<PAGE>
LETTER TO THE SHAREHOLDERS OF THE PIERPONT INTERNATIONAL EQUITY FUND
June 14, 1996
Dear Shareholder:
We are pleased to report that, following a Fund fiscal year of lackluster
performance by non-U.S. equity markets, The Pierpont International Equity Fund
recorded a 13.69% gain for the six-month period ended April 30, 1996. We believe
that country allocation, stock selection, and currency management decisions
enabled the Fund to slightly outperform its benchmark, the MSCI EAFE Index,
which returned 13.21% for the period. We also believe that active management
enabled the Fund to significantly outperform its competitors as measured by The
Morningstar Foreign Stock Funds Average and The Lipper International Fund
Average, which returned 12.61% and 11.95%, respectively.
We are also pleased to announce that we have made some enhancements to the
Fund's semi-annual report as part of our ongoing dedication to provide better
service to our shareholders. In addition to making Fund performance easier to
locate, we have added a portfolio manager Q&A with Paul A. Quinsee, a member of
our international portfolio management team. This interview is designed to
answer commonly asked questions about the Fund, elaborate on what happened
during the reporting period, and provide our outlook for the months ahead.
As always, we welcome your comments, questions, or any suggestions on how we can
further improve your financial reports. Please call J.P. Morgan Funds Services,
toll free, at (800) 521-5411.
Sincerely yours,
/s/ Evelyn E. Guernsey
Evelyn E. Guernsey
J.P. Morgan Funds Services
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS.... 1 FUND FACTS AND HIGHLIGHTS.... 8
FUND PERFORMANCE.............. 2 SPECIAL FUND-BASED SERVICES.. 9
PORTFOLIO MANAGER Q&A......... 3 FINANCIAL STATEMENTS......... 11
- ------------------------------------------------------------------------------
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 of 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 SINCE
AS OF APRIL 30, 1996 MONTHS MONTHS YEAR YEARS YEARS INCEPTION*
- ---------------------------------------------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Pierpont International Equity Fund 5.11% 13.69% 11.91% 8.14% 7.10% 5.17%
MSCI EAFE Index 5.45% 13.21% 11.40% 11.12% 8.84% 6.23%
Morningstar Foreign Stock Funds Average 5.44% 12.61% 16.02% 11.62% 9.64% 6.99%
Lipper International Fund Average 5.28% 11.95% 15.95% 12.13% 9.95% 7.60%
AS OF MARCH 31, 1996
The Pierpont International Equity Fund 3.14% 7.72% 11.60% 9.88% 6.70% 4.68%
MSCI EAFE Index 2.89% 7.06% 12.33% 13.44% 8.43% 5.81%
Morningstar Foreign Stock Funds Average 5.04% 6.24% 16.66% 12.13% 9.16% 6.48%
Lipper International Fund Average 4.38% 6.37% 16.08% 12.86% 9.49% 7.15%
</TABLE>
*6/1/90 -- COMMENCEMENT OF OPERATIONS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. FUND RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. MORNINGSTAR, INC. AND LIPPER
ANALYTICAL SERVICES, INC. ARE LEADING SOURCES FOR MUTUAL FUND DATA. ALTHOUGH
GATHERED FROM RELIABLE SOURCES, DATA ACCURACY AND COMPLETENESS CANNOT BE
GUARANTEED. THE PIERPONT INTERNATIONAL EQUITY FUND INVESTS ALL OF ITS INVESTABLE
ASSETS IN THE NON-U.S. EQUITY 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
[PHOTOGRAPH] Following is an interview with PAUL A. QUINSEE, who is a member
of the portfolio management team for The Non-U.S. Equity
Portfolio in which the Fund invests. Paul joined Morgan in 1992
as an international equity portfolio manager. Previously, he
worked for five years as an equity portfolio manager with
Citibank and for two years with Schroder Capital Management in
London. This interview was conducted on June 10, 1996 and
reflects Paul's views on that date.
THE POSITIVE TURNAROUND FOR INTERNATIONAL EQUITY MARKETS THAT WE FORECASTED IN
THE OCTOBER 31, 1995 ANNUAL REPORT HAS NOW COME TO PASS. WHAT FACTORS DO YOU
FEEL CONTRIBUTED TO THIS ABOUT-FACE IN THE MARKETS AND WHAT IS YOUR CURRENT VIEW
ON VALUATIONS?
PAQ: We believe that several factors were at work. The first of these was that,
while there was no decline in interest rates in the U.S., interest rates have
stayed very low in Japan and continued to edge down in Europe as European
central banks have looked to offset the economic weakness there. So, falling
interest rates have definitely helped the international markets.
Another aspect that has helped has been increasing signs of an economic
recovery in Japan, which has helped that market to recover from the very sharp
losses suffered in the first half of 1995. A combination of very low interest
rates and an expansionary fiscal policy have now got the Japanese economy
growing at the fastest rate seen in the last five years -- and that of course
has helped sentiment toward the Japanese equity market.
The third aspect that we believe should be mentioned is a more favorable
currency environment for international companies. Particularly key in this
regard has been the weakness of the yen against the U.S. dollar and the weakness
of the deutsche mark against its neighboring currencies in Europe, such as the
Italian lira, the British pound sterling, and the Swedish krona. Those are all
good for companies based in Japan and Germany that are exporting. So a backup in
currencies has helped international markets in local currency terms, although
that has slightly been offset by currency losses for a U.S. dollar-referenced
investor.
Turning to your question about valuations, after the gains we have seen over
the last few quarters, international markets are not as obviously cheap as they
were. This is particularly true in the case of Japan which has now advanced by
more than 60% from the lows it reached in the middle of 1995 when the outlook
appeared very bleak indeed. However, we do feel that Japan and particularly the
European markets offer better value at this point than the U.S. We are also
convinced that, given its focus on stock selection, Morgan's active management
is likely to help the Portfolio to grow as markets reach reasonable valuations.
3
<PAGE>
WHILE WE CERTAINLY WELCOME GOOD NEWS FOR THE MARKET, WE'RE EVEN MORE PLEASED TO
NOTICE THAT THE PERFORMANCE OF THE PORTFOLIO HAS BEEN AHEAD OF THE MSCI EAFE
INDEX FOR THE PERIOD UNDER REVIEW. DO YOU INTERPRET THIS AS A SIGN THAT OUR
LONG-TERM INVESTMENT APPROACH, WHICH ATTEMPTS TO IDENTIFY STOCKS' FUNDAMENTAL
VALUE, IS BEGINNING TO REAP THE REWARDS WE HAD EXPECTED?
PAQ: Perhaps the best indication of that being true will emerge if we look at
currency management which, along with country allocation and stock selection, is
one of the three investment decisions made in the Portfolio.
For a long time, we found that the yen was overvalued. As the Japanese economy
got weaker, the Japanese current account surplus grew, so the yen became more
and more overvalued, and that decision went against us for some time.
Nevertheless, we were convinced that in terms of fundamentals it was indeed
overpriced and that we were positioned the right way. When, in an unpredictable
way, the Bank of Japan cut interest rates in the middle of last year, the yen
suddenly began to weaken. It was possible to identify that the yen was
overvalued -- calling the timing would have been difficult, but backing value
worked. The yen has since declined by more than 30% against the U.S. dollar, and
that of course has helped the Portfolio's relative performance as we have had a
below-normal weighting in the Japanese currency.
YOU DECIDED TO STRUCTURE THE PORTFOLIO FOR THE PERIOD UNDER REVIEW BY BEING
OVERWEIGHTED IN JAPAN, GERMANY, AND FRANCE, WHILE UNDERWEIGHTING HONG KONG,
SINGAPORE, AND MALAYSIA. HOW "ON TARGET" WERE THESE AND OTHER COUNTRY ALLOCATION
DECISIONS, AND HOW MUCH OF THE PORTFOLIO'S RELATIVE OUTPERFORMANCE DERIVED FROM
ITS STOCK SELECTION DECISIONS?
PAQ: As I've just discussed, currency management was the major positive
contributor to the Portfolio's overall returns versus the benchmark for the
period. On the country allocation side, results have been closer to the
benchmark recently and proved to be a neutral influence on the Portfolio's
overall results. Our overweighted position in Japan helped during the later part
of last year, although Japanese stocks, while they continued to recover in 1996,
have not particularly outpaced other markets. The emphasis on Germany and France
have been helpful this year as the French and German markets has performed very
well and overweighting them has positively contributed to overall results
relative to the benchmark. On the other hand, underweighting some of the smaller
Asian markets has not been so successful. This has been particularly true of
Malaysia, which we think is fundamentally overpriced and vulnerable to the
overheating of the local economy, but the stock market has been driven higher by
a new round of speculation. For these reasons, our decision to have the
Portfolio underweighted in Malaysia has not been particularly helpful.
Stock selection has been working well for the Portfolio recently. We have had
a good year in stock selection within the Japanese market after a more difficult
time in 1995. As the Japanese economy has been recovering and trading volume has
picked up in the equity market, our value-based trading strategy has been adding
value again as we would normally expect. Thus far, 1996 has been another good
year in stock selection in virtually all the major European markets.
4
<PAGE>
WITH INTERNATIONAL EQUITY MARKETS NOW FAIRLY PRICED IN YOUR VIEW, WHAT IS YOUR
PLANNED RELATIVE WEIGHTING OF JAPAN, WHICH HAS THE HEAVIEST WEIGHTING IN THE
MSCI EAFE INDEX?
PAQ: We've cut back positions in Japan from an overweighting at the beginning
of the year down to a marginally below normal weighting now. We don't think that
the Japanese market is particularly at risk over the near term, but we do think
that the gains we've seen since the middle of last year reflect the potential
for a corporate earnings recovery. Given that forecast, we have reduced Japanese
holdings and reallocated the funds that we have taken out of Japan to the major
European markets that we think offer better value and a better chance of
earnings surprises. If the Japanese market continues to rally and if, in
particular, domestic investors come back to the market and drive prices much
higher, then we would expect to further reduce the Portfolio's weighting of
Japan to significantly below normal.
TURNING TO EUROPE, THE PORTFOLIO'S MOST AGGRESSIVE INVESTMENT PROGRAMS HAVE BEEN
IN FRANCE AND GERMANY. WHAT IS YOUR FORECAST AND STRATEGY FOR THESE MARKETS IN
THE MONTHS AHEAD?
PAQ: While earnings in some of the markets on the periphery of Europe have
actually recovered very well over the past three years, companies in France and
Germany have had to contend with a high level of real interest rates, overvalued
currencies, and very sluggish domestic economies. It's also a typical sort of
situation in which value is created. In fact, we believe that comparing current
prices of companies in both these markets with forecasts of their long-run flow
of profits and dividends will help to demonstrate that France and Germany now
rank among the most attractive markets in the international field.
We're also encouraged that, apart from value, the companies are showing
increasing signs of moving to restructure their businesses -- a strategy which
has clearly produced substantial long-term rewards for U.S. corporations. There
have been a whole string of announcements this year concerning mergers,
acquisitions, disposals, introductory public offerings, cost-cutting programs,
etc. With regard to signs of a greater realization that shareholders matter as
well, there have been stock buybacks, dividends rising faster than earnings,
along with signs of a greater focus on realizing some value for the
shareholders, and all of that of course is encouraging. So we look to see where
there's value in these markets and we think that the sort of restructuring
programs that are in place will restore profits to levels that we are expecting
and, on that basis, in a world where most equity markets look pretty fully
valued, these Core European markets seem attractively valued. We therefore plan
to have the Portfolio continue to be overweighted in both France and Germany.
YOUR UNDERWEIGHTED STRATEGY FOR ITALY AND THE U.K. YIELDED POSITIVE RESULTS FOR
THE PORTFOLIO DURING THE PERIOD UNDER REVIEW. WHAT EFFECT ARE RESULTS IN RECENT
AND UPCOMING ELECTIONS IN THESE COUNTRIES LIKELY TO HAVE ON THE PORTFOLIO'S
INVESTMENT STRATEGY?
PAQ: While earnings have been very depressed in the Core European markets
(creating a situation in which stocks have been somewhat undervalued), U.K.
corporate profits have done extremely well over the last four to five years,
helped by a reasonably buoyant domestic economy and by sterling's sharp decline
5
<PAGE>
against other European currencies in 1992. At the same time, there's been
something of a boom in corporate activity in the U.K. that started earlier than
it did in continental Europe and which has now reached unsustainable levels, in
our view. Given that we didn't see much chance of profits surprising on the
upside, that we were concerned about the durability of the mergers and
acquisitions boom in the U.K., and of course the uncertainty regarding the
upcoming elections in which the ruling Conservative Party, which has been in
power since 1979, is probably going to lose control, we've been somewhat
cautious in the U.K. market. The market has underperformed so far this year.
U.K. stocks are virtually where they were at the beginning of 1996, compared to
gains of 15% to 20% in many of the Continental markets, and that has created
some value. U.K. stocks are a much better value at this point, and we have begun
to add back to positions that are still somewhat lower than normal.
Meanwhile, the case of Italy is quite interesting. Italian stocks also
performed very badly in the first part of the year, when we began to add a
little bit to the Portfolio's allocation. Then the election results at the
beginning of April produced a surprise victory for the so-called "Olive Tree
Coalition," and we've increased the Portfolio's level of investment on signs
that stronger government would reward the country with lower bond yields, a
stronger currency, and a stronger equity market. We're still a bit skeptical
about the value of many Italian companies that have relatively poor track
records in terms of providing profits and dividends, and we don't see so many of
the signs evident, for example, in France and Germany that anything much is
being done about this. The Portfolio is less aggressively underweighted in Italy
than it was because the values are better.
HEDGING OUT OF THE YEN AND EUROPEAN CURRENCIES INTO THE U.S. DOLLAR ALSO ADDED
VALUE FOR THE PERIOD. DO YOU PLAN TO MAINTAIN THIS STRATEGY GOING FORWARD AND,
IF NOT, WHAT EXPECTED RELATIVE CURRENCY STRENGTHENINGS WILL DETERMINE FUTURE
PORTFOLIO HEDGES?
PAQ: The yen has fallen by a long way against the U.S. dollar, but it was
extraordinarily overvalued to start with. At this point, we still feel that the
yen is somewhat overpriced as interest rates in Japan are likely to remain very
low for a while, given that the authorities are going to make absolutely sure
that economic recovery really has taken hold before taking interest rates back
up to a more normal level. We would imagine that the yen will stay as one of the
weaker currencies for the time being. While we will have less aggressive hedging
at this level, a portion of the Portfolio's yen exposure is still hedged back
into the U.S. dollar.
Meanwhile, we've more recently begun to hedge a portion of the Portfolio's
European currency exposure into the U.S. dollar, also based on some
overvaluation, in particular the deutsche mark and the Swiss franc, but also
based on our view that European interest rates would tend to move down while
U.S. interest rates, if anything, would be tending to rise higher, particularly
at the longer end of the curve this year as the U.S. economy strengthens while
economies in Europe remain weak. So we have some hedges out of the European
currencies into the U.S. dollar as well. If, however, the U.S. dollar continues
to rally, then we'll be getting back to fair value against the yen fairly
quickly and then we'll be less aggressive with our hedging.
6
<PAGE>
WHILE THE PORTFOLIO'S DIVERSIFICATION OF INVESTMENT DECISIONS HAS BEEN DESIGNED
TO ENHANCE OVERALL LONG-TERM RETURNS, STOCK SELECTION BASED ON MORGAN'S IN-DEPTH
PROPRIETARY RESEARCH IS ARGUABLY THE PORTFOLIO'S GREATEST POTENTIAL SOURCE OF
ADDED VALUE. IN YOUR VIEW, WHERE DO YOU SEE PARTICULAR OPPORTUNITIES TO CONTINUE
ENHANCING VALUE FROM STOCK SELECTION?
PAQ: Stock selection has been the area in which we've been able to most
consistently add value for a long time, and this year so far has been no
different. We're very happy about the return to form of our stock pickers in
Japan, who had to contend with a very difficult market environment in 1995, and
we're still optimistic about that going forward. There's still an unusually wide
spread between the stocks our analysts find undervalued and the market as a
whole. We can be reasonably optimistic about Japanese stock picking. As the
Japanese economy and the corporate sectors recover, then we expect that our
value strategy will work well there.
In Europe, too, we had an excellent year in stock picking during 1995 that has
continued into 1996. We have a very good team of analysts in our London office
covering European companies, and with all the restructuring going on in Europe
there will be lots of opportunities to differentiate between those companies
that are leading in the process and creating interesting situations for their
shareholders and those that are not. For example, HOECHST was much quicker to
implement a program of cost-cutting than the two other large German chemical
companies and focused more aggressively on realizing value through sales or IPOs
of unrelated businesses. By recognizing this, we were able to participate in the
stock's dramatic rise over the past eighteen months. So in both Japan and Europe
we continue to see opportunities to add value through individual security
selection.
7
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The Pierpont International Equity Fund seeks to provide a high total return from
a portfolio of equity securities of foreign companies. It is designed for
investors with a long-term investment horizon who want to diversify their
portfolios by investing in an actively managed portfolio of non-U.S. securities
that seeks to outperform the MSCIEAFE Index. As an international investment, the
Fund is subject to foreign market, political, and currency risks.
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
6/1/90
- --------------------------------------------------------------------------------
NET ASSETS AS OF 4/30/96
$205,072,746
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/27/96
EXPENSE RATIO
The Fund's annualized expense ratio of 1.10% 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 APRIL 30, 1996
PORTFOLIO ALLOCATION
(AS A PERCENTAGE OF TOTAL INVESTMENTS)
[GRAPH] - JAPAN 43.1%
UNITED KINGSOM 13.9%
- FRANCE 11.0%
- GERMANY 9.1%
- SWITZERLAND 4.1%
- UNITED STATES 3.1%
- HONG KONG 2.9%
- NETHERLANDS 2.8%
- SPAIN 2.4%
- OTHER COUNTRIES 7.6%
LARGEST COMMON
STOCK HOLDINGS % OF TOTAL INVESTMENTS
SUMITOMO BANK LTD. (JAPAN) 1.3
NOMURA SECURITIES CO. LTD. (JAPAN) 1.2
MITSUBISHI HEAVY INDUSTRIES (JAPAN) 1.1
TOYOTA MOTOR CORP. (JAPAN) 1.1
MATSUSHITA ELECTRIC INDUSTRIES
CO., LTD. (JAPAN) 1.0
8
<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 Pierpont Funds, a family of diversified mutual
funds.
PAAS is available to clients who invest a minimum of $500,000 in The Pierpont
Funds.
IRA MANAGEMENT SERVICE
As one of the few remaining investments that
can help your assets grow tax-deferred until retirement, the IRA enables more of
your dollars to work for you longer. Morgan offers an IRA Rollover plan that
helps you to build well-balanced long-term investment portfolios, diversified
across a wide array of mutual funds. From money markets to emerging markets, The
Pierpont Funds provide an excellent way to help you accumulate long-term wealth
for retirement.
KEOGH
In early 1995, Morgan introduced a Keogh program for its clients. Keoghs provide
another excellent vehicle to help individuals who are self-employed or are
employees of unincorporated businesses to accumulate retirement savings. A Keogh
is a tax-deferred pension plan that can allow you to contribute the lesser of
$30,000 or 25% of your annual earned gross compensation. The Pierpont Funds can
help you build a comprehensive investment program designed to
maximize the retirement dollars in your Keogh account.
9
<PAGE>
SIGNATURE BROKER-DEALER SERVICES, INC. IS THE DISTRIBUTOR OF THE PIERPONT
INTERNATIONAL EQUITY FUND (THE "FUND").
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MORGAN") SERVES AS PORTFOLIO
INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS
SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN OR ANY OTHER
BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND CAN
FLUCTUATE, SO AN INVESTOR'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
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 Fund distributions. The Fund invests all
of its investable assets in The Non-U.S. Equity Portfolio, a separately
registered investment company which is not available to the public but only to
other collective investment vehicles such as the Fund. The Portfolio invests in
foreign securities which are subject to special risk.
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.
10
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Non-U.S. Equity Portfolio ("Portfolio"), at value $205,096,884
Receivable for Shares of Beneficial Interest Sold 123,438
Prepaid Trustees' Fees 603
Prepaid Expenses and Other Assets 5,182
------------
Total Assets 205,226,107
------------
LIABILITIES
Payable for Shares of Beneficial Interest Redeemed 86,345
Shareholder Servicing Fee Payable 41,205
Administrative Services Fee Payable 4,064
Administration Fee Payable 2,154
Fund Services Fee Payable 736
Accrued Expenses 18,857
------------
Total Liabilities 153,361
------------
NET ASSETS
Applicable to 17,803,810 Shares of Beneficial Interest Outstanding $205,072,746
(par value $0.001, unlimited shares authorized)
------------
------------
Net Asset Value, Offering and Redemption Price Per Share $11.52
ANALYSIS OF NET ASSETS
Paid-in Capital $180,720,362
Undistributed Net Investment Income 84,474
Accumulated Net Realized Gain on Investment and Foreign Currency 5,362,726
Transactions
Net Unrealized Appreciation of Investment and Foreign Currency 18,905,184
Translations
------------
Net Assets $205,072,746
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
$1,400,310
Allocated Dividend Income (Net of Foreign Withholding Tax of
$214,768)
285,915
Allocated Interest Income (Net of Foreign Withholding Tax of
$3,478)
(742,216)
Allocated Portfolio Expenses
----------
944,009
Net Investment Income Allocated from Portfolio
FUND EXPENSES
Shareholder Servicing Fee $ 243,021
Transfer Agent Fee 24,098
Administrative Services Fee 16,641
Administration Fee 16,494
Fund Services Fee 5,465
Trustees' Fees and Expenses 1,953
Miscellaneous 22,385
---------
(330,057)
TOTAL FUND EXPENSES
----------
613,952
NET INVESTMENT INCOME
5,441,621
NET REALIZED GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS
ALLOCATED FROM PORTFOLIO
18,960,635
NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENT AND FOREIGN
CURRENCY TRANSLATIONS ALLOCATED FROM PORTFOLIO
----------
$25,016,208
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
APRIL 30, 1996 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995
-------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 613,952 $ 1,527,847
Net Realized Gain on Investment and Foreign Currency Transactions Allocated
from Portfolio 5,441,621 6,944,892
Net Change in Unrealized Appreciation of Investment and Foreign Currency
Translations Allocated from Portfolio 18,960,635 (14,139,005)
-------------- ----------------
Net Increase (Decrease) in Net Assets Resulting from Operations 25,016,208 (5,666,266)
-------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (4,122,251) --
Net Realized Gain on Investment (5,795,842) (8,815,321)
-------------- ----------------
Total Distribution to Shareholders (9,918,093) (8,815,321)
-------------- ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 31,041,552 57,869,316
Reinvestment of Dividends and Distributions 6,492,606 8,519,540
Cost of Shares of Beneficial Interest Redeemed (33,100,142) (76,801,788)
-------------- ----------------
Net Increase (Decrease) from Transactions in Shares of Beneficial Interest 4,434,016 (10,412,932)
-------------- ----------------
Total Increase (Decrease) in Net Assets 19,532,131 (24,894,519)
NET ASSETS
Beginning of Period 185,540,615 210,435,134
-------------- ----------------
End of Period (including undistributed net investment income of $84,474 and
$3,592,773, respectively) $205,072,746 $ 185,540,615
-------------- ----------------
-------------- ----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL YEAR ENDED OCTOBER 31,
APRIL 30, 1996 -----------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
-------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.68 $ 11.50 $ 11.15 $ 8.58 $ 9.69 $ 9.33
-------------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04 0.09 0.05 0.01 0.04 0.11
Net Realized and Unrealized Gain (Loss) on
Investment and Foreign Currency 1.38 (0.42) 0.57 2.64 (1.11) 0.42
-------------- --------- --------- --------- --------- ---------
Total from Investment Operations 1.42 (0.33) 0.62 2.65 (1.07) 0.53
-------------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.24) -- (0.04) (0.08) (0.04) (0.05)
Net Realized Gain (0.34) (0.49) (0.23) -- -- (0.12)
-------------- --------- --------- --------- --------- ---------
Total Distributions (0.58) (0.49) (0.27) (0.08) (0.04) (0.17)
-------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 11.52 $ 10.68 $ 11.50 $ 11.15 $ 8.58 $ 9.69
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Total Return 13.69%(a) (2.71)% 5.73% 31.18% (11.08)% 5.89%
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
RATIOS AND SUPPLEMENTAL DATA
Net Assets at end of Period (in thousands) $ 205,073 $ 185,541 $ 210,435 $ 182,822 $ 41,484 $ 27,426
Ratios to Average Net Assets
Expenses 1.10%(b) 1.28% 1.38% 1.38% 1.38% 1.38%
Net Investment Income 0.63%(b) 0.80% 0.46% 0.79% 1.03% 1.34%
Decrease reflected in Expense Ratio due
to Expense Reimbursement -- 0.00 (c) 0.07% 0.13% 0.45% 0.66%
Portfolio Turnover -- -- -- 34.15 (d) 30.12% 18.84%
</TABLE>
- --------------------------
(a) Not Annualized.
(b) Annualized.
(c) Less than 0.01%.
(d) 1993 Portfolio Turnover reflects the period November 1, to October 3, 1993.
After October 3, 1993, all the Fund's investable assets were invested in The
Non-U.S. Equity Portfolio.
The Accompanying Notes are an Integral Part of the Financial Statements.
14
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Pierpont International Equity Fund (the "Fund") is a separate series of The
Pierpont Funds, a Massachusetts business trust (the "Trust") which was organized
on November 4, 1992. The Trust is registered under the Investment Company Act of
1940, as amended, as a diversified open-end management investment company. The
Fund, prior to its tax-free reorganization on October 3, 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"). This report includes periods which preceded the Fund's
reorganization and reflects the operations of the predecessor entity.
The Fund invests all of its investable assets in The Non-U.S. Equity Portfolio
(the "Portfolio"), a diversified open-end management investment company having
the same investment objectives as the Fund. The value of such investment
reflects the Fund's proportionate interest in the net assets of the Portfolio
(23% at April 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 and
unrealized gain and loss and adjusts its investment in the Portfolio each
day. All the net investment income and realized and unrealized 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)Distributions to shareholders of net investment income and net realized
capital gains, 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.
15
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Trust has retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and distributor. Signature
provides administrative services necessary for the operations of the Fund,
furnishes office space and facilities required for conducting the business
of the Fund and pays the compensation of the Fund's officers affiliated
with Signature. 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 act 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 November 1,
1995 through December 28, 1995, Signature's fee for these services
amounted to $7,759.
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% of the aggregate average daily net assets of the Master
Portfolios in excess of $7 billion. The portion of this charge payable by
the Fund is determined by the proportionate share its net assets bear to
the total net assets of the Trust, The JPM Institutional Funds, The JPM
Advisor Funds and the Master Portfolios. For the period from December 29,
1995 through April 30, 1996 such fees amounted to $8,735.
b)Until August 31, 1995, the Trust, on behalf of the Fund, 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 Fund and was also designed to provide an expense limit for certain
expenses of the Fund. This fee was calculated exclusive of the shareholder
servicing fee, the fund services fee and amortization of organization
expenses, at 0.223% of the Fund's average daily net assets up to and
including $100 million and 0.20% of any excess over $100 million. 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 Services 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 "Agreement") with Morgan
under which Morgan is responsible for certain aspects of the
administration and operation of the Fund. Under the Agreement, the Fund
has agreed to pay Morgan a fee equal to its proportionate share of an
annual complex-wide charge. This charge is calculated daily based on the
aggregate net assets of the Master Portfolios in accordance with the
following annual schedule: 0.06% on the first $7 billion of the Master
Portfolios' aggregate average daily net assets and 0.03% of the aggregate
average daily net assets in excess of $7 billion. The portion of this
charge payable by the Fund is determined by the
16
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
proportionate share that the Fund's net assets bear to the net assets of
the Trust, the Master Portfolios and other investors in the Master
Portfolios for which Morgan provides similar services. For the period from
December 29, 1995 through April 30, 1996, Morgan's fee for these services
amounted to $16,641.
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan. The Agreement provides for the Fund to pay Morgan a fee for
these services which is computed daily and paid monthly at an annual rate
of 0.25% of the average daily net assets of the Fund. For the six months
ended April 30, 1996, the fee for these services amounted to $243,021.
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
$5,465 for the six months ended April 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 represent the Fund's allocated portion of the total fees and
expenses. The Trustee who serves as Chairman and Chief Executive Officer
of the Trust 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 Funds
Services Fee shown in the financial statements was $700.
3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest of one or more series.
Transactions in shares of beneficial interest of the Fund were as follows:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
APRIL 30, 1996 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995
-------------- ----------------
<S> <C> <C>
Shares of beneficial interest sold 2,832,711 5,466,982
Reinvestment of dividends and distributions 606,219 822,349
Shares of beneficial interest redeemed (3,009,896) (7,211,273)
-------------- ----------------
Net increase (decrease) 429,034 (921,942)
-------------- ----------------
-------------- ----------------
</TABLE>
17
<PAGE>
The Non-U.S. Equity Portfolio
Semi-Annual Report April 30, 1996
(unaudited)
(The following pages should be read in conjunction
with The Pierpont International Equity Fund
Semi-Annual Financial Statements)
18
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
COMMON STOCKS (89.1%)
AUSTRALIA (1.6%)
Broken Hill Proprietary Co. Ltd. (Energy Sources)........................ 221,105 $ 3,405,694
CRA Ltd. (Metals, Materials & Paper)..................................... 69,700 1,131,137
CSR Ltd. (Multi-Industry)................................................ 217,000 783,150
National Australia Bank Ltd. (Banking)................................... 211,405 1,898,253
News Corporation Ltd. (Publishing)....................................... 280,630 1,646,060
North Broken Hill Peko Ltd. (Metals, Materials & Paper).................. 211,500 636,915
Rothmans Holdings Ltd. (Beverages & Tobacco)............................. 95,000 461,620
Santos Ltd. (Energy Sources)............................................. 164,000 585,426
Southcorp Holdings Ltd. (Food & Household Products)...................... 651,800 1,773,222
TNT Ltd. (Transportation) (A)............................................ 511,700 679,947
Western Mining Corp. Holdings Ltd. (Metals & Mining)..................... 127,100 927,398
------------
13,928,822
------------
BELGIUM (0.9%)
Arbed NPV (Metal, Materials & Paper) (A)................................. 4,300 468,014
Banque Bruxelles Lambert (Banking)....................................... 2,800 527,766
Electrabel NPV (Utilities)............................................... 4,835 1,083,173
Fortis AG NPV (Insurance)................................................ 5,900 732,024
Generale De Banque SA (Banking).......................................... 4,200 1,479,343
Petrofina SA NPV (Energy Sources)........................................ 3,800 1,122,612
Solvay and Cie Ord NPV (Chemicals)....................................... 2,100 1,237,784
Tractebel Capital NPV (Multi-Industry)................................... 3,200 1,299,740
------------
7,950,456
------------
FRANCE (10.7%)
Air Liquide (Chemicals).................................................. 19,290 3,498,717
Alcatel Alsthom (Electrical & Electronics)............................... 36,893 3,463,309
AXA (Multi-Industry)..................................................... 47,227 2,808,737
Banque Nationale de Paris (Banking)...................................... 38,800 1,617,313
Bouygues (Engineering & Construction).................................... 21,287 2,158,663
Carrefour Supermarkets (Merchandising)................................... 4,440 3,463,062
Castorama Dubois Investissments (Merchandising).......................... 8,630 1,648,611
Cetelem (Financial Services)............................................. 7,700 1,649,428
Chargeurs (Leisure & Tourism)............................................ 3,900 1,035,806
Christian Dior SA (Retail)............................................... 24,175 3,217,338
Compagnie Financiere de Cic Union Europ Certe de Invest (Banking)........ 14,777 1,027,542
Compagnie Financiere de St. Gobain (Glass & Packaging)................... 21,065 2,518,623
Compagnie Generale des Eaux (Utilities).................................. 43,139 4,682,927
Credit Commercial de France (Financial Services)......................... 36,400 1,820,306
Credit Local de France (Financial Services).............................. 15,000 1,182,412
Erid Beghin Say (Insurance).............................................. 7,900 1,286,369
Essilor International (Health & Personal Care)........................... 8,382 2,117,710
Groupe Danone (Food Processing).......................................... 29,419 4,438,027
Havas (Business & Public Services)....................................... 13,000 1,471,472
Lafarge Coppe SA (Building Materials).................................... 19,848 1,268,983
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
FRANCE (CONTINUED)
<S> <C> <C>
LaGardere Groupe (Leisure & Tourism)..................................... 69,480 $ 1,861,432
Peugeot SA (Automotive).................................................. 12,250 1,708,379
Pinault Printemps Redouto (Building Materials)........................... 7,410 2,245,702
Promodes (Merchandising)................................................. 12,560 3,602,692
Renault SA (Automotive).................................................. 57,820 1,750,081
Rhone Poulenc SA, Class A (Chemicals).................................... 92,804 2,222,795
Roussel Uclaf (Pharmaceuticals).......................................... 4,536 1,067,164
Sanofi (Pharmaceuticals)................................................. 32,780 2,640,317
Schneider (Technology)................................................... 34,300 1,595,371
Seb AG (Food & Household Products)....................................... 5,000 840,234
SEITA (Beverages & Tobacco).............................................. 79,900 3,071,220
SGS -- Thomson Microelectronics N.V. (Electrical & Electronics) (A)...... 30,000 1,427,818
Sidel (Technology)....................................................... 7,200 1,710,601
Sita (Telecommunications)................................................ 4,300 930,245
Societe Generale (Banking)............................................... 18,458 2,139,178
Societe Nationale Elf Aquitaine (Energy Sources)......................... 71,053 5,274,288
Sommer-Allibert (Building Materials)..................................... 2,260 644,326
Synthelabo (Health & Personal Care)...................................... 24,365 1,897,100
Television Francaise (Broadcasting & Publishing)......................... 14,480 1,566,274
Total SA, Class B (Energy Sources)....................................... 74,015 5,013,794
Union Assurance Federal (Insurance)...................................... 17,880 2,168,893
Usinor Sacilor (Metals, Materials & Paper) (A)........................... 97,800 1,510,318
Valeo (Automotive)....................................................... 21,700 1,202,126
------------
94,465,703
------------
GERMANY (8.1%)
Allianz Holdings AG (Insurance).......................................... 2,256 3,869,059
Ava Allgemeine Handels-Der Verbr (Merchandising)......................... 4,790 1,180,695
Bank Gesellschaft Berlin AG (Banking).................................... 4,600 943,385
BASF AG (Chemicals)...................................................... 9,900 2,698,498
Bayer AG (Chemicals)..................................................... 22,505 7,234,966
Beiersdorf AG (Health & Personal Care)................................... 2,613 2,198,061
Bilfinger & Berger Bau AG (Construction & Housing)....................... 6,125 2,314,569
Colonia Konzern AG (Insurance)........................................... 1,545 1,057,860
Continental AG (Industrial Components)................................... 140,570 2,424,537
Daimler-Benz AG (Automobiles)............................................ 5,308 2,902,315
Deutsche Bank AG (Banking) (A)........................................... 89,900 4,301,191
Deutsche Pfandbrief Und Hypotheken Bank (Banking)........................ 65,500 2,229,576
Douglas Holding AG (Retail).............................................. 19,000 628,163
Dresdner Bank AG (Banking)............................................... 114,600 2,878,601
Henkel KGAA (Chemicals).................................................. 5,200 1,990,453
Karstadt AG (Merchandising).............................................. 600 223,721
Lufthansa AG (Transportation)............................................ 10,670 1,689,366
Man AG (Machinery & Engineering)......................................... 5,445 1,453,283
Mannesmann AG (Machinery & Engineering).................................. 4,385 1,495,484
Munchener Ruckversicherungs (Insurance).................................. 2,792 5,061,401
Rheinisch Westfalisches Elekt AG (Utilities)............................. 55,000 2,137,566
SAP AG (Computer Software)............................................... 3,300 427,155
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
GERMANY (CONTINUED)
<S> <C> <C>
Siemens AG (Electrical & Electronics).................................... 14,865 $ 8,125,965
Thyssen AG (Metals, Materials & Paper)................................... 14,400 2,605,770
Veba AG (Energy Sources)................................................. 81,950 4,066,719
Volkswagen AG (Automotive)............................................... 14,780 5,093,660
------------
71,232,019
------------
HONG KONG (2.8%)
Cheung Kong Holdings (Building & Contractors)............................ 218,000 1,557,095
Henderson Land Development Co. (Building & Contractors).................. 600,000 4,304,974
Hong Kong Electric Holdings Ltd. (Utilities)............................. 703,500 2,237,306
Hong Kong Telecommunications Ltd. (Telecommunications)................... 1,583,200 3,018,937
HSBC Holdings PLC (Banking).............................................. 213,200 3,183,431
Hutchison Whampoa Ltd. (Multi-Industry).................................. 353,000 2,190,495
New World Development Co. Ltd. (Real Estate)............................. 110,000 493,456
Sing Tao Holdings (Broadcasting & Publishing)............................ 1,218,000 720,385
Sun Hung Kai Properties Ltd. (Real Estate)............................... 186,000 1,773,378
Swire Pacific Ltd. (Transportation)...................................... 387,500 3,306,297
Television Broadcasts Ltd. (Broadcasting & Publishing)................... 452,000 1,811,450
Tingyi Cayman Island Holdings (Food Processing) (A)...................... 1,310,000 364,113
------------
24,961,317
------------
IRELAND (0.3%)
Allied Irish Banks PLC (Banking)......................................... 53,000 275,581
Bank of Ireland (Banking)................................................ 150,000 1,080,282
CRH (Building & Contractors)............................................. 51,000 457,537
Irish Life (Insurance)................................................... 140,000 543,245
Smurfit (Jefferson) Group (Metals, Material & Paper)..................... 235,000 632,842
------------
2,989,487
------------
ITALY (0.8%)
Assicurazioni Generali SPA (Insurance)................................... 86,000 2,140,981
Ente Nazionale Idrocarburi SPA (Energy Sources) (A)...................... 136,00 586,745
Fiat SPA (Automotive) (A)................................................ 483,000 1,643,894
Istituto Mobiliare Italiano (Banking) (A)................................ 172,00 1,363,192
Telekom Italia SPA (Telecommunications).................................. 669,00 1,361,892
------------
7,096,704
------------
JAPAN (38.3%)
Achilles Corp. (Tire and Rubber)......................................... 170,000 766,003
Aichi Corp. (Machinery & Engineering).................................... 90,000 1,022,420
Alps Electric Co. Ltd. (Technology)...................................... 105,000 1,232,918
Asahi Bank Ltd. (Banking)................................................ 581,000 7,487,721
Asahi Glass Co. Ltd. (Metals, Materials & Paper)......................... 130,000 1,576,111
Asatsu Inc. (Commerical Services)........................................ 25,000 1,097,836
Bank of Kyoto (Banking).................................................. 102,000 688,429
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
JAPAN (CONTINUED)
<S> <C> <C>
Bridgestone Corp. (Metals, Material & Paper)............................. 45,000 $ 833,401
Canon Sales Co. Ltd. (Transport & Trade Services)........................ 85,000 2,377,532
Chugai Pharmaceutical Co. (Health & Personal Care)....................... 218,000 2,122,738
Chuo Trust & Banking Co. (Banking)....................................... 200,000 2,004,745
Cosmo Oil Company Ltd. (Energy Sources).................................. 600,000 3,923,572
Daido Steel Co. (Metals, Materials & Paper).............................. 500,000 2,758,910
Daiei Inc. (Retail)...................................................... 300,000 4,066,768
Dai Ichi Kangyo Bank Ltd. (Banking)...................................... 380,000 7,726,858
Daikin Industries (Machinery & Engineering).............................. 200,000 2,214,765
Dai Nippon Ink & Chemicals Inc. (Chemicals).............................. 367,000 1,993,508
Daishi Bank (Banking).................................................... 150,000 860,608
Daiwa Bank (Banking)..................................................... 1,050,000 8,169,334
Daiwa Danchi (Building & Contractors) (A)................................ 200,000 1,298,311
Daiwa House Industry Co. Ltd. (Building & Contractors)................... 100,000 1,594,249
Denki Kagaku Kogyo (Chemicals)........................................... 100,000 386,629
Dowa Mining Co. (Metals, Materials & Paper).............................. 63,000 336,797
East Japan Railway Co. (Transportation).................................. 825 4,402,562
Ebara Corp. (Capital Goods).............................................. 180,000 2,800,915
Eisai Co. Ltd. ( Health & Personal Care)................................. 52,500 1,037,455
Familymart (Retail)...................................................... 45,000 2,199,491
Fuji Denki Reiki (Retail)................................................ 115,500 1,598,784
Fuji Electric Co. Ltd. (Technology)...................................... 600,000 3,471,072
Fuji Fire & Marine (Insurance)........................................... 230,000 1,345,947
Fuji Machine Manufacturing (Capital Goods)............................... 50,000 1,641,981
Fujitsu (Technology)..................................................... 150,000 1,546,517
Fukui Bank (Banking)..................................................... 200,000 1,258,216
Gakken Co. Ltd. (Broadcasting & Publishing).............................. 270,000 1,946,034
Godo Steel (Metals, Materials & Paper) (A)............................... 150,000 1,078,266
Gunze Ltd. (Chemicals)................................................... 65,000 426,295
Hitachi Ltd. (Electrical & Electronics).................................. 680,000 7,335,456
Hitachi Plant Engineering & Construction Co. Ltd. (Capital Goods)........ 64,000 533,988
Hitachi Transport System (Transport & Trade Services).................... 107,000 1,164,470
Hokkai Can Co. Ltd. (Materials & Commodities)............................ 125,000 1,063,231
Hokkaido Takushoku Bank (Banking)........................................ 550,000 1,590,908
Honda Motor Co. Ltd. (Automotive)........................................ 180,000 4,106,862
Industrial Bank of Japan Ltd. (Banking).................................. 114,000 3,047,212
Itoham Foods Inc. (Food Processing)...................................... 250,000 2,030,997
Izumi Co. (Retail)....................................................... 60,000 1,271,581
Izumiya Co. Ltd. (Retail)................................................ 55,000 1,050,104
Japan Airport Terminals (Media & Leisure)................................ 60,000 864,904
Japan Tobacco Inc. (Beverages & Tobacco)................................. 200 1,848,184
Kagawa Bank (Banking).................................................... 100,000 1,040,558
Kaken Pharmaceutical Co. (Health & Personal Care)........................ 115,000 1,048,434
Kao Corp. (Chemicals).................................................... 100,000 1,336,496
Kawasaki Heavy Industries Ltd. (Capital Goods)........................... 200,000 1,032,921
Kawasaki Kisen Kaisha Ltd. (Transport & Trade Services) (A).............. 700,000 2,579,438
Keiyo Co. Ltd. (Retail).................................................. 65,000 905,954
Kinden Corp. (Building & Contractors).................................... 82,500 1,315,256
Kinki Nippon Railway Co. Ltd. (Transport & Trade Services)............... 154,500 1,200,584
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
JAPAN (CONTINUED)
<S> <C> <C>
Kissei Pharmaceutical Co. (Health & Personal Care)....................... 33,000 $ 1,039,603
Kitz Corp. (Machinery & Engineering)..................................... 145,000 757,173
Kurabo Industries (Textiles & Apparel)................................... 302,000 1,320,420
Kuraray Co. (Chemicals).................................................. 70,000 808,580
Kyocera Corp. (Technology)............................................... 15,000 1,128,385
Kyowa Hakko Kogyo Co. Ltd. (Chemicals)................................... 175,000 1,720,739
Marubeni Corp. (Transport & Trade Services).............................. 500,000 2,992,797
Maruha Corp. (Fishery) (A)............................................... 180,000 704,524
Matsushita Electric Industries Co. Ltd. (Consumer Electronics)........... 500,000 8,830,423
Matsushita Refrigeration Co. (Consumer).................................. 75,000 601,423
Matsumoto Yushi Seiyaku Co. (Chemicals).................................. 44,000 924,092
Minebea Co. (Capital Goods).............................................. 250,000 2,293,523
Minolta Co. Ltd. (Consumer).............................................. 125,000 763,712
Mitsubishi Chemical Corp. (Chemicals).................................... 120,000 657,556
Mitsubishi Electric Corp. Ltd. (Electrical & Electronics)................ 400,000 3,146,494
Mitsubishi Gas Chemical Corp. (Chemicals)................................ 750,000 3,694,458
Mitsubishi Heavy Industries (Capital Goods).............................. 1,118,000 9,968,468
Mitsubishi Oil Co. (Energy Sources)...................................... 100,000 899,271
Mitsui Mining & Smelting Co. Ltd. (Metals, Materials & Paper)............ 350,000 1,603,796
Mitsui Toatsu Chemicals Inc. (Chemicals)................................. 650,000 2,879,195
Mitsui Trust & Banking Co. Ltd. (Banking)................................ 200,000 2,405,693
Mizuno Corp. (Retail).................................................... 262,000 2,626,215
Morinaga Milk Industry Co. Ltd. (Food & Household Products).............. 100,000 537,462
Nagase & Co. Ltd. (Transport & Trade Services)........................... 100,000 992,826
Nagoya Railroad Co. Ltd. (Transport & Trade Services).................... 150,000 810,490
New Oji Paper Co. (Metals, Material & Paper)............................. 150,000 1,384,706
Nichii Co. Ltd. (Merchandising).......................................... 100,000 1,603,796
Nichicon Corp. (Technology).............................................. 75,000 1,245,806
Nihon Matai Co. (Wholesale & International Trade)........................ 94,000 620,077
Nippon Credit Bank (Banking)............................................. 193,000 786,729
Nippon Express Co. Ltd. (Transport & Trade Services)..................... 200,000 2,081,116
Nippon Meat Packers Inc. (Food Processing)............................... 50,000 792,351
Nippon Paper Industries (Metal, Materials & Paper)....................... 200,000 1,462,509
Nippon Road Co. Ltd. (Building & Contractors)............................ 130,000 1,120,652
Nippon Sheet Glass Co. Ltd. (Food & Household Products).................. 225,000 1,155,592
Nippon Steel Corp. (Metals).............................................. 433,000 1,562,498
Nippon Telephone & Telegraph (Telecommunications)........................ 160 1,238,741
Nippon Zeon Co. Ltd. (Chemicals)......................................... 180,000 1,147,859
Nishimatsu Construction Co. Ltd. (Building & Contractors)................ 200,000 2,348,415
Nissan Diesel Motor Co. (Automotive)..................................... 340,000 1,911,763
Nissan Motor Co. Ltd. (Automotive)....................................... 600,000 5,063,412
Nitto Boseki Co. (Consumer) (A).......................................... 105,000 377,894
Nomura Securities Co. Ltd. (Financial Services).......................... 474,000 10,316,988
North Pacific Bank (Banking)............................................. 220,000 1,260,125
Okamura Corp. (Transportation)........................................... 140,000 1,253,634
Okumura Corp. (Building & Contractors)................................... 300,000 2,863,921
Ono Pharmaceuticals Co. (Health & Personal Care)......................... 50,000 1,885,415
Osaka Gas Co. Ltd. (Utilities)........................................... 519,000 2,075,970
Osaka Sanso Kogyo (Chemicals)............................................ 300,000 1,340,315
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
JAPAN (CONTINUED)
<S> <C> <C>
Parco Co. (Retail)....................................................... 77,000 $ 918,841
Penta Ocean Construction (Building & Contractors)........................ 95,000 717,364
Pokka Corp. (Food & Household Products).................................. 50,000 620,516
QP Corp. (Food & Household Products)..................................... 146,000 1,477,401
Ricoh Corp. Ltd. (Electronics)........................................... 186,000 2,184,026
Rohm Co. (Electronics)................................................... 20,000 1,271,581
Ryobi Ltd. (Metals, Materials & Paper)................................... 400,000 2,195,673
Ryoyo Electro Corp. (Technology)......................................... 30,000 770,395
Sanden Corp. (Industrial Components)..................................... 50,000 371,355
San-in Godo Bank Ltd. (Banking).......................................... 100,000 849,630
Sakura Bank Ltd. (Banking)............................................... 358,000 4,203,663
Sankyo Aluminium Industry Co. Ltd. (Building & Contractors).............. 75,000 475,411
Sanwa Bank (Banking)..................................................... 200,000 4,047,675
Shikoku Electric Power Inc. (Utilities).................................. 100,000 2,453,425
Showa Aluminium Co. (Metals, Materials & Paper).......................... 120,000 674,740
Showa Denko K.K. (Chemicals) (A)......................................... 800,000 2,642,444
Snow Brand Milk Products Co. Ltd. (Food & Household Products)............ 300,000 2,173,716
Sony Corp. (Electrical & Electronics).................................... 73,000 4,738,834
Sumitomo Bank Ltd. (Banking)............................................. 520,000 11,119,650
Sumitomo Electric Industries Ltd. (Capital Goods)........................ 120,000 1,718,352
Sumitomo Forestry Co. (Engineering & Construction)....................... 200,000 3,073,942
Sumitomo Light Metal Industries (Metals, Materials & Paper).............. 150,000 608,583
Sumitomo Metal Industries (Metals, Materials & Paper).................... 2,790,000 8,949,180
Sumitomo Realty & Development Co. Ltd. (Building & Contractors).......... 150,000 1,205,711
Tadano Ltd. (Capital Goods).............................................. 100,000 964,187
Takashimaya Co. Ltd. (Retail)............................................ 200,000 3,264,870
Toa Corporation (Building & Contractors)................................. 150,000 1,051,059
Tobu Railway Co. Ltd. (Transport & Trade Services)....................... 175,000 1,209,529
Toenec Corp. (Technology)................................................ 50,000 510,733
Toho Gas Co. Ltd. (Utilities)............................................ 247,000 929,037
Tohoku Electric Power Co. Inc. (Utilities)............................... 80,000 1,985,652
Tokio Marine & Fire Insurance Co. Ltd. (The) (Insurance)................. 261,000 3,587,920
Tokyo Electric Power Co. Inc. (Utilities)................................ 135,000 3,672,978
Tokyu Land Corp. (Financial Services) (A)................................ 500,000 2,563,209
Tomen Corp. (Transport & Trade Services)................................. 500,000 2,042,930
Toppan Printing Co. Ltd. (Transport & Trade Services).................... 130,000 1,911,190
Topy Industries Co. Ltd. (Capital Goods)................................. 150,000 717,412
Toshiba Corp. (Electrical & Electronics)................................. 75,000 582,808
Tosoh Corp. (Chemicals) (A).............................................. 755,000 3,538,899
Toyo Construction Co. (Building & Contractors)........................... 303,000 1,718,181
Toyo Trust & Banking Co. Ltd. (Banking).................................. 210,000 2,285,409
Tyobo Co. Ltd. (Consumer)................................................ 95,000 385,436
Toyoda Gosei Co. (Automotive)............................................ 139,000 1,180,985
Toyota Motor Corp. (Automotive).......................................... 405,000 9,240,441
Tsubakimoto Chain (Capital Goods)........................................ 200,000 1,410,958
Ube Industires Ltd. (Chemicals).......................................... 321,000 1,320,759
Uni-Charm Corp. (Merchandising).......................................... 60,000 1,695,441
Victor Co. of Japan (Consumer)........................................... 50,000 692,114
Yamazaki Baking Co. (Food & Household Products).......................... 60,000 1,225,758
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
JAPAN (CONTINUED)
<S> <C> <C>
Yaohan Japan Corp. (Retail).............................................. 100,000 $ 913,591
Yaskawa Electric Manufacturing Co. Ltd. ( Technology) (A)................ 70,000 370,209
Yasuda Trust & Banking Co. Ltd. (Financial Services)..................... 645,000 4,273,256
Yokogawa Bridge Corp. (Metals, Materials & Paper)........................ 25,000 372,310
Yokohama Rubber Co. Ltd. (Metals, Materials & Paper)..................... 410,000 2,735,904
Zexel Corp. (Machinery & Engineering).................................... 200,000 1,477,783
------------
337,961,894
------------
MALAYSIA (0.7%)
Commerce Asset-Holdings (Financial Services)............................. 351,000 2,392,795
IOI Corporation (Metals, Materials & Paper).............................. 427,000 640,397
New Straits Times Press (Media & Leisure)................................ 205,000 1,101,560
Sime Darby Berhad (Multi-Industry)....................................... 535,000 1,480,309
Tan Chong Motor Holdings Berhad (Automotive)............................. 524,000 844,709
------------
6,459,770
------------
NETHERLANDS (2.7%)
ABN Amro Holdings (Banking).............................................. 52,130 2,694,944
Aegon NV ( Insurance).................................................... 17,500 832,275
Dutch State Mines (Chemicals)............................................ 20,700 2,111,285
Elsevier NV (Broadasting & Publishing)................................... 66,000 992,435
Heineken Holding (Food & Household Products)............................. 4,000 748,348
Internationale Nederlanden Groep (Insurance)............................. 31,300 2,413,474
Koninklijke KNP (Metals, Materials & Paper).............................. 28,450 678,178
Koninklijke PTT Nederland (Utilities).................................... 29,000 1,086,794
Moeara Enim Petroleum (Energy Sources)................................... 160 2,527,130
Royal Dutch Petroleum (Energy Sources)................................... 48,540 6,905,672
Unilever NV (Food & Household Products).................................. 20,645 2,813,182
------------
23,803,717
------------
NEW ZEALAND (0.3%)
Fletcher Challenge Paper (Metals, Materials & Paper) (A)................. 340,000 700,509
Fletcher Challenge Energy (Energy Sources) (A)........................... 170,000 364,265
Fletcher Challenge Building (Building & Contractors) (A)................. 170,000 402,793
Lion Nathan Ltd. (Food & Household Products)............................. 619,000 1,543,159
------------
3,010,726
------------
NORWAY (1.3%)
Aker AS, Series B (Building Materials)................................... 70,000 1,159,158
Hafslund Nycomed, Series B (Health & Personal Care)...................... 70,000 1,951,426
Kvaerner AS, Series B (Machinery & Engineering).......................... 50,000 1,925,599
Norsk Hydro AS (Energy Sources).......................................... 120,000 5,460,042
Orkla AS, B Free (Multi-Industry)........................................ 30,000 1,367,289
------------
11,863,514
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
SINGAPORE (1.3%)
<S> <C> <C>
Development Bank of Singapore (Banking).................................. 125 $ 1,583
Malaysia International Shipping Corp. (Transport & Trade Services)....... 333 1,044
Natsteel Ltd. (Metals, Materials & Paper)................................ 343,000 687,966
Overseas Chinese Banking Corp. (Banking)................................. 87,000 1,194,264
Sime Darby Berhad (Multi-Industry)....................................... 499,800 1,386,387
Sime U.E.P. Properties (Building & Contractors).......................... 334,000 641,407
Singapore Airlines Ltd. (Transportation)................................. 106,600 1,076,637
Singapore Press Holdings Ltd. (Media & Leisure).......................... 64,000 1,210,836
Singapore Telecommunications (Utilities)................................. 990,000 2,436,323
United Overseas Bank (Banking)........................................... 215,000 2,094,993
United Overseas Land (Building & Contractors)............................ 359,000 748,145
------------
11,479,585
------------
SPAIN (2.3%)
Banco Intercontinental Espanol (Banking)................................. 20,100 2,111,540
Banco Pastor (Banking)................................................... 22,200 1,270,655
Banco Popular Espanol (Banking).......................................... 14,700 2,432,961
Empresa Nacional de Electric (Utilities)................................. 50,400 3,161,728
Fuerzas Electric de Cataluna SA, Series A (Utilities).................... 403,300 2,814,992
Iberdrola SA (Utilities)................................................. 183,700 1,795,667
Repsol SA (Energy Sources)............................................... 103,300 3,783,548
Telefonica de Espana (Telecommunications)................................ 175,100 3,113,878
------------
20,484,969
------------
SWITZERLAND (3.5%)
Baer Holdings AG (Banking)............................................... 490 547,229
BBC AG Brown Boveri & Cie (Machinery & Engineering)...................... 620 745,214
Ciba Geigy AG (Chemicals)................................................ 5,035 5,829,368
Compagnie Financiere Richemont AG (Food & Household Products)............ 600 877,366
CS Holding (Banking)..................................................... 5,845 529,491
Fischer (Georg) AG (Capital Goods)....................................... 820 975,065
Holderbank Financiere Glarus (Building Materials)........................ 900 678,994
Interdiscount Holding AG (Retail) (A).................................... 3,400 81,952
Liechtenstein Global Trust (Financial Services).......................... 1,250 636,733
Merkur Holding AG (Retail)............................................... 5,640 1,160,051
Nestle SA (Food & Household Products).................................... 3,965 4,399,414
Roche Holdings Genusscheine NPV (Health & Personal Care)................. 796 6,245,156
Sandoz AG (Health & Personal Care)....................................... 3,430 3,736,903
Schweizerischer Bankverein (Banking) (A)................................. 7,720 2,884,219
Societe Generale de Surveillance Holdings SA (Transport & Trade
Service)................................................................ 350 787,379
Swissair AG (Transportation) (A)......................................... 880 867,531
------------
30,982,065
------------
UNITED KINGDOM (13.5%)
Abbey National PLC (Banking)............................................. 148,000 1,261,465
Allied Colloids Group PLC (Chemicals).................................... 700,000 1,386,555
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
26
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
UNITED KINGDOM (CONTINUED)
<S> <C> <C>
Allied Domecq PLC (Food & Household Products)............................ 261,000 $ 2,011,157
Amersham International PLC (Health & Personal Care)...................... 60,000 965,186
Argyll Group PLC (Retail)................................................ 374,000 1,863,265
Barclays Bank (Banking).................................................. 226,000 2,499,430
BAT Industries PLC (Beverages & Tobacco)................................. 407,000 3,065,936
BICC (Industrial Components)............................................. 272,000 1,416,326
BOC Group PLC (Chemicals)................................................ 111,100 1,538,795
Britannic Assurance (Insurance).......................................... 118,000 1,421,879
British Gas PLC (Utilities).............................................. 440,000 1,558,223
British Petroleum Co. Ltd. (Energy Sources).............................. 495,000 4,453,069
British Telecommunications PLC (Telecommunications)...................... 680,000 3,719,388
British Tire & Rubber PLC (Multi-Industry)............................... 579,000 2,780,312
Cable & Wireless PLC (Telecommunications)................................ 271,000 2,120,746
Caradon PLC (Building & Contractors)..................................... 509,000 1,756,753
Dalgety PLC (Food & Household Products).................................. 314,000 1,828,211
General Electric Co. PLC (Electrical & Electronics)...................... 353,000 1,899,017
Glaxo Wellcome PLC (Health & Personal Care).............................. 630,496 7,621,016
Glynwed International PLC (Metals, Materials & Paper).................... 300,200 1,660,019
Granada Group PLC (Leisure & Tourism).................................... 205,077 2,534,227
Guardian Royal Exchange PLC (Insurance).................................. 729,000 2,466,829
Guinness PLC (Beverages & Tobacco)....................................... 375,000 2,689,826
Hanson Trust PLC (Multi-Industry)........................................ 514,000 1,519,478
Hillsdown Holdings PLC (Food & Household Products)....................... 682,000 1,842,137
HSBC Holdings (Banking).................................................. 225,000 3,320,641
Inchcape PLC (Commercial Services)....................................... 303,000 1,327,671
Kingfisher (Merchandising)............................................... 218,000 1,944,793
Lloyds TSB Group (Banking)............................................... 696,450 3,328,621
Lucas Industries PLC (Capital Goods)..................................... 466,000 1,499,955
Marks & Spencer PLC (Merchandising)...................................... 329,500 2,192,876
MEPC (Real Estate)....................................................... 290,000 1,864,721
National Power (Utilities)............................................... 305,000 2,565,314
National Westminster Bank (Banking)...................................... 225,000 2,068,015
Pearson PLC (Multi-Industry)............................................. 194,000 2,043,637
Peninsular & Orient Steam Navigation Company (Transportation)............ 131,000 1,028,106
Racal Electronics (Technology)........................................... 277,000 1,434,049
Rank Organisation PLC (Media & Leisure).................................. 217,000 1,735,609
Reuters Holdings PLC (Broadcasting & Publishing)......................... 233,100 2,630,420
Rolls-Royce PLC (Machinery & Engineering)................................ 589,000 2,094,733
RTZ Corp. PLC (Metals, Materials & Paper)................................ 147,000 2,307,353
Sainsbury (J.) PLC (Retail).............................................. 437,000 2,400,090
Sears Holdings (Merchandising)........................................... 1,362,000 2,054,037
Shell Transport & Trading Co. (Energy Sources)........................... 282,000 3,709,079
Smithkline Beecham (Health & Personal Care).............................. 243,166 2,572,510
South West Water (Utilities)............................................. 217,700 2,231,229
Standard Chartered PLC (Financial Services).............................. 229,000 2,137,425
Tarmac PLC (Building Materials).......................................... 921,500 1,804,558
Thorn EMI PLC (Appliances & Household Durables).......................... 92,000 2,543,667
Tomkins (Multi-Industry)................................................. 423,000 1,739,226
Unilever PLC (Food & Household Products)................................. 70,000 1,277,311
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
27
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------- ----------- ------------
UNITED KINGDOM (CONTINUED)
<S> <C> <C>
Vodafone Group PLC (Telecommunications).................................. 718,000 $ 2,860,579
Willis Corroon Group PLC (Insurance)..................................... 367,900 844,668
Yorkshire Electricity Group (Utilities).................................. 85,000 1,044,005
Zeneca Group PLC (Health & Personal Care)................................ 64,000 1,337,335
------------
119,821,478
------------
Total Common Stocks (cost $721,817,227)................................ 788,492,226
------------
PREFERRED STOCKS (0.6%)
GERMANY (0.6%)
GEA AG (Machinery)....................................................... 4,715 1,463,522
Jungheinrich (Capital Goods)............................................. 6,730 943,548
Rheinisch Westfalisches Elekt AG (Utilities)............................. 50,300 1,461,256
SAP AG, 9.00 (Computer Software)......................................... 11,000 1,458,279
------------
Total Preferred Stocks (cost $6,015,623)............................... 5,326,605
------------
<CAPTION>
PRINCIPAL
AMOUNT
(IN FRF)
-----------
<S> <C> <C> <C>
CONVERTIBLE BONDS (4.6%)
FRANCE (0%)*
Sanofi 4.00% due 01/01/00 (Pharmaceuticals)................................... 372,500 323,699
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN YEN)
------------
<S> <C> <C>
JAPAN (3.9%)
BOT Cayman Finance 4.25% due 03/31/03 (Banking)............................... 950,000,000 13,206,852
Canon Inc. 1.3% due 12/19/08 (Consumer)....................................... 111,000,000 1,478,213
Daido Hoxan Inc. 1.6% due 03/29/02 (Chemicals)................................ 30,000,000 336,511
Izumiya Co. Ltd. 0.80% due 08/31/99 (Retail).................................. 140,000,000 1,804,270
Matsushita Electric Works 2.7% due 05/31/02 (Building & Contractors).......... 75,000,000 908,579
Mitsui & Co Ltd. 1.05% due 09/30/99 (Transport & Trade Services).............. 75,000,000 810,490
NEC Corp. 1.90% due 03/30/01 (Electrical & Electronics)....................... 700,000,000 9,168,365
SXL Corp. 2.70% due 03/29/02 (Building & Contractors)......................... 60,000,000 678,749
Toyota Motor Co. 1.70% due 05/31/96 (Automotive).............................. 75,000,000 1,174,207
Toyota Motor Co. 1.2% due 01/28/98 (Automotive)............................... 300,000,000 3,528,350
Yamato Transport 3.90% due 03/30/01 (Transportation).......................... 132,000,000 1,696,128
-----------
34,790,714
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
28
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
DESCRIPTION (IN USD) VALUE
- -------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
MALAYSIA (0.2%)
Telekom Malaysia 4% due 10/30/04 (Telecommunications)......................... 1,540,000 $ 1,641,063
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN CHF)
------------
<S> <C> <C>
SWITZERLAND (0.4%)
Sandoz Capital BVI Ltd. 1.25% due 10/23/02 (Financial Services)............... 1,595,000 1,720,414
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN USD)
------------
<S> <C> <C>
Swiss Re Finance Bermuda 2% due 07/06/00 (Insurance).......................... 1,790,000 1,995,850
-----------
3,716,264
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(IN STG)
------------
<S> <C> <C>
UNITED KINGDOM (0.1%)
BPB Industries PLC 7.25% due 08/25/08 (Building & Contractors)................ 396,000 792,193
-----------
Total Convertible Bonds (cost $37,665,016).................................. 41,263,933
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------
<S> <C> <C>
WARRANTS (0.6%)
FRANCE (0%)*
LaGardere Groupe, Expiring 12/31/96 (Leisure & Tourism) (A)................... 16,000 12,671
-----------
GERMANY (0.3%)
Alliance Holdings AG, Expiring 02/23/98 (Insurance) (A) 17,330 821,568
Veba International, Expiring 04/06/98 (Energy Sources) (A).................... 8,870 2,122,757
-----------
2,944,325
-----------
JAPAN (0.1%)
Dowa Mining Co, Expiring 12/09/97 (Metals, Materials & Paper) (A)............. 391 635,375
Maeda Corp, Expiring 02/05/97 (Building & Contractors) (A).................... 315 567,000
-----------
1,202,375
-----------
NETHERLANDS (0.1%)
Philips Electronics, Expiring 06/30/98 (Appliances & Household Durables)
(A).......................................................................... 27,800 444,760
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
29
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- -------------------------------------------------------------------------------- ------------ -----------
SWITZERLAND (0.1%)
<S> <C> <C>
Lion Corp., Expiring 6/18/99 (Chemicals) (A).................................. 2,000 $ 449,931
-----------
Total Warrants (cost $4,566,934)............................................ 5,054,062
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN US
DOLLARS)
------------
<S> <C> <C>
TIME DEPOSITS (3.1%)
UNITED STATES (3.1%)
State Street Bank & Trust Co. 4.875 % due 05/01/96 (Banking) (cost $27,177,000
)............................................................................ 27,177,000 27,177,000
-----------
TOTAL INVESTMENTS (COST $797,241,800) (98.0%) 867,313,826
OTHER ASSETS NET OF LIABILITIES (2.0%) 14,176,822
-----------
NET ASSETS (100.0%) $881,490,648
-----------
-----------
</TABLE>
(A) Non-Income-Producing Security
* Less than 0.1%
Note: For Federal Income Tax purposes, the cost of securities owned at April
30, 1996 was substantially the same as the cost of securities for
financial statement purposes.
The Accompanying Notes are an Integral Part of the Financial Statements.
30
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
TOTAL INVESTMENTS
---------------------
<S> <C>
Banking........................................................................................ 17.8%
Chemicals...................................................................................... 6.4%
Energy Sources................................................................................. 6.3%
Electrical & Electronics....................................................................... 6.0%
Metals, Materials & Paper...................................................................... 5.0%
Automotive..................................................................................... 4.8%
Utilities...................................................................................... 4.8%
Health & Personal Care......................................................................... 4.4%
Retail......................................................................................... 3.5%
Building & Contractors......................................................................... 3.3%
Financial Services............................................................................. 3.2%
Insurance...................................................................................... 3.2%
Capital Goods.................................................................................. 3.1%
Food & Household Products...................................................................... 3.1%
Transport & Trade.............................................................................. 2.4%
Merchandising.................................................................................. 2.3%
Multi-Industry................................................................................. 2.2%
Telecommunications............................................................................. 2.2%
Transportation................................................................................. 1.8%
Technology..................................................................................... 1.7%
Machinery...................................................................................... 1.6%
Beverages & Tobacco............................................................................ 1.3%
Broadcasting & Publishing...................................................................... 1.1%
Industrial Components.......................................................................... 1.0%
Miscellaneous.................................................................................. 7.5%
-----
100.0%
-----
-----
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
31
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $797,241,800) $867,313,826
Cash 4,477
Foreign Currency at Value (Cost $17,103,466) 17,075,133
Receivable for Investments Sold 13,382,375
Dividends and Interest Receivable 3,717,536
Foreign Tax Reclaim Receivable 1,017,270
Unrealized Appreciation on Forward Foreign Currency Contracts 462,389
Unrealized Appreciation on Open Spot Foreign Currency Contracts 2,282
Prepaid Trustees' Fees 2,795
Prepaid Expenses 1,618
------------
Total Assets 902,979,701
------------
LIABILITIES
Payable for Investments Purchased 17,664,492
Unrealized Depreciation on Forward Foreign Currency Contracts 3,072,023
Advisory Fee Payable 589,995
Custody Fee Payable 85,657
Administrative Services Fee Payable 17,303
Administration Fee Payable 9,087
Fund Services Fee Payable 3,109
Accrued Expenses 47,387
------------
Total Liabilities 21,489,053
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $881,490,648
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
32
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
$ 5,650,321
Dividends (Net of $866,267 Foreign Withholding Taxes)
1,118,324
Interest (Net of $14,094 Foreign Withholding Taxes)
------------
6,768,645
Investment Income
EXPENSES
Advisory Fee $ 2,275,697
Custodian Fees and Expenses 448,548
Administrative Fee 41,663
Professional Fees 34,250
Fund Services Fee 21,154
Administrative Services Fee 67,216
Trustees' Fees and Expenses 6,938
Printing Expenses 4,496
Miscellaneous 4,467
-------------
(2,904,429)
Total Expenses
------------
3,864,216
NET INVESTMENT INCOME
NET REALIZED GAIN ON
Investment Transactions 11,079,494
Foreign Currency Contracts and Foreign Exchange Transactions 9,429,974
-------------
20,509,468
Net Realized Gain
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Investments 78,383,012
Foreign Currency Contracts and Translations (4,430,580)
-------------
73,952,432
Net Change in Unrealized Appreciation (Depreciation)
------------
$ 98,326,116
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
33
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
APRIL 30, 1996 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 3,864,216 $ 6,919,031
Net Realized Gain on Investments and Foreign Currency Transactions 20,509,468 15,078,850
Net Change in Unrealized Appreciation of Investments and
Foreign Currency Translations 73,952,432 (27,987,331)
---------------- -----------------
Net Increase (Decrease) in Net Assets Resulting from Operations 98,326,116 (5,989,450)
---------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 228,090,206 373,795,232
Withdrawals (98,228,630) (138,078,647)
---------------- -----------------
Net Increase from Investors' Transactions 129,861,576 235,716,585
---------------- -----------------
Total Increase in Net Assets 228,187,692 229,727,135
NET ASSETS
Beginning of Period 653,302,956 423,575,821
---------------- -----------------
End of Period $ 881,490,648 $ 653,302,956
---------------- -----------------
---------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL FOR THE FISCAL
APRIL 30, 1996 YEAR ENDED YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995 OCTOBER 31, 1994
---------------- ----------------- -----------------
<S> <C> <C> <C>
Ratios to Average Net Assets
Expenses 0.77%(a) 0.82% 0.95%
Net Investment Income 1.02%(a) 1.31% 0.93%
Portfolio Turnover 26%(b) 59% 56%
</TABLE>
- ------------------------
(a) Annualized.
(b) Not Annualized
(c) Portfolio turnover for the fiscal year ended October 31, 1993, included the
portfolio activity of The Pierpont International Equity Fund, Inc. for the
period November 1, 1992 through October 3, 1993, prior to conversion when
The Pierpont International Equity Fund, Inc. contributed all of its
investable assets to the Portfolio.
The Accompanying Notes are an Integral Part of the Financial Statements.
34
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Non-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's investment
objective is to provide a high total return from a portfolio of equity
securities of foreign companies. The Portfolio commenced operations on
October 4, 1993 and received a contribution of certain assets and
liabilities, including securities, with a value of $160,213,973 on that date
from the Pierpont International Equity Fund, Inc. in exchange for a
beneficial interest in the Portfolio. At that date, net unrealized
appreciation of $11,116,204 was included in the contributed securities. The
Declaration of Trust permits the Trustees to issue an unlimited number of
beneficial interests in the Portfolio.
Investments in international markets may involve certain considerations and
risks not typically associated with investments in the United States. Future
economic and political developments in foreign countries could adversely
affect the liquidity or value, or both, of such securities in which the
Portfolio is invested. The ability of the issuers of the debt securities
held by the Portfolio to meet their obligations may be affected by economic
and political developments in a specific industry or region.
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 readily available closing bid price on
such exchanges, or at the quoted bid price in the over-the-counter market.
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 by the amortized cost method.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the exchange on which they are traded closes and the time
when the Portfolio's net asset value is calculated, such securities will
be valued at fair value in accordance with procedures established by and
under the general supervision of the Portfolio's Trustees.
35
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
b)The books and records of the Portfolio are maintained in U.S. dollars. The
market value of investment securities, other assets and liabilities and
forward contracts stated in foreign currencies are translated at the
prevailing exchange rates at the end of the period. Purchases, sales,
income and expenses are translated at the exchange rates prevailing on the
respective dates of such transactions. Translation gains and losses
resulting from changes in the exchange rates during the reporting period
and gains and losses realized upon settlement of foreign currency
transactions are reported in the Statement of Operations.
Although the net assets of the Portfolio are presented at the exchange
rates and market values prevailing at the end of the period, the Portfolio
does not isolate the portion of the results of operations arising as a
result of changes in foreign exchange rates from the fluctuations arising
from changes in the market prices of securities during the period.
c)The Portfolio may enter into forward and spot foreign currency contracts
to protect securities and related receivables and payables against
fluctuations in future foreign currency rates. A forward contract is an
agreement to buy or sell currencies of different countries on a specified
future date at a specified rate. Risks associated with such contracts
include the movement in the value of the foreign currency relative to the
U.S. dollar and the ability of the counterparty to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily based on procedures established
by and under the general supervision of the Portfolio's Trustees and the
change in the market value is recorded by the Portfolio as unrealized
appreciation or depreciation of foreign currency translations. At April
30, 1996, the Portfolio had open foreign currency contracts as follows:
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY SALE CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
VALUE AT APPRECIATION/
SALES CONTRACTS PROCEEDS 04/30/96 (DEPRECIATION)
- ------------------------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
French Franc 117,210,233, expiring 07/23/96 $ 22,946,404 $ 22,719,718 $ 226,686
German Mark 21,655,860, expiring 07/23/96 14,427,622 14,191,919 235,703
Japanese Yen 9,318,493,076, expiring 07/23/96 87,007,405 90,079,428 (3,072,023)
---------------
Net Unrealized Depreciation on Forward Foreign Currency Contracts $ (2,609,634)
---------------
---------------
</TABLE>
SUMMARY OF OPEN SPOT FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR
VALUE AT NET UNREALIZED
PURCHASE CONTRACTS COST 04/30/96 APPRECIATION
- ------------------------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
Italian Lira 662,000,000, per GBP 280,447, expiring 05/03/96 $ 420,839 $ 423,121 $ 2,282
------
------
</TABLE>
d)Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or at the time that the
relevant ex-dividend date and amount becomes known. Interest
36
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
income, which includes the amortization of premiums and discount, 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.
e)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxable 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 Portfolio earns foreign
income which may be subject to foreign withholding taxes at various rates.
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 0.60%
of the Portfolio's average daily net assets. For the six months ended
April 30, 1996, such fees amounted to $2,275,697.
b)The Portfolio has retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and exclusive placement agent.
Signature provides administrative services necessary for the operations of
the Portfolio, furnishes office space and facilities required for
conducting the business of the Portfolio and pays the compensation of the
Portfolio's officers affiliated with Signature. The agreement provided 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
Administrative Services Agreement, 0.008% of the next $2 billion of such
net assets, 0.006% of the next $2 billion of such net assets, and 0.004%
of such net assets in excess of $5 billion. The daily equivalent of the
fee rate is applied each day to the net assets of the Portfolio. For the
period November 1, 1995 through December 28, 1995, such fees amounted to
$9,619.
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. For
the period from December 29, 1995 through April 30, 1996, such fees
amounted to $32,044.
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 percentage described below, for overseeing
certain aspects of the administration and operation of the Portfolio and
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 0.15% of the
Portfolio's average daily net assets up to $200 million, 0.10% of the next
$200 million of average daily net
37
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1996
- --------------------------------------------------------------------------------
assets, and 0.05% of the next $200 million of average daily net assets and
0.03% on any excess over $600 million. 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 Services 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 "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 average daily net assets and 0.03% of the aggregate
average daily 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. For the period December 29, 1995 through April
30, 1996, the fee for these services amounted to $67,216.
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 $21,154 for the six months ended April 30, 1996.
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 the
Master 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 the Portfolio 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 $2,700.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six
months ended April 30, 1996, were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- -------------- --------------
<S> <C>
$324,131,537 $192,349,478
</TABLE>
38
<PAGE>
THE PIERPONT MONEY MARKET FUND
THE PIERPONT TAX EXEMPT MONEY MARKET FUND
THE PIERPONT TREASURY MONEY MARKET FUND
THE PIERPONT SHORT TERM BOND FUND
THE PIERPONT BOND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFIED FUND
THE PIERPONT EQUITY FUND
THE PIERPONT CAPITAL APPRECIATION FUND
THE PIERPONT EUROPEAN EQUITY FUND
THE PIERPONT JAPAN EQUITY FUND
THE PIERPONT INTERNATIONAL EQUITY FUND
THE PIERPONT ASIA GROWTH FUND
THE PIERPONT EMERGING MARKETS EQUITY FUND
THE
PIERPONT
INTERNATIONAL
EQUITY FUND
FOR MORE INFORMATION ON HOW THE PIERPONT FAMILY OF FUNDS CAN HELP YOU PLAN FOR
YOUR FUTURE, CALL J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
SEMI-ANNUAL REPORT
APRIL 30, 1996
