excess over $2 billion. For the six months
ended April 30, 1997, the fee for these services amounted to $163,188.
Morgan, Charles Schwab & Co. ("Schwab") and the Trust are parties to
separate services and operating agreements (the "Schwab Agreements")
whereby Schwab makes Fund shares available to customers of
13
<PAGE>
THE JPM PIERPONT FEDERAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
investment advisors and other financial intermediaries who are Schwab's
clients. The Fund is not responsible for payments to Schwab under the
Schwab Agreements; however, in the event the Services Agreement with
Schwab is terminated for reasons other than a breach by Schwab and the
relationship between the Trust and Morgan is terminated, the Fund would be
responsible for the ongoing payments to Schwab with respect to
pre-termination shares.
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
$3,946 for the six months ended April 30, 1997.
e)An aggregate annual fee of $75,000 is paid to each Trustee for serving as
a Trustee of the Trust, The JPM Institutional Funds, the Master Portfolios
and JPM Series Trust. The Trustees' Fees and Expenses shown in the
financial statements represents the Fund's allocated portion of the total
fees and expenses. Prior to April 1, 1997, the aggregate annual Trustee
Fee was $65,000. The Trust's Chairman and Chief Executive Officer also
serves as Chairman of Group and receives 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 $800.
14
<PAGE>
The Federal Money Market Portfolio
Semi-annual Report April 30, 1997
(unaudited)
(The following pages should be read in conjunction
with The JPM Pierpont Federal Money Market Fund
Semi-annual Financial Statements)
15
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION DATE RATE VALUE
- -------------- ------------------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (34.3%)
$ 10,000 Federal Farm Credit Bank Discount Note........... 05/13/97 5.240% $ 9,982,533
13,000 Federal Farm Credit Bank Discount Note........... 05/21/97 5.260 12,962,011
20,000 Federal Farm Credit Bank Discount Note........... 05/29/97 5.260 19,918,178
30,000 Federal Home Loan Bank Discount Note............. 05/01/97 5.380 30,000,000
12,000 Federal Home Loan Bank Discount Note............. 05/05/97 5.320 11,992,907
25,000 Federal Home Loan Bank Bond...................... 04/15/98 6.020 24,977,585
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(AMORTIZED COST $109,833,214) 109,833,214
------------
U.S. TREASURY OBLIGATIONS (61.8%)
13,851 United States Treasury Bills..................... 05/01/97 4.900 13,851,000
22,000 United States Treasury Bills..................... 05/29/97 4.760 21,918,551
30,000 United States Treasury Bills..................... 05/08/97 4.950 29,971,125
47,000 United States Treasury Bills..................... 05/22/97 4.990 46,863,191
40,000 United States Treasury Notes..................... 05/15/97 8.500 40,047,222
15,000 United States Treasury Notes..................... 09/30/97 5.750 15,004,102
20,130 United States Treasury Notes..................... 10/31/97 5.625 20,114,339
10,000 United States Treasury Notes..................... 11/30/97 5.375 9,990,779
------------
TOTAL U.S. TREASURY OBLIGATIONS (AMORTIZED
COST $197,760,309) 197,760,309
------------
REPURCHASE AGREEMENT (4.9%)
15,527 Goldman Sachs Repurchase Agreement, dated
04/30/97, proceeds $15,529,307, (collateralized
by $16,357,000 U.S. Treasury Bonds 6.625%, due
02/15/2027 valued at $15,838,317) (cost
$15,527,000)................................... 05/01/97 5.350 15,527,000
------------
TOTAL INVESTMENTS (COST $323,120,523) (101.0%) 323,120,523
LIABILITIES IN EXCESS OF OTHER ASSETS (-1.0%) (3,186,313)
------------
NET ASSETS (100.0%) $319,934,210
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value $323,120,523
Cash 261
Receivable for Investments Sold 10,019,157
Interest Receivable 1,938,285
Receivable for Expense Reimbursement 19,274
Deferred Organization Expenses 3,772
Prepaid Trustees' Fees 1,483
Prepaid Expenses and Other Assets 700
------------
Total Assets 335,103,455
------------
LIABILITIES
Payable for Investments Purchased 15,077,155
Advisory Fee Payable 55,039
Administrative Services Fee Payable 8,636
Custody Fee Payable 5,650
Administration Fee Payable 1,299
Fund Services Fee Payable 685
Accrued Expenses 20,781
------------
Total Liabilities 15,169,245
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $319,934,210
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $8,607,834
EXPENSES
Advisory Fee $ 327,216
Administrative Services Fee 51,218
Custodian Fees and Expenses 29,753
Professional Fees and Expenses 17,237
Fund Services Fee 5,758
Administration Fee 3,315
Amortization of Organization Expenses 2,753
Trustees' Fees and Expenses 2,342
Miscellaneous 4,999
---------
Total Expenses 444,591
Less: Reimbursement of Expenses (116,658)
---------
NET EXPENSES 327,933
----------
NET INVESTMENT INCOME 8,279,901
NET REALIZED LOSS ON INVESTMENTS (12,933)
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $8,266,968
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
--------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 8,279,901 $ 16,581,846
Net Realized Gain (Loss) on Investments (12,933) 169,188
--------------- ----------------
Net Increase in Net Assets Resulting from
Operations 8,266,968 16,751,034
--------------- ----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 1,086,952,947 1,895,749,425
Withdrawals (1,070,221,037) (1,935,444,581)
--------------- ----------------
Net Increase (Decrease) from Investors'
Transactions 16,731,910 (39,695,156)
--------------- ----------------
Total Increase (Decrease) in Net Assets 24,998,878 (22,944,122)
NET ASSETS
Beginning of Period 294,935,332 317,879,454
--------------- ----------------
End of Period $ 319,934,210 $ 294,935,332
--------------- ----------------
--------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE PERIOD
FOR THE YEAR ENDED JANUARY 4, 1993
SIX MONTHS ENDED OCTOBER 31, (COMMENCEMENT OF
APRIL 30, 1997 ------------------ OPERATIONS) TO
(UNAUDITED) 1996 1995 1994 OCTOBER 31, 1993
---------------- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20%(a) 0.20% 0.20% 0.22% 0.26%(a)
Net Investment Income 5.06%(a) 5.08% 5.55% 3.65% 2.75%(a)
Decrease Reflected in Expense Ratio due to
Expense Reimbursement 0.07%(a) 0.07% 0.06% 0.05% 0.07%(a)
</TABLE>
- ------------------------
(a) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Federal Money Market 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's investment objective is to provide
current income, maintain a high level of liquidity and preserve capital. The
Portfolio commenced operations on January 4, 1993. The Declaration of Trust
permits the Trustees to issue an unlimited number of beneficial interests in the
Portfolio. Prior to January 9, 1997, the Portfolio's name was The Treasury Money
Market Portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Portfolio:
a) Investments are valued at amortized cost which approximates market value.
The amortized cost method of valuation values a security at its cost at
the time of purchase and thereafter assumes a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instruments.
The Portfolio's custodian or designated subcustodians, as the case may be
under triparty repurchase agreements, takes possession of the collateral
pledged for investments in repurchase agreements on behalf of the
Portfolio. It is the policy of the Portfolio to value the underlying
collateral daily on a mark-to-market basis to determine that the value,
including accrued interest, is at least equal to the repurchase price
plus accrued interest. In the event of default of the obligation to
repurchase, the Portfolio has the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or
proceeds may be subject to legal proceedings.
b) Securities transactions are recorded on a trade date basis. Investment
income consists of interest income, which includes the amortization of
premiums and discounts, 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. The cost of
securities is substantially the same for book and tax purposes.
d) The Portfolio incurred organization expenses in the amount of $27,491.
These costs were deferred and are being amortized on a straight-line
basis over a five-year period from the commencement of operations.
20
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
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 six months ended April 30, 1997, this
fee amounted to $327,216.
b) The Portfolio has retained Funds Distributor, Inc. ("FDI"), a registered
broker-dealer, to serve as co-administrator and exclusive placement
agent. Under a Co-Administration Agreement between FDI and the Portfolio,
FDI 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 officers
affiliated with FDI. The Portfolio has agreed to pay FDI fees equal to
its allocable share of an annual complex-wide charge of $425,000 plus
FDI's out-of-pocket expenses. The amount allocable to the Portfolio is
based on the ratio of the Portfolio's net assets to the aggregate net
assets of The JPM Pierpont Funds, The JPM Institutional Funds, The JPM
Advisor Funds, the Portfolio and other portfolios (the "Master
Portfolios") in which The JPM Pierpont Funds and The JPM Institutional
Funds invest, JPM Series Trust and JPM Series Trust II. For the six
months ended April 30, 1997, the fee for these services amounted to
$3,315.
On November 15, 1996, The JPM Advisor Funds terminated operations and
were liquidated. Subsequent to that date, the net assets of the JPM
Advisor Funds were no longer included in the calculation of the
allocation of FDI's fees.
c) The Portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is responsible for overseeing
certain aspects of the administration and operation of the Portfolio.
Under the Services Agreement, the Portfolio has agreed to pay Morgan a
fee equal to its allocable share of an annual complex-wide charge. This
charge is calculated daily based on the aggregate net assets of the
Master Portfolios and JPM Series Trust in accordance with the following
annual schedule: 0.09% on the first $7 billion of their aggregate average
daily net assets and 0.04% of their aggregate average daily net assets in
excess of $7 billion less the complex-wide fees payable to FDI. The
portion of this charge payable by the Portfolio is determined by the
proportionate share that its net assets bear to the net assets of the
Master Portfolios, investors in the Master Portfolios for which Morgan
provides similar services, The JPM Pierpont Funds, The JPM Institutional
Funds, and JPM Series Trust. For the six months ended April 30, 1997, the
fee for these services amounted to $51,218.
In addition, Morgan has agreed to reimburse the Portfolio to the extent
necessary to maintain the total operating expenses of the Portfolio at no
more than 0.20% of the average daily net assets of the Portfolio through
February 28, 1998. For the six months ended April 30, 1997, Morgan has
agreed to reimburse the Portfolio $116,658 for expenses under this
agreement.
d) The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $5,758 for the six months ended April 30, 1997.
21
<PAGE>
THE FEDERAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1997
- --------------------------------------------------------------------------------
e) An aggregate annual fee of $75,000 is paid to each Trustee for serving as
a Trustee of The JPM Pierpont Funds, The JPM Institutional Funds, the
Master Portfolios and JPM Series Trust. The Trustees' Fees and Expenses
shown in the financial statements represents the Portfolio's allocated
portion of the total fees and expenses. Prior to April 1, 1997, the
aggregate annual Trustee Fee was $65,000. The Portfolio's Chairman and
Chief Executive Officer also serves as Chairman of Group and receives
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
$1,200.
22
<PAGE>
JPM PIERPONT PRIME MONEY MARKET FUND
JPM PIERPONT TAX EXEMPT MONEY MARKET FUND
JPM PIERPONT FEDERAL MONEY MARKET FUND
JPM PIERPONT SHORT TERM BOND FUND
JPM PIERPONT BOND FUND
JPM PIERPONT TAX EXEMPT BOND FUND
JPM PIERPONT NEW YORK TOTAL RETURN BOND FUND
JPM PIERPONT SHARES: CALIFORNIA BOND FUND
JPM PIERPONT EMERGING MARKETS DEBT FUND
JPM PIERPONT DIVERSIFIED FUND
JPM PIERPONT U.S. EQUITY FUND
JPM PIERPONT SHARES: TAX AWARE U.S. EQUITY FUND
JPM PIERPONT SHARES: TAX AWARE DISCIPLINED EQUITY FUND
JPM PIERPONT U.S. SMALL COMPANY FUND
JPM PIERPONT U.S. SMALL COMPANY OPPORTUNITIES FUND
JPM PIERPONT INTERNATIONAL EQUITY FUND
JPM PIERPONT INTERNATIONAL OPPORTUNITIES FUND
JPM PIERPONT EMERGING MARKETS EQUITY FUND
JPM PIERPONT EUROPEAN EQUITY FUND
JPM PIERPONT JAPAN EQUITY FUND
JPM PIERPONT ASIA GROWTH FUND
FOR MORE INFORMATION ON HOW THE JPM PIERPONT FAMILY OF FUNDS CAN HELP YOU PLAN
FOR YOUR FUTURE, CALL J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
THE
JPM PIERPONT
FEDERAL MONEY MARKET FUND
SEMI-ANNUAL REPORT
APRIL 30, 1997
