<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- -------------------------------------------------- ------- ------------
<S> <C> <C>
COMMON STOCKS (95.1%)
BASIC INDUSTRIES (6.0%)
CHEMICALS (3.6%)
Du Pont (E.I.) de Nemours & Co., Inc.............. 102,200 $ 6,796,300
Union Carbide Corp................................ 225,920 8,952,080
Wellman Inc....................................... 354,900 9,094,312
------------
24,842,692
------------
METALS & MINING (1.7%)
Aluminum Co. of America........................... 60,000 3,510,000
Freeport McMoRan Copper & Gold Inc., Cl. A........ 93,960 2,536,920
Freeport McMoRan Copper & Gold Inc., Cl. B........ 56,202 1,524,479
Reynolds Metals Co................................ 71,200 4,111,800
------------
11,683,199
------------
PAPER AND FOREST PRODUCTS (0.7%)
Buckeye Cellulose Corp. (a)....................... 90,700 1,916,037
International Paper Co............................ 600 22,875
Mead Corp......................................... 52,900 3,021,912
------------
4,960,824
------------
TOTAL BASIC INDUSTRIES........................ 41,486,715
------------
CONSUMER GOODS & SERVICES (26.2%)
AUTOMOTIVE (2.1%)
General Motors Corp............................... 300,600 14,579,100
------------
BEVERAGES, FOOD, SOAP & TOBACCO (7.0%)
Archer-Daniels-Midland Co......................... 270,470 4,665,608
CPC International, Inc............................ 71,200 4,895,000
General Mills Inc................................. 116,500 6,422,063
Nabisco Holdings Corp.- Cl. A..................... 209,100 5,907,075
PepsiCo., Inc..................................... 215,300 11,895,325
Philip Morris Cos., Inc........................... 172,300 15,119,325
------------
48,904,396
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- -------------------------------------------------- ------- ------------
<S> <C> <C>
CONSUMER GOODS & SERVICES (CONTINUED)
ENTERTAINMENT, LEISURE & MEDIA (5.2%)
Circus Circus Enterprises Inc. (a)................ 418,000 $ 11,599,500
International Game Technology..................... 355,900 4,404,263
Tele-Communications Inc., Liberty Media Group
Series A (a).................................... 162 4,516
Tele-Communications Inc., TCI Group Series A
(a)............................................. 705,950 13,104,197
Time Warner, Inc.................................. 170,000 6,800,000
------------
35,912,476
------------
FOOTWEAR APPAREL (0.1%)
Converse Inc. (a)................................. 87,633 361,486
Florsheim Shoe Co. (a)............................ 43,816 186,218
------------
547,704
------------
HOUSEHOLD PRODUCTS (3.0%)
Colgate-Palmolive Co.............................. 105,540 7,730,805
Interco Inc. (a).................................. 479,100 4,012,462
Procter & Gamble Co............................... 106,310 9,182,526
------------
20,925,793
------------
MERCHANDISING (6.3%)
Fruit of the Loom Inc., Cl. A (a)................. 355,450 6,886,844
Hechinger Co., Cl. A.............................. 132,300 595,350
Limited Inc....................................... 515,300 9,210,987
Melville Corp..................................... 196,100 6,103,612
Price Costco Inc. (a)............................. 457,800 7,639,537
Wal Mart Stores, Inc.............................. 565,460 13,571,040
------------
44,007,370
------------
PERSONAL CARE (0.2%)
International Flavors and Fragrances, Inc......... 21,500 1,099,188
------------
PERSONAL SERVICES (1.7%)
Service Corp. International....................... 292,600 11,886,875
------------
RESTAURANTS (0.6%)
Cracker Barrel Old Country Store, Inc............. 245,000 4,578,438
------------
TOTAL CONSUMER GOODS & SERVICES............... 182,441,340
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- -------------------------------------------------- ------- ------------
<S> <C> <C>
ENERGY (8.7%)
OIL-EQUIPMENT (0.3%)
Cooper Cameron Corp. (a).......................... 74,712 $ 1,942,512
------------
OIL-PRODUCTION (8.4%)
Anadarko Petroleum Corp........................... 181,300 8,725,063
Chevron Corp...................................... 130,000 6,418,750
Diamond Shamrock Inc.............................. 221,000 5,552,625
Oryx Energy Co. (a)............................... 391,500 5,138,437
Repsol S.A. (ADR)................................. 134,300 4,247,238
Royal Dutch Petroleum Co. (ADR)................... 73,320 9,412,455
Sun Inc........................................... 269,475 7,477,931
Texaco Inc........................................ 154,900 11,462,600
------------
58,435,099
------------
TOTAL ENERGY.................................. 60,377,611
------------
FINANCE (13.1%)
BANKING (8.2%)
BankAmerica Corp.................................. 209,600 13,335,800
Citicorp.......................................... 66,475 4,703,106
Firstar Corp...................................... 69,750 2,859,750
First Union Corp.................................. 125,750 6,869,094
Fleet Financial Group Inc......................... 212,150 8,857,262
Great Western Financial Corp...................... 273,200 6,966,600
NationsBank Corp.................................. 191,647 13,678,805
------------
57,270,417
------------
FINANCIAL SERVICES (1.0%)
Dean Witter Discover & Co......................... 136,600 6,966,600
------------
INSURANCE (3.9%)
AMBAC Inc......................................... 210,300 9,279,488
Providian Corp.................................... 322,500 12,940,312
USLIFE Corp....................................... 167,850 4,846,669
------------
27,066,469
------------
TOTAL FINANCE................................. 91,303,486
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- -------------------------------------------------- ------- ------------
HEALTHCARE (9.0%)
<S> <C> <C>
HEALTH SERVICES (4.2%)
Columbia/HCA Healthcare Corp...................... 294,300 $ 15,193,238
Health Care and Retirement Corp. (a).............. 700 23,450
Humana, Inc. (a).................................. 491,700 13,767,600
------------
28,984,288
------------
PHARMACEUTICALS (4.8%)
Alza Corp. Cl. A (a).............................. 140,600 3,233,800
Bausch & Lomb Inc................................. 313,900 11,339,638
Forest Laboratories, Inc. (a)..................... 75,000 3,187,500
Lilly, Eli & Co................................... 97,445 9,695,777
Warner - Lambert Co............................... 71,200 6,354,600
------------
33,811,315
------------
TOTAL HEALTHCARE.............................. 62,795,603
------------
INDUSTRIAL PRODUCTS & SERVICES (14.1%)
CAPITAL GOODS (0.7%)
USG Corp. (a)..................................... 158,800 4,664,750
------------
DIVERSIFIED MANUFACTURING (9.4%)
Allied Signal, Inc................................ 222,000 10,489,500
Coltec Industries, Inc. (a)....................... 433,225 4,765,475
Cooper Industries, Inc............................ 261,939 9,560,774
Cooper Tire & Rubber Co........................... 246,100 6,060,213
General Electric Co............................... 152,700 10,269,075
ITT Corp.......................................... 39,900 4,892,737
Manville Corp. (a)................................ 791,000 10,085,250
Tyco International Ltd............................ 306,200 9,607,025
------------
65,730,049
------------
ELECTRONICS (3.3%)
General Instrument Corp. (a)...................... 198,100 5,076,312
Grainger (W.W.), Inc.............................. 108,200 7,235,875
Harris Corp....................................... 158,200 9,116,275
Magnetek, Inc. (a)................................ 177,900 1,467,675
------------
22,896,137
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- -------------------------------------------------- ------- ------------
<S> <C> <C>
INDUSTRIAL PRODUCTS & SERVICES (CONTINUED)
ENVIRONMENTAL CONTROL (0.7%)
Wheelabrator Technologies Inc..................... 347,700 $ 5,215,500
------------
TOTAL INDUSTRIAL PRODUCTS & SERVICES.......... 98,506,436
------------
TECHNOLOGY (5.4%)
COMPUTERS-PERIPHERALS (0.5%)
Quantum Corp. (a)................................. 180,000 3,363,750
------------
COMPUTERS-SOFTWARE (0.6%)
Autodesk Inc...................................... 119,500 4,227,313
------------
COMPUTERS-SYSTEMS (0.9%)
International Business Machines................... 68,000 6,570,500
------------
ELECTRONICS (1.4%)
Motorola, Inc..................................... 163,325 10,003,656
------------
INFORMATION PROCESSING (1.5%)
Novell, Inc. (a).................................. 602,275 10,125,748
------------
TELECOMMUNICATIONS-EQUIPMENT (0.5%)
Bay Networks Inc. (a)............................. 70,050 3,147,872
------------
TOTAL TECHNOLOGY.............................. 37,438,839
------------
TRANSPORTATION (2.5%)
RAILROADS (1.9%)
Union Pacific Corp................................ 193,445 13,105,899
------------
TRUCKING AND FREIGHT (0.6%)
Consolidated Freightways Inc...................... 180,400 4,735,500
------------
TOTAL TRANSPORTATION.......................... 17,841,399
------------
UTILITIES (10.1%)
ELECTRIC (3.3%)
Allegheny Power System Inc........................ 249,900 6,934,725
Entergy Corp...................................... 235,500 6,564,563
Illinova Corp..................................... 62,100 1,762,087
SCEcorp........................................... 285,900 4,467,188
Western Resources, Inc............................ 100,000 3,312,500
------------
23,041,063
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- -------------------------------------------------- ------- ------------
<S> <C> <C>
UTILITIES (CONTINUED)
TELEPHONE (6.8%)
AT&T.............................................. 226,070 $ 14,920,620
BellSouth Corp.................................... 226,400 8,801,300
MCI Communications Corp........................... 183,785 4,904,762
Pacific Telesis Group............................. 222,800 6,684,000
Telefonos de Mexico, Cl. L (ADR).................. 95,000 3,135,000
U.S. West, Inc., Communications Group............. 189,180 5,911,875
U.S. West, Inc., Media Group (a).................. 189,180 3,405,240
------------
47,762,797
------------
TOTAL UTILITIES............................... 70,803,860
------------
TOTAL COMMON STOCKS (COST $592,005,549)........... 662,995,289
------------
CONVERTIBLE PREFERRED STOCKS (0.6%)
HEALTHCARE (0.1%)
PHARMACEUTICALS (0.1%)
Gensia Inc., $3.75 (144A)......................... 20,000 260,000
------------
INDUSTRIAL PRODUCTS AND SERVICES (0.5%)
CAPITAL GOODS (0.5%)
Owens Corning LLC., 6.5% (144A)................... 60,000 3,532,500
------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST
$4,081,156)..................................... 3,792,500
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ----------------------------------------------------------------------------------- ------------- --------------
<S> <C> <C>
CONVERTIBLE BONDS (0.4%)
INDUSTRIAL PRODUCTS & SERVICES (0.3%)
POLLUTION CONTROL (0.3%)
WMX Technologies Inc. 2.00% Subordinated Debentures due 01/24/05...................
$ 2,283,000 $ 1,974,795
--------------
TECHNOLOGY (0.1%)
COMPUTERS-PERIPHERALS (0.1%)
Conner Peripherals Inc. 6.50% Subordinated Debentures due 03/01/02.................
994,000 1,043,700
--------------
TOTAL CONVERTIBLE BONDS (COST $2,653,210)..........................................
3,018,495
--------------
SHORT-TERM INVESTMENTS (4.2%)
REPURCHASE AGREEMENT (4.2%)
Goldman Sachs 5.85% dated 11/30/95 due 12/01/95, proceeds $29,110,730
(collateralized by U.S. Treasury Bond, 9.25% due 2/15/06 valued at
$29,688,680).....................................................................
29,106,000 29,106,000
--------------
TOTAL SHORT TERM INVESTMENTS (COST $29,106,000)....................................
29,106,000
--------------
TOTAL INVESTMENTS (COST $627,845,915) (100.3%).....................................
698,912,284
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.3%)......................................
(1,770,304)
--------------
NET ASSETS (100.0%)................................................................
$ 697,141,980
--------------
--------------
</TABLE>
(a) Non-income-producing security.
(ADR) - Securities whose value is determined or significantly influenced by
trading on exchanges not located in the United States or Canada. ADR
after the name of a foreign holdings stands for American Depository
Receipt, representing ownership of foreign securities on deposit with a
domestic custodian bank.
144A - Securities restricted for resale to Qualified Institutional Buyers.
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $627,845,915) $698,912,284
Cash 884
Receivable for Investments Sold 3,420,254
Dividends Receivable 1,721,257
Interest Receivable 36,939
Other Assets 6,002
------------
Total Assets 704,097,620
------------
LIABILITIES
Payable for Investments Purchased 6,269,054
Advisory Fee Payable 643,577
Custody Fee Payable 17,416
Fund Services Fee Payable 2,803
Administration Fee Payable 3,285
Accrued Expenses 19,505
------------
Total Liabilities 6,955,640
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $697,141,980
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax of
$35,840) $ 6,761,202
Interest Income 1,105,248
-----------
Investment Income 7,866,450
EXPENSES
Advisory Fee $1,304,403
Financial and Fund Accounting Services Fees 62,181
Fund Services Fee 26,438
Professional Fees 23,744
Custodian Fees and Expenses 14,792
Administration Fee 19,340
Trustees' Fees and Expenses 7,192
Insurance 4,303
Miscellaneous 7,326
----------
Total Expenses (1,469,719)
-----------
NET INVESTMENT INCOME 6,396,731
NET REALIZED GAIN ON INVESTMENTS (including
$1,561,383 net realized gains from futures
contracts) 38,466,915
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS (including $478,918 net unrealized
depreciation from futures contracts) 25,989,003
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $70,852,649
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
NOVEMBER 30, 1995 YEAR ENDED
(UNAUDITED) MAY 31, 1995
------------------ -------------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 6,396,731 $ 10,756,648
Net Realized Gain on Investments 38,466,915 31,481,163
Net Change in Unrealized Appreciation of Investments 25,989,003 35,361,393
------------------ -------------------
Net Increase in Net Assets Resulting from Operations 70,852,649 77,599,204
------------------ -------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 123,607,594 266,876,529
Withdrawals (100,072,047) (179,469,109)
------------------ -------------------
Net Increase from Investors' Transactions 23,535,547 87,407,420
------------------ -------------------
Total Increase in Net Assets 94,388,196 165,006,624
NET ASSETS
Beginning of Period 602,753,784 437,747,160
------------------ -------------------
End of Period $ 697,141,980 $ 602,753,784
------------------ -------------------
------------------ -------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 19, 1993
MONTHS ENDED FOR THE FISCAL (COMMENCEMENT OF
NOVEMBER 30, 1995 YEAR ENDED OPERATIONS) TO
(UNAUDITED) MAY 31, 1995 MAY 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Ratios to Average Net Assets:
Expenses 0.45%(a) 0.51% 0.53%(a)
Net Investment Income 1.96%(a) 2.12% 1.79%(a)
Portfolio Turnover 31% 71% 76%(b)
</TABLE>
- ------------------------
(a) Annualized.
(b) Portfolio turnover is for the twelve month period ended May 31, 1994, and
includes the portfolio activity of the Portfolio's predecessor entity, The
Pierpont Equity Fund, for the period June 1, 1993 to July 18, 1993.
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Selected U.S. Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Portfolio commenced operations on July 19, 1993 and
received a contribution of certain assets and liabilities, including securities,
with a value of $209,477,219 on that date from The Pierpont Equity Fund in
exchange for a beneficial interest in the Portfolio. At that date, net
unrealized appreciation of $12,039,552 was included in the contributed
securities. The Declaration of Trust permits the Trustees to issue an unlimited
number of beneficial interests in the Portfolio.
The following is a summary of the significant accounting policies of the
Portfolio:
a)The value of each security for which readily available market quotations
exists is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchanges. Securities listed on a foreign
exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures
established by the Portfolio's Trustees. Such procedures include the use
of independent pricing services, which use prices based upon yields or
prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All
portfolio securities with a remaining maturity of less than 60 days are
valued at amortized cost.
b)Futures - A futures contract is an agreement to purchase/sell a specified
quantity of an underlying instrument at a specified future date or to
make/receive a cash payment based on the value of a securities index. The
price at which the purchase and sale will take place will be fixed when
the Portfolio enters into the contract. Upon entering into such a contract
the Portfolio is required to pledge to the broker an amount of cash and/or
securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, the Portfolio agrees to receive from
or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the Portfolio as unrealized gains or losses.
When the contract is closed, the Portfolio records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time when it was closed. The Portfolio
invests in futures contracts solely for the purpose of hedging its
existing portfolio securities, or securities the Portfolio intends to
purchase, against fluctuations in value caused by changes in prevailing
market values. The use of futures transactions involves the risk of
imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets, and the possible
inability of counterparties to meet the terms of their contracts. Realized
and unrealized gains and losses on futures transactions for the six months
ended November 30, 1995 are included in the Statement of Operations. There
were no open futures contracts as of November 30, 1995.
26
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
c)Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount becomes known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d)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.
e)The Portfolio's custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the Portfolio. It is the
policy of the Portfolio to value the underlying collateral daily on a
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.
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the investment
advisory agreement, the Portfolio pays Morgan at an annual rate of 0.40%
of the Portfolio's average daily net assets. For the six months ended
November 30, 1995, this fee amounted to $1,304,403.
b)The Portfolio retains Signature Broker-Dealer Services, Inc. ("Signature")
to serve as Administrator and exclusive placement agent. Signature
provides administrative services necessary for the operations of the
Portfolio, furnishes office space and facilities required for conducting
the business of the Portfolio and pays the compensation of the Portfolio's
officers affiliated with Signature. The agreement provides for a fee to be
paid to Signature at an annual rate determined by the following schedule:
0.01% of the first $1 billion of the aggregate average daily net assets of
the Portfolio and the other portfolios subject to the Administration
Agreement, 0.008% of the next $2 billion of such net assets, 0.006% of the
next $2 billion of such net assets, and 0.004% of such net assets in
excess of $5 billion. The daily equivalent of the fee rate is applied to
the daily net assets of the Portfolio. For the six months ended November
30, 1995, Signature's fee for these services amounted to $19,340.
Effective December 29,1995, the Administration Agreement was amended such
that the fee charged would be equal to the Portfolio's proportionate share
of a complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios subject to this agreement (the "Master
Portfolios") and 0.01% on the aggregate average daily net assets of the
Master Portfolios in excess of $7 billion. The portion of this charge
payable by the Portfolio is determined by the proportionate share its net
assets bear to the total net assets of The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds and the Master Portfolios.
27
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
c)Until August 31, 1995, the Portfolio had a Financial and Fund Accounting
Services Agreement ("Services Agreement") with Morgan under which Morgan
received a fee, based on the percentages described below, for overseeing
certain aspects of the administration and operation of the Portfolio and
which was also designed to provide an expense limit for certain expenses
of the Portfolio. This fee was calculated exclusive of the advisory fee,
custody expenses, fund services fee, and brokerage costs, at 0.10% of the
Portfolio's average daily net assets up to $200 million, 0.05% of the next
$200 million of average daily net assets, and 0.03% of average daily net
assets thereafter. For the three month period ended August 31, 1995, the
fee for these services amounted to $62,181. From September 1, 1995 until
December 28, 1995, an interim agreement between the Portfolio and Morgan
provided for the continuation of the oversight functions that were
outlined under the prior agreement and that Morgan should bear all of its
expenses incurred in connection with these services.
Effective December 29, 1995, the Portfolio entered into an Administrative
Services Agreement with Morgan under which Morgan is responsible for
overseeing certain aspects of the administration and operation of the
Portfolio. Under the Agreement, the Portfolio has agreed to pay Morgan a
fee equal to its proportionate share of an annual complex-wide charge.
This charge is calculated daily based on the aggregate net assets of the
Master Portfolios, in accordance with the following annual schedule: 0.06%
on the first $7 billion of the Master Portfolios' aggregate net assets and
0.03% of the aggregate net assets in excess of $7 billion. The portion of
this charge payable by the Portfolio is determined by the proportionate
share that the Portfolio's net assets bear to the net assets of the Master
Portfolios and other investors in the Master Portfolios for which Morgan
provides similar services.
d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $26,438 for the six months ended November 30, 1995.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds and their
corresponding Portfolios. The Trustees' Fees and Expenses shown in the
financial statements represent the Portfolio's allocated portion of the
total fees and expenses. The Trustee who serves as Chairman and Chief
Executive Officer of these Funds and Portfolios also serves as Chairman of
Group and received compensation and employee benefits from Group in his
role as Group's Chairman. The allocated portion of such compensation and
benefits included in the Fund Services Fee shown in the financial
statements was $3,400.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended November 30, 1995 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- -------------- --------------
<S> <C>
$ 241,121,597 $ 190,381,534
</TABLE>
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