<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -------------
<S> <C> <C>
COMMON STOCKS (98.9%)
BASIC INDUSTRIES (6.8%)
CHEMICALS (3.2%)
E.I. Du Pont De Nemours & Co..................... 114,300 $ 10,772,775
Union Carbide Corp............................... 316,100 14,580,112
Wellman, Inc..................................... 32,300 520,837
-------------
25,873,724
-------------
FOREST PRODUCTS & PAPER (0.7%)
Temple-Inland, Inc............................... 105,400 5,665,250
-------------
METALS & MINING (2.9%)
Allegheny Teledyne, Inc.......................... 487,955 11,405,948
Aluminum Company of America (ALCOA).............. 191,200 12,165,100
-------------
23,571,048
-------------
TOTAL BASIC INDUSTRIES......................... 55,110,022
-------------
CONSUMER GOODS & SERVICES (22.7%)
AUTOMOTIVE (2.2%)
Cooper Tire & Rubber............................. 67,500 1,383,750
General Motors Corp.............................. 281,600 16,227,200
-------------
17,610,950
-------------
BROADCASTING & PUBLISHING (2.1%)
Tele-Communications TCI, Series A+............... 1,259,300 17,079,256
-------------
ENTERTAINMENT, LEISURE & MEDIA (1.7%)
Time Warner Inc.................................. 336,500 13,712,375
-------------
FOOD, BEVERAGES & TOBACCO (7.6%)
CPC International, Inc........................... 101,500 8,449,875
Kellogg Co....................................... 56,700 3,848,512
PepsiCo., Inc.................................... 359,900 10,752,012
Philip Morris Companies, Inc..................... 190,900 19,686,562
Ralston Purina Co................................ 87,400 6,686,100
Unilever NV (ADR)................................ 67,700 11,720,562
-------------
61,143,623
-------------
HOUSEHOLD APPLIANCES FURNISHINGS (0.4%)
Furniture Brands International, Inc.+............ 244,300 3,023,212
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -------------
<S> <C> <C>
HOUSEHOLD PRODUCTS (2.9%)
Colgate-Palmolive Co............................. 41,500 $ 3,843,937
Procter & Gamble Co.............................. 177,430 19,295,512
-------------
23,139,449
-------------
RETAIL (5.8%)
Circuit City Stores, Inc......................... 220,000 7,342,500
Federated Department Stores, Inc.+............... 219,600 7,493,850
General Nutrition Companies, Inc.+............... 294,900 5,105,456
Toys 'R' Us, Inc.+............................... 204,400 7,051,800
Wal-Mart Stores, Inc............................. 785,560 20,031,780
-------------
47,025,386
-------------
TOTAL CONSUMER GOODS & SERVICES................ 182,734,251
-------------
ENERGY (10.0%)
GAS EXPLORATION (1.0%)
Enron Corp....................................... 173,600 7,942,200
-------------
OIL-PRODUCTION (8.9%)
Anadarko Petroleum Corp.......................... 128,200 8,573,375
Ashland Inc...................................... 176,700 8,481,600
Cooper Cameron Corp.+............................ 65,812 4,327,139
Diamond Shamrock, Inc............................ 250,800 8,151,000
Exxon Corp....................................... 245,200 23,202,050
MAPCO, Inc....................................... 117,900 3,979,125
Royal Dutch Petroleum Co. (ADR).................. 47,100 8,001,112
Texaco Inc....................................... 66,900 6,631,483
-------------
71,346,884
-------------
OIL-SERVICES (0.1%)
Input/Output, Inc.+.............................. 19,500 468,000
-------------
TOTAL ENERGY................................... 79,757,084
-------------
FINANCE (14.4%)
BANKING (7.7%)
Crestar Financial Corp........................... 25,000 1,740,625
First Chicago NBD Corp........................... 240,300 14,117,625
First Hawaiian, Inc.............................. 35,300 1,145,044
Firstar Corp..................................... 74,750 3,989,781
Fleet Financial Group, Inc....................... 264,800 14,663,300
Great Western Financial Corp..................... 130,600 4,064,925
NationsBank Corp................................. 122,500 12,694,062
Standard Federal Bancorporation.................. 166,000 9,358,250
-------------
61,773,612
-------------
</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, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -------------
<S> <C> <C>
FINANCIAL SERVICES (3.4%)
Dean Witter Discover & Co........................ 208,900 $ 14,283,537
First USA, Inc................................... 126,800 4,168,550
Mercury Finance Co............................... 78,500 912,563
Salomon, Inc..................................... 167,400 7,637,625
-------------
27,002,275
-------------
INSURANCE (3.3%)
AMBAC, Inc....................................... 185,300 12,693,050
Providian Corp................................... 263,600 14,102,600
-------------
26,795,650
-------------
TOTAL FINANCE.................................. 115,571,537
-------------
HEALTH CARE (9.9%)
HEALTH SERVICES (3.2%)
Columbia / HCA Healthcare Corp................... 199,500 7,980,000
Humana, Inc.+.................................... 200,600 3,786,325
United Healthcare Corp........................... 314,800 13,575,750
-------------
25,342,075
-------------
PHARMACEUTICALS (6.7%)
Alza Corp.+...................................... 233,900 6,607,675
American Home Products Corp...................... 73,000 4,690,250
Bausch & Lomb, Inc............................... 299,400 11,115,225
Bristol-Myers Squibb Co.......................... 79,700 9,065,875
Forest Laboratories, Inc.+....................... 190,900 7,397,375
Gensia, Inc.+.................................... 1,082 4,970
Warner-Lambert Co................................ 209,000 14,943,500
-------------
53,824,870
-------------
TOTAL HEALTH CARE.............................. 79,166,945
-------------
INDUSTRIAL PRODUCTS & SERVICES (13.6%)
BUILDING MATERIALS (1.1%)
Schuller Corp.................................... 357,500 3,440,938
USG Corp.+....................................... 182,500 5,703,125
-------------
9,144,063
-------------
COMMERCIAL SERVICES (1.9%)
First Data Corp.................................. 180,800 7,209,400
Service Corp. International...................... 257,000 7,742,125
-------------
14,951,525
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -------------
<S> <C> <C>
DIVERSIFIED MANUFACTURING (4.2%)
AlliedSignal, Inc................................ 161,000 $ 11,793,250
Cooper Industries, Inc........................... 259,700 10,777,550
General Electric Co.............................. 105,650 10,987,600
-------------
33,558,400
-------------
ELECTRICAL EQUIPMENT (3.9%)
Anixter International, Inc.+..................... 511,500 8,567,625
General Instrument Corp.+........................ 488,000 10,797,000
Grainger (W.W.), Inc............................. 131,100 10,422,450
MagneTek, Inc.+.................................. 152,800 1,910,000
-------------
31,697,075
-------------
POLLUTION CONTROL (2.5%)
WMX Technologies, Inc............................ 561,500 20,214,000
-------------
TOTAL INDUSTRIAL PRODUCTS & SERVICES........... 109,565,063
-------------
TECHNOLOGY (11.2%)
AEROSPACE (2.5%)
Boeing Co........................................ 131,500 13,067,813
Coltec Industries, Inc.+......................... 390,425 7,222,863
-------------
20,290,676
-------------
COMPUTER PERIPHERALS (1.3%)
Quantum Corp.+................................... 318,600 8,562,375
Read-Rite Corp.+................................. 99,000 2,196,563
-------------
10,758,938
-------------
COMPUTER SOFTWARE (1.2%)
Autodesk, Inc.................................... 140,600 3,919,225
Cisco Systems, Inc.+............................. 89,300 6,066,819
-------------
9,986,044
-------------
COMPUTER SYSTEMS (3.3%)
EMC Corp.+....................................... 449,520 14,497,020
International Business Machines Corp............. 75,300 12,000,938
-------------
26,497,958
-------------
ELECTRONICS (1.4%)
Bay Networks, Inc.+.............................. 131,900 3,528,325
Perkin-Elmer Corp................................ 58,100 3,580,413
Sensormatic Electronics Corp..................... 200,900 4,018,000
-------------
11,126,738
-------------
</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, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -------------
<S> <C> <C>
SEMICONDUCTORS (1.2%)
Advanced Micro Devices, Inc.+.................... 212,200 $ 5,145,850
Intel Corp....................................... 34,600 4,387,713
-------------
9,533,563
-------------
TELECOMMUNICATIONS (0.3%)
Paging Network, Inc.+............................ 145,700 2,385,838
-------------
TOTAL TECHNOLOGY............................... 90,579,755
-------------
TRANSPORTATION (1.5%)
RAILROADS (1.0%)
Union Pacific Corp............................... 134,800 7,852,100
-------------
TRUCK & FREIGHT CARRIERS (0.5%)
Consolidated Freightways, Inc.................... 174,700 4,214,638
-------------
TOTAL TRANSPORTATION........................... 12,066,738
-------------
UTILITIES (8.8%)
ELECTRIC (2.9%)
Dominion Resources, Inc.......................... 97,200 3,705,750
Duke Power Co.................................... 146,700 6,803,213
Northern States Power Co......................... 74,500 3,510,813
P P & L Resources, Inc........................... 97,400 2,228,025
Pacific Gas & Electric Co........................ 185,600 4,477,600
Pinnacle West Capital Corp....................... 96,300 2,997,338
-------------
23,722,739
-------------
TELEPHONE (5.9%)
AT & T Corp...................................... 201,900 7,924,575
Bell Atlantic Corp............................... 118,700 7,463,263
GTE Corp......................................... 150,200 6,740,225
MCI Communications Corp.......................... 450,300 13,762,294
US West Communications Group..................... 254,600 7,956,250
WorldCom, Inc.+.................................. 155,700 3,610,294
-------------
47,456,901
-------------
TOTAL UTILITIES................................ 71,179,640
-------------
TOTAL COMMON STOCKS (COST $645,437,484)........ 795,731,035
-------------
CONVERTIBLE PREFERRED STOCKS (0.5%)
HEALTH CARE (0.0%)*
PHARMACEUTICALS (0.0%)*
Gensia, Inc., $3.75 (144A)....................... 20,000 320,000
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -------------
<S> <C> <C>
INDUSTRIAL PRODUCTS & SERVICES (0.5%)
BUILDING MATERIALS (0.5%)
Owens Corning LLC, 6.5% (144A)................... 62,500 $ 3,562,500
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST
$4,220,219)................................... 3,882,500
-------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (0.5%)
REPURCHASE AGREEMENT (0.5%)
Goldman Sachs Repurchase Agreements, dated
11/27/96 through 11/29/96, due 12/02/96,
proceeds $4,374,367 (collateralized by U.S.
Treasury Note, 7.25%, due 08/15/04, valued at
$4,460,282)
(cost $4,372,000).............................. 4,372,000 4,372,000
-------------
TOTAL INVESTMENTS (COST $654,029,703) (99.9%).................
803,985,535
OTHER ASSETS IN EXCESS OF LIABILITIES (0.1%)..................
558,069
-------------
NET ASSETS (100.0%)........................................... $ 804,543,604
-------------
-------------
</TABLE>
- ------------------------------
<TABLE>
<S> <C>
Note: The cost of securities for Federal Income Tax purposes at November 30,
1996, was $654,715,836, the aggregate gross unrealized appreciation and
depreciation was $157,950,775 and $8,681,076, respectively, resulting in net
unrealized appreciation of $149,269,699.
+ 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.
* -- Less than 0.1%
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $654,029,703 ) $803,985,535
Cash 540
Receivable for Investments Sold 13,537,749
Dividends Receivable 1,611,333
Prepaid Trustees' Fees 1,818
Interest Receivable 1,689
Prepaid Expenses and Other Assets 9,202
------------
Total Assets 819,147,866
------------
LIABILITIES
Payable for Investments Purchased 14,239,205
Advisory Fee Payable 255,266
Custody Fee Payable 62,532
Administrative Services Fee Payable 20,130
Administration Fee Payable 3,553
Fund Services Fee Payable 1,044
Accrued Expenses 22,532
------------
Total Liabilities 14,604,262
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $804,543,604
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $75,783 ) $ 6,584,094
Interest Income 643,007
-----------
Investment Income 7,227,101
EXPENSES
Advisory Fee $1,455,233
Administrative Services Fee 107,393
Custodian Fees and Expenses 105,282
Professional Fees and Expenses 29,260
Administration Fee 21,230
Fund Services Fee 12,937
Trustees' Fees and Expenses 7,500
Registration Fees 303
Miscellaneous 922
----------
Total Expenses 1,740,060
-----------
NET INVESTMENT INCOME 5,487,041
NET REALIZED GAIN ON INVESTMENTS 38,385,276
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS 41,651,186
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $85,523,503
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
NOVEMBER 30, 1996 YEAR ENDED
(UNAUDITED) MAY 31, 1996
----------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 5,487,041 $ 15,066,796
Net Realized Gain on Investments 38,385,276 78,377,073
Net Change in Unrealized Appreciation of
Investments 41,651,186 63,227,280
----------------- --------------
Net Increase in Net Assets Resulting from
Operations 85,523,503 156,671,149
----------------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 97,890,419 222,740,564
Withdrawals (98,082,367) (262,953,448)
----------------- --------------
Net Decrease from Investors' Transactions (191,948) (40,212,884)
----------------- --------------
Total Increase in Net Assets 85,331,555 116,458,265
NET ASSETS
Beginning of Period 719,212,049 602,753,784
----------------- --------------
End of Period $ 804,543,604 $ 719,212,049
----------------- --------------
----------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE PERIOD
FOR THE YEAR ENDED MAY JULY 19, 1993
SIX MONTHS ENDED 31, (COMMENCEMENT OF
NOVEMBER 30, 1996 --------------- OPERATIONS) TO
(UNAUDITED) 1996 1995 MAY 31, 1994
-------------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.48%(a) 0.46% 0.51% 0.53%(a)
Net Investment Income 1.50%(a) 2.20% 2.12% 1.79%(a)
Portfolio Turnover 46.49% 84.55% 71.00% 76.00%+
Average Broker Commissions $ 0.05 -- -- --
</TABLE>
- ------------------------
(a) Annualized.
+Portfolio Turnover is for the twelve month period ended May 31, 1994, and
includes the portfolio activity of the Portfolio's predecessor entity, The
Pierpont Equity Fund, for the period June 1, 1993 to July 18, 1993.
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Selected U.S. Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load,
diversified, open-end management investment company which was organized as a
trust under the laws of the State of New York. The Portfolio commenced
operations on July 19, 1993 and received a contribution of certain assets and
liabilities, including securities, with a value of $209,477,219 on that date
from The Pierpont Equity Fund 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. On October 31, 1993, the Portfolio received a
contribution of securities and certain assets and liabilities, with a market
value and cost of $128,337,342 from the JPM North America Fund, Ltd., in
exchange for a beneficial interest in the Portfolio. The Portfolio's investment
objective is to provide a high total return from a portfolio of selected equity
securities. The Declaration of Trust permits the Trustees to issue an unlimited
number of beneficial interests in the Portfolio.
The preparation of financial statements prepared 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)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
24
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
interest rates. 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. There
were no futures transactions during the six months ended November 30,
1996.
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 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, 1996 this
fee amounted to $1,455,233.
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. Effective December 29, 1995, the Administration Agreement
provided for a fee to be paid to Signature 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 (the "Master Portfolios") in which The JPM Pierpont Funds
(formerly The 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
25
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
Funds, The JPM Institutional Funds, The JPM Advisor Funds and the Master
Portfolios. For the period from June 1, 1996 through July 31, 1996,
Signature's fee for these services amounted to $14,675. The Administrative
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 an annual complex-wide charge of $425,000
plus FDI's out-of-pocket expenses. The amount allocable to the portfolio
is based on the ratio of the Portfolio's net assets to the aggregate net
assets of The JPM Pierpont Funds, The JPM Institutional Funds, The JPM
Advisor Funds and the Master Portfolios. For the period August 1, 1996
through November 30, 1996, the fee for these services amounted to $6,555.
On November 15, 1996, The JPM Advisor Funds terminated operations and were
being liquidated. Subsequent to that date, the net assets of the JPM
Advisor Funds are no longer included in the calculation of the allocation
of FDI's fees.
c)Effective December 29, 1995, the Portfolio entered into an Administrative
Services Agreement (the "Services Agreement") with Morgan under which
Morgan was responsible for overseeing certain aspects 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 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 that 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
June 1, 1996 through July 31,1996, the fee for these services amounted to
$28,287.
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 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 (see Note 2b). For the period from August 1, 1996 through
November 30, 1996, the fee for these services amounted to $79,106.
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 $12,937 for the six months 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
26
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
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 $1,700.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended November 30, 1996 were as follows:
<TABLE>
<S> <C>
COST OF PROCEEDS
PURCHASES FROM SALES
- --------------- ---------------
$ 355,736,279 $ 330,016,086
</TABLE>
27
