<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
<S> <C> <C>
COMMON STOCKS (89.9%)
BASIC INDUSTRIES (15.5%)
<CAPTION>
ALUMINUM (0.4%)
<S> <C> <C>
Sankyo Aluminum Industry Co.
Ltd............................
120,000 $ 642,712
Showa Aluminum Co...............
180,000 871,671
-----------
1,514,383
-----------
<CAPTION>
CHEMICALS (4.8%)
<S> <C> <C>
Central Glass Co. Ltd.(a).......
200,000 676,029
Daiso Co. Ltd...................
262,000 1,248,465
Denki Kagaku Kogyo K.K.(a)......
25,000 90,799
Kaneka Corp.....................
32,000 201,762
Kumiai Chemical Industrial
Co.............................
250,000 1,433,414
Kyowa Hakko Kogyo Co. Ltd.......
70,000 660,339
Matsumoto Yushi-Seiyaku Co......
19,000 368,039
Mitsubishi Chemicals Corp.......
370,000 1,798,935
Mitsui Toatsu Chemicals Inc.....
1,000,000 4,019,370
Nippon Steel Chemical(a)........
354,000 1,590,857
Nippon Zeon Co. Ltd.(a).........
200,000 1,075,061
Nissan Chemical Industries
Ltd............................
22,000 145,957
Sekisui Plastics Co., Ltd.......
200,000 1,053,753
Showa Denko K.K.(a).............
525,000 1,647,458
Toagosei Chemical Industry Co.
Ltd............................
20,000 106,150
Tosoh Corp.(a)..................
50,000 240,678
UBE Industries Ltd.(a)..........
950,000 3,588,378
-----------
19,945,444
-----------
<CAPTION>
CONTAINERS & GLASS (0.6%)
<S> <C> <C>
Hokkai Can Co...................
213,000 1,458,508
Ishizuka Glass Co. Ltd..........
150,000 758,354
Nippon Sheet Glass Co. Ltd......
55,000 239,177
Yamamura Glass Co. Ltd..........
15,000 89,056
-----------
2,545,095
-----------
<CAPTION>
DIVERSIFIED MANUFACTURING (2.0%)
<S> <C> <C>
Fuji Denki Reiki................
129,000 1,724,165
Itoki Crebio Corp...............
120,000 929,782
Lion Corp.......................
250,000 1,474,576
Organo Co.......................
20,000 218,886
Ryobi Ltd.......................
150,000 771,429
Sun Wave Industrial.............
100,000 1,375,303
Uni-Charm Corp..................
80,000 2,014,528
-----------
8,508,669
-----------
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
FOREST PRODUCTS & PAPER (1.7%)
<S> <C> <C>
Chuetsu Pulp and Paper Co.
Ltd.(a)........................
75,000 $ 447,458
Mitsubishi Pencil Co. Ltd.......
10,000 87,167
New Oji Paper Co., Ltd..........
110,000 995,061
Nippon Paper Industries.........
250,000 1,736,077
Sumitomo Forestry Co............
250,000 3,825,666
-----------
7,091,429
-----------
<CAPTION>
INDUSTRIAL MATERIALS (1.9%)
<S> <C> <C>
Achilles Corp...................
639,000 2,469,356
Dowa Mining Co. Ltd.............
100,000 482,324
Mitsui Mining & Smelting(a).....
450,000 1,804,358
Nichias Corp....................
75,000 392,978
Sumitomo Light Metal
Industries(a)..................
100,000 354,479
Yokogawa Bridge Corp............
25,000 377,724
Yokohama Rubber Co. Ltd.........
300,000 1,815,981
-----------
7,697,200
-----------
<CAPTION>
STEEL (4.1%)
<S> <C> <C>
Daido Steel Co. Ltd.............
400,000 2,014,528
Nakayama Steel Works Ltd........
40,000 220,048
Nippon Yakin Kogyo Co.
Ltd.(a)........................
15,000 69,443
Nisshin Steel Co. Ltd...........
650,000 2,625,182
NKK Corp.(a)....................
750,000 2,019,370
Sanyo Special Steel Co..........
30,000 130,169
Sumitomo Metal Industries(a)....
3,206,000 9,718,915
-----------
16,797,655
-----------
Total Basic Industries.........
64,099,875
-----------
CAPITAL GOODS (13.8%)
<CAPTION>
BUILDING CONSTRUCTION & ENGINEERING (3.1%)
<S> <C> <C>
Dai Dan Co. Ltd.................
50,000 644,068
Daito Trust Construction Co.
Ltd............................
39,600 467,913
Hitachi Plant Engineering &
Construction Co................
20,000 149,734
Matsui Construction Co. Ltd.....
200,000 1,557,385
Nippon Hodo Co..................
115,000 1,949,153
Nippon Road Co. Ltd.............
130,000 1,095,400
Nishimatsu Construction Co.
Ltd............................
25,000 292,978
Nittoc Construction Co..........
73,000 578,344
Okumura Corp....................
205,000 1,866,344
Toenec Corp.....................
80,000 712,833
Tokyo Denki Komusho.............
50,000 513,317
Toyo Construction Co............
520,000 3,031,864
-----------
12,859,333
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
7
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
ELECTRICAL EQUIPMENT (4.8%)
<S> <C> <C>
Alps Electric Co. Ltd...........
100,000 $ 1,152,542
Fuji Electric Co., Ltd..........
700,000 3,559,322
Hitachi.........................
650,000 6,547,215
Kokusai Electric Co.............
50,000 1,046,005
Matsushita Refrigeration Co.....
125,000 907,990
Mitsubishi Electric Corp.
Ltd............................
450,000 3,238,257
Nippon Columbia Co. Ltd.(a).....
290,000 1,994,189
Toshiba Corp....................
150,000 1,175,303
-----------
19,620,823
-----------
<CAPTION>
INDUSTRIAL MACHINERY (5.9%)
<S> <C> <C>
Aichi Corp......................
150,000 1,330,751
Daikin Industries...............
400,000 3,912,833
Eagle Industry Co...............
48,000 316,126
Ebara Corp......................
260,000 3,802,421
Ishikawajima-Harima Heavy
Industries.....................
1,036,000 4,364,746
Kitz Corp.......................
250,000 1,019,370
Minebea Co. Ltd.................
180,000 1,509,734
Mitsubishi Heavy Industries
Ltd............................
250,000 1,992,736
Niigata Engineering Co.
Ltd.(a)........................
150,000 473,608
Okamura Corp....................
300,000 2,295,399
OSG Corporation.................
10,000 68,571
Sanden Corp.....................
50,000 320,581
Shin Nippon Machinery...........
48,000 359,361
Tsubakimoto Chain...............
135,000 811,961
Yaskawa Electric Manufacturing
Co. Ltd.(a)....................
370,000 1,745,182
-----------
24,323,380
-----------
Total Capital Goods..........
56,803,536
-----------
<CAPTION>
CONSUMER BASICS (7.0%)
DRUGS & HEALTH CARE (2.4%)
<S> <C> <C>
Chugai Pharmaceutical Co.
Ltd............................
438,000 4,195,467
Dai Ichi Pharmaceutical Co.
Ltd............................
100,000 1,423,729
Eisai Co. Ltd...................
100,000 1,753,027
Kaken Pharmaceutical Co.........
200,000 1,801,453
Kissei Pharmaceutical Co........
25,000 755,448
-----------
9,929,124
-----------
<CAPTION>
FOOD, BEVERAGES & TOBACCO (2.7%)
<S> <C> <C>
Ezaki Glico Co. Ltd.............
55,000 531,622
Itoham Foods Inc................
350,000 2,644,068
Japan Tobacco Inc...............
215 1,863,680
Marudai Food Co. Ltd............
10,000 71,671
Maruha Corp.(a).................
25,000 84,504
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
FOOD, BEVERAGES & TOBACCO (CONTINUED)
<S> <C> <C>
Morinaga Milk Industry Co.
Ltd............................
295,000 $ 1,382,857
Nippon Suisan Kaisha Ltd.(a)....
400,000 1,654,237
Shinobu Foods Products Co.......
85,000 539,225
Snow Brand Milk Products Co.
Ltd............................
202,000 1,291,235
Yamazaki Baking Co. Ltd.........
50,000 929,782
-----------
10,992,881
-----------
<CAPTION>
RETAIL GROCERY (1.9%)
<S> <C> <C>
Daiei Inc.......................
200,000 2,421,307
Familymart Co...................
35,000 1,579,661
Kansai Super Market Ltd.(a).....
70,000 847,458
Nagasakiya Co.(a)...............
275,000 1,179,903
Seiyu Ltd.......................
130,000 1,611,622
Yaohan Japan Corp...............
50,000 438,257
-----------
8,078,208
-----------
Total Consumer Basics........
29,000,213
-----------
<CAPTION>
CONSUMER DURABLE GOODS (5.5%)
AUTO & TRUCKS (4.7%)
<S> <C> <C>
Fuji Heavy Industry(a)..........
380,000 1,497,918
Honda Motor Co..................
352,000 7,261,598
Komatsu Forklift Co. Ltd........
25,000 165,860
Mitsubishi Motors Corp..........
450,000 3,665,375
Nissan Diesel Motor Co.(a)......
300,000 1,397,579
Shinmaywa Industries Ltd........
50,000 412,591
Toyota Auto Body Co. Ltd........
100,000 922,034
Toyota Motor Corp...............
200,000 4,242,131
-----------
19,565,086
-----------
<CAPTION>
AUTO PARTS (0.8%)
<S> <C> <C>
Topy Industries Co. Ltd.........
230,000 1,055,884
Toyota Tsusho Corp..............
25,000 161,259
Unisia JECS Corp................
35,000 206,780
Zexel Corporation...............
250,000 1,699,758
-----------
3,123,681
-----------
Total Consumer Durable
Goods.......................
22,688,767
-----------
<CAPTION>
CONSUMER NON-DURABLE GOODS (3.0%)
APPAREL & TEXTILES (0.9%)
<S> <C> <C>
Gunze Ltd.......................
30,000 181,598
Kurabo Industries...............
450,000 1,721,550
Tomiya Apparel Co...............
229,000 1,745,501
Toyobo Co. Ltd..................
25,000 89,830
-----------
3,738,479
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
RETAIL TRADE (1.3%)
<S> <C> <C>
Izumiya Co. Ltd.................
147,000 $ 2,349,152
Keiyo Co. Ltd...................
25,000 290,557
Marutomi Group Co...............
70,000 718,644
Parco Co........................
50,000 527,845
Takashimaya Co. Ltd.............
100,000 1,598,063
-----------
5,484,261
-----------
<CAPTION>
SPORTING GOODS (0.8%)
<S> <C> <C>
Mizuno Corp.....................
350,000 3,033,898
-----------
Total Consumer Non-Durable
Goods.......................
12,256,638
-----------
<CAPTION>
CONSUMER SERVICES (1.9%)
LEISURE & MEDIA (1.9%)
<S> <C> <C>
Asatsu Inc......................
30,000 1,261,017
Daiwa Kosho Lease Co. Ltd.......
15,000 149,637
Gakken Co. Ltd.(a)..............
273,000 1,797,966
Japan Airport Terminals.........
80,000 968,523
Kinki Nippon Tourist Co.
Ltd.(a)........................
192,000 1,355,622
Kyodo Printing Co...............
90,000 1,124,455
Shin Nippon Air Technologies
Co.............................
10,000 151,090
Tokyo Broadcasting System
Inc............................
10,000 164,649
Toppan Printing Co. Ltd.........
50,000 658,596
-----------
7,631,555
-----------
Total Consumer Services......
7,631,555
-----------
<CAPTION>
ENERGY (1.4%)
DOMESTIC OIL (1.4%)
<S> <C> <C>
Cosmo Oil Company Ltd...........
900,000 4,916,223
Mitsubishi Oil Company Ltd......
25,000 222,034
Showa Shell Sekiyu K.K..........
50,000 418,886
-----------
5,557,143
-----------
Total Energy.................
5,557,143
-----------
<CAPTION>
FINANCE (22.5%)
BANKS (16.3%)
<S> <C> <C>
Asahi Bank Limited..............
650,000 8,184,019
Bank of Ryukyus.................
40,000 1,472,155
Chuo Trust and Banking Co.
Ltd............................
275,000 2,663,438
Dai Ichi Kangyo Bank Ltd........
325,000 6,389,830
Daiwa Bank Ltd..................
900,000 7,278,450
Fukui Bank......................
600,000 3,196,126
Hokkaido Takushoku Bank(a)......
890,000 2,637,676
Hyakugo Bank....................
400,000 2,285,714
Industrial Bank of Japan Ltd....
315,000 9,549,152
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
BANKS (CONTINUED)
<S> <C> <C>
Juroku Bank.....................
300,000 $ 1,557,385
Kita-Nippon Bank................
15,000 828,087
Kiyo Bank.......................
210,000 1,059,661
Kyushu Bank.....................
96,000 399,806
Miyazaki Bank...................
153,000 1,001,724
Nanto Bank Ltd..................
201,000 1,382,179
Nippon Credit Bank..............
150,000 685,714
North Pacific Bank..............
30,000 153,705
Sakura Bank Ltd.................
426,000 5,404,939
Shinwa Bank.....................
89,000 518,915
Sumitomo Bank Ltd...............
190,000 4,030,024
Suruga Bank Ltd.................
103,000 693,317
Toyo Trust and Banking Co.
Ltd............................
200,000 1,766,586
Yasuda Trust & Banking Co.
Ltd............................
658,000 3,893,830
-----------
67,032,432
-----------
<CAPTION>
FINANCIAL SERVICES (3.6%)
<S> <C> <C>
Daiwa Securities Co. Ltd........
75,000 1,147,700
Diamond Lease Co. Ltd...........
100,000 1,355,932
Nichiei Co......................
150,000 591,283
Nikko Securities Co. Ltd........
103,000 1,326,780
Nomura Securities Co. Ltd.......
489,000 10,656,174
-----------
15,077,869
-----------
<CAPTION>
INSURANCE (1.5%)
<S> <C> <C>
Chiyoda Fire & Marine Insurance
Co. Ltd........................
202,000 1,154,286
Fuji Fire and Marine............
250,000 1,317,191
Koa Fire & Marine Insurance Co.
Ltd............................
150,000 918,160
Tokio Marine & Fire Insurance
Co. Ltd........................
200,000 2,615,012
-----------
6,004,649
-----------
<CAPTION>
REAL ESTATE (1.1%)
<S> <C> <C>
Daiwa Danchi Co. Ltd.(a)........
150,000 803,390
Mitsui Fudosan Co. Ltd..........
180,000 2,214,044
Tokyu Land Corp.(a).............
330,000 1,438,257
-----------
4,455,691
-----------
Total Finance................
92,570,641
-----------
<CAPTION>
SHELTER (0.9%)
CONSTRUCTION MATERIALS (0.6%)
<S> <C> <C>
Daiken Corp.....................
25,000 215,254
Komai Tekko Inc.................
40,000 301,404
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
CONSTRUCTION MATERIALS (CONTINUED)
<S> <C> <C>
Sanyo Industries................
117,000 $ 662,906
Sumitomo Electric Industries....
100,000 1,200,969
Toyo Shutter Co. Ltd............
36,000 247,554
-----------
2,628,087
-----------
<CAPTION>
HOMEBUILDERS (0.3%)
<S> <C> <C>
Daiwa House Industry Co. Ltd....
25,000 411,622
Mitsui Home Co. Ltd.............
30,000 479,419
Sekisui House Ltd...............
25,000 319,613
-----------
1,210,654
-----------
Total Shelter................
3,838,741
-----------
<CAPTION>
TECHNOLOGY (6.3%)
ELECTRONICS (5.3%)
<S> <C> <C>
Amada Metrecs Co. Ltd...........
20,000 319,613
Casio Computer Co. Ltd..........
105,000 1,027,119
Kenwood Corp.(a)................
100,000 601,453
Kyocera Corp....................
20,000 1,485,714
Matsushita Electric Industries
Co. Ltd........................
430,000 6,996,610
Ryoyo Electro Corp..............
50,000 1,142,857
Sanken Electric Co..............
100,000 886,199
Sony Corp.......................
110,000 6,594,673
Tec Corp.(a)....................
200,000 984,019
Tokai Rika Denki Co.............
80,000 719,806
Victor Co. of Japan, Ltd.(a)....
100,000 1,268,765
-----------
22,026,828
-----------
<CAPTION>
OFFICE & BUSINESS EQUIPMENT (1.0%)
<S> <C> <C>
Canon Inc.......................
50,000 905,569
Ricoh Corp. Ltd.................
300,000 3,283,293
-----------
4,188,862
-----------
<CAPTION>
SOFTWARE (0.0%)*
<S> <C> <C>
Hitachi Software Engineering
Co.............................
3,000 78,450
-----------
Total Technology.............
26,294,140
-----------
<CAPTION>
TRANSPORT & TRADE SERVICES (6.8%)
RAILROADS & EQUIPMENT (2.7%)
<S> <C> <C>
East Japan Railway Co...........
1,600 7,779,177
Nagoya Railroad Co. Ltd.........
200,000 1,007,264
Tobu Railway Co.................
400,000 2,502,663
-----------
11,289,104
-----------
<CAPTION>
DESCRIPTION SHARES VALUE
- --------------------------------- --------- -----------
TRUCKING & LEASING (1.4%)
<S> <C> <C>
Hitachi Transport System........
4,000 $ 38,741
Itochu Warehouse Co. Ltd........
47,000 240,804
Kanagawa Chuo Kotsu.............
45,000 257,143
Kawasaki Kisen Kaisha Ltd.(a)...
671,000 2,131,603
Nippon Express Co. Ltd..........
150,000 1,444,068
Sankyu Inc......................
150,000 620,339
Senko Co. Ltd...................
136,000 835,099
-----------
5,567,797
-----------
<CAPTION>
WHOLESALE DISTRIBUTION (2.7%)
<S> <C> <C>
Kamei Corp......................
10,000 124,939
Kanematsu Corp..................
1,206,000 4,707,196
Kawasho Corp.(a)................
152,000 635,971
Marubeni Corp...................
700,000 3,789,830
Tomen Corp......................
285,000 1,051,671
Yuasa Trading Co., Ltd..........
150,000 813,559
-----------
11,123,166
-----------
Total Transport & Trade
Services....................
27,980,067
-----------
<CAPTION>
UTILITIES (5.3%)
ELECTRIC UTILITIES (2.7%)
<S> <C> <C>
Shikoku Electric Power Inc......
100,000 2,305,085
Tohoku Electric Power Co.
Inc............................
140,000 3,376,271
Tokyo Electric Power............
200,000 5,346,247
-----------
11,027,603
-----------
<CAPTION>
GAS & PIPELINES (0.6%)
<S> <C> <C>
Hokuriku Gas Co.................
204,000 810,073
Osaka Gas Co. Ltd...............
488,000 1,687,322
-----------
2,497,395
-----------
<CAPTION>
TELEPHONE (2.0%)
<S> <C> <C>
Nippon Telegraph & Telephone....
1,000 8,087,167
-----------
Total Utilities..............
21,612,165
-----------
Total Common Stocks (cost
$364,772,644)...............
370,333,481
-----------
WARRANTS (0.0%)*
<CAPTION>
SHELTER (0.0%)*
HOMEBUILDERS (0.0%)*
<S> <C> <C>
Maeda Corporation, US$ warrants,
expiring February 5, 1997(a)
(cost $207,813)................
125 173,438
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN
JAPANESE
DESCRIPTION YEN) VALUE
- --------------------------------- --------- -----------
CONVERTIBLE BONDS (7.3%)
<S> <C> <C>
CAPITAL GOODS (3.1%)
<CAPTION>
ELECTRICAL EQUIPMENT (3.1%)
<S> <C> <C>
Fujitsu Ltd. 2.00% Due March 31,
2004...........................
150,000,00 $ 1,765,133
Hitachi Ltd. 2.70% Due March 31,
1997...........................
289,000,00 3,582,760
NEC Corporation 1.90% Due March
30, 2001.......................
600,000,00 7,624,213
-----------
Total Capital Goods.............
12,972,106
-----------
<CAPTION>
CONSUMER DURABLE GOODS (0.8%)
AUTO & TRUCKS (0.8%)
<S> <C> <C>
Toyota Motor Corp. 1.70% Due May
31, 1996.......................
220,000,00 3,172,688
-----------
<CAPTION>
FINANCE (2.6%)
BANKS (2.6%)
<S> <C> <C>
Bank of Tokyo Cayman Finance
4.25% Due March 31, 2049.......
800,000,00 10,692,494
-----------
<CAPTION>
SHELTER (0.4%)
HOMEBUILDERS (0.4%)
<S> <C> <C>
SXL Corp. 2.70% Due March 29,
2002...........................
150,000,00 1,675,061
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(IN US
DESCRIPTION DOLLARS) VALUE
- --------------------------------- --------- -----------
FINANCE (0.4%)
FINANCIAL SERVICES (0.4%)
<S> <C> <C>
Daiwa International Finance
5.65% Due August 30, 1996......
$1,300,000 $ 1,677,000
-----------
Total Convertible Bonds (cost
$28,618,497)
30,189,349
-----------
SHORT TERM INVESTMENT (2.4%)
<CAPTION>
EURO-DOLLAR TIME DEPOSIT (2.4%)
<S> <C> <C>
State Street Cayman Island Time
Deposit 5.25% Due January 2,
1996 (cost $9,993,000).........
9,993,000 9,993,000
-----------
TOTAL INVESTMENTS (99.6%)
(COST $403,591,954)(B)..........
$410,689,268
OTHER ASSETS IN EXCESS OF
LIABILITIES (0.4%)..............
1,801,936
-----------
NET ASSETS.......................
$412,491,204
-----------
-----------
</TABLE>
(a) Non-income producing security.
(b) The cost of investments for Federal Income Tax purposes at December 31,
1995, was $403,622,644, the aggregate gross unrealized appreciation and
depreciation of investments was $22,608,082,and $15,541,458, respectively,
resulting in net unrealized appreciation of $7,066,624.
* Less than 0.1%.
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at Value (Cost $403,591,954) $410,689,268
Foreign Currency, at Value (Cost $4,544,695) 4,520,047
Cash 992
Receivable for Investments Sold 875,246
Dividends and Interest Receivable 257,109
Deferred Organization Expense 27,955
-----------
Total Assets 416,370,617
-----------
LIABILITIES
Payable for Investments Purchased 3,471,713
Advisory Fee Payable 238,553
Custody Fee Payable 126,425
Administration Fee Payable 2,265
Fund Services Fee Payable 1,571
Administrative Services Fee Payable 851
Accrued Trustees' Fees and Expenses 674
Accrued Expenses and Other Liabilities 37,361
-----------
Total Liabilities 3,879,413
-----------
NET ASSETS
Applicable to Investors' Beneficial Interests $412,491,204
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 28, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31,1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (Net of $519,585 Foreign Withholding Taxes) $ 2,078,331
Interest (Net of $33,665 Foreign Withholding Taxes) 607,344
-----------
$2,685,675
Investment Income
EXPENSES
Advisory Fee 1,777,126
Custodian Fees and Expenses 334,250
Financial and Fund Accounting Services Fees 147,123
Professional Fees 53,860
Fund Services Fee 21,727
Administration Fee 17,418
Trustees' Fees and Expenses 7,957
Amortization of Organization Expense 5,045
Administrative Services Fee 851
Miscellaneous 5,535
-----------
(2,370,892)
Total Expenses
----------
314,783
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) ON
Investment Transactions 5,350,019
Foreign Currency Transactions (338,908)
-----------
5,011,111
Net Realized Gain
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Investments 7,097,314
Foreign Currency Translations (21,736)
-----------
7,075,578
Net Change in Unrealized Appreciation (Depreciation)
----------
$12,401,472
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 28, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31,1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 314,783
Net Realized Gain on Investments and Foreign Currency Transactions 5,011,111
Net Change in Unrealized Appreciation (Depreciation) of Investments and 7,075,578
Foreign Currency Translations
-----------
Net Increase in Net Assets Resulting from Operations 12,401,472
-----------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 465,133,508
Withdrawals (65,143,876)
-----------
Net Increase from Investors' Transactions 399,989,632
-----------
Total Increase in Net Assets 412,391,104
NET ASSETS
Beginning of Period 100,100
-----------
End of Period $412,491,204
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
FOR THE PERIOD MARCH 28, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER
31,1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RATIOS TO AVERAGE NET ASSETS
0.87%(a)
Expenses
0.12%(a)
Net Investment Income
60%(b)
Portfolio Turnover
</TABLE>
- ------------------------
(a) Annualized.
(b) Not annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
14
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Japan Equity Portfolio (the "Portfolio"), one of three portfolios comprising
The Series Portfolio (the "Series Portfolio"), is registered under the
Investment Company Act of 1940, as amended, (the "Act") as a no-load,
non-diversified, open-end management investment company which was organized as a
trust under the laws of the State of New York on June 24, 1994. The Portfolio
commenced operations on March 28, 1995. The Portfolio's investment objective is
to provide a high total return from a portfolio of equity securities of issuers
that have their principal activities in Japan or are organized under Japanese
law. The Declaration of Trust permits the Trustees to issue an unlimited number
of beneficial interests in the Portfolio.
Investments in Japanese markets may involve certain considerations and risks not
typically associated with investments in the United States. Future economic and
political developments in Japan could adversely affect the liquidity or value,
or both, of such securities in which the Portfolio is invested. The ability of
the issuers of the debt securities held by the Portfolio to meet their
obligations may be affected by economic and political developments in a specific
industry or region.
The preparation of financial statements prepared in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual amounts
could differ from those estimates. The following is a summary of the significant
accounting policies of the Portfolio:
a)The value of each security for which readily available market quotations
exists is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the readily available closing bid price on
such exchanges, or at the quoted bid price in the over-the-counter market.
Securities listed on a foreign exchange are valued at the last quoted sale
price available before the time when net assets are valued. Unlisted
securities are valued at the average of the quoted bid and asked prices in
the over-the-counter market. Securities or other assets for which market
quotations are not readily available are valued at fair value in
accordance with procedures established by the Portfolio's Trustees. Such
procedures 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 asset value is calculated, such securities will
be valued at fair value in accordance with procedures established by and
under the general supervision of the Portfolio's Trustees.
15
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
b)The books and records of the Portfolio are maintained in U.S. dollars. The
market value of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing 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.
Although the net assets of the Portfolio are presented at the exchange
rates and market values prevailing at the end of the period, the Portfolio
does not isolate the portion of the results of operations arising as a
result of changes in foreign exchange rates from the fluctuations arising
from changes in the market prices of securities during the period.
c)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 and payables against
fluctuations in future foreign currency rates. A forward contract is an
agreement to buy or sell currencies of different countries on a specified
future date at a specified rate. Risks associated with such contracts
include the movement in the value of the foreign currency relative to the
U.S. Dollar and the ability of the counterparty to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily based on procedures established
by and under the general supervision of the Portfolio's Trustees and the
change in the market value is recorded by the Portfolio as unrealized
appreciation or depreciation of forward and spot foreign currency contract
translations. At December 31, 1995 the Portfolio did not have any open
foreign currency contracts.
e)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxable on
its share of the Portfolio's ordinary income and capital gains. It is
intended that the Portfolio's assets will be managed in such a way that an
investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code.
f)The Portfolio incurred organization expenses in the amount of $33,000.
These costs were deferred and are being amortized on a straight-line basis
over a five year period from the commencement of operations.
16
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the investment
advisory agreement, the Portfolio pays Morgan at an annual rate of 0.65%
of the Portfolio's average daily net assets. For the period March 28, 1995
(commencement of operations) through December 31, 1995 such fees amounted
to $1,777,126.
b)The Portfolio has retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as Administrator and exclusive placement agent.
Signature provides administrative services necessary for the operations of
the Portfolio, furnishes office space and facilities required for
conducting the business of the Portfolio and pays the compensation of the
Portfolio's officers affiliated with Signature. The agreement provided for
a fee to be paid to Signature at an annual rate determined by the
following schedule: 0.01% of the first $1 billion of the aggregate average
daily net assets of the Portfolio and the other portfolios subject to the
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 is applied each day to the net assets of the Portfolio. For the
period March 28, 1995 (commencement of operations) through December 28,
1995 such fees amounted to $16,967.
Effective December 29,1995, the Administration Agreement was amended such
that the fee charged would be equal to the Portfolio's proportionate share
of a complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios subject to this agreement (the "Master
Portfolios") and 0.01% on the aggregate average daily net assets of the
Master Portfolios in excess of $7 billion. The portion of this charge
payable by the Portfolio is determined by the proportionate share its net
assets bear to the total net assets of The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds and the Master Portfolios. For
the period December 29, 1995 through December 31, 1995 such fees amounted
to $451.
c)Until August 31, 1995, the Portfolio had a Financial and Fund Accounting
Services Agreement with Morgan under which Morgan received a fee for
overseeing certain aspects of the administration and operation of the
Portfolio and which 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 service fee, and brokerage costs
at 0.15% of the Portfolio's average daily net assets up to $200 million,
0.10% on the next $200 million of average daily net assets, 0.05% of the
next $200 million of average daily net assets and 0.03% of average daily
net assets thereafter. For the period March 28, 1995 (commencement of
operations) through August 31, 1995, the fee for these services amounted
to $147,123. 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 prior agreement
and that Morgan should bear all of its expenses incurred in connection
with these services.
17
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Effective December 29, 1995, the Portfolio entered into an Administrative
Services Agreement with Morgan under which Morgan is responsible for
overseeing certain aspects of the administration and operation of the
Portfolio. Under the Agreement, the Portfolio has agreed to pay Morgan a
fee equal to its proportionate share of an annual complex-wide charge.
This charge is calculated daily based on the aggregate net assets of the
Master Portfolios, in accordance with the following annual schedule: 0.06%
on the first $7 billion of the Master Portfolios' aggregate average daily
net assets and 0.03% of the aggregate average daily net assets in excess
of $7 billion. The portion of this charge payable by the Portfolio is
determined by the proportionate share that the Portfolio's net assets bear
to the net assets of the Master Portfolios and other investors in the
Master Portfolios for which Morgan provides similar services. For the
period December 29, 1995 through December 31, 1995 such fees amounted to
$851.
d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $21,727 for the period March 28, 1995 (commencement of
operations) through December 31, 1995.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of the Series Portfolio as well as the funds and the
corresponding portfolios of two other affiliated series. The Trustees'
Fees and Expenses shown in the financial statements represent the
Portfolio's allocated portion of the total fees and expenses. The Trustee
who serves as Chairman and Chief Executive Officer of these Funds and
Portfolios also serves as Chairman of Group and received compensation and
employee benefits from Group in his role as Group's Chairman. The
allocated portion of such compensation and benefits included in the Fund
Services Fee shown in the financial statements was $2,800.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the period March
28, 1995 (commencement of operations) through December 31, 1995 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- -------------- --------------
<S> <C>
$290,861,582 $ 209,552,328
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The Japan 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 Japan Equity Portfolio (one of three
portfolios comprising The Series Portfolio, hereafter referred to as the
"Portfolio") at December 31, 1995, and the results of its operations, the
changes in its net assets and the supplementary data for the period March 28,
1995 (commencement of operations) through December 31, 1995, 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 audit. We conducted our
audit 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
audit, which included confirmation of securities at December 31, 1995 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provides
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
February 23, 1996
19
