<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 86.0%
ARGENTINA - 0.9%
25,400 Grupo Financiero Galicia S.A. ADR(+) $ 369,888
9,421 Perez Companc S.A. ADR 135,427
133,400 Siderar S.A.I.C. Cl A 352,246
21,547 Telecom Argentina Stet France Telecom S.A. ADR 370,339
---------------
1,227,900
---------------
BRAZIL - 4.6%
59,413 Centrais Eletricas Brasileiras S.A. ADR 527,688
5,509,000 CIA Siderurgica Nacional(+) 152,959
28,026 Companhia Brasileira de Distribuicao Grupo
Pao de Acucar ADR 998,426
123,828 Companhia Paranaense de Energia - Copel ADR(+) 1,122,192
9,446 Perdigao S.A.(+) 64,343
102,087 Petroleo Brasileiro S.A. ADR 2,707,296
199,600 Souza Cruz S.A. 970,546
---------------
6,543,450
---------------
CHILE - 2.5%
24,500 Administradora de Fondos de Pensiones
Provida S.A. 520,625
39,500 Banco Santander Chile ADR 530,781
52,283 Companhia de Telecomunicaciones
de Chile S.A. ADR(+) 797,316
36,900 Embotelladora Andina S.A. Cl A ADR 442,800
52,410 Gener S.A. ADR 635,471
47,824 Madeco S.A. ADR(+) 242,109
1,261 Sociedad Quimica y Minera de Chile
S.A. Cl A ADR 25,535
25,240 Sociedad Quimica y Minera de Chile
S.A. Cl B ADR 466,940
---------------
3,661,577
---------------
COLOMBIA - 0.2%
84,700 Cementos Diamante S.A. GDR 144A(+) 211,750
9,482 Corporacion Financiera del Valle S.A. ADR(+) 22,283
---------------
234,033
---------------
CROATIA - 0.4%
55,860 Pliva d.d. GDR 144A 589,323
---------------
CZECH REPUBLIC - 1.0%
297,500 Ceske Energeticke Zavody A.S.(+) 724,260
48,700 Cesky Telecom A.S.(+) 647,550
---------------
1,371,810
---------------
EGYPT - 0.4%
22,800 Egyptian Co. for Mobile Services (Mobinil)(+) 447,216
31,400 Orascom Telecommunications Cl A GDR 144A(+) 191,540
---------------
638,756
---------------
SHARES VALUE
--------------------------------------------------------------------------------
GREECE - 2.1%
23,554 Alpha Bank S.A. $ 868,692
60,835 Hellenic Telecommunications Organization S.A. 1,060,343
28,179 National Bank of Greece S.A. 1,070,907
1 Silver & Baryte Ores Mining Co. S.A. 27
--------------
2,999,969
--------------
HONG KONG - 3.5%
2,320,830 Brilliance China Automotive Holdings Ltd. 743,942
114,701 China Mobile (Hong Kong) Ltd. ADR(+) 3,512,718
200,000 Citic Pacific Ltd. 802,657
--------------
5,059,317
--------------
HUNGARY - 1.2%
126,834 Matav RT 563,471
50,600 MOL Magyar Olaj-es Gazipari RT 781,080
7,600 OTP Bank RT 352,072
--------------
1,696,623
--------------
INDIA - 5.2%
137,676 Apollo Hospitals Enterprise Ltd. 607,174
3,910 Asian Paints (India) Ltd. 20,040
61,400 Bajaj Auto Ltd. 342,167
111,847 Bajaj Auto Ltd. GDR 682,267
44,633 BSES Ltd. GDR 504,353
36,348 Hindalco Industries Ltd. GDR 547,037
58,900 ITC Ltd. 957,981
138,891 Larsen & Toubro Ltd. GDR 875,013
107,828 Reliance Industries Ltd. GDR 1,420,635
405,772 Tata Engineerng & Locomotive Co. Ltd. GDR 608,658
265,700 United Breweries Ltd. 279,117
73,500 Wockhardt Ltd.(f) 583,637
--------------
7,428,079
--------------
INDONESIA - 2.2%
51,500 PT Indosat (Persero) Tbk ADR 363,719
638,700 PT International Nickel Indonesia Tbk(+) 464,013
148,605 PT Unilever Indonesia Tbk 2,333,860
-------------
3,161,592
-------------
ISRAEL - 6.1%
696,451 Bank Hapoalim Ltd. 1,762,166
233,854 Bank Leumi Le-Israel 459,457
250,573 Bezeq Israeli Telecommunication Corp. Ltd. 1,254,076
15,300 Check Point Software Technologies Ltd.(+) 2,423,138
31,982 Delta-Galil Industries Ltd. 468,369
21,500 ECI Telecom Ltd. 507,938
30,400 Teva Pharmaceutical Industries Ltd. ADR 1,797,400
-------------
8,672,544
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
1
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
MALAYSIA - 1.7%
70,732 British American Tobacco (Malaysia) Berhad $ 646,825
305,500 MAA Holdings Berhad 611,000
102,000 Malakoff Berhard 250,974
106,000 Malayan Banking Berhad 424,000
92,000 Nestle (Malaysia) Berhad 486,632
-------------
2,419,431
-------------
MEXICO - 13.4%
75,258 Cemex S.A. de C.V. ADR 1,589,825
936,090 Controladora Comercial Mexicana S.A. de C.V. 1,036,785
875,000 Empaques Ponderosa S.A. de C.V. Cl B(+) 511,990
42,133 Grupo Aeroportuario de Sureste
S.A. de C.V. ADR(+) 626,728
1,307,715 Grupo Financiero Banamex Accival
S.A. de C.V. Cl O(+) 2,030,473
48 Grupo Financiero BBVA Bancomer
S.A. de C.V. Cl O(+) 30
443,333 Grupo Gigante S.A. de C.V.(+) 625,359
118,483 Grupo Iusacell S.A. de C.V. Cl V ADR(+) 1,540,279
215,000 Grupo Modelo S.A. de C.V. Cl C 572,854
23,845 Grupo Televisa S.A. ADR(+) 1,290,611
185,168 Nuevo Grupo Mexico Cl B(+) 615,260
25,000 Panamerican Beverages Inc. ADR 412,500
106,642 Telefonos de Mexico S.A. de C.V. Cl L ADR 5,752,002
38,793 Tubos de Acero de Mexico S.A. 599,902
886,508 Wal-Mart de Mexico S.A. de C.V. Cl V(+) 2,125,840
------------
19,330,438
------------
PAKISTAN - 0.8%
90,800 Hub Power Co. Ltd. GDR(+) 703,700
10,707 Pakistan Telecommunications Ltd. GDR 450,122
-------------
1,153,822
-------------
PEOPLES REPUBLIC OF CHINA - 0.4%
3,928,100 Sinopec Zhenhai Refining & Chemical Co. Ltd. 543,954
-------------
PERU - 0.4%
43,800 Companhia de Minas Buenaventura S.A. ADR 563,925
-------------
PHILIPPINES - 0.2%
413,740 First Philippine Holdings Corp.(+) 169,864
186,621 Manila Electric Co. Cl B 153,237
-------------
323,101
-------------
POLAND - 2.1%
14,300 Agora S.A. GDR(+) 261,603
17,000 Bank Polska Kasa Opieki S.A.(+) 171,230
74,620 Bank Polska Kasa Opieki S.A. GDR 751,797
39,384 Elektrim Spolka Akcyjna S.A.(+) 311,927
55,600 KGHM Polska Miedz S.A.(+) 296,765
38,200 Polski Koncern Naftowy Orlen S.A. GDR 292,684
500 Polski Koncern Naftowy Orlen S.A. GDR 144A 3,838
176,200 Telekomunikacja Polska S.A. GDR 144A 868,419
-------------
2,958,263
-------------
SHARES VALUE
--------------------------------------------------------------------------------
RUSSIAN FEDERATION - 3.1%
105,800 OAO Gazprom ADR(+) $ 854,335
29,573 OAO Lukoil Holding ADR(+) 1,579,198
69,519 Surgutneftegaz ADR 893,319
57,322 Vimpel Communications ADR(+) 1,117,779
-----------
4,444,631
-----------
SLOVAK REPUBLIC - 0.3%
12,700 Slovakofarma A.S. 385,350
------------
SOUTH AFRICA - 9.2%
287,000 ABSA Group Ltd. 975,816
38,800 Anglo American Platinum Corp. Ltd. 1,514,281
167,500 Billiton Plc 647,069
1,706,900 BOE Ltd. 869,404
30,800 De Beers 847,553
201,938 Dimension Data Holdings Plc(+) 1,741,881
153,800 Gold Fields Ltd. 457,817
223,383 Highveld Steel & Vanadium Corp. Ltd. 458,073
22,249 Impala Platinum Holdings Ltd. 953,693
308,420 Iscor Ltd.(+) 489,640
121,000 JD Group Ltd. 608,306
126,611 Liberty Group Ltd. 966,496
71,900 Sappi Ltd. 492,733
148,800 Sasol Ltd. 1,139,815
95,764 South African Breweries Plc 573,923
152,008 Standard Bank Investment Corp. Ltd. 532,924
--------------
13,269,424
--------------
SOUTH KOREA - 10.9%
148,530 H&CB ADR(+) 1,782,360
755 Hansol Paper Co., Ltd. GDR 1,151
99,490 Hyundai Electronics Industries Co., Ltd.(+) 611,372
79,900 Hyundai Motor Co. Ltd. 913,143
133,205 Korea Electric Power Corp. 2,974,424
29,724 Korea Telecom Corp. ADR 1,096,073
28,700 LG Chemical Ltd. 282,585
25,699 Pohang Iron & Steel Co., Ltd. 1,493,366
7,900 Pohang Iron & Steel Co., Ltd. ADR 124,919
9,200 Samsung Electronics 1,152,527
28,455 Samsung Electronics GDR 939,015
21,741 Samsung Fire & Marine Insurance 504,582
100,009 Shinhan Bank GDR 2,035,182
77,800 SK Corp. 937,020
35,539 Sk Telecom Co., Ltd. ADR 890,696
---------------
15,738,415
---------------
TAIWAN (REPUBLIC OF CHINA) - 6.5%
183,600 Asustek Computer Inc. 913,433
222,724 Asustek Computer Inc. GDR 1,219,417
513,560 Cathay Life Insurance Co., Ltd. 920,444
1,298,511 China Steel Corp. 750,352
---------------
42,642 China Steel Corp. GDR 495,713
---------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
2
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
<TABLE>
<C> <S> <C>
SHARES VALUE
--------------------------------------------------------------------------------
5,201 Evergreen Marine Corp. GDR(+) $ 33,807
822,000 Far Eastern Textile Ltd. 675,665
161,184 President Chain Store Corp. 458,235
2,568 Siliconware Precision Industries Co. ADR(+) 9,630
220,000 Synnex Technology International Corp. 462,285
1,334,600 Taishin International Bank(+) 622,739
707,928 Taiwan Semiconductor Manufacturing Co. Ltd.(+) 2,143,844
79,500 Via Technologies Inc.(+) 569,945
-------------
9,275,509
-------------
THAILAND - 1.2%
65,300 Advanced Info Service Public Co. Ltd.(+) 537,425
120,573 BEC World Public Co. Ltd.(+) 575,658
136 Dhana Siam Finance Public Co. Ltd.(f)(+) -
103,700 Shin Corp. Public Co. Ltd.(+) 308,848
492,100 TelecomAsia Corp. Public Co. Ltd.(+) 296,479
--------------
1,718,410
--------------
TURKEY - 4.0%
15,057,000 Aksa Akrilik Kimya Sanayi A.S. 319,735
11,875,500 Arcelik A.S. 382,612
23,872,000 Eregli Demir ve Celik Fabrikalari A.S.(+) 751,643
10,322,000 Ford Otomotivl Sanayai A.S.(+) 702,912
42,652,800 Haci Omer Sabanci Holding A.S. 431,004
4,769,000 Netas Northern Electric Telekomunikasyon A.S. 607,618
7,500,000 Sarkuysan Elektrolitik Bakir Sanayi ve Ticaret A.S. 145,533
17,381,000 Turkiye Garanti Bankasi A.S.(+) 178,179
64,635,749 Turkiye Is Bankasi Cl C 1,230,554
108,048,144 Yapi ve Kredi Bankasi A.S.(+) 933,584
---------------
5,683,374
---------------
VENEZUELA - 1.5%
78,410 Compania Anonima Nacional
Telefonos de Venezuela ADR 1,489,790
675 Corimon C.A. S.A.C.A. Cl A(+) 2
34,866 International Briquettes Holding Inc.(+) 82,807
94,537 Mavesa S.A. ADR 395,874
83,000 Mercantil Servicios Financieros C.A. Cl B 89,749
--------------
2,058,222
--------------
TOTAL COMMON STOCKS 123,151,242
--------------
(Cost $133,997,152)
PARTNERSHIPS - 1.9%
RUSSIAN FEDERATION - 1.9%
800 New Century Holdings Ltd.
(Partnership III; Group B)(f)(+) 59,200
900 New Century Holdings Ltd.
(Partnership IV; Group I)(f)(+) 112,500
1,600 New Century Holdings Ltd.
(Partnership V; Group I)(f)(+) 203,200
2,617 New Century Holdings Ltd. (Partnership X)(f)(+) 2,043,877
SHARES VALUE
--------------------------------------------------------------------------------
2,500 New Century Holdings Ltd.
(Partnerships XIV; Group I)(f)(+) $ 367,500
--------------
TOTAL PARTNERSHIPS 2,786,277
--------------
(Cost $7,240,200)
PREFERRED STOCKS - 8.1%
BRAZIL - 7.8%
112,359 Companhia de Bebidas das Americas ADR(+) 2,535,100
39,000,000 Companhia Energetica de Minas Gerais 592,204
37,200 Companhia Vale do Rio Doce ADR 869,550
4,167,000 Copene-Petroquimica do Nordeste S.A. 1,611,342
7,393,000 Electropaulo Metropolitana
Electricidade de Sao Paulo S.A.(+) 414,488
85,809 Embratel Participacoes S.A. ADR 1,389,033
982,000 Itausa - Investimentos Itau S.A.(+) 833,555
65,924 Tele Norte Leste Participacoes S.A. ADR 1,458,568
33,662 Telesp Celular Participacoes S.A. ADR 1,064,561
42,000 Ultrapar Participacoes S.A. ADR 422,625
--------------
11,191,026
--------------
COLOMBIA - 0.3%
158,500 Bancolombia S.A. ADR 475,500
-------------
GREECE(z)
836 Delta Dairy S.A. 7,812
-------------
TOTAL PREFERRED STOCKS 11,674,338
--------------
(Cost $10,559,054)
PRIVATE PLACEMENTS - 2.0%
INDIA - 2.0%
13,527 Apollo Hospital Enterprise Ltd.,
Participatory Note, 1/01/03 60,466
43,850 Cipla Ltd., Participatory Note, 9/01/03 839,201
269,000 Hindustan Petroleum Corp.,
Participatory Note, 4/08/03 622,466
8,200 Infosys Technologies Ltd.,
Participatory Note, 4/07/04 1,275,100
---------------
TOTAL PRIVATE PLACEMENTS 2,797,233
---------------
(Cost $3,982,806)
RIGHTS(Z)
THAILAND(z)
133,705 Telecomasia Corp.(+) -
---------------
(Cost $-)
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
3
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
<TABLE>
<S> <C>
SHARES VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 2.0%
2,916,072 Hamilton Money Fund 2,916,072
--------------
(Cost $2,916,072)
TOTAL INVESTMENT SECURITIES - 100.0% $143,325,162
================
(Cost $158,695,284)
</TABLE>
<TABLE>
<S> <C>
MARKET SECTORS % OF TOTAL
(UNAUDITED) INVESTMENTS
INDUSTRIAL CYCLICAL 19.6%
TELECOMMUNICATIONS 19.2%
FINANCE 12.9%
ENERGY 6.7%
UTILITIES 6.1%
CONSUMER STABLE 5.8%
RETAIL 4.9%
CONSUMER CYCLICAL 4.9%
SEMICONDUCTORS 4.1%
SOFTWARE & SERVICES 3.8%
PHARMACEUTICALS 3.4%
INSURANCE 2.1%
SHORT TERM INVESTMENTS 2.0%
PARTNERSHIPS 1.9%
CONSUMER SERVICES 1.3%
OTHER 1.3%
-----------
100.0%
===========
</TABLE>
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
144A - Securities restricted for resale to Qualified Institutional Buyers
(f) Fair valued security. Approximately 2.4% of the market value of the
securities have been valued at fair value. (See Note 1)
(z) Category is less than 0.05% of total investment securities.
(+) Non-income producing security
The Accompanying Notes are an Integral Part of the Financial Statements.
4
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $158,695,284) $143,325,162
Foreign Currency at Value (Cost $1,593,931) 1,583,565
Receivable for Investments Sold 8,569,395
Dividend and Interest Receivable 92,681
Prepaid Trustees' Fees and Expenses 281
Prepaid and Other Assets 441
------------
TOTAL ASSETS 153,571,525
------------
LIABILITIES
Payable for Investments Purchased 1,991,499
Advisory Fee Payable 129,695
Deferred Capital Gains Taxes 43,305
Due to Custodian 3,800
Administration Service Fee Payable 3,104
Accrued Foreign Capital Gains Taxes 1,541
Administration Fee Payable 167
Fund Services Fee Payable 110
Accrued Expenses and Other Liabilities 174,646
------------
TOTAL LIABILITIES 2,347,867
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $151,223,658
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
5
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
INCOME
Dividend Income (Net of Foreign Withholding Tax of $337,105) $ 3,212,016
Interest Income 165,901
-------------
Investment Income 3,377,917
-------------
EXPENSES
Advisory Fee 1,771,982
Custodian Fees and Expenses 486,704
Professional Fee 53,078
Administrative Services Fee 43,197
Trustees' Fees and Expenses 7,555
Printing Expenses 7,349
Fund Services Fee 2,806
Administration Fee 1,321
Miscellaneous 3,332
-------------
Total Expenses 2,377,324
-------------
NET INVESTMENT INCOME 1,000,593
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON
Investment Transactions (Net of Capital Gains
Taxes of $7,672) 3,904,160
Foreign Currency Contracts and Transactions (220,695)
-------------
Net Realized Gain 3,683,465
-------------
NET CHANGE IN UNREALIZED DEPRECIATION ON
Investment Transactions (Net of Deferred Capital
Gains Taxes of $91,593) (12,793,456)
Foreign Currency Contracts and Translations (11,296)
-------------
Net Change in Unrealized Depreciation (12,804,752)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (8,120,694)
=============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
6
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE YEARS ENDED OCTOBER 31
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS 2000 1999
FROM OPERATIONS
<S> <C> <C>
Net Investment Income $ 1,000,593 $ 1,897,361
Net Realized Gain (Loss) on Investments, and
Foreign Currency Contracts and Transactions 3,683,465 (31,028,225)
Net Change in Unrealized Appreciation (Depreciation) of Investments,
and Foreign Currency Contracts and Translations (12,804,752) 76,321,203
-------------- -----------
Net Increase (Decrease) in Net Assets Resulting from Operations (8,120,694) 47,190,339
-------------- -------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 98,957,108 168,310,686
Withdrawals (106,666,366) (193,661,035)
-------------- -------------
Net Decrease from Transactions in Investors' Beneficial Interest (7,709,258) (25,350,349)
-------------- -------------
Total Increase (Decrease) in Net Assets (15,829,952) 21,839,990
-------------- --------------
NET ASSETS
Beginning of Year 167,053,610 145,213,620
-------------- -------------
End of Year $151,223,658 $167,053,610
============== =============
</TABLE>
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31
2000 1999 1998 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Net Expenses 1.34% 1.30% 1.30% 1.20% 1.23%
Net Investment Income 0.56% 1.14% 1.32% 1.10% 1.14%
Portfolio Turnover 65% 87% 44% 55% 31%
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
7
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--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. 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 in accordance with accounting
principles generally accepted in the United States of America 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:
SECURITY VALUATIONS--Securities traded on principal securities exchanges are
valued at the last reported sales price, or mean of the latest bid and asked
prices when no last sales price is available. Securities traded over-the-counter
and certain foreign securities are valued at the quoted bid price from a market
maker or dealer. When valuations are not readily available, securities are
valued at fair value as determined in accordance with procedures adopted by the
Trustees. All short-term securities, including real estate owned investments,
with a remaining maturity of sixty days or less are valued using 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 when 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 adopted by the Trustees.
REPURCHASE AGREEMENTS--The Portfolio's custodian (or designated
subcustodians, as the case may be under tri-party repurchase agreements) takes
possession of the collateral pledged for investments in repurchase agreements on
behalf of the Portfolio. It is the policy of the Portfolio to mark-to-market the
collateral on a daily 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. In the event of default or bankruptcy by the seller of the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.
INVESTMENT INCOME--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date or as of the time that the relevant
ex-dividend and amount becomes known. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
FOREIGN CURRENCY TRANSACTIONS--All assets and liabilities initially
expressed in foreign currencies are translated into U.S. dollars at prevailing
exchange rates at period end. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the rates
of exchange prevailing on the respective dates of such transactions. Realized
and unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates and are reported in the Statement of
Operations.
Although the net assets of the Portfolio are presented at the exchange
rates and market values prevailing at the end of the period, the Portfolio does
not isolate the portion of the results of operations arising from changes in
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities during the period.
RESTRICTED SECURITIES--The Portfolio is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the end of
the period, the Portfolio had the following investments in restricted
securities (excluding 144A issues).
8
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
<TABLE>
<S> <C> <C> <C>
SHARES DATE ACQUIRED U.S. $ COST
---------------------------------------------------------
New Century Holdings Ltd. Partnership III 800 4/11/94 $ 492,000
New Century Holdings Ltd. Partnership IV 900 6/16/94 900,000
New Century Holdings Ltd. Partnership V 1,600 11/9/94 731,200
New Century Holdings Ltd. Partnership X 2,617 1/21/97 2,617,000
New Century Holdings Ltd. Partnership XIV 2,500 9/22/97 2,500,000
</TABLE>
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the procedures described above. The value of these
securities at October 31, 2000 is $3,369,914 representing 2.4% of the
portfolio's net assets.
INCOME TAX STATUS--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 provisions of the Internal
Revenue Code.
FOREIGN TAXES--The Portfolio may be subject to foreign taxes on income,
gains on investments or currency repatriation, a portion of which may be
recoverable. The Portfolio will accrue such taxes and recoveries as applicable,
based upon their current interpretation of tax rules and regulations that exist
in the markets in which they invest.
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2. TRANSACTIONS WITH AFFILIATES
ADVISORY--The Portfolio has an Investment Advisory Agreement with J.P.
Morgan Investment Management Inc. ("JPMIM"), an affiliate of Morgan Guaranty
Trust Company of New York ("Morgan") and a wholly owned subsidiary of J.P.
Morgan & Co. Incorporated ("J.P. Morgan"). Under the terms of the agreement, the
Portfolio pays JPMIM at an annual rate of 1.00% of the Portfolio's average
daily net assets.
The Portfolio may invest in one or more affiliated money market funds: J.P.
Morgan Institutional Prime Money Market Fund, J.P. Morgan Institutional Tax
Exempt Money Market Fund, J.P. Morgan Institutional Federal Money Market Fund
and J.P. Morgan Institutional Treasury Money Market Fund. The Advisor has agreed
to reimburse its advisory fee from the Portfolio in an amount to offset any
investment advisory, administrative fee and shareholder servicing fees related
to a Portfolio investment in an affiliated money market fund.
ADMINISTRATIVE SERVICEs--The Portfolio has an Administrative Services
Agreement (the "Services Agreement") with Morgan under which Morgan is
responsible for certain aspects of the administration and operation of the
Portfolio. Under the Services Agreement, the Portfolio has 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 registered investment companies for which JPMIM acts as
investment advisor 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 Funds Distributor, Inc. 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 Portfolio and certain other investment
companies for which Morgan provides similar services.
ADMINISTRATION--The Portfolio has retained Funds Distributor, Inc. ("FDI"),
a registered broker-dealer, to serve as the co-administrator and distributor for
the Portfolio. 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 Portfolio's
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 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 Portfolio and certain other investment companies for which FDI
provides similar services.
FUND SERVICES -- The Portfolio has a Fund Services Agreement with Pierpont
Group, Inc. ("PGI") 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 PGI.
9
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO NOTES TO FINANCIAL STATEMENTS
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(Continued)
OCTOBER 31, 2000
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2. TRANSACTIONS WITH AFFILIATES (CONTINUED)
Each Trustee receives an aggregate annual fee of $75,000 for serving on the
boards of the Trust, the J.P. Morgan Funds, the J.P. Morgan Institutional Funds,
and other registered investment companies in which they invest. The Trustees'
fees and expenses shown in the financial statements represent the Fund's
allocated portion of the total Trustees' fees and expenses. The Trust's Chairman
and Chief Executive Officer also serves as Chairman of PGI and receives
compensation and employee benefits from PGI. The allocated portion of such
compensation and benefits included in the Fund Services Fee shown on the
Statement of Operations was $500.
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3. FEDERAL INCOME TAXES
As of October 31, 2000, accumulated net unrealized (depreciation) was
$15,949,501, based on the aggregate cost of investments for federal income tax
purposes of $159,274,663, which consisted of unrealized appreciation of
$21,530,606 and unrealized depreciation of $37,480,107.
--------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS
During the year ended October 31, 2000, the Portfolio purchased $111,665,739
of investment securities and sold $120,801,837 of investment securities other
than U.S. government securities and short-term investments.
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5. CONCENTRATIONS OF CREDIT RISK
The Portfolio may have elements of risk not typically associated with
investments in the United States due to concentrated investments in a limited
number of countries or regions which may vary throughout the year. Such
concentrations may subject the Portfolio to additional risks resulting from
political or economic conditions in such countries or regions and the possible
imposition of adverse governmental laws or currency exchange restrictions could
cause the securities and their markets to be less liquid and their prices more
volatile than those of comparable U.S. securities.
--------------------------------------------------------------------------------
6. CREDIT AGREEMENT
The Portfolio is party to a revolving line of credit agreement (the
"Agreement") as discussed more fully in Note 4 of the Fund's Notes to the
Financial Statements, which are included elsewhere in this report.
--------------------------------------------------------------------------------
7. SUBSEQUENT EVENTS
On September 13, 2000, J.P. Morgan & Co. Incorporated and The Chase
Manhattan Corporation announced that they have entered into an agreement and
plan of merger. The transaction is expected to close in December 2000 and is
subject to approval by shareholders of both companies.
10
<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, 2000, 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 five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. 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 auditing standards generally accepted
in the United States of America, 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 October
31, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 21, 2000
11
<PAGE>
NOTES
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12
<PAGE>
NOTES
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13
<PAGE>
NOTES
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14
<PAGE>
[back cover]
J.P. MORGAN FUNDS
Federal Money Market Fund
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Prime Money Market Fund
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Emerging Market Debt Fund
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Tax Aware Enhanced Income Fund:
Select Shares
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Tax Exempt Money Market Fund
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Short Term Bond Fund
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Bond Fund
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Global Strategic Income Fund
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Tax Exempt Bond Fund
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California Bond Fund:
Select Shares
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New York Tax Exempt Bond Fund
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Diversified Fund
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Disciplined Equity Fund
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Tax Aware U.S. Equity Fund:
Select Shares
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U.S. Equity Fund
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U.S. Small Company Fund
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U.S. Small Company Opportunities Fund
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Emerging Markets Equity Fund
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European Equity Fund
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Global 50 Fund: Select Shares
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Global Healthcare Fund: Select Shares
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International Equity Fund
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International Opportunities Fund
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For more information on the J.P. Morgan Funds, call J.P. Morgan Funds
Services at (800) 521-5411.
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Morgan Guaranty Trust Company MAILING
500 Stanton Christiana Road INFORMATION
Newark, Delaware 19713-2107
IN-ANN-23759 1000
