<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------------- ------------------------------------------------- --------------------- ------------ ---------------
<C> <S> <C> <C> <C>
BANKERS ACCEPTANCE -- FOREIGN (1.1%)
$ 50,000 Dai-Ichi Kangyo Bank............................. 12/29/97 5.620% $ 49,781,444
---------------
CERTIFICATES OF DEPOSIT -- DOMESTIC (1.5%)
64,000 Regions Bank..................................... 12/05/97-06/25/98 5.650-6.00 63,991,878
---------------
CERTIFICATES OF DEPOSIT -- FOREIGN (17.6%)
115,000 Deutsche Bank.................................... 12/17/97-02/03/98 5.570-5.760 114,999,621
45,000 Landesbank Hessen Thuringen...................... 06/09/98-06/19/98 5.940-6.080 44,988,746
11,000 National Westminster Bank, PLC................... 03/05/98-05/26/98 5.660-6.060 10,999,041
180,000 Norinchukin Bank................................. 02/13/98 6.020 180,003,645
10,000 Rabobank Nederland Inst. CTF..................... 03/24/98 5.990 9,998,521
10,000 Royal Bank of Canada............................. 05/12/98 6.140 9,998,730
5,000 San Paolo Bank................................... 12/10/97 5.820 5,000,000
125,000 Societe Generale................................. 12/02/97 5.560 125,000,000
75,000 Sumitomo Bank Yankee CD.......................... 12/09/97 5.600 75,000,000
150,000 Swiss Bank Corp.................................. 03/19/98 5.760-5.980 149,997,172
35,000 Westpac Banking Corp............................. 03/23/98 5.970 34,991,776
---------------
TOTAL CERTIFICATES OF DEPOSIT -- FOREIGN......... 760,977,252
---------------
COMMERCIAL PAPER -- DOMESTIC (14.1%)
40,000 Associate Corp. of North America................. 12/18/97 5.510 39,895,922
205,000 CXC Inc.......................................... 12/10/97-02/20/98 5.520-5.690 203,687,303
28,000 Dupont EI de Nemours & Co........................ 06/05/98 5.460 27,210,120
81,399 Enterprise Funding Corp.......................... 12/01/97-12/05/97 5.510-5.540 81,371,204
109,400 General Electric Capital Corp.................... 01/23/98-02/06/98 5.700 108,350,282
10,385 Southern Co...................................... 02/23/98 5.700 10,246,879
25,000 Trident Capital Finance Inc...................... 01/23/98 5.770 24,787,632
112,943 Windmill Funding Corp............................ 12/05/97-02/13/98 5.520-5.800 111,908,318
---------------
TOTAL COMMERCIAL PAPER -- DOMESTIC............... 607,457,660
---------------
COMMERCIAL PAPER -- FOREIGN (16.1%)
110,000 Bank of Montreal................................. 12/04/97 5.592 109,948,740
199,000 Cregem North America Inc......................... 12/18/97-02/17/98 5.515-5.700 197,958,010
6,692 Den Danske Bank.................................. 12/15/97 5.520 6,677,635
175,000 Export Import Bank of Korea...................... 12/17/97 6.010 174,532,556
25,000 Halifax Building Society......................... 12/08/97 5.640 24,972,583
15,500 KFW International Finance, Inc................... 12/04/97 5.520 15,492,870
28,000 Korea Development Bank........................... 12/23/97 6.000 27,897,333
35,000 Rabobank Nederland N.V........................... 04/29/98 5.550 34,196,021
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------------- ------------------------------------------------- --------------------- ------------ ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER -- FOREIGN (CONTINUED)
$ 47,523 UBS Finance Delaware, Inc........................ 12/01/97 5.760% $ 47,523,000
58,000 Westpac Capital Corp............................. 12/05/97 5.640 57,963,653
---------------
TOTAL COMMERCIAL PAPER -- FOREIGN................ 697,162,401
---------------
FLOATING RATE NOTES (36.1%)(a)
100,000 Asset Backed Securities Investment Trust, Series
1997-C, (resets monthly to one month LIBOR, due
06/15/98) (144A)................................ 12/15/97(b) 5.688 100,000,000
50,000 Asset Backed Securities Investment Trust, Series
1997-E, Class N, (resets monthly to one month
LIBOR, due 08/15/98) (144A)..................... 12/15/97(b) 5.625 50,000,000
27,800 Asset Backed Securities Investment Trust, Series
1995-A, Class 2, (resets monthly to one month
LIBOR -3 basis points, due 08/10/98)............ 12/10/97(b) 5.607 27,793,943
60,000 Bankers Trust, (resets daily to Prime rate -281
basis points, due 04/23/98)..................... 12/01/97(b) 5.690 59,988,623
64,000 Bankers Trust, (resets daily to Fed Fund rate +5
basis points, due 07/07/98)..................... 12/01/97(b) 5.580 63,959,367
100,000 Bayerische Landesbank, (resets monthly to one
month LIBOR -13 basis points, due 06/26/98)..... 12/26/97(b) 5.558 99,955,883
31,500 Corestates Bank, (resets monthly to one month
LIBOR +3 basis points, due 04/21/98)............ 12/31/97(b) 5.598 31,500,000
10,000 Den Danske Bank, (resets monthly to one month
LIBOR -5 basis points, due 03/25/98)............ 12/25/97(b) 5.598 9,999,900
25,000 FCC National Bank, (resets monthly to one month
LIBOR -12 basis points, due 07/02/98)........... 12/01/97(b) 5.536 24,989,828
35,000 FCC National Bank, (resets daily to Fed Fund rate
+20 basis points, due 07/23/98)................. 12/01/97(b) 5.770 35,017,508
25,000 First USA Bank, (resets quarterly to three month
LIBOR +28 basis points, due 02/17/98)........... 02/17/98(b) 6.125 25,017,090
20,000 First USA Bank, (resets quarterly to three month
LIBOR +9 basis points, due 04/28/98)............ 01/28/98(b) 5.930 20,011,181
7,000 First USA Bank, (resets monthly to one month
LIBOR +5 basis points, due 05/07/98)............ 12/16/97(b) 5.738 7,002,667
50,000 First USA Bank, (resets monthly to one month
LIBOR +7 basis points, due 05/13/98)............ 12/15/97(b) 5.758 50,024,139
5,000 First USA Bank, (resets quarterly to three month
LIBOR + 30 basis points, due 07/29/98).......... 01/16/98(b) 6.144 5,010,816
15,000 First USA Bank, (resets quarterly to three month
LIBOR + 30 basis points, due 09/03/98).......... 12/17/97(b) 6.081 15,039,791
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------------- ------------------------------------------------- --------------------- ------------ ---------------
<C> <S> <C> <C> <C>
FLOATING RATE NOTES (CONTINUED)
$ 20,000 First Union Bank of North Carolina, (resets
monthly to one month LIBOR -3 basis points, due
12/19/97)....................................... 12/19/97(b) 5.720% $ 20,000,000
44,200 Jacksonville Health Facility Hospital, (resets
monthly, due 08/15/14).......................... 12/03/97(b) 5.830 44,200,000
162,500 Korea Development Bank, (resets quarterly, due
06/16/98)....................................... 12/16/97(b) 5.843 162,482,994
138,689 Liquid Asset Backed Securities Trust, Series
1997-2, (resets monthly to one month LIBOR, due
06/30/98) (144A)................................ 12/30/97(b) 5.688 138,689,231
94,622 Natwest Asset Trust Securities, Series R-13/14A,
(resets monthly to one month LIBOR + 2 basis
points, due 10/15/01) (144A).................... 12/15/97(b) 5.708 94,622,000
66,500 Old Kent, (resets daily to Prime rate -285 basis
points, due 11/04/98)........................... 12/01/97(b) 5.650 66,500,000
50,000 PNC Bank, N.A., (resets daily to Fed Fund rate +
7 basis points, due 06/04/98)................... 12/01/97(b) 5.720 49,986,098
100,000 Racers 97-MM-8-6, (resets monthly to one month
LIBOR -2 basis points, due 08/28/98) (144A)..... 12/28/97(b) 5.615 99,992,805
75,000 Short Term Card Account Trust, (resets monthly to
one month LIBOR + 2 basis points, due 01/15/98)
(144A).......................................... 12/15/97(b) 5.504 75,001,364
45,000 Societe Generale, (resets daily to Fed Fund rate
+ 9 basis points, due 01/18/98)................. 12/01/97(b) 5.610 44,997,802
137,000 Triangle Funding Ltd. Series 1997-1, (resets
quarterly to three month LIBOR, due 11/15/98)
(144A).......................................... 01/15/98(b) 5.750 137,000,000
---------------
TOTAL FLOATING RATE NOTES........................ 1,558,783,030
---------------
TAXABLE MUNICIPALS (1.5%) (a)
39,240 Sacramento, (resets quarterly to three month
LIBOR, due 08/15/14)............................ 02/14/98(b) 5.500 39,236,875
25,000 Wake Forest University, (resets weekly, due
07/01/17), LOC Wachovia Bank.................... 12/03/97(b) 5.970 25,000,000
---------------
TOTAL TAXABLE MUNICIPALS......................... 64,236,875
---------------
TIME DEPOSITS -- DOMESTIC (2.5%)
110,000 Suntrust Bank.................................... 12/01/97 5.500-5.625 110,000,000
---------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- -------------- ------------------------------------------------- --------------------- ------------ ---------------
<C> <S> <C> <C> <C>
TIME DEPOSITS -- FOREIGN (6.3%)
$ 100,000 Deutsche Bank.................................... 12/01/97 5.750% $ 100,000,000
100,000 Wachovia Bank & Trust, Grand Cayman.............. 12/01/97 5.510 100,000,000
70,000 Westdeutsche Landesbank.......................... 12/02/97 5.594 70,000,000
---------------
TOTAL TIME DEPOSITS -- FOREIGN................... 270,000,000
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (0.3%)
11,725 Student Loan Marketing Association............... 12/01/97 5.630 11,725,000
---------------
REPURCHASE AGREEMENTS (2.5%)
6,129 Goldman Sachs Repurchase Agreement, dated
11/28/97, proceeds include interest $6,131,809
(collateralized by $6,027,000 U.S. Treasury
Notes 6.250%, due 05/31/99 valued at
$6,251,824)..................................... 12/01/97 5.500 6,129,000
100,000 Greenwich Capital Repurchase Agreement, dated
11/28/97, proceeds include interest $100,047,917
(collateralized by $128,432,714 GNMA
7.00%-8.250%, due 12/15/08-11/20/27 valued at
$102,000,205)................................... 12/01/97 5.750 100,000,000
---------------
106,129,000
---------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE (99.6%).................................. 4,300,244,540
OTHER ASSETS IN EXCESS OF LIABILITIES (0.4%)........................................... 19,401,267
---------------
NET ASSETS (100.0%).................................................................... $ 4,319,645,807
---------------
---------------
</TABLE>
- ------------------------------
(a)The Coupon rate shown on floating or adjustable rate securities represents
the rate at the end of the reporting period. The due date in the security
description reflects the final maturity date.
(b) Reflects the next interest rate reset date.
144A -- Securities restricted for resale to Qualified Institutional Buyers.
LOC -- Letter of Credit
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value $4,300,244,540
Cash 487,430
Interest Receivable 19,627,584
Prepaid Trustees' Fees 6,851
Prepaid Expenses and Other Assets 22,379
--------------
Total Assets 4,320,388,784
--------------
LIABILITIES
Advisory Fee Payable 428,293
Custody Fee Payable 150,688
Administrative Services Fee Payable 104,558
Fund Services Fee Payable 5,582
Administration Fee Payable 4,315
Accrued Expenses 49,541
--------------
Total Liabilities 742,977
--------------
NET ASSETS
Applicable to Investors' Beneficial Interests $4,319,645,807
--------------
--------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $228,228,783
EXPENSES
Advisory Fee $5,063,662
Administrative Services Fee 1,256,131
Custodian Fees and Expenses 686,535
Fund Services Fee 143,027
Administration Fee 96,662
Professional Fees and Expenses 92,381
Trustees' Fees and Expenses 70,918
Miscellaneous 33,130
----------
Total Expenses 7,442,446
------------
NET INVESTMENT INCOME 220,786,337
NET REALIZED LOSS ON INVESTMENTS (105,748)
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $220,680,589
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1997 NOVEMBER 30, 1996
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 220,786,337 $ 185,209,978
Net Realized Gain (Loss) on Investments (105,748) 267,432
----------------- -----------------
Net Increase in Net Assets Resulting from
Operations 220,680,589 185,477,410
----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 22,011,079,297 18,847,392,256
Withdrawals (21,760,363,996) (18,519,575,165)
----------------- -----------------
Net Increase from Investors' Transactions 250,715,301 327,817,091
----------------- -----------------
Total Increase in Net Assets 471,395,890 513,294,501
NET ASSETS
Beginning of Fiscal Year 3,848,249,917 3,334,955,416
----------------- -----------------
End of Fiscal Year $ 4,319,645,807 $ 3,848,249,917
----------------- -----------------
----------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 12, 1993
FOR THE FISCAL YEAR ENDED (COMMENCEMENT OF
NOVEMBER 30, OPERATIONS) TO
----------------------------- NOVEMBER 30,
1997 1996 1995 1994 1993
----- ----- ----- ----- ----------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.18% 0.19% 0.19% 0.20% 0.19%(a)
Net Investment Income 5.43% 5.29% 5.77% 3.90% 2.98%(a)
Decrease Reflected in Expense Ratio due to
Expense Reimbursement -- 0.00%(b) -- 0.00%(b) --
</TABLE>
- ------------------------
(a) Annualized.
(b) Less than 0.01%.
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Prime Money Market Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Portfolio's investment objective is to maximize
current income and maintain a high level of liquidity. The Portfolio commenced
operations on July 12, 1993. The Declaration of Trust permits the Trustees to
issue an unlimited number of beneficial interests in the Portfolio. Prior to May
12, 1997, the Portfolio's name was The Money Market Portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Portfolio:
a) Investments are valued at amortized cost which approximates market value.
The amortized cost method of valuation values a security at its cost at
the time of purchase and thereafter assumes a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instruments.
The Portfolio's custodian or designated subcustodians, as the case may be
under triparty repurchase agreements, take possession of the collateral
pledged for investments in repurchase agreements on behalf of the
Portfolio. It is the policy of the Portfolio to value the underlying
collateral daily on a mark-to-market basis to determine that the value,
including accrued interest, is at least equal to the repurchase price plus
accrued interest. In the event of default of the obligation to repurchase,
the Portfolio has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. Under certain circumstances,
in the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject
to legal proceedings.
b) Securities transactions are recorded on a trade date basis. 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.
c) 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. The cost of securities is substantially the
same for book and tax purposes.
2. TRANSACTIONS WITH AFFILIATES
a) The Portfolio has an Investment Advisory Agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the agreement,
the Portfolio pays Morgan at an annual rate of 0.20% of the Portfolio's
average daily net assets up to $1 billion and 0.10% on any excess over $1
billion. For the fiscal year ended November 30, 1997, this fee amounted to
$5,063,662.
24
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
b) The Portfolio has retained Funds Distributor Inc. ("FDI"), a registered
broker-dealer, to serve as the co-administrator and exclusive placement
agent. Under a Co-Administration Agreement between FDI and the Portfolio,
FDI provides administrative services necessary for the operations of the
Portfolio, furnishes office space and facilities required for conducting
the business of the Portfolio and pays the compensation of the officers
affiliated with FDI. 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
Portfolio and certain other investment companies subject to similar
agreements with FDI. For the fiscal year ended November 30, 1997, the fee
for these services amounted to $96,662.
c) The Portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is 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 allocable share of an annual complex-wide charge. This charge
is calculated based on the aggregate average daily net assets of the
Portfolio and certain other portfolios for which Morgan acts as investment
advisor (the "Master Portfolios") and J.P. Morgan Series Trust in
accordance with the following annual schedule: 0.09% on the first $7
billion of their aggregate average daily net assets and 0.04% of their
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The portion of this charge payable by
the Portfolio is determined by the proportionate share that its net assets
bear to the net assets of the Master Portfolios, other investors in the
Master Portfolios for which Morgan provides similar services, and J.P.
Morgan Series Trust. For the fiscal year ended November 30, 1997, the fee
for these services amounted to $1,256,131.
Morgan has agreed to reimburse the Portfolio to the extent necessary to
maintain the total operating expenses of the Portfolio at no more than
0.20% of the average daily net assets of the Portfolio through March 31,
1998. For the fiscal year ended November 30, 1997, there was no
reimbursement under this agreement.
d) The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $143,027 for the fiscal year ended November 30, 1997.
e) An aggregate annual fee of $75,000 is paid to each Trustee for serving as
a Trustee of the J.P. Morgan Funds, J.P. Morgan Institutional Funds, the
Master Portfolios and J.P. Morgan Series Trust. The Trustees' Fees and
Expenses shown in the financial statements represents the Portfolio's
allocated portion of the total fees and expenses. Prior to April 1, 1997,
the aggregate annual Trustee Fee was $65,000. The Portfolio's Chairman and
Chief Executive Officer also serves as Chairman of Group and receives
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 $28,900.
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The Prime Money Market Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the supplementary data present fairly, in all material
respects, the financial position of The Prime Money Market Portfolio (the
"Portfolio") at November 30, 1997, 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 four years in the
period then ended and for the period July 12, 1993 (commencement of operations)
through November 30, 1993, in conformity with generally accepted accounting
principles. These financial statements and supplementary data (hereafter
referred to as "financial statements") are the responsibility of the Portfolio's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1997 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
January 20, 1998
26
