<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM PIERPONT MONEY MARKET FUND
January 15, 1997
Dear Shareholder:
We are pleased to report that The JPM Pierpont Money Market Fund produced a
total return of 5.27% for the year ended November 30, 1996, outperforming the
4.89% return of its benchmark, the IBC/Donoghue First Tier Money Fund Average.
In a relatively stable environment for money market interest rates, active
management of the Portfolio's average maturity, as well as its security
selections, were responsible for the Fund's relative success during the period.
The Fund's net asset value remained $1.00 per share. The Fund's net assets were
approximately $2.2 billion at the end of the reporting period, while the net
assets of The Money Market Portfolio, in which the Fund invests, totalled
approximately $3.8 billion on November 30, 1996.
This report also includes a Q&A with Robert R. ("Skip") Johnson, the lead
portfolio manager for The Money Market Portfolio, in which the Fund invests. In
this section Skip reviews portfolio activity over the previous year, discusses
some of the factors relevant to money market portfolios in general, and this one
in particular, and offers an outlook for the months ahead.
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
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS . . . .1 FUND FACTS AND HIGHLIGHTS. . . . .6
FUND PERFORMANCE . . . . . . . . .2 SPECIAL FUND-BASED SERVICES. . . .7
PORTFOLIO MANAGER Q&A. . . . . . .3 FINANCIAL STATEMENTS . . . . . . .9
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows you
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change in a fund's value over various time periods, typically 1, 5, or 10
years (or since inception). Total returns for periods of less than one year are
not annualized and provide a picture of how a fund has performed over the short
term.
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
---------------- ------------------------------------
THREE SIX ONE THREE FIVE TEN
AS OF NOVEMBER 30, 1996 MONTHS MONTHS YEAR YEARS YEARS YEARS
- ---------------------------------------- ---------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The JPM Pierpont Money Market Fund 1.27% 2.55% 5.27% 4.90% 4.28% 5.83%
IBC/Donoghue Money Fund Benchmark* 1.19% 2.39% 4.89% 4.63% 4.02% 5.56%
IBC/Donoghue Taxable Money Fund Avg. 1.21% 2.43% 4.95% 4.66% 4.04% 5.56%
Lipper Retail Money Fund Avg. 1.17% 2.36% 4.83% 4.57% 3.95% 5.51%
AS OF SEPTEMBER 30, 1996
- ---------------------------------------------------------------------------------------------------------------
The JPM Pierpont Money Market Fund 1.28% 2.53% 5.35% 4.78% 4.28% 5.84%
IBC/Donoghue Money Fund Benchmark* 1.19% 2.38% 4.97% 4.51% 4.03% 5.56%
IBC/Donoghue Taxable Money Fund Avg. 1.21% 2.42% 5.02% 4.53% 4.04% 5.57%
Lipper Retail Money Fund Average 1.19% 2.35% 4.89% 4.44% 3.95% 5.51%
</TABLE>
*CONSISTS OF THE IBC/DONOGHUE TAXABLE MONEY FUND AVERAGE FROM INCEPTION THROUGH
NOVEMBER 30, 1995 AND THE IBC/DONOGHUE FIRST TIER MONEY FUND AVERAGE THEREAFTER.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL FUND RETURNS ARE NET
OF FEES, ASSUME THE REINVESTMENT OF DISTRIBUTIONS. THE IBC/DONOGHUE TAXABLE
MONEY FUND AVERAGE IS AN AVERAGE OF ALL TAXABLE MAJOR MONEY MARKET FUND RETURNS.
THIS COMPARATIVE INFORMATION IS AVAILABLE TO THE PUBLIC FROM THE IBC/DONOGHUE
ORGANIZATION, INC. NO REPRESENTATION IS MADE THAT THE INFORMATION GATHERED FROM
THIS SOURCE IS ACCURATE OR COMPLETE. THE FUND INVESTS ALL OF ITS INVESTABLE
ASSETS IN THE MONEY MARKET PORTFOLIO, A SEPARATELY REGISTERED INVESTMENT COMPANY
WHICH IS NOT AVAILABLE TO THE PUBLIC BUT ONLY TO OTHER COLLECTIVE INVESTMENT
VEHICLES SUCH AS THE FUND.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
Following is an interview with ROBERT R. ("SKIP") JOHNSON, a member of the
portfolio management team for The Money Market Portfolio, in which the Fund
invests. Prior to joining Morgan in 1988, he held senior positions with the Bank
of Montreal and U.S. Steel. This interview was conducted on January 3, 1997 and
reflects Skip's views on that date.
THIS HAS BEEN SOME YEAR! IN DECEMBER OF 1995, THE U.S. GOVERNMENT WAS BEING RUN
WITH EMERGENCY BORROWING, AND THE UNTHINKABLE -- DEFAULT ON GOVERNMENT DEBT --
WAS BEING TREATED AS A REAL POSSIBILITY. FEDERAL RESERVE EASING WAS REGARDED AS
SUCH A GIVEN THAT THE YIELD CURVE WAS INVERTED OUT TO TWO YEARS. THE FED, IN
FACT, DID EASE -- TWICE -- AND THE BOND MARKET SEEMED SET FOR ANOTHER SOLID
YEAR. BUT THEN, IN FEBRUARY FED CHAIRMAN ALAN GREENSPAN MADE COMMENTS THAT
SUGGESTED AN ECONOMY STRONGER THAN GENERALLY BELIEVED, WHICH PROMPTLY TURNED THE
MARKET ON ITS EAR. RATES SURGED ACROSS THE YIELD CURVE (WHICH, OF COURSE, MEANS
THAT BOND PRICES PLUMMETED) AND THE MARKET THEN ANTICIPATED, AND PRICED IN, FED
TIGHTENING. THE TIGHTENING NEVER CAME, HOWEVER, AND GRADUALLY THE MARKET RELAXED
AND RATES LEVELED OFF THROUGH THE SUMMER. THEN, IN SEPTEMBER, THE MARKET RALLIED
AGAIN AND HAS PERFORMED STRONGLY TO THE END OF NOVEMBER. WHAT EFFECT DID ALL OF
THIS HAVE ON THE MONEY MARKETS?
RRJ: Actually, the volatility in the bond market had very little effect on the
money markets. In fact, 90 day yields averaged 5.14% over the period and
fluctuated by no more than 16 basis points from that average. Early in the year,
when we and the market expected lower rates, the Portfolio's average life was
held within a 50 to 60 day range, and holdings emphasized Treasuries and
agencies which we found to offer the best value at that time. The Portfolio also
took advantage of high quality Japanese bank paper which offered attractive
yields. In April, with 12-month yields at 5.5% we added 12-month Treasury bills,
and in May increased holdings of commercial paper to take advantage of widening
spreads from Treasuries. Expecting rising rates, we also added floating rate
notes to the Portfolio, and also shortened the average life to 44 days.
Meanwhile, spreads on short-term Japanese paper tightened so we took profits on
the Portfolio's Japanese holdings, and invested the proceeds in commercial
paper. When Fall arrived and the markets anticipated that there would be no
tightening by the Fed, we extended the Portfolio's life, ending November at 62
days.
THE PORTFOLIO'S AVERAGE LIFE HAS RANGED (USING END OF MONTH FIGURES) FROM A HIGH
OF 63 DAYS AT THE END OF APRIL TO A LOW OF 44 DAYS AT THE END OF JULY. WHAT ARE
SOME OF THE FACTORS THAT YOU TAKE INTO ACCOUNT IN TARGETING AN AVERAGE MATURITY?
RRJ: When making the average life decision for the Portfolio we focus much
attention on the direction and level of economic activity, as well as statements
by members of the Federal Reserve Board. Additionally, we evaluate the technical
condition of the market, that is supply and demand factors. We synthesize the
available
3
<PAGE>
information and estimate what effect it will have on the yield curve. For
example, if economic data is generally being reported on the strong side --
which is typically negative for interest rates -- and the Fed appears to be
leaning toward tighter monetary policy, we may assume a defensive posture in the
Portfolio, shortening the maturity, in an effort to protect our investors from
the potentially adverse effects that would result from tighter monetary policy.
That said, our investment process does not rely solely on average life
decisions to produce the Portfolio's return. Security selection is also an
important component, and in this we rely heavily on the expertise of our trading
desk and our credit analysis group.
MONEY MARKETS, LIKE OTHER SECURITIES MARKETS, ARE DIVIDED INTO SECTORS --
COMMERCIAL PAPER, CERTIFICATES OF DEPOSIT, TREASURIES, FLOATING RATE NOTES AND
SO ON. COMMERCIAL PAPER AND CERTIFICATES OF DEPOSIT GENERALLY PROVIDE THE BEST
YIELD, WHILE PREDICTABLY, TREASURIES USUALLY OFFER THE LOWEST YIELD. DO YOU
CONSCIOUSLY MAKE SECTOR ALLOCATIONS OR ARE THEY A BY-PRODUCT OF SEEKING THE BEST
YIELD? WOULD THERE BE ANY ARGUMENT AGAINST HOLDING ONLY THE HIGHEST-YIELDING
SECTOR?
RRJ: In money market portfolios, sector allocations tend to be a by-product of
other decisions. We focus more on security selection and the on-going average
life decision. Commercial paper and certificates of deposit generally provide a
higher return than Treasuries, and we often find that they offer the best
opportunity to enhance yield. Nonetheless, in the early part of the year, the
Portfolio's holdings of Treasuries and agencies, in combination with Japanese
bank paper, helped it to outperform the IBC/Donoghue First Tier Money Fund
Average.
As for holding only the highest-yielding sector, while the SEC mandates
that no more than 25% be held in any one industry (banks excepted), there is no
limitation by security type, and one could have a portfolio composed entirely of
certificates of deposit or commercial paper. In practice, however, this doesn't
happen because if one kind of security becomes desirable, it will become
expensive. Other types of securities will begin to look attractive by
comparison, and the market will move toward them. The result is that a fairly
wide range of sectors will be attractively priced and, without consciously
seeking it, the Portfolio will have a balance of types of securities.
MONEY MARKET FUNDS ARE MANAGED UNDER SPECIFIC AND QUITE RESTRICTIVE SEC
REGULATIONS, INCLUDING QUALITY REQUIREMENTS. GIVEN THESE CONSTRAINTS, DOES
CREDIT ANALYSIS PLAY ANY ROLE IN MANAGING MONEY MARKET FUNDS?
RRJ: As a matter of fact, credit analysis plays a very important role. Although
we buy only A1/P1-rated commercial paper (the highest quality rating assigned by
the rating agencies), we use the A1/P1 rating only as a starting point and do
our own credit analysis. Our credit analysts meticulously examine the financial
statements of issuers, and credit committee approval is required before an
issuer's money market securities can be purchased.
4
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND AGAIN OUTPERFORMED BOTH ITS BENCHMARK, THE
IBC/DONOGHUE FIRST TIER MONEY FUND AVERAGE, AND ITS LIPPER COMPETITORS BY THE
RESPECTABLE MARGINS OF 0.38% AND 0.44% RESPECTIVELY. WHAT FACTORS DO YOU THINK
CONTRIBUTED MOST STRONGLY TO THIS OUTPERFORMANCE?
RRJ: I believe it starts with a sound and disciplined investment process. We
seek to add value consistently over the entire year by combining security
selection and average life decisions to create well-constructed portfolios.
We also expend a good deal of effort analyzing economic data to try to
determine the direction of the market -- and to anticipate the Fed's reaction to
it -- and monitor the economy daily to fine-tune portfolio strategy. We were
successful in positioning the Portfolio's average life to capitalize on the
economic environment, lengthening when there was less risk and shortening when
the economy appeared to be overheating. Our trading desk also is a significant
resource, keeping us closely connected with and responsive to the market.
Because our traders are immersed in the market, they see opportunities for both
buying and selling, and can move quickly before the opportunity passes. For
instance, they alerted us to the value in Japanese bank paper, both when it was
cheap and when it made sense to sell. Also, our size makes us a significant
player in the short-term market, and dealers often call us when new deals come
onto the market. These advantages of early information and execution have worked
well for us.
LOOKING FORWARD OVER THE COMING YEAR, WHAT EVENTS WOULD YOU EXPECT TO HAVE A
SIGNIFICANT EFFECT ON THE JPM PIERPONT MONEY MARKET FUND?
RRJ: With the equity market performing at such high levels there is a
possibility that people may move into money markets as they get more concerned
about a correction in equity prices. On the economics side, we're expecting
economic growth to be near trend level -- 2 to 2 1/2% growth with benign
inflation levels. There are some possible negatives on the inflation front --
oil prices are up, unemployment is low and labor prices could rise. That said,
however, inflation appears to be well-behaved, and I think it's very conceivable
that Fed policy will be stable, at least for the first quarter of the year.
5
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPM Pierpont Money Market Fund seeks to maximize current income and maintain
a high level of liquidity. 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 11/30/96
$2,155,358,025
- ---------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY
- ---------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/96
EXPENSE RATIO
The Fund's annualized expense ratio, after reimbursement, of 0.40% covers
shareholders' expenses for custody, tax reporting, investment advisory, and
shareholder services. 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, 1996
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[Graph]
CERTIFICATES OF DEPOSIT-FOREIGN 34.8%
COMMERCIAL PAPER-DOMESTIC 17.2%
COMMERCIAL PAPER-FOREIGN 15.3%
REPURCHASE AGREEMENTS 9.4%
FLOATING RATE NOTES 7.3%
CERTIFICATES OF DEPOSIT-DOMESTIC 5.0%
US GOVERNMENT AGENCIES 4.8%
US TREASURY OBLIGATIONS 2.6%
OTHER 3.6%
AVERAGE 7-DAY YIELD
5.08%
AVERAGE MATURITY
62 days
6
<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.
7
<PAGE>
FUNDS DISTRIBUTOR, INC. IS THE DISTRIBUTOR OF THE JPM PIERPONT MONEY MARKET FUND
(THE "FUND"). SIGNATURE BROKER-DEALER SERVICES, INC. SERVED AS THE FUND'S
DISTRIBUTOR PRIOR TO AUGUST 1, 1996.
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 distributions.
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.
8
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Money Market Portfolio
("Portfolio"), at value $ 2,156,899,837
Prepaid Trustees' Fees 6,628
Prepaid Expenses and Other Assets 11,620
---------------
Total Assets 2,156,918,085
---------------
LIABILITIES
Dividends Payable to Shareholders 1,071,422
Shareholder Servicing Fee Payable 264,456
Administrative Services Fee Payable 57,222
Administration Fee Payable 14,439
Fund Services Fee Payable 3,052
Accrued Expenses 149,469
---------------
Total Liabilities 1,560,060
---------------
NET ASSETS
Applicable to 2,154,905,878 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $ 2,155,358,025
---------------
---------------
Net Asset Value, Offering and Redemption Price
Per Share $1.00
----
----
ANALYSIS OF NET ASSETS
Paid-in Capital $ 2,155,256,694
Accumulated Net Realized Gain on Investment 101,331
---------------
Net Assets $ 2,155,358,025
---------------
---------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Interest Income $ 115,937,752
Allocated Portfolio Expenses (Net of
Reimbursement of $6,506) (3,975,919)
--------------
Net Investment Income Allocated from
Portfolio 111,961,833
FUND EXPENSES
Shareholder Servicing Fee $ 3,148,702
Administrative Services Fee 530,464
Transfer Agent Fees 247,379
Administration Fee 227,211
Fund Services Fee 96,853
Trustees' Fees and Expenses 38,362
Miscellaneous 117,592
------------
Total Fund Expenses 4,406,563
--------------
NET INVESTMENT INCOME 107,555,270
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 164,473
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 107,719,743
--------------
--------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 107,555,270 $ 117,903,314
Net Realized Gain on Investment Allocated from
Portfolio 164,473 1,151,919
----------------- -----------------
Net Increase in Net Assets Resulting from
Operations 107,719,743 119,055,233
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (107,555,270) (117,903,314)
Net Realized Gain (1,163,884) --
----------------- -----------------
Total Distributions to Shareholders (108,719,154) (117,903,314)
----------------- -----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (AT
A CONSTANT $1.00 PER SHARE)
Proceeds from Shares of Beneficial Interest Sold 11,935,880,480 13,845,812,899
Reinvestment of Dividends and Distributions 106,615,817 109,754,767
Cost of Shares of Beneficial Interest Redeemed (12,039,607,579) (13,806,940,589)
----------------- -----------------
Net Increase from Transactions in Shares of
Beneficial Interest 2,888,718 148,627,077
----------------- -----------------
Total Increase in Net Assets 1,889,307 149,778,996
NET ASSETS
Beginning of Fiscal Year 2,153,468,718 2,003,689,722
----------------- -----------------
End of Fiscal Year $ 2,155,358,025 $ 2,153,468,718
----------------- -----------------
----------------- -----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE JPM 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,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0509 0.0557 0.0367 0.0281 0.0371
Net Realized Gain on Investment 0.0001 0.0005 (0.0000)(a) 0.0003 0.0006
----------- ----------- ----------- -------- --------
Total from Investment Operations 0.0510 0.0562 0.0367 0.0284 0.0377
----------- ----------- ----------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.0509) (0.0557) (0.0367) (0.0281) (0.0371)
Net Realized Gain (0.0005) -- -- (0.0003) (0.0006)
----------- ----------- ----------- -------- --------
Total Distributions to Shareholders (0.0514) (0.0557) (0.0367) (0.0284) (0.0377)
----------- ----------- ----------- -------- --------
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -------- --------
----------- ----------- ----------- -------- --------
Total Return 5.27% 5.71% 3.73% 2.89% 3.83%
----------- ----------- ----------- -------- --------
----------- ----------- ----------- -------- --------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Year (in thousands) $ 2,155,358 $ 2,153,469 $ 2,003,690 $2,562,713 $2,700,392
Ratios to Average Net Assets
Expenses 0.40% 0.41% 0.43% 0.43% 0.43%
Net Investment Income 5.09% 5.56% 3.64% 2.82% 3.74%
Decrease Reflected in Expense Ratio due to
Expense Reimbursement 0.00%(b) 0.00%(b) 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.
12
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Pierpont 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, 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"). Prior to October 10, 1996, the Trust's and Fund's names
were The Pierpont Funds and The Pierpont Money Market Fund, respectively.
The Fund invests all of its investable assets in The Money Market Portfolio (the
"Portfolio"), a diversified open-end management investment company having the
same investment objective as the Fund. The value of such investment included in
the Statement of Assets and Liabilities reflects the Fund's proportionate
interest in the net assets of the Portfolio (56% at November 30, 1996). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the Schedule of
Investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Fund:
a)Valuation of securities by the Portfolio is discussed in Note 1 of the
Portfolio's Notes to Financial Statements which are included elsewhere in
this report.
b)The Fund records its share of net investment income, realized gain and
loss and adjusts its investment in the Portfolio each day. All the net
investment income and realized gain and loss of the Portfolio is allocated
pro rata among the Fund and other investors in the Portfolio at the time
of such determination.
c)All the Fund's net investment income is declared as dividends daily and
paid monthly. Distributions to shareholders of net realized capital gain,
if any, are declared and paid annually.
d)Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to comply with the provisions of the
Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income,
including net realized capital gains, if any, within the prescribed time
periods. Accordingly, no provision for federal income or excise tax is
necessary.
e)Expenses incurred by the Trust with respect to any two or more funds in
the Trust are allocated in proportion to the net assets of each fund in
the Trust, except where allocations of direct expenses to each fund can
otherwise be made fairly. Expenses directly attributable to a fund are
charged to that fund.
2. TRANSACTIONS WITH AFFILIATES
a)The Trust had retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and distributor. Under an
Administration Agreement, Signature provided administrative services
necessary for the operations of the Fund, furnished office space and
facilities required for conducting
13
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
the business of the Fund and paid the compensation of the Fund's officers
affiliated with Signature. Until December 28, 1995, the agreement provided
for a fee to be paid to Signature at an annual rate determined by the
following schedule: 0.04% of the first $1 billion of the aggregate average
daily net assets of the Trust, as well as two other affiliated fund
families for which Signature acted 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 was applied each day to the net assets of the
Fund. For the period from December 1, 1995 to December 28, 1995,
Signature's fee for these services amounted to $42,799.
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 paid by the
Fund was determined by the proportionate share its net assets bore to the
total net assets of the Trust, The JPM Institutional Funds, The JPM
Advisor Funds and the Master Portfolios. For the period from December 29,
1995 through July 31, 1996, Signature's fee for these services amounted to
$158,417. The Administration Agreement with Signature was terminated July
31, 1996.
Effective August 1, 1996, certain administrative functions formerly
provided by Signature are provided by Funds Distributor, Inc. ("FDI"), a
registered broker-dealer, and by Morgan. FDI also serves as the Fund's
distributor. Under a Co-Administration Agreement between FDI and the Trust
on behalf of the Fund, 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 and the Master
Portfolios. For the period from August 1, 1996 through November 30, 1996,
the fee for these services amounted to $25,995.
b)Until August 31, 1995, the Trust, on behalf of the Fund, had a Financial
and Fund Accounting Services Agreement with Morgan which provided that
Morgan would receive a fee, based on the percentage described below, for
overseeing certain aspects of the administration and operation of the Fund
and that was also designed to provide an expense limit for certain
expenses of the Fund. This fee was calculated exclusive of the shareholder
servicing fee and the fund services fee at 0.043% of the Fund's average
daily net assets. From September 1, 1995 until December 28, 1995, an
interim agreement between the Trust, on behalf of the Fund, and Morgan
provided for the continuation of the oversight functions that were
outlined under the agreement and that Morgan should bear all of its
expenses incurred in connection with these services.
Effective December 29, 1995, the Trust, on behalf of the Fund, entered
into an Administrative Services Agreement (the "Services Agreement") with
Morgan under which Morgan is responsible for certain aspects of the
administration and operation of the Fund. Under the Services Agreement,
the Fund had agreed to pay Morgan a fee equal to its proportionate share
of an annual complex-wide charge. Until July 31, 1996, this charge was
calculated daily based on the aggregate net assets of the Master
Portfolios
14
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
in accordance with the following annual schedule: 0.06% on the first $7
billion of the Master Portfolios' aggregate average daily net assets and
0.03% of the Master Portfolios' aggregate average daily net assets in
excess of $7 billion. The portion of this charge paid by the Fund was
determined by the proportionate share its net assets bore to the net
assets of the Trust, the Master Portfolios and other investors in the
Master Portfolios for which Morgan provided similar services. For the
period from December 29, 1995 through July 31, 1996, Morgan's fee for
these services amounted to $302,568.
Effective August 1, 1996, the Services Agreement was amended such that the
aggregate complex-wide charge is calculated daily based on the aggregate
net assets of the Master Portfolios in accordance with the following
annual schedule: 0.09% on the first $7 billion of the Master Portfolios'
aggregate average daily net assets and 0.04% of the Master Portfolios'
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The allocation of the Fund's portion of
this charge is described above. For the period August 1, 1996 through
November 30, 1996, the fee for these services amounted to $227,896.
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan. Until December 28, 1995, the agreement provided for the Fund
to pay Morgan a fee for these services which was computed daily and paid
monthly at an annual rate of 0.18% 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 period from December 1, 1995 through December 28, 1995,
the fee for these services amounted to $286,112.
Effective December 29, 1995, the Shareholder Servicing Agreement was
amended such that the annual rate for providing these services was changed
to 0.15% of the average daily net assets of the Fund up to and including
$2 billion and 0.10% on any excess of $2 billion. For the period from
December 29, 1995 through November 30, 1996, the fee for these services
amounted to $2,862,590.
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
$96,853 for the fiscal year ended November 30, 1996.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of the Trust, The JPM Institutional Funds and the Master
Portfolios. The Trustees' Fees and Expenses shown in the financial
statements represents the Fund's allocated portion of the total fees and
expenses. The Trust's Chairman and Chief Executive Officer 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 $12,400.
3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
From time to time, the Fund may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the Fund and Portfolio.
15
<PAGE>
Report of Independent Accountants
To the Trustees and Shareholders of
The JPM 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 JPM Pierpont Money Market Fund (one of the series constituting part of The
JPM Pierpont Funds, hereafter referred to as the "Fund") at November 30, 1996,
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 four 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 the year 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 16, 1997
16
<PAGE>
The Money Market Portfolio
Annual Report November 30, 1996
(The following pages should be read in conjunction
with The JPM Pierpont Money Market Fund
Annual Financial Statements)
17
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- DOMESTIC (5.0%)
$ 33,500 Bank of America, Chicago................ 11/07/97 5.570% $ 33,484,726
25,000 Bank of America Nationale Trust &
Savings Association.................... 02/12/97 4.900 24,997,587
15,000 Bank of New York........................ 04/01/97 5.550 14,996,536
25,000 Chase Manhattan......................... 12/30/96 5.750 25,000,000
42,825 First Union Bank of North Carolina...... 02/18/97 5.360 42,825,000
50,000 National Bank of Detroit................ 01/03/97 5.200 49,995,615
---------------
TOTAL CERTIFICATES OF DEPOSIT --
DOMESTIC............................... 191,299,464
---------------
CERTIFICATES OF DEPOSIT -- FOREIGN (34.5%)
32,000 Bank of Montreal, Chicago............... 01/10/97 5.360 32,000,000
158,500 Banque Nationale de Paris Ltd., New
York................................... 12/03/96-04/11/97 5.330-5.750 158,496,834
30,300 Bayerische Landesbank, New York......... 12/09/96-11/21/97 5.310-5.500 30,286,461
51,150 Bayerische Vereinsbank AG, New York..... 10/28/97 5.680 51,127,776
88,500 Canadian Imperial Bank of Commerce...... 12/19/96 5.270 88,500,000
50,000 Commerzbank U.S. Finance, Inc........... 12/13/96 5.290 50,000,166
38,500 Credit Agricole, Chicago................ 12/30/96 5.420 38,500,182
11,500 Deutsche Bank........................... 11/10/97 5.550 11,494,350
175,000 Landesbank Hessen Thuringen............. 07/18/97 6.010 175,331,454
35,000 Rabobank Nederland N. V................. 12/27/96 5.540 35,000,249
59,000 Royal Bank of Canada, New York.......... 05/13/97-05/15/97 5.745-5.810 59,005,348
150,000 Sanwa Bank Ltd. Yankee CD............... 12/09/96-01/15/97 5.360-5.500 150,000,186
196,000 Societe Generale, New York.............. 12/05/96-10/06/97 5.280-5.840 195,982,211
130,000 Sumitomo Bank Yankee CD................. 12/03/96-01/21/97 5.500-5.520 130,000,000
48,400 Swiss Bank Corp., New York.............. 12/18/96 5.530 48,400,226
50,000 Union Bank of Switzerland............... 12/13/96 5.500 50,000,000
25,000 Westpac Banking Corp. Yankee CD......... 12/27/96 5.570 25,000,356
---------------
TOTAL CERTIFICATES OF DEPOSIT --
FOREIGN................................ 1,329,125,799
---------------
COMMERCIAL PAPER -- DOMESTIC (17.1%)
20,976 AI Credit Corp.......................... 12/03/96-12/17/96 5.240 20,961,791
40,000 American Express Co..................... 12/16/96 5.260 39,912,333
73,000 American Express Credit Corp............ 01/02/97 5.250 72,659,334
25,000 Bank of New York........................ 12/12/96 5.270 24,959,743
25,000 Bankers Trust........................... 12/27/96 5.600 24,898,889
7,000 Bellsouth Capital Funding Corp.......... 12/02/96 5.300 6,998,969
22,458 Campbell Soup Co........................ 12/20/96 5.270 22,395,536
24,024 CIT Group Holdings Inc.................. 12/19/96 5.250 23,960,937
25,000 Deere & Co.............................. 01/24/97 5.330 24,800,125
116,000 Ford Motor Credit Corp.................. 12/05/96-12/20/96 5.250 115,780,083
5,600 General Electric Capital Corp........... 12/04/96 5.250 5,597,550
25,000 H.J. Heinz Co........................... 12/09/96 5.230 24,970,944
45,300 J.C. Penny Funding Corp................. 12/11/96-12/16/96 5.250-5.270 45,230,987
51,000 Koch Industries Inc..................... 12/02/96 5.350 50,992,421
10,000 PACCAR Financial Corp................... 12/06/96 5.300 9,992,639
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
COMMERCIAL PAPER -- DOMESTIC (CONTINUED)
<C> <S> <C> <C> <C>
$ 2,732 PepsiCo Inc............................. 12/13/96 5.270% $ 2,727,201
65,000 Raytheon Co............................. 12/20/96 5.270 64,819,210
26,000 Republic Bank of New York............... 12/10/96 5.250 25,965,875
7,000 Southern Co............................. 12/09/96 5.250 6,991,833
20,800 Unilever Capital Corp................... 12/13/96 5.250 20,763,600
18,930 Warner Lambert Co....................... 12/02/96 5.230 18,927,250
3,365 Xerox Credit Corp....................... 12/09/96-12/18/96 5.240-5.270 3,358,434
---------------
TOTAL COMMERCIAL PAPER -- DOMESTIC...... 657,665,684
---------------
COMMERCIAL PAPER -- FOREIGN (15.2%)
57,165 Bayerische Vereinsbank.................. 12/04/96-12/17/96 5.250-5.430 57,069,542
90,000 Caisse D'Amortissement.................. 06/06/97 5.290 87,526,925
40,000 Canadian Imperial Holding Inc........... 12/10/96 5.444 39,945,560
37,000 Commonwealth Bank of Australia.......... 12/30/96 5.320 36,841,434
78,561 Creditanstalt Finance Inc............... 12/04/96-12/12/96 5.250 78,482,808
21,900 Deutsche Bank Finance Inc............... 12/03/96 5.270 21,893,588
22,020 Dresdner Bank U.S. Finance Inc.......... 12/05/96 5.250 22,007,155
18,000 Glaxo Wellcome PLC...................... 12/09/96 5.420 17,978,320
50,000 National Australia Funding.............. 12/02/96 5.290 49,992,653
55,000 Ontario Hydro........................... 12/04/96-12/30/96 5.240-5.370 54,862,179
26,300 Seagram, Joseph E. & Sons Inc........... 12/11/96 5.250 26,261,646
24,000 Swiss Bank Corp., New York.............. 12/27/96 5.300 23,905,013
69,000 UBS Finance Delaware Inc................ 12/04/96 5.340 68,969,295
---------------
TOTAL COMMERCIAL PAPER -- FOREIGN....... 585,736,118
---------------
CORPORATE OBLIGATIONS (3.2%)
75,000 Abbey National Treasury Services, PLC... 11/03/97-11/21/97 5.500-5.640 74,953,304
15,000 General Electric Capital Corp........... 01/31/97 5.080 14,999,699
25,000 John Deere Capital Corp................. 07/03/97 5.850 24,989,740
9,000 Old Kent Bank & Trust Co................ 01/15/97 5.125 9,000,000
---------------
TOTAL CORPORATE OBLIGATIONS............. 123,942,743
---------------
FLOATING RATE NOTES (7.3%) (a)
53,000 Abbey National Treasury Services, PLC,
(resets monthly to one month LIBOR
-12.5 basis points, due 05/16/97)...... 12/18/96(b) 5.250 52,982,004
72,500 Asset Backed Securities Investment
Trust, Series 1996-M, (resets monthly
to one month LIBOR, due 10/15/97)
(144A)................................. 12/15/96(b) 5.375 72,500,000
20,000 Federal National Mortgage Association,
(resets weekly to six month Treasury
Bill rate +10 basis points, due
06/11/97).............................. 12/10/96(b) 5.370 19,991,850
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ---------------------- ------------ ---------------
FLOATING RATE NOTES (CONTINUED)
<C> <S> <C> <C> <C>
$ 94,622 Natwest Asset Trust Securities, Series
R-13/14A, (resets monthly to one month
LIBOR +2 basis points, due 09/15/03)
(144A)................................. 12/15/96(b) 5.395% $ 94,622,000
40,000 Society National Bank of Cleveland,
(resets daily to the Fed Funds rate +8
basis points, due 07/08/97)............ 12/4/96(b) 5.500 39,983,656
---------------
TOTAL FLOATING RATE NOTES............... 280,079,510
---------------
TIME DEPOSITS -- FOREIGN (0.3%)
13,203 Banque Nationale de Paris, Grand
Cayman................................. 12/02/96 5.375 13,203,000
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (4.8%)
30,000 Federal Farm Credit Bank................ 12/02/96 5.400 29,999,868
1,060 Federal Home Loan Banks................. 06/27/97 5.875 1,059,245
73,430 Federal Home Loan Mortgage Corp......... 12/02/96 5.330-5.700 73,418,679
79,500 Federal National Mortgage Association... 12/04/96-12/18/96 5.370-5.410 79,497,955
---------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS............................ 183,975,747
---------------
U.S. TREASURY OBLIGATIONS (2.6%)
97,500 United States Treasury Notes............ 01/31/97 7.500 97,874,271
---------------
REPURCHASE AGREEMENTS (9.3%)
357,587 Goldman Sachs Repurchase Agreements,
dated 11/29/96, proceeds $357,827,145
(collateralized by $263,308,000 U.S.
Treasury Notes 6.250%-7.500%, due
02/28/97-11/15/01 valued at
$270,636,657; $95,642,000 U.S. Treasury
Bills 0.000%, due 03/06/97-04/24/97
valued at $94,102,422) (cost
$357,587,000).......................... 12/02/96 5.350-5.660 357,587,000
---------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE (99.3%) 3,820,489,336
OTHER ASSETS IN EXCESS OF LIABILITIES (0.7%) 27,760,581
---------------
NET ASSETS (100.0%) $ 3,848,249,917
---------------
---------------
</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 in the security
description reflects the final maturity date.
(b) Reflects the next interest rate reset date.
144A -- Securities restricted for resale to Qualified Institutional Buyers.
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value $3,820,489,336
Cash 2,198
Interest Receivable 28,466,958
Prepaid Trustees' Fees 6,237
Prepaid Expenses and Other Assets 13,201
--------------
Total Assets 3,848,977,930
--------------
LIABILITIES
Advisory Fee Payable 409,662
Custody Fee Payable 119,011
Administrative Services Fee Payable 102,973
Administration Fee Payable 56,064
Fund Services Fee Payable 5,425
Accrued Expenses 34,878
--------------
Total Liabilities 728,013
--------------
NET ASSETS
Applicable to Investors' Beneficial Interests $3,848,249,917
--------------
--------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $191,789,557
EXPENSES
Advisory Fee $4,503,793
Administrative Services Fee 891,730
Custodian Fees and Expenses 588,354
Administration Fee 306,001
Fund Services Fee 157,428
Trustees' Fees and Expenses 63,351
Professional Fees and Expenses 48,407
Miscellaneous 30,508
----------
Total Expenses 6,589,572
Less: Reimbursement of Expenses (9,993)
----------
NET EXPENSES 6,579,579
------------
NET INVESTMENT INCOME 185,209,978
NET REALIZED GAIN ON INVESTMENTS 267,432
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $185,477,410
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 185,209,978 $ 168,180,713
Net Realized Gain on Investments 267,432 1,573,477
----------------- -----------------
Net Increase in Net Assets Resulting from
Operations 185,477,410 169,754,190
----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 18,847,392,256 17,654,676,133
Withdrawals (18,519,575,165) (17,137,148,786)
----------------- -----------------
Net Increase from Investors' Transactions 327,817,091 517,527,347
----------------- -----------------
Total Increase in Net Assets 513,294,501 687,281,537
NET ASSETS
Beginning of Fiscal Year 3,334,955,416 2,647,673,879
----------------- -----------------
End of Fiscal Year $ 3,848,249,917 $ 3,334,955,416
----------------- -----------------
----------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD
JULY
12,
1993
(COMMENCEMENT
FOR THE FISCAL OF
YEAR ENDED OPERATIONS)
NOVEMBER 30, TO
------------------ NOVEMBER
1996 1995 1994 30, 1993
---- ---- ---- -------
<S> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.19% 0.19% 0.20% 0.19%(a)
Net Investment Income 5.29% 5.77% 3.90% 2.98%(a)
Decrease Reflected in Expense Ratio due to
Expense Reimbursement 0.00%(b) -- 0.00%(b) --
</TABLE>
- ------------------------
(a) Annualized
(b) Less than 0.01%
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Portfolio's investment objective is to maximize
current income and maintain a high level of liquidity. The Portfolio commenced
operations on July 12, 1993. The Declaration of Trust permits the Trustees to
issue an unlimited number of beneficial interests in the Portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Portfolio:
a)Investments are valued at amortized cost which approximates market value.
The amortized cost method of valuation values a security at its cost at
the time of purchase and thereafter assumes a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instruments.
The Portfolio's custodian or designated subcustodians, as the case may be
under tri-party repurchase agreements, take 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 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, 1996,
this fee amounted to $4,503,793.
24
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
b)The Portfolio had retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and exclusive placement agent.
Under an Administration Agreement, Signature provided administrative
services necessary for the operations of the Portfolio, furnished office
space and facilities required for conducting the business of the Portfolio
and paid the compensation of the Portfolio's officers affiliated with
Signature. Until December 28, 1995, the agreement provided for a fee to be
paid to Signature at an annual fee rate determined by the following
schedule: 0.01% of the first $1 billion of the aggregate average daily net
assets of the Portfolio and the other portfolios subject to the 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 was applied each day to the
net assets of the Portfolio. For the period from December 1, 1995 through
December 28, 1995, Signature's fee for these services amounted to $14,797.
Effective December 29, 1995, the Administration Agreement was amended such
that the fee charged was 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 (the "Master Portfolios") in which The
JPM Pierpont Funds, 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 paid by the
Portfolio was determined by the proportionate share its net assets bore to
the total net assets of The JPM Pierpont Funds, The JPM Institutional
Funds, The JPM Advisor Funds and the Master Portfolios. For the period
from December 29, 1995 through July 31, 1996, such fees for these services
amounted to $258,192. The Administration Agreement with Signature was
terminated July 31, 1996.
Effective August 1, 1996, certain administrative functions formerly
provided by Signature are provided by Funds Distributor, Inc. ("FDI"), a
registered broker-dealer, and by Morgan. FDI also serves as the
Portfolio's exclusive placement agent. Under a Co-Administration Agreement
between FDI and the Portfolio, the Portfolio has agreed to pay FDI fees
equal to its allocable share of 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 and the Master Portfolios. For the period from August 1,
1996 through November 30, 1996, the fee for these services amounted to
$33,012.
c)Until August 31, 1995, the Portfolio had a Financial and Fund Accounting
Services Agreement with Morgan which provided that Morgan would receive a
fee, based on the percentages described below, for overseeing certain
aspects of the administration and operation of the Portfolio and that was
also designed to provide an expense limit for certain expenses of the
Portfolio. This fee was calculated exclusive of the advisory fee, custody
expenses and fund services fee at 0.03% of the Portfolio's average daily
net assets. From September 1, 1995 until December 28, 1995, an interim
agreement between the Portfolio and Morgan provided for the continuation
of the oversight functions that were outlined under the 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 (the "Services Agreement") with Morgan under which
Morgan is responsible for overseeing certain aspects
25
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
of the administration and operation of the Portfolio. Under the Services
Agreement, the Portfolio had agreed to pay Morgan a fee equal to its
proportionate share of an annual complex-wide charge. Until July 31, 1996,
this charge was calculated daily based on the aggregate net assets of the
Master Portfolios in accordance with the following annual schedule: 0.06%
on the first $7 billion of the Master Portfolios' aggregate average daily
net assets and 0.03% of the Master Portfolios' aggregate average daily net
assets in excess of $7 billion. The portion of this charge paid by the
Portfolio was determined by the proportionate share its net assets bore to
the net assets of the Master Portfolios and other investors in the Master
Portfolios for which Morgan provided similar services. For the period from
December 29, 1995 through July 31, 1996, the fee for these services
amounted to $493,282.
Effective August 1, 1996, the Services Agreement was amended such that the
annual complex-wide charge is calculated daily based on the aggregate net
assets of the Master Portfolios in accordance with the following annual
schedule: 0.09% on the first $7 billion of the Master Portfolios'
aggregate average daily net assets and 0.04% of the Master Portfolios'
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The allocation of the Portfolio's
portion of this charge is described above. For the period from August 1,
1996 through November 30, 1996, the fee for these services amounted to
$398,448.
In addition, Morgan has agreed to reimburse the Portfolio to the extent
necessary to maintain the total operating expenses of the Portfolio at no
more than 0.20% of the average daily net assets of the Portfolio through
March 31, 1997. For the fiscal year ended November 30, 1996, Morgan
reimbursed the Portfolio $9,993 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 $157,428 for the fiscal year ended November 30, 1996.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The JPM Pierpont Funds, The JPM Institutional Funds and the
Master Portfolios. The Trustees' Fees and Expenses shown in the financial
statements represents the Portfolio's allocated portion of the total fees
and expenses. The Portfolio's Chairman and Chief Executive Officer 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 $20,200.
26
<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, 1996, 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 three 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, 1996 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
January 16, 1997
27
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
THE JPM PIERPONT TAX EXEMPT MONEY MARKET FUND
THE JPM PIERPONT TREASURY MONEY MARKET FUND
THE JPM PIERPONT SHORT TERM BOND FUND
THE JPM PIERPONT BOND FUND
THE JPM PIERPONT TAX EXEMPT BOND FUND
THE JPM PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE JPM PIERPONT DIVERSIFIED FUND
THE JPM PIERPONT EQUITY FUND
THE JPM PIERPONT CAPITAL APPRECIATION FUND
THE JPM PIERPONT INTERNATIONAL EQUITY FUND
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
THE JPM PIERPONT EUROPEAN EQUITY FUND
THE JPM PIERPONT JAPAN EQUITY FUND
THE 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 MONEY MARKET FUND
ANNUAL REPORT
NOVEMBER 30, 1996
