<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
November 27, 1996
Dear Shareholder:
We are pleased to announce that, following a difficult year for emerging equity
markets around the world, The JPMPierpont Emerging Markets Equity Fund recorded
a 6.31% gain for the one year period ending October 31, 1996. Both the Fund's
country allocation and stock selection decisions enabled it to outperform its
benchmark,* which returned 5.12% for the period. The Fund did not keep pace with
the Lipper Emerging Markets Fund Average, which returned 9.11% for the period.
Please keep in mind, however, that many of the funds contained in this average
have a less structured management approach where more aggressive bets are taken.
Included in this report is a Q&A with Doug Dooley, the senior member of the
Fund's 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. We hope you find it
informative.
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 GUERNSEY
Evelyn E. Guernsey
J.P. Morgan Funds Services
* International Finance Corporation (IFC) Global Index Adjusted for limited-
access countries (capped weights of 5% in Chile, India, Korea and Taiwan, and
15% in Malaysia through August 31, 1993, from September 1, 1993 forward
Malaysia not capped) through December 31, 1994. From January 1, 1995 through
December 31, 1995 IFC Investable Index (excluding South Africa starting April
1, 1995). MSCI Emerging Markets Free (gross dividends) beginning January 1,
1996.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS . . . . . 1
FUND PERFORMANCE . . . . . . . . . . 2
PORTFOLIO MANAGER Q&A. . . . . . . . 4
FUND FACTS AND HIGHLIGHTS. . . . . . 6
SPECIAL FUND-BASED SERVICES. . . . . 7
FINANCIAL STATEMENTS . . . . . . . . 9
- --------------------------------------------------------------------------------
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to evaluate a mutual fund's historical performance is to look at the
growth of a hypothetical investment of $100,000, which is the Fund's investment
minimum. The chart at the right shows that $100,000 invested in the Fund on
November 30, 1993 would have grown to $101,655 on October 31, 1996.
Another 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.
GROWTH OF $100,000 SINCE FUND INCEPTION*
NOVEMBER 30, 1993 -- OCTOBER 31, 1996
[CHART]
Plot Points:
The JPM
Pierpont
Emerging MCSI
Markets Emerging Emerging IFC
Equity Markets Markets Investable
Fund Free Benchmark** Index
Nov-93 100 100 100 100
Oct-94 121.27 122.22 122.9 119.84
Oct-95 95.621 96.835 94.67 91.138
Oct-96 101.655 103.071 99.517 98.976
2
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURN
----------------------- ---------------------------
THREE SIX ONE SINCE
AS OF OCTOBER 31, 1996 MONTHS MONTHS YEAR INCEPTION*
- ------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
The JPM Pierpont Emerging
Markets Equity Fund -1.17% -5.04% 6.31% 0.56%
Emerging Markets Benchmark** 0.65% -6.07% 5.12% -0.17%
IFC Investable Index 2.29% -4.19% 8.60% -0.35%
MSCI Emerging Markets Free 0.65% -6.06% 6.44% 1.05%
Lipper Emerging MarketsFund Average 0.71% -3.88% 9.11% 0.44%
<CAPTION>
AS OF SEPTEMBER 30, 1996
- ------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
The JPM Pierpont Emerging
Markets Equity Fund -3.23% 0.87% 4.26% 1.58%
Emerging Markets Benchmark** -3.63% 0.40% 1.87% 0.80%
IFC Investable Index -2.23% 1.95% 4.77% 0.43%
MSCI Emerging Markets Free -3.63% 0.40% 5.21% 2.06%
Lipper Emerging MarketsFund Average -2.76% 3.15% 7.64% 1.37%
</TABLE>
*11/15/93 -- COMMENCEMENT OF OPERATIONS (AVERAGE ANNUAL TOTAL RETURNS BASED ON
MONTH END FOLLOWING INCEPTION). THE FUND'S AVERAGE ANNUAL TOTAL RETURN SINCE ITS
COMMENCEMENT OF OPERATIONS ON 11/15/93 IS 1.40%.
**INTERNATIONAL FINANCE CORPORATION (IFC) GLOBAL INDEX ADJUSTED FOR LIMITED-
ACCESS COUNTRIES (CAPPED WEIGHTS OF 5% IN CHILE, INDIA, KOREA AND TAIWAN, AND
15% IN MALAYSIA THROUGH AUGUST 31, 1993, FROM SEPTEMBER 1, 1993 FORWARD MALAYSIA
NOT CAPPED) THROUGH DECEMBER 31, 1994. FROM JANUARY 1, 1995 THROUGH DECEMBER 31,
1995 IFC INVESTABLE INDEX (EXCLUDING SOUTH AFRICA STARTING APRIL 1, 1995). MSCI
EMERGING MARKETS FREE (GROSS DIVIDENDS) BEGINNING JANUARY 1, 1996.THE JPM
PIERPONT EMERGING MARKETS EQUITY FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN
THE EMERGING MARKETS 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.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. LIPPER ANALYTICAL SERVICES,
INC. IS A LEADING SOURCE FOR MUTUAL FUND DATA. ALTHOUGH GATHERED FROM RELIABLE
SOURCES, DATA ACCURACY AND COMPLETENESS CANNOT BE GUARANTEED.
3
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO] The following is an interview with DOUG DOOLEY, a managing director
and the senior member of the portfolio management team for the
Emerging Markets Equity Portfolio. Prior to assuming this position, he
was head of the International Research Group in London. Doug joined
Morgan's U.S. Equity Research Department in 1979 and subsequently
managed institutional balanced accounts. Doug has a B.S. from American
University and an M.B.A. from Columbia University. He is a chartered
financial analyst. This interview was conducted on November 21, 1996
and reflects his views on that date.
FOR THE YEAR UNDER REVIEW, WHAT IMPORTANT EVENTS CONTRIBUTED TO THE PERFORMANCE
OF EMERGING MARKETS AS A WHOLE?
DD: The most important was the recovery of Latin America from the Mexican peso
crisis, which punished markets all through the previous fiscal year. This
recovery not only benefited Latin America, but contributed to a rebound in
investors' perceptions of emerging markets in general.
DURING THE YEAR, THE FUND WAS ABLE TO BEAT THE RETURNS FOR ITS BENCHMARK INDEX.
WHAT WERE THE REASONS FOR THIS OUTPERFORMANCE?
DD: Both the countries we chose to emphasize and the stocks we selected for the
Portfolio helped the Fund turn in performance that was well ahead of the Index.
Our decision to underweight South Africa and Thailand and overweight Eastern
Europe, relative to the Index, proved to be beneficial during the year.
As far as stock selection goes, during the fiscal year we saw a return to an
investment environment where our value-oriented approach was rewarded. Last
year, after the peso crisis, many investors clung to the big "safe" stocks,
resulting in the markets having very little breadth. Investors were not focused
on fundamentals, causing our value approach to have no advantage in the market.
This year, investors have ventured beyond those stocks and into the broader
market, providing the conditions for our fundamental research to add value.
ASIA HAS LAGGED THE OTHER REGIONS THIS YEAR. WHILE SOME COUNTRIES HAD UNIQUE
PROBLEMS THAT SUPPRESSED EQUITY PRICES, THE REGION AS A WHOLE SEEMS TO BE
STRUGGLING ECONOMICALLY. WHY?
DD: Emerging Asia broadly lagged because, in most of these countries, there was
a need to slow down the domestic economy in order to control a rising current
account deficit. This economic slowdown resulted in reduced corporate earnings
expectations, which quickly translated into lower stock prices. Adding to this,
there has been a slowdown in exports, especially in electronics, which has had a
negative effect, particularly in Taiwan and Korea. Politics also played a role
in sentiment in India, Indonesia, Thailand, and Korea.
4
<PAGE>
WHAT MAJOR FACTORS CONTRIBUTED TO THE GOOD PERFORMANCE OF THE EMERGING EUROPEAN
MARKETS?
DD: Mainly, these countries are establishing track records of success. They
have implemented economic reforms which have produced visible results. Poland
has been a leader here and the Czech Republic and Hungary have not been far
behind.
In addition to that, Russia made it through the elections in good order. There
was a risk they would falter and potentially bring down the whole region.
However, with the re-election of Boris Yeltsin and an improved economic outlook,
they allowed eastern Europe to do well.
WILL THE UPCOMING EUROPEAN MONETARY UNION (EMU) AFFECT THE EMERGING ECONOMIES
AND MARKETS OF THE NON-UNION MEMBERS?
DD: The coming EMU has brought interest rates down. That should be beneficial
for the emerging European countries even though they will not be directly
participating. These lower rates should trigger higher domestic demand in the
EMU countries for goods imported from emerging Europe. Also, the lower rates in
the EMU allow for lower rates in the surrounding countries, which would help
lower the cost of capital to these economies.
However, EMU alone does not make a case for emerging Europe. These countries
need to continue with their economic reforms in order to move forward.
WHICH STOCK IN THE PORTFOLIO WOULD BE A GOOD EXAMPLE OF IT'S SELECTION PROCESS
UNCOVERING HIDDEN VALUE?
DD: A recent example would be Mavesa, the leading Venezuelan consumer company
with a dominant market share in detergents, mayonnaise and margarine. The
company also makes fruit juices, preserves, baby foods, ketchup, tomato paste,
and mineral water. During the latter half of last year, we accumulated a
position in the Portfolio in the shares. During the third quarter of this year,
the stock experienced an appreciation of 63% -- outperforming the local market
by 38%. For the year to date, the stock has outperformed the local market by
96%. Despite this dramatic appreciation, we believe the stock is still
attractive, selling at only a 50% premium to book value with an earnings
multiple of ten.
LOOKING AHEAD, IN WHICH MARKETS AND INDUSTRIES DO YOU SEE THE BEST RELATIVE
VALUE?
DD: In our view, Latin America now represents the best relative value. During
the Mexican peso crisis these markets were oversold. Now, they are continuing to
experience a recovery. And we think that recovery is justified by the underlying
fundamentals. The industrial growth rate in Latin America is higher than in the
other regions. We especially like Argentina, where we were impressed by the way
their government handled the peso crisis. The actions they took were politically
difficult, where the country experienced a lot of internal pain for the sake of
stabilizing the currency.
We also see relative value in eastern Europe, where we have seen the most
improvement in economic fundamentals -- especially in Russia, Croatia, Hungary,
and the Czech Republic. Investors in these markets are likely to be rewarded as
eastern Europe continues with its integration into the mainstream.
5
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPMPierpont Emerging Markets Equity Fund seeks to provide a high total
return from a portfolio of equity securities of companies in emerging markets.
It is designed for long-term investors who want to diversify their investments
by adding exposure to the rapidly growing emerging markets. As an international
investment, the Fund is subject to foreign market, political, and currency risk.
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
11/15/93
- --------------------------------------------------------------------------------
NET ASSETS AS OF 10/31/96
$59,107,467
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/27/96
EXPENSE RATIO
The Fund's current annualized expense ratio of 1.69% 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 OCTOBER 31, 1996
COUNTRY ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS AND CASH)
ASIA 38.2
LATIN AMERICA 31.5
EUROPE 11.7
AFRICA.MIDDLE EAST 10.1
CASH 8.5
LARGEST HOLDINGS % OF PORTFOLIO
TELECOMUNICACOES BRASILEIRAS (BRAZIL) 2.8
YPFSOCIEDAD ANONIMA (ARGENTINA) 1.8
TELEFONOS DE MEXICO (MEXICO) 1.8
TELEFONICA DE ARGENTINA (ARGENTINA) 1.1
COMPHANIA ENERGETICA DE MINAS GERAIS 1.0
(PREFERRED) (BRAZIL)
6
<PAGE>
SPECIAL FUND-BASED SERVICES
PIERPONT ASSET ALLOCATION SERVICE (PAAS)
For many investors, a diversified portfolio -- including short-term instruments,
bonds, and stocks -- can offer an excellent opportunity to achieve one's
investment objectives. PAAS provides investors with a comprehensive management
program for their portfolios. Through this service, investors can:
- create and maintain an asset allocation that is specifically targeted at
meeting their most critical investment objectives;
- make ongoing tactical adjustments in the actual asset mix of their
portfolios to capitalize on shifting market trends;
- make investments through The JPM Pierpont Funds, a family of diversified
mutual funds.
PAAS is available to clients who invest a minimum of $500,000 in The JPM
Pierpont Funds.
IRA MANAGEMENT SERVICE
As one of the few remaining investments that can help your assets grow tax-
deferred until retirement, the IRA enables more of your dollars to work for you
longer. Morgan offers an IRA Rollover plan that helps you to build well-balanced
long-term investment portfolios, diversified across a wide array of mutual
funds. From money markets to emerging markets, The JPM Pierpont Funds provide an
excellent way to help you accumulate long-term wealth for retirement.
KEOGH
In early 1995, Morgan introduced a Keogh program for its clients. Keoghs provide
another excellent vehicle to help individuals who are self-employed or are
employees of unincorporated businesses to accumulate retirement savings. A Keogh
is a tax-deferred pension plan that can allow you to contribute the lesser of
$30,000 or 25% of your annual earned gross compensation. The JPM Pierpont Funds
can help you build a comprehensive investment program designed to maximize the
retirement dollars in your Keogh account.
7
<PAGE>
FUNDS DISTRIBUTOR, INC. IS THE DISTRIBUTOR OF THE JPM PIERPONT EMERGING MARKETS
EQUITY FUND (THE "FUND"). SIGNATURE BROKER-DEALER SERVICES, INC. SERVED AS THE
FUND'S DISTRIBUTOR PRIOR TO AUGUST 1, 1996.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MORGAN")SERVES AS PORTFOLIO
INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS
SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN OR ANY OTHER
BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. 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, assume the reinvestment of Fund distributions. The Fund invests all of
its investable assets in The Emerging Markets 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.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS BY CALLING J.P.
MORGAN FUNDS SERVICES AT (800) 521-5411.
8
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Emerging Markets
Equity Portfolio ("Portfolio"), at
value $ 59,109,731
Receivable for Shares of Beneficial
Interest Sold 33,000
Deferred Organization Expenses 17,887
Prepaid Trustees' Fees 204
Prepaid Expenses and Other Assets 8,604
------------
Total Assets 59,169,426
------------
LIABILITIES
Shareholder Servicing Fee Payable 12,932
Transfer Agent Fee Payable 11,159
Payable for Shares of Beneficial
Interest Redeemed 4,901
Administrative Services Fee Payable 1,649
Fund Services Fee Payable 29
Accrued Expenses 31,289
------------
Total Liabilities 61,959
------------
NET ASSETS
Applicable to 5,806,058 Shares of
Beneficial Interest Outstanding
(par value $0.001, unlimited shares
authorized) $ 59,107,467
------------
------------
Net Asset Value, Offering and
Redemption Price Per Share $10.18
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $ 64,746,185
Undistributed Net Investment Income 86,759
Accumulated Net Realized Loss on
Investment and Foreign Currency
Transactions (5,402,237)
Net Unrealized Depreciation of
Investment and Foreign Currency
Translations (323,240)
------------
Net Assets $ 59,107,467
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM
PORTFOLIO
Allocated Dividend Income (Net of
Foreign Withholding Tax of
$143,527) $ 1,170,314
Allocated Interest Income 225,337
Allocated Portfolio Expenses (720,183)
------------
Net Investment Income Allocated
from Portfolio 675,468
FUND EXPENSES
Shareholder Servicing Fee $146,876
Transfer Agent Fees 42,529
Registration Fees 26,826
Administrative Services Fee 13,747
Professional Fees 11,875
Printing Expenses 9,638
Amortization of Organization Expenses 8,760
Administration Fee 7,120
Fund Services Fee 2,818
Trustees' Fees and Expenses 1,096
Insurance Expense 244
Miscellaneous 2,825
--------
Total Fund Expenses 274,354
------------
NET INVESTMENT INCOME 401,114
NET REALIZED LOSS ON INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS
ALLOCATED FROM PORTFOLIO (2,194,573)
NET CHANGE IN UNREALIZED APPRECIATION
OF INVESTMENT AND FOREIGN CURRENCY
TRANSLATIONS ALLOCATED FROM
PORTFOLIO 5,503,869
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,710,410
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
OCTOBER 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 401,114 $ 269,650
Net Realized Loss on Investment and
Foreign Currency Transactions
Allocated from Portfolio (2,194,573) (3,740,156)
Net Change in Unrealized Appreciation
(Depreciation) of Investment and
Foreign Currency Translations
Allocated from Portfolio 5,503,869 (7,871,522)
------------ ------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 3,710,410 (11,342,028)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (367,563) (127,754)
Net Realized Gain -- (594,019)
------------ ------------
Total Distributions to
Shareholders (367,563) (721,773)
------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from Shares of Beneficial
Interest Sold 38,600,103 28,623,172
Reinvestment of Dividends and
Distributions 302,123 694,559
Cost of Shares of Beneficial Interest
Redeemed (32,433,086) (21,389,671)
------------ ------------
Net Increase from Transactions in
Shares of Beneficial Interest 6,469,140 7,928,060
------------ ------------
Total Increase (Decrease) in Net
Assets 9,811,987 (4,135,741)
NET ASSETS
Beginning of Fiscal Year 49,295,480 53,431,221
------------ ------------
End of Fiscal Year (including
undistributed net investment income
of $86,759 and $155,800,
respectively) $ 59,107,467 $ 49,295,480
------------ ------------
------------ ------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
FISCAL YEAR NOVEMBER 15,
ENDED 1993
OCTOBER 31, (COMMENCEMENT OF
--------------- OPERATIONS) TO
1996 1995 OCTOBER 31, 1994
------ ------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.65 $ 12.43 $ 10.00
------ ------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.08 0.05 0.02
Net Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Allocated from Portfolio 0.53 (2.66) 2.41
------ ------- ----------------
Total from Investment Operations 0.61 (2.61) 2.43
------ ------- ----------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.08) (0.03) --
Net Realized Gain -- (0.14) --
------ ------- ----------------
Total Distributions to Shareholders (0.08) (0.17) --
------ ------- ----------------
NET ASSET VALUE, END OF PERIOD $10.18 $ 9.65 $ 12.43
------ ------- ----------------
------ ------- ----------------
Total Return 6.31% (21.15)% 24.30%(a)
------ ------- ----------------
------ ------- ----------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands) $59,107 $49,295 $53,431
Ratios to Average Net Assets
Expenses 1.69% 1.80% 1.84%(b)
Net Investment Income 0.68% 0.55% 0.25%(b)
Decrease Reflected in Expense Ratio
due to Expense Reimbursement -- -- 0.12%(b)
</TABLE>
- ------------------------
(a) Not annualized.
(b) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Pierpont Emerging Markets Equity Fund (the "Fund") is a separate series
of The JPM 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 an open-end management investment company.
The Fund commenced operations on November 15, 1993. Prior to October 10, 1996,
the Trust's and the Fund's names were The Pierpont Funds and The Pierpont
Emerging Markets Equity Fund, respectively.
The Fund invests all of its investable assets in The Emerging Markets Equity
Portfolio (the "Portfolio"), a diversified open-end management investment
company having the same investment objective as the Fund. The value of such
investment reflects the Fund's proportionate interest in the net assets of the
Portfolio (7% at October 31, 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 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 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)The Fund incurred organization expenses in the amount of $43,837. These
costs were deferred and are being amortized by the Fund on a straight-line
basis over a five-year period from the commencement of operations.
e)Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to comply with the provisions of the
Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income,
including net realized capital gains, if any, within the prescribed time
periods. Accordingly, no provision for federal income or excise tax is
necessary.
f)Expenses incurred by the Trust with respect to any two or more funds in
the Trust are allocated in proportion to the net assets of each fund in
the Trust, except where allocations of direct expenses to each fund can
otherwise be made fairly. Expenses directly attributable to a fund are
charged to that fund.
13
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
g)The Fund accounts for and reports distributions to shareholders in
accordance with Statement of Position 93-2 "Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, Return of
Capital Distributions by Investment Companies." The effect of applying
this statement as of October 31, 1996, was to increase accumulated net
realized gain on investment and foreign currency transactions by $272,160,
decrease undistributed net investment income by $102,592, and decrease
paid-in-capital by $169,568. The adjustments are primarily attributable to
tax treatment of partnership allocations of capital gains and losses and
foreign currency losses. Net investment income, net realized loss and net
assets were not effected by this change.
h)For the United States Federal income tax purposes, the Fund had a capital
loss carryforward at October 31, 1996 of approximately $5,309,000, of
which $3,480,000 will expire in the year 2003 and $1,829,000 will expire
in the year 2004. No capital gains distribution is expected to be paid to
shareholders until future net gains have been realized in excess of such
carryforward.
2. TRANSACTIONS WITH AFFILIATES
a)The Trust had retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and distributor. Under an
Administration Agreement, Signature provided administrative services
necessary for the operations of the Fund, furnished office space and
facilities required for conducting the business of the Fund and paid the
compensation of the Fund's officers affiliated with Signature. Until
December 28, 1995, the agreement provided for a fee to be paid to
Signature at an annual rate determined by the following schedule: 0.04% of
the first $1 billion of the aggregate average daily net assets of the
Trust, as well as two other affiliated fund families for which Signature
acts 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 is
applied each day to the net assets of the Fund. For the period November 1,
1995 through December 28, 1995, Signature's fee for these services
amounted to $1,926.
Effective December 29, 1995, the Administration Agreement was amended such
that the fee charged would be equal to the Fund's proportionate share of a
complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios (the "Master Portfolios") in which
series of the Trust, The JPM Institutional Funds, or The JPM Advisor Funds
invest and 0.01% on the aggregate average daily net assets of the Master
Portfolios in excess of $7 billion. The portion of this charge paid by the
Fund was determined by the proportionate share its net assets bore to the
total net assets of the Trust, The JPM Institutional Funds, The JPM
Advisor Funds and the Master Portfolios. For the period December 29, 1995
through July 31, 1996, Signature's fee for those services amounted to
$4,630. The Administration Agreement with Signature was terminated July
31, 1996.
Effective August 1, 1996, certain administrative functions formerly
provided by Signature are provided by Funds Distributor, Inc. ("FDI"), a
registered broker-dealer, and by Morgan Guaranty Trust Company of New York
("Morgan"). FDI also serves as the Fund's distributor. Under a Co-
Administration Agreement between FDI and the Trust on behalf of the Fund,
the Fund has agreed to pay FDI fees equal to its allocable share of an
annual complex-wide charge of $425,000 plus FDI's out-
14
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
of-pocket expenses. The amount allocable to the Fund is based on the ratio
of the Fund's net assets to the aggregate net assets of the Trust, The JPM
Institutional Funds, The JPM Advisor Funds and the Master Portfolios. For
the period from August 1, 1996 through October 31, 1996, the fee for these
services amounted to $564.
b)Until August 31, 1995, the Trust, on behalf of the Fund, had a Financial
and Fund Accounting Services Agreement with Morgan which provided that
Morgan would receive a fee, based on the percentage described below, for
overseeing certain aspects of the administration and operation of the Fund
and which was also designed to provide an expense limit for certain
expenses of the Fund. This fee was calculated exclusive of the shareholder
servicing fee, 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 average daily net assets thereafter. 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 "Services Agreement") with
Morgan under which Morgan is responsible for certain aspects of the
administration and operation of the Fund. Under the Services Agreement,
the Fund had agreed to pay Morgan a fee equal to its proportionate share
of an annual complex-wide charge. Until July 31, 1996, this charge was
calculated daily based on the aggregate net assets of the Master
Portfolios in accordance with the following annual schedule: 0.06% on the
first $7 billion of the Master Portfolios' aggregate average daily net
assets and 0.03% of the aggregate average daily net assets in excess of $7
billion. The portion of this charge paid by the Fund was determined by the
proportionate share that the Fund's net assets bore 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 July 31, 1996, Morgan's fee for these services
amounted to $8,842.
Effective August 1, 1996, the Services Agreement was amended such that the
annual complex-wide charge is calculated daily based on the aggregate net
assets of the Master Portfolios in accordance with the following schedule:
0.09% on the first $7 billion of the Master Portfolios' aggregate average
daily net assets and 0.04% of the Master Portfolios' aggregate average
daily net assets in excess of $7 billion less the complex-wide fees
payable to FDI. The allocation of the Fund's portion of this charge is
described above. For the period August 1, 1996 through October 31, 1996,
the fee for these services amounted to $4,905.
In addition to the expenses that Morgan assumed under the Services
Agreement, Morgan had agreed to reimburse the Fund to the extent necessary
to maintain the total operating expenses of the Fund, including the
expenses allocated to the Fund from the Portfolio, at no more than 1.88%
of the average daily net assets of the Fund through February 29, 1996.
15
<PAGE>
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan. The agreement provided for the Fund to pay Morgan a fee for
these services which was computed daily and paid monthly at an annual rate
of 0.25% of the average daily net assets of the Fund. For the fiscal year
ended October 31, 1996, the fee for these services amounted to $146,876.
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
$2,818 for the fiscal year ended October 31, 1996.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The Trust, The JPM Institutional Funds, and the Master
Portfolios. The Trustees' Fees and Expenses shown in the financial
statements represents the Fund's allocated portion of the total fees and
expenses. The Trust's Chairman and Chief Executive Officer 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 $360.
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 FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
Shares sold.......................... 3,833,546 2,844,508
Reinvestment of dividends and
distributions....................... 31,373 64,658
Shares redeemed...................... (3,167,481) (2,099,527)
---------------- ----------------
Net Increase......................... 697,438 809,639
---------------- ----------------
---------------- ----------------
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The JPM Pierpont Emerging Markets Equity Fund
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The JPM Pierpont Emerging Markets Equity Fund (one of the series constituting
part of The JPM Pierpont Funds, hereafter referred to as the "Fund") at October
31, 1996, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended and for
the period November 15, 1993 (commencement of operations) through October 31,
1994, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
December 26, 1996
17
<PAGE>
The Emerging Markets Equity Portfolio
Annual Report October 31, 1996
(The following pages should be read in conjunction
with The JPM Pierpont Emerging Markets Equity Fund
Annual Financial Statements)
18
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
COMMON STOCK (79.0%)
ARGENTINA (6.3%)
Astra Compania Argentina De Petroleo SA
(Oil-Production)..................... 1,768,030 $ 3,182,845
Banco de Galicia y Buenos Aires
(Banking)............................ 114,700 2,064,600
Banco Frances del Rio de la Plata
S.A.(ADR) (Banking).................. 114,655 3,009,694
Capex SA (Electric).................... 486,300 3,526,109
Corporacion Cementeria Argentina SA
(Class B) (Building Materials)+...... 577,336 2,453,980
Molinos Rio de la Plata SA (ADR) (Multi
- Industry).......................... 983,447 3,098,239
Perez Companc SA (Spon. ADR)
(Oil-Services)+...................... 433,800 5,466,487
Quilmes Industrial (Quinsa)
(Registered) (Spon. ADR) (Food,
Beverages & Tobacco)................. 170,325 1,788,412
Telefonica de Argentina
(Telecommunications)................. 427,600 9,941,700
Transportadora De Gas Del Sur SA (ADR)
(Oil-Services)....................... 299,100 3,469,560
YPF Sociedad Anonima (ADS)
(Oil-Production)..................... 691,100 15,722,525
------------
53,724,151
------------
BOLIVIA (0.3%)
Compania Bolivia de Energia Electrica
(Electric)........................... 61,600 2,602,600
------------
BRAZIL (3.2%)
Bompreco Supermercados Do Norde SA
(Food, Beverages & Tobacco)+......... 197,100 3,252,150
Companhia Energetica De Minas Gerais SA
(Spon. ADR Represents Non-Voting
Shares) (Telecommunications)......... 176,419 5,596,222
Electrobras Centrale (Units)
(Utilities).......................... 11,382,000 3,534,064
Makro Atacadista (GDS) (144A)
(Retail)+............................ 360,000 3,348,000
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
BRAZIL (CONTINUED)
Perdigao Commercio Industrio SA (Food,
Beverages & Tobacco)................. 44,384,895 $ 77,763
Refrigeracao Parana SA (Spon. ADR)
(Household Appliances
Furnishings)+........................ 251,771 3,014,228
Santista Alimentos SA (Food, Beverages
& Tobacco)+.......................... 3,632,500 7,389,533
Votorantim Celulose E Papel SA (ADR)
(Forest Products & Paper)............ 139,250 1,376,182
------------
27,588,142
------------
CANADA (0.3%)
Echo Bay Mines Ltd. (Metals &
Mining).............................. 312,947 2,450,238
Minera Rayrock, Inc. (Subsidiary Voting
A Shares) (Metals & Mining)+......... 104,616 45,245
Minera Rayrock Inc. (Multiple Voting B
Shares) (Metals & Mining)+........... 6,000 2,595
------------
2,498,078
------------
CHILE (3.6%)
Administradora De Fondos De Pensiones
Provida SA (Multi - Industry)........ 110,100 2,559,825
Compania Cervecerias Unidas SA (Spon.
ADR) (Food, Beverages & Tobacco)..... 256,000 5,152,000
Compania de Telecomucicaciones de Chile
SA (Spon. ADR)
(Telecommunications)................. 69,700 6,874,162
Empresa Nacional De Electricas SA (ADR)
(Capital Goods)...................... 144,800 2,660,700
Enersis SA (ADR) (Electric)............ 80,000 2,350,000
Madeco S.A. (Spon. ADR) (Metals &
Mining).............................. 129,000 3,096,000
Sociedad Quimica Y Minera De Chile
S.A.(ADR) (Chemicals)................ 137,146 7,885,895
------------
30,578,582
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
CHINA (0.7%)
Dongfang Electrical Machinery Co.
(Electrical Equipment)............... 3,200,000 $ 778,034
Luoyang Glass Co. Ltd. (Building
Materials)........................... 3,574,000 614,747
Shanghai Erfangji Co. Ltd. (Series B)
(Capital Goods)+..................... 177,320 17,377
Shanghai Tyre and Rubber Co. Ltd.
(Series B) (Metals & Mining)+........ 3,229,990 781,658
Tsingtao Brewery Co. Ltd. (Series B)
(Food, Beverages & Tobacco).......... 6,720,000 2,411,697
Yizheng Chemical Fibre Co. Ltd.
(Chemicals).......................... 7,702,000 1,782,982
------------
6,386,495
------------
COLOMBIA (0.6%)
Banco De Colombia (ADR) (Banking)...... 440,000 3,410,000
Banco Ganadero SA (ADR) (Banking)...... 53,000 1,046,750
Banco Industrial Colombiano SA (ADR)
(Banking)............................ 30,400 558,600
Cementos Diamante SA (Building
Materials)+.......................... 16,200 224,775
Corporacion Financiera Del Valle SA
(ADR) (144A) (Banking)............... 18,815 101,037
------------
5,341,162
------------
CROATIA (0.3%)
Pliva D.D. (GDR) (144A)
(Pharmaceuticals)+................... 57,800 2,846,650
------------
CZECHOSLOVAKIA (2.6%)
Central European Media Entertainment
Ltd. (Entertainment, Leisure &
Media)+.............................. 123,000 3,490,125
Ceska Pojistovna (Insurance)+.......... 3,646 499,154
Cokoladovny Praha (Food, Beverages &
Tobacco)............................. 36,100 4,499,061
Czech Power Company (Utilities)+....... 92,400 3,299,999
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
CZECHOSLOVAKIA (CONTINUED)
Elektra Opatovice AS
(Telecommunications)................. 30,500 $ 4,447,916
SPT Telecom AS (Telecommunications)+... 46,800 5,012,544
Synthesia (Chemicals)+................. 63,000 890,625
------------
22,139,424
------------
ECUADOR (0.2%)
La Cemento Nacional CA (GDS) (144A)
(Construction & Housing)............. 10,240 2,068,480
------------
EGYPT (0.3%)
Commercial International Bank (Egypt)
(Banking)+........................... 170,550 2,430,337
------------
GHANA (0.1%)
Guiness Ghana Ltd. (Food, Beverages &
Tobacco)............................. 1,845,745 265,447
Pioneer Tobacco Co. (Food, Beverages &
Tobacco)............................. 2,848,800 220,088
Unilever Ghana Ltd. (Food, Beverages &
Tobacco)............................. 450,000 212,069
------------
697,604
------------
GREECE (3.0%)
Alpha Credit Bank SA (Banking)......... 63,680 4,072,091
Athens Medical Centre (Health
Services)............................ 190,000 1,406,815
Boutaris Wine Co. SA (Food, Beverages &
Tobacco)+............................ 3,500 3,166
Ergo Bank SA (Banking)................. 75,000 4,406,289
Hellenic Bottling Co. SA (Food,
Beverages & Tobacco)................. 235,602 7,592,391
Hellenic Sugar Industry SA (Food,
Beverages & Tobacco)................. 318,450 3,121,533
Michaniki SA (Building Materials)...... 126,720 1,127,525
Titan Cement Co. SA (Registered)
(Building Materials)................. 66,000 3,742,869
------------
25,472,679
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
HONG KONG (1.5%)
Citic Pacific Ltd. (Multi -
Industry)............................ 644,000 $ 3,131,585
Concord Land Development Company Ltd.
(Real Estate)+....................... 202,400 104,706
Guangdong Investment Ltd. (Financial
Services)............................ 3,192,190 2,291,249
Pacific Concord Holdings Ltd.
(Transport & Services)............... 10,120,000 2,683,026
Yue Yuen Industrial (Holdings) Ltd.
(Metals & Mining).................... 14,870,000 4,423,126
------------
12,633,692
------------
HUNGARY (1.7%)
Julius Meinl International AG (Food,
Beverages & Tobacco)................. 16,800 509,635
Magyar Olaj ES Gas (Natural Gas)....... 334,000 3,409,589
Pick Szeged RT (Spon. GDS) (144A)
(Food, Beverages & Tobacco).......... 45,600 2,055,835
Polifarb Cieszyn SA (Chemicals)+....... 464,300 2,097,446
Wedel SA (Food, Beverages & Tobacco)... 101,217 5,040,968
Zalakeramia RT (Building Materials).... 29,333 1,239,698
------------
14,353,171
------------
INDIA (3.9%)
Ashok Leyland Ltd. (GDR)
(Automotive)......................... 267,900 3,013,875
Bajaj Auto Ltd. (GDR) (Automotive)..... 156,200 4,998,400
Hindalco Industries Ltd. (GDR) (Metals
& Mining)............................ 273,450 5,026,011
Hindustan Development Corp. (GDR)
(144A) (Multi - Industry)............ 1,000,000 250,000
Indian Petrochemicals Corp. Ltd. (GDR)
(Chemicals).......................... 395,800 3,760,100
ITC Ltd. (GDR) (Food, Beverages &
Tobacco)............................. 710,000 6,297,700
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
INDIA (CONTINUED)
Raymond Ltd. (GDR) (Textiles).......... 136,100 $ 1,292,950
Reliance Industrial Infrastructure Ltd.
(GDR) (Chemicals)+................... 274,200 3,084,750
Shiram Industrial Enterprises Ltd.
(GDR) (144A) (Multi - Industry)...... 258,000 129,000
Shriram Industrial Enterprises Ltd.
(GDR) (Multi - Industry)+............ 246,900 123,450
Southern Petrochemical Industries Corp.
Ltd. (GDS) (144A) (Chemicals)........ 422,325 1,583,719
Videocon International Ltd. (GDS)
(Entertainment, Leisure & Media)..... 1,185,500 1,837,525
Wockhardt Ltd. (GDR)
(Pharmaceuticals).................... 284,400 1,848,600
------------
33,246,080
------------
INDONESIA (3.3%)
P.T. Fastfood Indonesia (Food,
Beverages & Tobacco)................. 197,000 313,034
P.T. Goodyear Indonesia (Capital
Goods)............................... 100,000 107,365
P.T. Indorama Synthetic (Textiles)..... 180,000 514,065
P.T. Indoryan Utama (Forest Products &
Paper)............................... 642,000 578,999
P.T. International Nickel Indonesia
(Metals & Mining).................... 3,555,700 7,635,172
P.T. Jakarta International Hotel &
Development (Entertainment, Leisure &
Media)............................... 3,887,500 2,504,294
P.T. Matahari Putra Prima (Retail)..... 241,000 209,588
P.T. Modern Photo Film Co. (Wholesale &
International Trade)................. 377,500 1,041,631
P.T. Multi Bintang Indonesia (Multi -
Industry)............................ 200,000 2,963,281
P.T. Niaga Bank (Banking).............. 1,308,600 3,456,255
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
INDONESIA (CONTINUED)
P.T. Pakuwon Jati (Real Estate)........ 11,158,000 $ 3,833,541
P.T. Pan Brothers Textiles
(Textiles)+.......................... 165,000 143,494
P.T. Putra Surya Perkasa (Building
Materials)........................... 1,350,000 1,289,993
P.T. Surya Toto Indonesia (Metals &
Mining).............................. 900,000 1,835,946
P.T. Tempo Scan Pacific (Health
Services)............................ 664,000 976,680
P.T. Unilever Indonesia (Entertainment,
Leisure & Media)..................... 47,605 715,557
------------
28,118,895
------------
ISRAEL (2.1%)
First International Bank (Banking)..... 52,500 5,466,004
Israel Chemicals Ltd. (Chemicals)+..... 4,492,500 3,659,165
Koors Industries Ltd. (Multi -
Industry)............................ 287,900 5,002,262
Teva Pharmaceutical Industries Ltd.
(ADR) (Pharmaceuticals).............. 90,900 3,800,756
------------
17,928,187
------------
MALAYSIA (9.9%)
Antah Holdings Berhad (Multi -
Industry)............................ 200 268
Box Pak (Malaysia) Berhad (Packaging &
Containers)+......................... 1,896 5,215
Carlsberg Brewery Malaysia Berhard
(Food, Beverages & Tobacco).......... 565,416 3,960,919
Cold Storage Malaysia Berhard (Food,
Beverages & Tobacco)................. 74,000 112,465
Edaran Otomobil Nasional Berhad
(Automotive)......................... 592,000 5,529,531
Golden Hope Plantations Berhard (Metals
& Mining)............................ 3,005,166 5,114,362
Hong Leong Industries Berhard (Multi -
Industry)............................ 807,000 4,120,195
Kian Joo Can Factory Berhard (Capital
Goods)............................... 814,000 4,445,883
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
MALAYSIA (CONTINUED)
Kuala Lumpur Kepong Berhad (Metals &
Mining).............................. 2,695,500 $ 6,774,350
Land & General Berhad (Real Estate).... 383,000 833,712
Lion Corp. Berhad (Multi - Industry)... 1,086,000 2,213,562
London & Pacific Insurance Co. Berhad
(Insurance).......................... 126,000 1,092,117
Malayan Cement Berhad (Building
Materials)........................... 349,000 780,420
Malaysia Mining Corp. Berhad (Metals &
Mining).............................. 2,322,600 2,472,756
Malaysian Assurance Alliance Berhad
(Insurance).......................... 493,500 2,421,940
Malaysian International Shipping Corp.
Berhad (Transport & Services)........ 1,666,333 4,979,243
Malaysian Tobacco Co. Berhad (Food,
Beverages & Tobacco)................. 322,000 471,533
Matsushita Electric Co. Malaysia Berhad
(Electronics)........................ 296,000 2,858,486
Nestle Malaysia Berhad (Food, Beverages
& Tobacco)........................... 1,065,000 8,345,827
New Straits Times Press Berhad
(Entertainment, Leisure & Media)..... 100,000 526,388
Nylex Malaysia Berhad (Chemicals)...... 633,000 1,390,437
Perlis Plantations Berhad (Transport &
Services)............................ 1,845,000 5,294,061
Putera Capital Berhad (Real Estate).... 1,000 2,830
Resorts World Berhad (Entertainment,
Leisure & Media)..................... 907,000 5,205,109
Shell Refining Company Malaysia Berhad
(Oil-Production)..................... 996,500 2,879,087
Sistem Televisyen Malaysia Berhad
(Entertainment, Leisure & Media)..... 2,540,000 5,478,792
Tanjong Co. Berhad (Entertainment,
Leisure & Media)..................... 393,000 1,524,310
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
MALAYSIA (CONTINUED)
Tenaga Nasional Berhad
(Telecommunications)................. 1,548,000 $ 6,187,951
UMW Holdings Berhad (Capital Goods)+... 200 918
------------
85,022,667
------------
MEXICO (7.8%)
Carso Global Telecom
(Telecommunications)+................ 783,256 1,894,975
Cementos Mexicanos SA de CV (Building
Materials)........................... 1,899,675 6,811,491
Cifra SA de CV (Class B) (Retail)+..... 2,645,000 3,373,524
Cydsa SA de CV (Class A) (Registered)
(Chemicals).......................... 456,720 855,642
Desc SA (Multi - Industry)+............ 10,666 51,610
Desc Sociedad de Fomento Industrial SA
de CV (Class A) (Multi -
Industry)+........................... 268,000 1,379,901
Desc Sociedad de Fomento Industrial SA
de CV (Class B) (Multi -
Industry)+........................... 244,000 1,192,755
Empresas La Moderna SA de CV (Food,
Beverages & Tobacco)................. 152,000 2,736,000
Fomento Economico Mexicana SA de CV
(Class B) (Food, Beverages &
Tobacco)............................. 1,800,000 5,449,133
Gruma SA de CV (Food, Beverages &
Tobacco)+............................ 554,000 2,742,507
Grupo Carso SA de CV (Class A) (Multi -
Industry)............................ 754,400 3,416,328
Grupo Casa Autrey SA de CV (Spon. ADR)
(Food, Beverages & Tobacco).......... 151,800 2,865,225
Grupo Financiero Banamex Accival SA de
CV (Class B) (Banking)+.............. 1,587,000 3,347,271
Grupo Financiero Banamex Accival SA de
CV (Class L) (Banking)+.............. 18,960 38,579
Grupo Financiero Bancomer SA de CV
(Financial Services)+................ 3,780,000 1,599,231
Grupo Financiero Inbursa SA de CV
(Financial Services)................. 26,322 84,910
Grupo Financiero Probursa SA de CV
(Class B) (Banking)+................. 1,050 64
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
MEXICO (CONTINUED)
Grupo Industrial Maseca SA de CV (Spon.
ADR) (Class B) (Food, Beverages &
Tobacco)............................. 161,733 $ 2,951,627
Industrias Penoles SA de CV (Class CP)
(Metals & Mining).................... 691,500 2,736,831
Kimberly Clark De Mexico SA de CV
(Class A) (Forest Products &
Paper)............................... 273,000 5,250,001
Telefonos De Mexico SA de CV (ADR L
Shares) (Telecommunications)......... 506,320 15,442,760
Telefonos De Mexico SA de CV (ADR)
(Telecommunications)................. 200,000 296,875
Transportacion Maritima Mexicana SA de
CV (ADR L shares) (Transport &
Services)............................ 349,800 2,448,600
------------
66,965,840
------------
MOROCCO (0.3%)
Banque Commerciale Du Maroc
(Banking)+........................... 170 6,936
Elf Gabon SA (Oil-Production).......... 9,461 2,259,585
------------
2,266,521
------------
PAKISTAN (0.8%)
Hub Power Co. Ltd. (Spon. GDR)
(Oil-Services)+...................... 235,500 4,651,125
Pakistan Telecommunications Corp. (GDR)
(Telecommunications)+................ 28,000 2,128,000
------------
6,779,125
------------
PERU (0.7%)
Cementos Norte Pacasmayo SA (Class T)
(Building Materials)................. 945,540 1,385,241
Creditcorp Holdings Ltd. (Financial
Services)............................ 120,416 2,107,280
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
PERU (CONTINUED)
Minsur SA (Class T) (Metals &
Mining).............................. 1 $ 9
Telefonica del Peru SA
(Telecommunications)................. 1,070,500 2,277,387
------------
5,769,917
------------
PHILIPPINES (2.4%)
Filinvest Land Inc. (Building
Materials)+.......................... 14,338,500 4,855,879
Manila Electric Company (Class B)
(Electric)........................... 663,000 4,869,059
Petron Corp. (Oil-Services)............ 11,353,344 3,326,509
Philippine Long Distance Telephone Co.
(ADR) (Telecommunications)........... 5,600 335,300
Philippine National Bank (Banking)+.... 323,290 3,721,275
RFM Corp. (Food, Beverages &
Tobacco)............................. 172,065 28,481
San Miguel Corp. (Class B) (Food,
Beverages & Tobacco)................. 1,089,000 3,936,639
------------
21,073,142
------------
POLAND (0.8%)
Bank Przemyslowo-Handlowy SA
(Banking)............................ 64,160 4,450,742
Zaklady Piwowarslie w Zywcu SA (Zywiec)
(Food, Beverages & Tobacco).......... 50,400 2,241,145
------------
6,691,887
------------
PORTUGAL (1.7%)
Banco Commercial Portugues SA
(Banking)............................ 271,985 3,378,253
Cimpor Cimentos de Portugal SA
(Building Materials)................. 122,000 2,565,692
Corporacao Industrial Do Norte
(Building Materials)................. 92,400 3,002,078
Mague-Gestao E Participacoes (Building
Materials)........................... 76 1,515
Portugal Telecom SA (ADR)
(Telecommunications)................. 138,000 3,570,750
Uniao Cervejaria SA (Food, Beverages &
Tobacco)............................. 132,000 2,381,643
------------
14,899,931
------------
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
RUSSIA (0.9%)
Rostelekom (RDC) (Registered)
(Telecommunications)+................ 295 $ 7,463,500
------------
SOUTH AFRICA (6.3%)
Amalgamated Banks of South Africa Ltd.
(Banking)............................ 1,231,735 6,272,830
Anglo-American Corp. of South Africa
Ltd. (Multi - Industry).............. 101,400 6,098,461
Anglovaal Ltd. (GDR) (Multi -
Industry)............................ 71,900 2,174,975
De Beers Consolidated Mines Ltd.
(Centenary Linked Units) (Metals &
Mining).............................. 229,000 6,758,240
Distillers Corporation (South Africa)
Ltd. (Food, Beverages & Tobacco)..... 850,000 2,082,884
Engen Ltd. (Oil-Production)............ 529,828 2,878,879
Iscor Ltd. (Metals & Mining)........... 3,001,500 2,142,553
Kersaf Investments Ltd. (Entertainment,
Leisure & Media)..................... 131,000 1,284,037
Omni Media Corp. Ltd. (Entertainment,
Leisure & Media)..................... 209,465 3,235,920
Pepkor Ltd. (ADS) (Retail)............. 500,000 3,686,250
Premier Group Ltd. (Food, Beverages &
Tobacco)............................. 1,163,150 1,541,610
Sasol Ltd. (Oil-Production)............ 698,200 8,517,334
Sun International Bophuthatswana Ltd.
(Entertainment, Leisure & Media)..... 2,199,600 1,968,527
Trans-Natal Coal Corp. Ltd. (Metals &
Mining).............................. 713,400 5,647,292
------------
54,289,792
------------
SOUTH KOREA (3.1%)
Dong Ah Construction Industrial Co.
Ltd. (EDR) (Building Materials)+..... 172,166 2,415,901
Hansol Paper Co. Ltd. (GDS) (Forest
Products & Paper).................... 142,188 2,097,273
Hansol Paper Co. Ltd. (GDS) (144A)
(Forest Products & Paper)+........... 20,903 308,319
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
SOUTH KOREA (CONTINUED)
Hyundai Motor Co. Ltd. (GDS)
(Automotive)+........................ 386,600 $ 4,155,950
Kia Motors Corp. (GDS) (144A)
(Automotive)+........................ 1,074 19,601
Korea Electric Power Corp. (ADR)
(Electric)........................... 234,500 4,221,000
Korea Electric Power Corp. (ADR)
(Electric)........................... 40,900 1,201,705
Korea Long Term Credit Bank
(Banking)............................ 86,570 1,956,343
Korea Zinc Co. Ltd. (Metals &
Mining).............................. 104,400 2,246,926
Pohang Iron & Steel Co. Ltd. (Metals &
Mining).............................. 100 6,366
Pohang Iron & Steel Co. Ltd. (ADS)
(Metals & Mining).................... 125,000 2,593,750
Samsung Co. (144A) (Electronics)+...... 7,699 28,871
Samsung Co. Ltd. (Building
Materials)+.......................... 126 473
Samsung Corp. (GDS represents 1/2
non-voting common share 144A)
(Electronics)........................ 666 2,614
Samsung Electronics Co. Ltd. (GDS
represents 1/2 non-voting common
share) (144A) (Electronics).......... 106,821 2,296,652
Samsung Electronics Co. Ltd. (GDS
represents 1/2 non-voting preferred
share) (144A) (Electronics).......... 32,193 515,088
Samsung Electronics Co. Ltd. (GDS
represents 1/2 voting common share)
(144A) (Electronics)................. 1,845 63,653
Samsung Electronics Co. Ltd. (GDS
represents 1/2 voting common share)
(144A) (Electronics)+................ 6,123 281,658
Shinhan Bank (Banking)................. 125,000 2,492,594
------------
26,904,737
------------
TAIWAN (2.5%)
Asia Cement Corp. (GDS) (Building
Materials)........................... 142,658 2,853,160
China Steel Corp. (GDS) (Metals &
Mining).............................. 181,700 3,522,709
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
TAIWAN (CONTINUED)
Hocheng Group Corp. (GDR) (144A)
(Building Materials)................. 408,148 $ 3,277,428
Macronix International Co. Ltd. (ADR)
(Semiconductors)+.................... 544,700 7,141,763
Microelectronics Technology Inc. (GDS)
(Telecommunications)+................ 55,946 265,744
President Enterprises Corp. (GDR)
(Food, Beverages & Tobacco)+......... 294,926 4,423,896
President Enterprises Corp. (GDR)
(144A) (Food, Beverages &
Tobacco)+............................ 29,476 442,134
------------
21,926,834
------------
THAILAND (4.5%)
Advanced Info Service Public Co. Ltd.
(Telecommunications)................. 202,500 2,747,105
American Standard Sanitaryware
(Thailand) Ltd. (Building
Materials)........................... 94,800 1,523,934
Bangkok Bank Public Co. Ltd.
(Banking)............................ 421,700 4,497,245
Bangkok Insurance Public Co. Ltd.
(Insurance).......................... 9,800 138,326
Bangkok Rubber Co. Ltd. (Metals &
Mining).............................. 454,300 156,747
Bumrungrad Hospital Public Co. Ltd.
(Health & Personal Care)............. 739,575 521,950
Charoen Pokphand Feedmill Public Co.
Ltd. (Agriculture)................... 329,700 1,279,759
Dhana Siam Finance and Securities
Public Co. Ltd. (Financial
Services)............................ 68 180
International Cosmetics Public Co. Ltd.
(Retail)............................. 262,040 1,705,492
Krung Thai Bank Public Co. Ltd.
(Banking)............................ 1,713,200 4,634,802
Land & House Public Co. Ltd. (Real
Estate).............................. 219,100 1,821,178
Lanna Lignite Public Co. Ltd. (Metals &
Mining).............................. 277,200 2,282,373
Phatra Thanakit Public Co. Ltd.
(Financial Services)................. 538,100 1,993,742
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
THAILAND (CONTINUED)
Saha-Union Public Co. Ltd.
(Textiles)........................... 665,400 $ 776,147
Sahavirya Steel Industries Public Co.
Ltd. (Metals & Mining)+.............. 3,270,600 1,243,865
Siam Cement Public Co. Ltd. (Building
Materials)........................... 165,500 5,658,334
TelecomAsia Corporation Public Co. Ltd.
(Telecommunications)+................ 1,301,300 2,500,044
Thai Farmers Bank Public Co. Ltd.
(Banking)............................ 330,100 2,523,796
Thai Plastic and Chemical Public Co.
Ltd. (Chemicals)..................... 289,400 902,069
The Oriental Hotel (Thailand) Public
Co. Ltd. (Entertainment, Leisure &
Media)............................... 264,200 1,450,223
------------
38,357,311
------------
TURKEY (1.8%)
Eregli Demir Ve Celik Fabrikalari A.S.
(Metals & Mining).................... 28,784,000 3,363,315
Guney Biracilik Ve Malt Sanayii A.S.
(Food, Beverages & Tobacco).......... 8,974,140 820,237
Koc Holding A.S. (Multi - Industry).... 16,649,000 3,285,531
Mardin Cimento Sanayii Ve Ticaret A.S.
(Building Materials)................. 1,187,000 40,068
Migros Turk A.S. (Food, Beverages &
Tobacco)............................. 3,854,200 3,883,022
Turkiye Garanti Bankasi A.S. (ADR)
(Banking)............................ 338,563 1,642,031
Turkiye Garanti Bankasi A.S. (ADR)
(144A) (Banking)..................... 48,512,500 2,418,571
------------
15,452,775
------------
VENEZUELA (1.2%)
Ceramicas Carabobo CA (Spon. ADR)
(Class A) (Building Materials)....... 1,408,000 1,492,480
Ceramicas Carabobo CA (Spon. ADR)
(Class B) (Building Materials)....... 351,998 373,118
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
VENEZUELA (CONTINUED)
Mavesa CA (Spon. ADR) (144A) (Food,
Beverages & Tobacco)................. 596,343 $ 3,662,858
Mavesa SA (Spon. ADR) (144A) (Food,
Beverages & Tobacco)................. 282,388 1,734,484
Venezolana de Prerreducidos Caroni CA
(GDS) (Metals & Mining).............. 263,000 1,341,300
Venezolana De Pulpa Y Papel CA (GDS)
(144A) (Metals & Mining)............. 739,047 1,939,998
------------
10,544,238
------------
ZIMBABWE (0.3%)
Trans Zambezi Industries Ltd. (Multi -
Industry)............................ 1,312,000 2,492,800
------------
TOTAL COMMON STOCK (COST
$701,911,377)....................... 677,555,426
------------
CONVERTIBLE PREFERRED STOCKS (0.3%)
PHILIPPINES (0.3%)
Philippine Long Distance Telephone Co.
(GDS represents 1 Series 2 Cnv Pfd)
(Telecommunications)................. 90,000 2,970,000
------------
(COST $3,202,982)....................
PREFERRED STOCK (7.7%)
ARGENTINA (0.1%)
Quilmes Industrial (Quinsa)(Sponsored
ADR non-voting) (Food, Beverages &
Tobacco)............................. 93,850 961,962
------------
BRAZIL (7.6%)
Banco Do Estado De Sao Paulo SA
(Banking)+........................... 14,100,000 32,938
Ceval Alimentos SA (ADR) (Food,
Beverages & Tobacco)................. 190,000 1,830,821
Companhia Acos Especiais Itabira (ADR)
(Metals & Mining).................... 420,000 1,520,400
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
26
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
BRAZIL (CONTINUED)
Companhia Energetica De Minas Gerais SA
(ADR) (Telecommunications)........... 287,547 $ 9,121,336
Companhia Hering (Textiles)............ 71,300,000 485,795
Companhia Vale Do Rio Doce SA (Spon.
ADR) (Metals & Mining)............... 387,200 8,140,493
Copene Petroquimica Do Nordeote SA
(Sponsored ADR) (Class A)
(Chemicals).......................... 166,200 3,178,658
Hering Textile Companhia SA
(Textiles)+.......................... 14,260,000 18,738
Iochpe Maxion SA (Automotive)+......... 22,260,000 2,144,991
Perdigao Commercio Industrio SA (Food,
Beverages & Tobacco)................. 900,000,000 1,681,933
Petroleo Brasileiro SA (Chemicals)..... 65,533,333 8,483,577
Telecomunicacoes Brasileiras SA (ADR)
(Telecommunications)................. 323,663 24,112,893
Telecomunicacoes de Minas Gerais SA
(Telecommunications)+................ 625,000 74,826
Telecomunicacoes de Rio de Janeiro SA
(Telecommunications)+................ 37,130,000 3,577,876
Varig SA (Transportation)+............. 130,000 199,924
------------
64,605,199
------------
GREECE (0.0%)(1)
Delta Dairy SA (Food, Beverages &
Tobacco)............................. 1,417 11,863
Michaniki SA (Building Materials)...... 11,520 92,082
------------
103,945
------------
TOTAL PREFERRED STOCK (COST
$52,294,837)........................ 65,671,106
------------
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------- ------------ ------------
RIGHTS AND WARRANTS (0.0%)(1)
MALAYSIA (0.0%)(1)
London & Pacific Insurance Co. Berhad
(Expire 11/18/96) (Insurance)........ 36,000 $ 212,297
UMW Holdings Berhad (Expire 1/26/00)
(Capital Goods)+..................... 200 487
------------
212,784
------------
THAILAND (0.0%)(1)
Thai Farmers Bank Public Co Ltd.
(Expire 9/30/99) (Banking)+.......... 41,263 62,691
------------
TOTAL WARRANTS (COST $87,990)........ 275,475
------------
PRINCIPAL
AMOUNT
------------
CONVERTIBLE BONDS (3.6%)
MALAYSIA (0.9%)
Telekom Malaysia Berhad, 4.00% due
10/03/04 (Telecommunications)........ $ 7,545,000 7,889,278
------------
INDONESIA (0.1%)
P.T. Inti Indorayon Utama, 7.00% due
05/02/06 (Forest Products & Paper)... 900,000 702,000
------------
MEXICO (0.1%)
Nacional Financiera, 11.25% due
05/15/98 (Financial Services)........ 25,000 803,125
------------
SOUTH KOREA (0.7%)
Daewoo Heavy Industries Ltd., 3.00% due
12/31/01 (Capital Goods)............. 200,000 200,000
Ssangyong Cement Ltd., 3.00% due
12/31/05 (Building Materials)........ 2,800,000 3,472,000
Ssangyong Oil Refining Co. Ltd., 3.75%
due 12/31/08 (Oil-Production)........ 2,000,000 2,125,000
------------
5,797,000
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
27
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
TAIWAN (1.4%)
Far Eastern Department Stores Ltd.,
3.00% due 07/06/01 (Retail).......... $ 3,383,000 $ 3,636,725
Pacific Electric Wire & Cable Co. Ltd.,
3.75% due 10/31/01 (Electrical
Equipment)........................... 300,000 404,250
Yang Ming Marine Transport Corp., 2.00%
due 10/06/01 (Transport &
Services)............................ 5,710,000 6,587,913
Yieh Loong Co. Ltd., 2.00% due 12/31/00
(Metals & Mining).................... 2,500,000 1,534,297
------------
12,163,185
------------
THAILAND (0.4%)
Siam Commercial Bank Public Co. Ltd.,
3.25% due 01/24/04 (Banking)......... 3,870,000 3,628,125
------------
TOTAL CONVERTIBLE BONDS (COST
$34,551,561)........................ 30,982,713
------------
<CAPTION>
UNITS
------------
<S> <C> <C>
UNIT TRUSTS (2.3%)
CHILE (0.1%)
Chile Fund Inc.+....................... 33,000 717,750
------------
GHANA (0.1%)
Blakeney Investors+*................... 100,000 1,003,000
------------
RUSSIA (1.9%)
New Century Holdings Ltd. (Partnership
III; Group B)+*...................... 1,800 6,186,600
New Century Holdings Ltd. (Partnership
IV; Group I)+*....................... 2,000 3,516,000
New Century Holdings Ltd. (Partnership
V; Group II)+*....................... 3,800 6,604,400
------------
16,307,000
------------
<CAPTION>
SECURITY DESCRIPTION UNITS VALUE
- --------------------------------------- ------------ ------------
<S> <C> <C>
TAIWAN (0.2%)
R.O.C. Taiwan Fund+.................... 140,000 $ 1,365,000
------------
TOTAL UNIT TRUSTS (COST
$10,649,500)........................ 19,392,750
------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (7.1%)
REPURCHASE AGREEMENT (7.1%)
State Street Bank and Trust, 4.75%
dated 10/31/95 due 11/01/96, proceeds
$60,437,973 (collateralized by
$48,980,000 U.S. Treasury Bond, 8.75%
due 5/1/17, valued at $61,639,371)
(cost $60,430,000)................... 60,430,000 60,430,000
------------
TOTAL INVESTMENTS (COST $863,128,247) (100.0%).......
857,277,470
OTHER ASSETS IN EXCESS OF LIABILITIES (0.0%).........
2,081,298
------------
NET ASSETS (100.0%).................................. $859,358,768
------------
------------
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $864,745,112 for Federal Income Tax
purposes at October 31, 1996 the aggregate gross unrealized appreciation and
depreciation was $115,341,129 and $122,808,771 respectively, resulting in net
unrealized depreciation of $7,467,642.
+ - Non-income producing securities.
* - Restricted securities. See Note 4.
1 - Less than .01%
ADR - American Depositary Receipt.
ADS - American Depositary Shares.
Spon. ADR - Sponsored ADR.
EDR - European Depositary Receipt.
GDR - Global Depositary Receipt.
GDS - Global Depositary Shares.
RDC - Russian Depositary Certificate.
144A - Securities restricted for resale to Qualified Institutional Buyers.
The Accompanying Notes are an Integral Part of the Financial Statements.
28
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
PORTFOLIO
-----------
<S> <C>
Banking............................................................................................... 15.80%
Telecommunications.................................................................................... 14.55%
Food, Beverages & Tobacco............................................................................. 12.69%
Metals & Mining....................................................................................... 10.13%
Building Materials.................................................................................... 5.98%
Multi-Industry........................................................................................ 5.41%
Chemicals............................................................................................. 4.61%
Oil-Production........................................................................................ 4.38%
Entertainment, Leisure & Media........................................................................ 3.41%
Transport & Services.................................................................................. 2.57%
Automotive............................................................................................ 2.32%
Unit Trusts........................................................................................... 2.26%
Electric.............................................................................................. 2.19%
Oil-Services.......................................................................................... 1.97%
Retail................................................................................................ 1.86%
Forest Products & Paper............................................................................... 1.20%
Financial Services.................................................................................... 1.04%
Pharmaceuticals....................................................................................... 0.99%
Capital Goods......................................................................................... 0.87%
Semiconductors........................................................................................ 0.83%
Utilities............................................................................................. 0.80%
Real Estate........................................................................................... 0.77%
Electronics........................................................................................... 0.71%
Insurance............................................................................................. 0.51%
Natural Gas........................................................................................... 0.40%
Textiles.............................................................................................. 0.38%
Household Appliances Furnishings...................................................................... 0.35%
Health Services....................................................................................... 0.28%
Construction & Housing................................................................................ 0.24%
Agriculture........................................................................................... 0.15%
Electrical Equipment.................................................................................. 0.14%
Wholesale & International Trade....................................................................... 0.12%
Health & Personal Care................................................................................ 0.06%
Transportation........................................................................................ 0.02%
Packaging & Containers................................................................................ 0.01%
-----------
100.00%
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
29
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost
$802,698,247) $796,847,470
Repurchase Agreement (Cost $60,430,000) 60,430,000
Foreign Currency at Value (Cost
$13,001,163) 13,232,543
Receivable for Investments Sold 1,944,107
Dividends Receivable 1,070,968
Interest Receivable 372,778
Deferred Organization Expenses 3,356
Prepaid Trustees' Fees and Expenses 2,354
Prepaid Expenses and Other Assets 5,294
-----------
Total Assets 873,908,870
-----------
LIABILITIES
Payable for Investments Purchased 13,367,199
Advisory Fee Payable 733,156
Custody Fee Payable 296,052
Payable to Custodian 39,609
Administrative Services Fee Payable 23,372
Administration Fee Payable 2,227
Fund Services Fee Payable 357
Accrued Expenses 88,130
-----------
Total Liabilities 14,550,102
-----------
NET ASSETS
Applicable to Investors' Beneficial
Interests $859,358,768
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
30
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign
Withholding Tax of $1,920,325) $15,533,339
Interest Income 2,951,479
----------
Investment Income 18,484,818
EXPENSES
Advisory Fee $7,825,873
Custodian Fees and Expenses 1,348,716
Administrative Services Fee 183,498
Professional Fees and Expenses 97,584
Administration Fee 71,970
Fund Services Fee 36,851
Trustees' Fees and Expenses 14,424
Amortization of Organization Expense 911
Miscellaneous 10,103
----------
Total Expenses 9,589,930
----------
NET INVESTMENT INCOME 8,894,888
NET REALIZED LOSS ON
Investment Transactions (7,070,634)
Foreign Currency Transactions (146,081)
----------
Net Realized Loss (7,216,715)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF
Investments 41,838,536
Foreign Currency Contracts and
Translations 275,233
----------
Net Change in Unrealized
Appreciation (Depreciation) 42,113,769
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $43,791,942
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
31
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
OCTOBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 8,894,888 $ 6,090,029
Net Realized Loss on Investment and
Foreign Currency Transactions (7,216,715) (28,967,303)
Net Change in Unrealized Appreciation
(Depreciation) of Investment and
Foreign Currency Contracts and
Translations 42,113,769 (102,424,260)
------------ ------------
Net Increase (Decrease) in Net
Assets Resulting from Operations 43,791,942 (125,301,534)
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS
Contributions 449,754,895 350,949,115
Withdrawals (253,675,258) (153,817,752)
------------ ------------
Net Increase from Investors'
Transactions 196,079,637 197,131,363
------------ ------------
Total Increase in Net Assets 239,871,579 71,829,829
NET ASSETS
Beginning of Fiscal Year 619,487,189 547,657,360
------------ ------------
End of Fiscal Year $859,358,768 $619,487,189
------------ ------------
------------ ------------
<CAPTION>
- -------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------
FOR THE FOR THE PERIOD
FISCAL NOVEMBER 15,
YEAR 1993
ENDED (COMMENCEMENT
OCTOBER OF
31, OPERATIONS) TO
-------- OCTOBER 31,
1996 1995 1994
--- --- ---------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.23% 1.31% 1.36%(a)
Net Investment Income 1.14% 1.07% 0.66%(a)
Portfolio Turnover 31% 41% 27%
Average Broker Commissions .0006 -- --
</TABLE>
- ------------------------
(a)Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
32
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Emerging Markets 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 on June 16, 1993. The Portfolio
commenced operations on November 15, 1993 and received a contribution of certain
assets and liabilities, including securities, with a value of $223,722,513 on
that date from the JPM Emerging Markets Equity Fund, Ltd. in exchange for a
beneficial interest in the Portfolio. The Portfolio's investment objective is to
provide a high total return from a portfolio of equity securities of companies
in emerging markets. The Declaration of the Trust permits the Trustees to issue
an unlimited number of beneficial interests in the Portfolio.
The preparation of financial statements prepared in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual amounts
could differ from those estimates. The following is a summary of the significant
accounting policies of the Portfolio:
a)The value of each security for which readily available market quotations
exists is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the 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 may 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;
operating data 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 assets are 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.
Investments in emerging markets may involve certain considerations and
risks not typically associated with investments in the Unites States.
Future economic and political developments in emerging market 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.
b)The books and records of the Portfolio are maintained in U.S. dollars. The
market values of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing
33
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
exchange rates at the end of the period. Purchases, sales, income and
expense are translated at the exchange rate prevailing on the respective
dates of such transactions. Translation gains and losses resulting from
changes in exchange rates during the reporting period and gains and losses
realized upon settlement of foreign currency transactions are reported in
the Statement of Operations.
Since 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)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 income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d)The Portfolio may enter into forward and spot foreign currency contracts
to protect securities and related receivables 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 forward and spot foreign currency contract
translations.
e)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxed 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.
f)The Portfolio incurred organization expenses in the amount of $7,629.
These costs were deferred and are being amortized on a straight-line basis
over a five year period from the commencement of operations.
g)The Portfolio's custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the Portfolio. It is the
policy of the Portfolio to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the Portfolio has
the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event
of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral or proceeds may be subject to legal
proceedings.
34
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
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 1.00%
of the Portfolio's average daily net assets. For the fiscal year ended
October 31, 1996, such fees amounted to $7,825,873.
b)The Portfolio had retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and exclusive placement agent.
Under an Administration Agreement, Signature provided administrative
services necessary for the operations of the Portfolio, furnished office
space and facilities required for conducting the business of the Portfolio
and paid the compensation of the Portfolio's officers affiliated with
Signature. Until December 28, 1995, the agreement provided for a fee to be
paid to Signature at an annual fee rate determined by the following
schedule: 0.01% of the first $1 billion of the aggregate average daily net
assets of the Portfolio and the other portfolios subject to the
Administration Agreement, 0.008% of the next $2 billion of such net
assets, 0.006% of the next $2 billion of such net assets, and 0.004% of
such net assets in excess of $5 billion. The daily equivalent of the fee
rate was applied each day to the net assets of the Portfolio. For the
period November 1, 1995 through December 28, 1995, such fees amounted to
$6,052.
Effective December 29, 1995, the Administration Agreement was amended such
that the fee charged was equal to the Portfolio's proportionate share of a
complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios (the "Master Portfolios") in which The
JPM Pierpont Funds, The JPM Institutional Funds or the JPM Advisor Funds
invest and 0.01% on the aggregate average daily net assets of the Master
Portfolios in excess of $7 billion. The portion of this charge paid by the
Portfolio was determined by the proportionate share its net assets bore to
the total net assets of The JPM Pierpont Funds, The JPM Institutional
Funds, The JPM Advisor Funds and the Master Portfolios. For the period
December 29, 1995 through July 31, 1996, such fees amounted to $60,199.
The Administration Agreement with Signature was terminated July 31,1996.
Effective August 1, 1996, certain administrative functions formerly
provided by Signature are provided by Funds Distributor, Inc. ("FDI"), a
registered broker dealer, and by Morgan. FDI also serves as the
Portfolio's exclusive placement agent. Under a Co-Administration Agreement
between FDI and the Portfolio, the Portfolio has agreed to pay FDI fees
equal to its allocable share of an annual complex-wide charge of $425,000
plus FDI's out-of-pocket expenses. The amount allocable to the Portfolio
is based on the ratio of the Portfolio's net assets to the aggregate net
assets of the JPM Pierpont Funds, The JPM Institutional Funds, The JPM
Advisor Funds and the Master Portfolios. For the period August 1, 1996
through October 31, 1996, the fee for these services amounted to $5,719.
c)Until August 31, 1995, the Portfolio had a Financial and Fund Accounting
Services Agreement with Morgan which provided that Morgan would receive a
fee, based on the 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, amortization of organization expenses and
brokerage
35
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
costs at 0.03% of the Portfolio's average daily net assets. From September
1, 1995 until December 28, 1995, an interim agreement between the
Portfolio and Morgan provided for the continuation of the oversight
functions that were outlined under the 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 "Services Agreement") with Morgan under which
Morgan was responsible for overseeing certain aspects of the
administration and operation of the Portfolio. Under the Services
Agreement, the Portfolio had agreed to pay Morgan a fee equal to its
proportionate share of an annual complex-wide charge. Until July 31, 1996
this charge was calculated daily based on the aggregate net assets of the
Master Portfolios in accordance with the following annual schedule: 0.06%
on the first $7 billion of the Master Portfolios' aggregate average daily
net assets and 0.03% of the aggregate average daily net assets in excess
of $7 billion. The portion of this charge paid by the Portfolio was
determined by the proportionate share that the Portfolio's net assets bore
to the net assets of the Master Portfolios and investors in the Master
Portfolios for which Morgan provides similar services. For the period
December 29, 1995 through July 31, 1996, such fees amounted to $114,989.
Effective August 1, 1996, the Services Agreement was amended such that the
annual complex-wide charge is calculated daily based on the aggregate net
assets of the Master Portfolios in accordance with the following annual
schedule: 0.09% on the first $7 billion of the Master Portfolios'
aggregate average daily net assets and 0.04% of the Master Portfolios'
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The allocation of the Fund's portion of
this charge is described above. For the period from August 1, 1996 through
October 31, 1996, the fee for these services amounted to $68,509.
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 $36,851 for the fiscal year ended October 31, 1996.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The JPM Pierpont Funds, The JPM Institutional Funds and the
Master Portfolios. The Trustees' Fees and Expenses shown in the financial
statements represent the Portfolio's allocated portion of the total fees
and expenses. The Portfolio's Chairman and Chief Executive Officer also
serves as Chairman of Group and received compensation and employee
benefits from Group in his role as Group's Chairman. The allocated portion
of such compensation and benefits included in the Fund Services Fee shown
in the financial statements was $4,700.
36
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS:
Investment transactions (excluding short-term investments) for the fiscal year
ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
----------- -----------
<S> <C> <C>
406,600,163 228,363,813
----------- -----------
</TABLE>
4. RESTRICTED SECURITIES:
<TABLE>
<CAPTION>
DATE U.S. $
SHARES ACQUIRED COST
------- ------------ ----------
<S> <C> <C> <C>
New Century Holdings Ltd. Partnership
III................................... 1,800 4/11/94 $1,800,000
New Century Holdings Ltd. Partnership
IV.................................... 2,000 6/16/94 $2,000,000
New Century Holdings Ltd. Partnership
V..................................... 3,800 11/9/94 $3,800,000
Blakeney Investors..................... 100,000 11/1/96 $1,000,000
</TABLE>
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the procedures described in Note 1a. The value of
these securities at October 31, 1996 is $17,310,000 representing 2.0% of net
assets.
37
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The Emerging Markets Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the supplementary data present fairly, in all material
respects, the financial position of The Emerging Markets Equity Portfolio (the
"Portfolio") at October 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the supplementary data for each of the two years in the
period then ended and for the period November 15, 1993 (commencement of
operations) through October 31, 1994, in conformity with generally accepted
accounting principles. These financial statements and supplementary data
(hereafter referred to as "financial statements") are the responsibility of the
Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits which involved
confirmation of securities at October 31, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
December 26, 1996
38
<PAGE>
THE JPM PIERPONT MONEY MARKET FUND
THE JPM PIERPONT TAX EXEMPT MONEY MARKET FUND
THE JPM PIERPONT TREASURY MONEY MARKET FUND
THE JPM PIERPONT SHORT TERM BOND FUND
THE JPM PIERPONT BOND FUND
THE JPM PIERPONT TAX EXEMPT BOND FUND
THE JPM PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE JPM PIERPONT DIVERSIFIED FUND
THE JPM PIERPONT EQUITY FUND
THE JPM PIERPONT CAPITAL APPRECIATION FUND
THE JPM PIERPONT INTERNATIONAL EQUITY FUND
THE JPM PIERPONT EMERGING MARKETS EQUITY FUND
THE JPM PIERPONT EUROPEAN EQUITY FUND
THE JPM PIERPONT JAPAN EQUITY FUND
THE JPM PIERPONT ASIA GROWTH FUND
FOR MORE INFORMATION ON HOW THE JPM PIERPONT
FAMILY OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
THE
JPM PIERPONT
EMERGING MARKETS
EQUITY FUND
ANNUAL REPORT
OCTOBER 31, 1996
