SERIES PORTFOLIO, POS AMI, 1996-10-09

SERIES PORTFOLIO
POS AMI, 1996-10-09

Previous: DARDEN RESTAURANTS INC, 4, 1996-10-09

Next: CRW FINANCIAL INC /DE, 8-K, 1996-10-09

<PAGE>

File No. 811-9008

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 3

THE SERIES PORTFOLIO

(Exact Name of Registrant as Specified in Charter)

Post Office Box 2508 GT, George Town,
Grand Cayman, Cayman Islands, BWI

(Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code: (809) 949-6644

John E. Pelletier, c/o Funds Distributor, Inc., 60 State Street,
Suite 1300, Boston, Massachusetts 02109

(Name and Address of Agent for Service)

Copy to: Steven K. West, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

<PAGE>

EXPLANATORY NOTE

This Amendment No. 3 (the "Amendment") to the Registrant's
Registration Statement on Form N-1A (File No. 811-9008) (the "Registration
Statement") has been filed by the Registrant pursuant to Section 8(b) of the
Investment Company Act of 1940, as amended (the "1940 Act"). However,
beneficial interests in the Registrant are not being registered under the
Securities Act of 1933 (the "1933 Act") because such interests will be issued
solely in private placement transactions that do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in
the Registrant may only be made by other investment companies, insurance
company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning
of Regulation D under the 1933 Act. This Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
beneficial interests in the Registrant.

<PAGE>

PART A (THE EUROPEAN EQUITY PORTFOLIO)

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT

The Series Portfolio (the "Portfolio Trust") is an open-end
management investment company which was organized as a trust under the laws
of the State of New York on June 24, 1994. Beneficial interests of the
Portfolio Trust are divided into actual and potential series, only one of
which, The European Equity Portfolio (the "Portfolio") is described herein.
The Portfolio is diversified for purposes of the Investment Company Act of
1940, as amended (the "1940 Act"). Beneficial interests in the Portfolio are
issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the Securities Act of
1933 (the "1933 Act"). Investments in the Portfolio may only be made by other
investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the
1933 Act.

The Portfolio is advised by Morgan Guaranty Trust Company of New
York ("Morgan" or the "Advisor").

Investments in the Portfolio are not deposits or obligations of, or
guaranteed or endorsed by, Morgan or any other bank. Interests in the
Portfolio are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency. An
investment in the Portfolio is subject to risk, as the net asset value of the
Portfolio will fluctuate with changes in the value of the Portfolio's
holdings.

Part B contains more detailed information about the Portfolio,
including information related to (i) the investment policies and restrictions
of the Portfolio, (ii) the Trustees, officers, Advisor and administrators of
the Portfolio, (iii) portfolio transactions, (iv) rights and liabilities of
investors and (v) the audited financial statements of the Portfolio at
December 31, 1995, and its unaudited semi-annual financial statements at
June 30, 1996.

The investment objective of the Portfolio is described below,
together with the policies it employs in its efforts to achieve this
objective. Additional information about the investment policies of the
Portfolio appears in Part B under Item 13. There can be no assurance that the
investment objective of the Portfolio will be achieved.

The Portfolio's investment objective is to provide a high total return
from a portfolio of equity securities of European companies. Total return will
consist of realized and unrealized capital gains and losses plus income. Under
certain market conditions, the Portfolio may not be able to achieve its
investment objective.

A-1

<PAGE>

The Portfolio is designed for investors who want an actively managed
portfolio of European equity securities that seeks to outperform the Morgan
Stanley Capital International Europe Index which is comprised of more than 500
companies in fourteen European countries. The Portfolio does not represent a
complete investment program nor is the Portfolio suitable for all investors.

The Portfolio seeks to achieve its investment objective through a
country allocation and stock valuation and selection. Based on fundamental
research, quantitative valuation techniques, and experienced judgment, Morgan
uses a structured decision-making process to allocate the Portfolio
across European countries, consisting of Austria, Belgium, Denmark, Germany,
Finland, France, Ireland, Italy, the Netherlands, Norway, Spain, Sweden,
Switzerland and the United Kingdom.

A European company is one that: (i) has its principal securities
trading market in a European country; or (ii) is organized under the laws of a
European country; or (iii) derives 50% or more of its total revenue and/or
profits from either goods produced, sales made or services performed in
European countries; or (iv) has at least 50% of its assets located in European
countries.

Using a dividend discount model and based on analysts' industry
expertise, companies in each country are ranked within industrial sectors
according to their relative value. Based on this valuation, Morgan
selects the companies which appear the most attractive for the Portfolio.
Morgan believes that under normal market conditions, industrial sector
weightings generally will be similar to those of the Morgan Stanley Capital
International Europe Index.

The Portfolio's investments are primarily denominated in foreign
currencies but it may also invest in securities denominated in the U.S. dollar
or multinational currency units such as the ECU. The Advisor will not routinely
attempt to hedge the Portfolio's foreign currency exposure. However, the
Advisor may from time to time engage in foreign currency exchange transactions
if, based on fundamental research, technical factors, and the judgment of
experienced currency managers, it believes the transactions would be in the
Portfolio's best interest. For further information on foreign currency
exchange transactions, see Risk Factors and Additional Investment Information.

The Advisor intends to manage the Portfolio's portfolio actively in
pursuit of its investment objective. The Portfolio does not intend to respond
to short-term market fluctuations or to acquire securities for the purpose of
short-term trading; however, it may take advantage of short-term trading
opportunities that are consistent with its objective. To the extent the
Portfolio engages in short-term trading, it may realize short-term capital
gains or losses and incur increased transaction costs. The portfolio turnover
rate for the Portfolio for the period March 28, 1995 (commencement of
operations) through December 31, 1995 was 36%.

A-2

<PAGE>

partnership interests and equity participations. The Portfolio's primary
equity investments are the common stock of companies based in the developed
countries of Europe. Such investments will be made in at least three European
countries. The common stock in which the Portfolio may invest includes the
common stock of any class or series or any similar equity interest, such as
trust or limited partnership interests. These equity investments may or may
not pay dividends and may or may not carry voting rights. In addition to its
equity investments in European companies, the Portfolio may invest up to 5%
of its assets in equity securities of issuers in emerging European markets
such as Eastern European countries and Turkey. See Risk Factors and
Additional Investment Information. The Portfolio invests in securities listed
on foreign or domestic securities exchanges and securities traded in foreign
or domestic over-the-counter markets, and may invest in certain restricted or
unlisted securities.

The Portfolio may also invest in money market instruments and bonds
denominated in U.S. dollars and other currencies, purchase securities on a
when-issued or delayed delivery basis, enter into repurchase and reverse
repurchase agreements, loan its portfolio securities, purchase certain
privately placed securities and enter into forward foreign currency exchange
contracts. In addition, the Portfolio may use options on securities and
indexes of securities, futures contracts and options on futures contracts for
hedging and risk management purposes. Forward foreign currency exchange
contracts, options and futures contracts are derivative instruments. For a
discussion of these investments and investment techniques, see Risk Factors
and Additional Investment Information.

RISK FACTORS AND ADDITIONAL INVESTMENT INFORMATION

FOREIGN INVESTMENT INFORMATION. The Portfolio invests primarily in
foreign securities. Investment in securities of foreign issuers involves
somewhat different investment risks from those affecting securities of U.S.
domestic issuers. There may be limited publicly available information with
respect to foreign issuers, and foreign issuers are not generally subject to
uniform accounting, auditing and financial standards and requirements
comparable to those applicable to domestic companies. Dividends and interest
paid by foreign issuers may be subject to withholding and other foreign taxes
which may decrease the net return on foreign investments as compared to
dividends and interest paid to the Portfolio by domestic companies.

Investors should realize that the value of the Portfolio's
investments in foreign securities may be adversely affected by changes in
political or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of funds or assets,
or imposition of (or change in) exchange control or tax regulations in those
foreign countries. In addition, changes in government administrations or
economic or monetary policies in the United States or abroad could result in
appreciation or depreciation of portfolio securities and could favorably or
unfavorably affect the Portfolio's operations. Furthermore, the economies of
individual foreign nations may differ from the U.S. economy, whether
favorably or unfavorably, in areas such as growth of gross national product,
rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position; it may

A-3

<PAGE>

also be more difficult to obtain and enforce a judgment against a foreign
issuer. Any foreign investments made by the Portfolio must be made in
compliance with U.S. and foreign currency restrictions and tax laws
restricting the amounts and types of foreign investments.

In addition, while the volume of transactions effected on foreign
stock exchanges has increased in recent years, in most cases it remains
appreciably below that of domestic security exchanges. Accordingly, the
Portfolio's foreign investments may be less liquid and their prices may be
more volatile than comparable investments in securities of U.S. companies.
Moreover, the settlement periods for foreign securities, which are often
longer than those for securities of U.S. issuers, may affect portfolio
liquidity. In buying and selling securities on foreign exchanges, purchasers
normally pay fixed commissions that are generally higher than the negotiated
commissions charged in the United States. In addition, there is generally
less government supervision and regulation of securities exchanges, brokers
and issuers located in foreign countries than in the United States.

Although the Portfolio invests primarily in securities of
established issuers in developed European countries, it may also invest in
equity securities of companies in European emerging market countries.
Investments in securities of issuers in European emerging market countries
may involve a high degree of risk and many may be considered speculative.
These investments carry all of the risks of investing in securities of
foreign issuers outlined in this section to a heightened degree. These
heightened risks include (i) greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability;
(ii) the small current size of the markets for securities of emerging markets
issuers and the currently low or nonexistent volume of trading, resulting in
lack of liquidity and in price volatility; (iii) certain national policies
which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to
relevant national interests; and (iv) the absence of developed legal
structures governing private or foreign investment and private property.

The Portfolio may invest in securities of foreign issuers directly
or in the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") or other similar securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a U.S. bank
or trust company evidencing ownership of the underlying foreign securities.
Certain such institutions issuing ADRs may not be sponsored by the issuer of
the underlying foreign securities. A non-sponsored depository may not provide
the same shareholder information that a sponsored depository is required to
provide under its contractual arrangements with the issuer of the underlying
foreign securities. EDRs are receipts issued by a European financial
institution evidencing a similar arrangement. Generally, ADRs, in registered
form, are designed for use in the U.S. securities markets, and EDRs, in
bearer form, are designed for use in European securities markets.

Since the Portfolio's investments in foreign securities involve
foreign currencies, the value of its assets as measured in U.S. dollars may
be affected favorably or unfavorably by changes in currency rates and in
exchange control

A-4

<PAGE>

regulations, including currency blockage. See Foreign Currency Exchange
Transactions.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the Portfolio buys
and sells securities and receives interest and dividends in currencies other
than the U.S. dollar, the Portfolio may enter from time to time into foreign
currency exchange transactions. The Portfolio either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market, or uses forward contracts to purchase or
sell foreign currencies. The cost of the Portfolio's spot currency exchange
transactions is generally the difference between the bid and offer spot rate
of the currency being purchased or sold.

A forward foreign currency exchange contract is an obligation by the
Portfolio to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract. Forward foreign
currency exchange contracts establish an exchange rate at a future date.
These contracts are derivative instruments, as their value derives from the
spot exchange rates of the currencies underlying under the contract. These
contracts are entered into in the interbank market directly between currency
traders (usually large commercial banks) and their customers. A forward
foreign currency exchange contract generally has no deposit requirement and
is traded at a net price without commission. The Portfolio will not enter
into forward contracts for speculative purposes. Neither spot transactions
nor forward foreign currency exchange contracts eliminate fluctuations in the
prices of the Portfolio's securities or in foreign exchange rates, or prevent
loss if the prices of these securities should decline.

The Portfolio may enter into foreign currency exchange transactions
in an attempt to protect against changes in foreign currency exchange rates
between the trade and settlement dates of specific securities transactions or
anticipated securities transactions. The Portfolio may also enter into
forward contracts to hedge against a change in foreign currency exchange
rates that would cause a decline in the value of existing investments
denominated or principally traded in a foreign currency. To do this, the
Portfolio would enter into a forward contract to sell the foreign currency in
which the investment is denominated or principally traded in exchange for
U.S. dollars or in exchange for another foreign currency. The Portfolio will
only enter into forward contracts to sell a foreign currency in exchange for
another foreign currency if the Advisor expects the foreign currency
purchased to appreciate against the U.S. dollar.

Although these transactions are intended to minimize the risk of
loss due to a decline in the value of the hedged currency, at the same time
they limit any potential gain that might be realized should the value of the
hedged currency increase. In addition, forward contracts that convert a
foreign currency into another foreign currency will cause the Portfolio to
assume the risk of fluctuations in the value of the currency purchased
against the hedged currency and the U.S. dollar. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible because the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
such securities between the date

A-5

<PAGE>

the forward contract is entered into and the date it matures. The projection
of currency market movements is extremely difficult, and the successful
execution of a hedging strategy is highly uncertain.

CONVERTIBLE SECURITIES. The convertible securities in which the
Portfolio may invest include any debt securities or preferred stock which may
be converted into common stock or which carry the right to purchase common
stock. Convertible securities entitle the holder to exchange the securities
for a specified number of shares of common stock, usually of the same
company, at specified prices within a certain period of time.

COMMON STOCK WARRANTS. The Portfolio may invest in common stock
warrants that entitle the holder to buy common stock from the issuer of the
warrant at a specific price (the strike price) for a specific period of time.
The market price of warrants may be substantially lower than the current
market price of the underlying common stock, yet warrants are subject to
similar price fluctuations. As a result, warrants may be more volatile
investments than the underlying common stock.

Warrants generally do not entitle the holder to dividends or voting
rights with respect to the underlying common stock and do not represent any
rights in the assets of the issuer company. A warrant will expire worthless
if it is not exercised on or prior to the expiration date.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may
purchase securities on a when-issued or delayed delivery basis. Delivery of
and payment for these securities may take as long as a month or more after
the date of the purchase commitment. The value of these securities is subject
to market fluctuation during this period and for fixed income investments no
interest accrues to the Portfolio until settlement. At the time of settlement,
a when-issued security may be valued at less than its purchase price. The
Portfolio maintains with the Custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments.
When entering into a when-issued or delayed delivery transaction, the
Portfolio will rely on the other party to consummate the transaction; if the
other party fails to do so, the Portfolio may be disadvantaged. It is the
current policy of the Portfolio not to enter into when-issued commitments
exceeding in the aggregate 15% of the market value of the Portfolio's total
assets less liabilities other than the obligations created by these
commitments.

REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase
agreement transactions with brokers, dealers or banks that meet the credit
guidelines established by the Portfolio Trust's Trustees. In a repurchase
agreement, the Portfolio buys a security from a seller that has agreed to
repurchase it at a mutually agreed upon date and price, reflecting the
interest rate effective for the term of the agreement. The term of these
agreements is usually from overnight to one week. A repurchase agreement may
be viewed as a fully collateralized loan of money by the Portfolio to the
seller. The Portfolio always receives securities as collateral with a market
value at least equal to the purchase price plus accrued interest and this
value is maintained during the term of the agreement. If the seller defaults
and the collateral value declines,

A-6

<PAGE>

the Portfolio might incur a loss. If bankruptcy proceedings are commenced
with respect to the seller, the Portfolio's realization upon the disposition
of collateral may be delayed or limited. Investments in certain repurchase
agreements and certain other investments which may be considered illiquid are
limited. See "Illiquid Investments; Privately Placed and other Unregistered
Securities" below.

LOANS OF PORTFOLIO SECURITIES. Subject to applicable investment
restrictions, the Portfolio is permitted to lend its securities in an amount
up to 33 1/3% of the value of the Portfolio's net assets. The Portfolio may
lend its securities if such loans are secured continuously by cash or
equivalent collateral or by a letter of credit in favor of the Portfolio at
least equal at all times to 100% of the market value of the securities
loaned, plus accrued interest. While such securities are on loan, the
borrower will pay the Portfolio any income accruing thereon. Loans will be
subject to termination by the Portfolio in the normal settlement time,
generally three business days after notice, or by the borrower on one day's
notice. Borrowed securities must be returned when the loan is terminated. Any
gain or loss in the market price of the borrowed securities which occurs
during the term of the loan inures to the Portfolio and its respective
investors. The Portfolio may pay reasonable finders' and custodial fees in
connection with a loan. In addition, the Portfolio will consider all facts
and circumstances, including the creditworthiness of the borrowing financial
institution, and the Portfolio will not make any loans in excess of one year.
Loans of portfolio securities may be considered extensions of credit by the
Portfolio. The risks to the Portfolio with respect to borrowers of its
portfolio securities are similar to the risks to the Portfolio with respect
to sellers in repurchase agreement transactions. See "Repurchase Agreements"
above. The Portfolio will not lend its securities to any officer, Trustee,
Director, employee or other affiliate of the Portfolio, the Advisor or the
exclusive placement agent or any affiliate thereof, unless otherwise
permitted by applicable law.

REVERSE REPURCHASE AGREEMENTS. The Portfolio is permitted to enter
into reverse repurchase agreements. In a reverse repurchase agreement, the
Portfolio sells a security and agrees to repurchase the same security at a
mutually agreed upon date and price, reflecting the interest rate effective
for the term of the agreement. For the purposes of the 1940 Act, a reverse
repurchase agreement is also considered as the borrowing of money by the
Portfolio and, therefore, is a form of leverage. Leverage may cause any gains
or losses of the Portfolio to be magnified. See "Investment Restrictions" for
investment limitations applicable to reverse repurchase agreements and other
borrowings. For more information, see Item 13 in Part B.

ILLIQUID INVESTMENTS; PRIVATELY PLACED AND OTHER UNREGISTERED
SECURITIES. The Portfolio may not acquire any illiquid securities if, as a
result thereof, more than 15% of the market value of the Portfolio's net
assets would be in illiquid investments. Subject to this non-fundamental
policy limitation, the Portfolio may acquire investments that are illiquid or
have limited liquidity, such as private placements or investments that are not
registered under the 1933 Act and cannot be offered for public sale in the
United States without first being registered under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which it is
valued by the Portfolio. The price the Portfolio pays for illiquid securities
or receives upon resale may be lower than the price paid or received for
similar securities with a more liquid market. Accordingly the valuation of
these securities will reflect any limitations on their liquidity.

A-7

<PAGE>

The Portfolio may also purchase Rule 144A securities sold to
institutional investors without registration under the 1933 Act. These
securities may be determined to be liquid in accordance with guidelines
established by the Advisor and approved by the Trustees of the Portfolio
Trust. The Trustees will monitor the Advisor's implementation of these
guidelines on a periodic basis.

FUTURES AND OPTIONS TRANSACTIONS. The Portfolio may (a) purchase and
sell (write) exchange traded and OTC put and call options on equity
securities or indexes of equity securities, (b) purchase and sell futures
contracts on indexes of equity securities, and (c) purchase and sell (write)
put and call options on futures contracts on indexes of equity securities.
Each of these instruments is a derivative instrument, as its value derives
from the underlying asset or index.

The Portfolio may use futures contracts and options for hedging and
risk management purposes. The Portfolio may not use future contract and
options for speculation. For a more detailed description of these
transactions see "Options and Futures Transactions" in Item 13 in Part B.

The Portfolio may utilize options and futures contracts to manage its
exposure to changing interest rates and/or security prices. Some options and
futures strategies, including selling futures contracts and buying puts, tend
to hedge the Portfolio's investments against price fluctuations. Other
strategies, including buying futures contracts, writing puts and calls, and
buying calls, tend to increase market exposure. Options and futures contracts
may be combined with each other or with forward contracts in order to adjust
the risk and return characteristics of the Portfolio's overall strategy in a
manner deemed appropriate to the Advisor and consistent with the Portfolio's
objective and policies. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.

The use of options and futures is a highly specialized activity
which involves investment strategies and risks different from those
associated with ordinary portfolio securities transactions, and there can be
no guarantee that their use will increase the Portfolio's return. While the
use of these instruments by the Portfolio may reduce certain risks associated
with owning its portfolio securities, these techniques themselves entail
certain other risks. If the Advisor applies a strategy at an inappropriate
time or judges market conditions or trends incorrectly, options and futures
strategies may lower the Portfolio's return. Certain strategies limit the
Portfolio's possibilities to realize gains as well as limiting its exposure
to losses. The Portfolio could also experience losses if the prices of its
options and futures positions were poorly correlated with its other
investments or if it could not close out its positions because of an illiquid
secondary market. In addition, the Portfolio will incur transaction costs,
including trading commissions and option premiums, in connection with its
futures and options transactions and these transactions could significantly
increase the Portfolio's turnover rate.

A-8

<PAGE>

OPTIONS. Purchasing Put and Call Options. By purchasing a put
option, the Portfolio obtains the right (but not the obligation) to sell the
instrument underlying the option at a fixed strike price. In return for this
right, the Portfolio pays the current market price for the option (known as
the option premium). Options have various types of underlying instruments,
including specific securities, indexes of securities, indexes of securities
prices, and futures contracts. The Portfolio may terminate its position in a
put option it has purchased by allowing it to expire or by exercising the
option. The Portfolio may also close out a put option position by entering
into an offsetting transaction, if a liquid market exists. If the option is
allowed to expire, the Portfolio will lose the entire premium it paid. If the
Portfolio exercises a put option on a security, it will sell the instrument
underlying the option at the strike price. If the Portfolio exercises an
option on an index, settlement is in cash and does not involve the actual
sale of securities. If an option is American style, it may be exercised on
any day up to its expiration date. A European style option may be exercised
only on its expiration date.

The buyer of a typical put option can expect to realize a gain if
the price of the underlying instrument falls substantially. However, if the
price of the instrument underlying the option does not fall enough to offset
the cost of purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction costs).

The features of call options are essentially the same as those of
put options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the instrument underlying the option at the
option's strike price. A call buyer typically attempts to participate in
potential price increases of the instrument underlying the option with risk
limited to the cost of the option if security prices fall. At the same time,
the buyer can expect to suffer a loss if security prices do not rise
sufficiently to offset the cost of the option.

The Portfolio may purchase put and call options on securities,
indexes of securities and futures contracts, or purchase and sell futures
contracts, only if such options are written by other persons and if (i) the
aggregate premiums paid on all such options which are held at any time do not
exceed 20% of the Portfolio's net assets, and (ii) the aggregate margin
deposits required on all such futures or options thereon held at any time do
not exceed 5% of the Portfolio's total assets. In addition, the Portfolio
will not purchase or sell (write) futures contracts, options on futures
contracts or commodity options for risk management purposes if, as a result,
the aggregate initial margin and options premiums required to establish these
positions exceed 5% of the net asset value of the Portfolio. For more
detailed information about these transactions, see Item 13 in Part B.

A-9

<PAGE>

an offsetting option in the market at its current price. If the market is not
liquid for a put option the Portfolio has written, however, the Portfolio
must continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to post margin as
discussed below.

If the price of the underlying instrument rises, a put writer would
generally expect to profit, although its gain would be limited to the amount
of the premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able to
close out the option at a lower price. If security prices fall, the put
writer would expect to suffer a loss. This loss should be less than the loss
from purchasing and holding the underlying instrument directly, however,
because the premium received for writing the option should offset a portion
of the decline.

Writing a call option obligates the Portfolio to sell or deliver the
option's underlying instrument in return for the strike price upon exercise
of the option. The characteristics of writing call options are similar to
those of writing put options, except that writing calls generally is a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium a call writer offsets part of the effect of a price decline.
At the same time, because a call writer must be prepared to deliver the
underlying instrument in return for the strike price, even if its current
value is greater, a call writer gives up some ability to participate in
security price increases.

The writer of an exchange traded put or call option on a security,
an index of securities or a futures contract is required to deposit cash or
securities or a letter of credit as margin and to make mark to market
payments of variation margin as the position becomes unprofitable.

OPTIONS ON INDEXES. Options on securities indexes are similar to
options on securities, except that the exercise of securities index options
is settled by cash payment and does not involve the actual purchase or sale
of securities. In addition, these options are designed to reflect price
fluctuations in a group of securities or segment of the securities market
rather than price fluctuations in a single security. The Portfolio, in
purchasing or selling index options, is subject to the risk that the value of
its portfolio securities may not change as much as an index because the
Portfolio's investments generally will not match the composition of an index.

For a number of reasons, a liquid market may not exist and thus the
Portfolio may not be able to close out an option position that it has
previously entered into. When the Portfolio purchases an OTC option, it will
be relying on its counterparty to perform its obligations, and the Portfolio
may incur additional losses if the counterparty is unable to perform.

A-10

<PAGE>

a specified quantity of the underlying instrument at a specified future date
or to receive a cash payment based on the value of a securities index. The
price at which the purchase and sale will take place is fixed when the
Portfolio enters into the contract. Futures can be held until their delivery
dates or the position can be (and normally is) closed out before then. There
is no assurance, however, that a liquid market will exist when the Portfolio
wishes to close out a particular position.

When the Portfolio purchases a futures contract, the value of the
futures contract tends to increase and decrease in tandem with the value of
its underlying instrument. Therefore, purchasing futures contracts will tend
to increase the Portfolio's exposure to positive and negative price
fluctuations in the underlying instrument, much as if it had purchased the
underlying instrument directly. When the Portfolio sells a futures contract,
by contrast, the value of its futures position will tend to move in a
direction contrary to the value of the underlying instrument. Selling futures
contracts, therefore, will tend to offset both positive and negative market
price changes, much as if the underlying instrument had been sold.

The purchaser or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract is held
until the delivery date. However, when the Portfolio buys or sells a futures
contract it will be required to deposit "initial margin" with its Custodian
in a segregated account in the name of its futures broker, known as a futures
commission merchant (FCM). Initial margin deposits are typically equal to a
small percentage of the contract's value. If the value of either party's
position declines, that party will be required to make additional "variation
margin" payments equal to the change in value on a daily basis. The party
that has a gain may be entitled to receive all or a portion of this amount.
The Portfolio may be obligated to make payments of variation margin at a time
when it is disadvantageous to do so. Furthermore, it may not always be
possible for the Portfolio to close out its futures positions. Until it
closes out a futures position, the Portfolio will be obligated to continue to
pay variation margin. Initial and variation margin payments do not constitute
purchasing on margin for purposes of the Portfolio's investment restrictions.
In the event of the bankruptcy of an FCM that holds margin on behalf of the
Portfolio, the Portfolio may be entitled to return of margin owed to it only
in proportion to the amount received by the FCM's other customers,
potentially resulting in losses to the Portfolio.

The Portfolio will segregate liquid assets in connection with its
use of options and futures contracts to the extent required by the staff of
the Securities and Exchange Commission. Securities held in a segregated
account cannot be sold while the futures contract or option is outstanding,
unless they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet
redemption requests or other current obligations.

A-11

<PAGE>

FIXED INCOME INVESTMENTS. The Portfolio is permitted to invest in
money market instruments and bonds although it intends to stay invested in
equity securities to the extent practical in light of its objective. The
Portfolio may invest in fixed income instruments of foreign or domestic
issuers denominated in U.S. dollars and other currencies. Under normal
circumstances the Portfolio will purchase money market instruments to invest
temporary cash balances or to maintain liquidity to meet redemptions.
However, the Portfolio may also invest in money market instruments and bonds
without limitation as a temporary defensive measure taken in the Advisor's
judgment during, or in anticipation of, adverse market conditions. For more
detailed information about these investments, see Item 13 in Part B.

INVESTMENT RESTRICTIONS

As a diversified investment company, 75% of the assets of the
Portfolio are subject to the following fundamental limitations: (a) the
Portfolio may not invest more than 5% of its total assets in the securities
of any one issuer, except U.S. Government securities, and (b) the Portfolio
may not own more than 10% of the outstanding voting securities of any one
issuer.

The investment objective of the Portfolio, together with the
investment restrictions described below and in Part B, except as noted, are
deemed fundamental policies, i.e., they may be changed only with the approval
of the holders of a majority of the outstanding voting securities of the
Portfolio.

The Portfolio may not purchase securities or other obligations of
issuers conducting their principal business activity in the same industry if
its investments in such industry would exceed 25% of the value of the
Portfolio's total assets, except this limitation shall not apply to
investments in U.S. Government securities. In addition, the Portfolio may not
borrow money except that the Portfolio may (a) borrow money from banks for
temporary or emergency purposes (not for leveraging purposes) and (b) enter
into reverse repurchase agreements for any purpose, provided that (a) and (b)
in total do not exceed one third of the Portfolio's total assets less
liabilities (other than borrowings); and the Portfolio may not issue senior
securities except as permitted by the 1940 Act or any rule, order or
interpretation thereunder. See "Risk Factors and Additional Investment
Information-Loans of Portfolio Securities" and "Reverse Repurchase
Agreements."

For a more detailed discussion of the above investment restrictions,
as well as a description of certain other investment restrictions, see Item
13 in Part B.

ITEM 5. MANAGEMENT OF THE PORTFOLIO TRUST

The Board of Trustees provides broad supervision over the affairs of
the Portfolio Trust. The Portfolio Trust has retained the services of Morgan
as investment adviser and administrative services agent. The Portfolio Trust
has retained the services of Funds Distributor, Inc. ("FDI") as
co-administrator (the "Co-Administrator").

A-12

<PAGE>

The Portfolio Trust has not retained the services of a principal
underwriter or distributor, since interests in the Portfolio are offered
solely in private placement transactions. FDI, acting as agent for the
Portfolio, serves as exclusive placement agent of interests in the Portfolio.
FDI receives no additional compensation for serving as exclusive placement
agent to the Portfolio.

The Portfolio Trust has entered into an Amended and Restated
Portfolio Fund Services Agreement dated July 11, 1996 with Pierpont
Group, Inc. to assist the Trustees of the Portfolio Trust in exercising their
overall supervisory responsibilities for the Portfolio Trust's affairs. The
fees to be paid under the agreement approximate the reasonable cost of
Pierpont Group, Inc. in providing these services. Pierpont Group, Inc. was
organized in 1989 at the request of the Trustees of The Pierpont Funds for
the purpose of providing these services at cost to these funds. The principal
offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New York,
New York 10017. See Item 14 in Part B.

INVESTMENT ADVISOR. The Portfolio has retained the services of
Morgan as investment advisor. Morgan, with principal offices at 60 Wall
Street, New York, New York 10260, is a New York trust company which conducts
a general banking and trust business. Morgan is a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"), a bank holding company
organized under the laws of Delaware. Through offices in New York City and
abroad, J.P. Morgan, through the Advisor and other subsidiaries, offers a
wide range of services to governmental, institutional, corporate and
individual customers and acts as investment adviser to individual and
institutional clients with combined assets under management of over $179
billion (of which the Advisor advises over $28 billion). Morgan provides
investment advice and portfolio management services to the Portfolio. Subject
to the supervision of the Portfolio Trust's Trustees, Morgan, as Advisor
makes the Portfolio's day-to-day investment decisions, arranges for the
execution of portfolio transactions and generally manages the Portfolio's
investments. See Item 16 in Part B.

The Advisor uses a sophisticated, disciplined, collaborative process
for managing all asset classes. For equity portfolios, this process utilizes
fundamental research, systematic stock selection, disciplined portfolio
construction and, in the case of foreign equities, country exposure and
currency management. Morgan has managed portfolios of equity securities of
international, including European, companies on behalf of its clients since
1974. The portfolio managers making investments in European equity securities
work in conjunction with Morgan's European equity analysts, as well as
capital market, credit and economic research analysts, traders and
administrative officers. The European equity analysts, located in London,
each cover a different industry, monitoring a universe of approximately 600
companies in Europe.

A-13

<PAGE>

February, 1992 and by Citibank, N.A. prior to 1992 as a portfolio manager of
international equity investments) and Rudolph Leuthold, Managing Director
(since March, 1995, employed by Morgan since prior to 1991 as a
portfolio manager of international equity investments).

As compensation for the services rendered and related expenses borne
by Morgan under the Investment Advisory Agreement with the Portfolio
Trust, the Portfolio has agreed to pay Morgan a fee, which is
computed daily and may be paid monthly, at the annual rate of 0.65% of the
Portfolio's average daily net assets.

Under a separate agreement, Morgan also provides administrative and
related services to the Portfolio Trust. See "Administrative Services Agent"
below.

CO-ADMINISTRATOR. Under a Co-Administration Agreement with the
Portfolio Trust, FDI serves as the Co-Administrator for the Portfolio and in
that capacity FDI (i) provides office space, equipment and clerical personnel
for maintaining the organization and books and records of the Portfolio; (ii)
provides officers for the Portfolio; (iii) files Portfolio regulatory
documents and mails Portfolio communications to Trustees and investors and
(iv) maintains related books and records. See "Administrative Services Agent"
below.

FDI, a registered broker-dealer, also serves as Exclusive Placement
Agent for the Portfolio. FDI is a wholly owned indirect subsidiary of Boston
Institutional Group, Inc. FDI currently provides administration and
distribution services for a number of other registered investment companies.

ADMINISTRATIVE SERVICES AGENT. Under the Administrative Services
Agreement with the Portfolio Trust, Morgan is responsible for certain
administrative and related services provided to the Portfolio, including
services related to taxes, financial statements, calculation of performance
data, oversight of service providers and certain regulatory and Board of
trustees matters. Under the Administrative Services Agreement and the
Co-Administration Agreement, the Portfolio has agreed to pay Morgan and FDI
fees equal to its allocable share of an annual complex-wide charge. This
charge is calculated daily based on the aggregate net assets of the Portfolio
and the other portfolios (collectively, the "Master Portfolios") in which
series of The JPM Institutional Funds, The Pierpont Funds or The JPM Advisor
Funds invest in accordance with the following annual schedule: 0.09% on the
first $7 billion of the Master Portfolios' aggregate average daily net assets
and 0.04% of the Master Portfolios' aggregate average daily net assets in
excess of $7 billion.

A-14

<PAGE>

EXPENSES. In addition to the fees payable to Morgan, FDI and
Pierpont Group, Inc. under the various agreements discussed above, the
Portfolio is responsible for certain usual and customary expenses associated
with its operations. Such expenses include organization expenses, legal fees,
accounting expenses, insurance costs, the compensation and expenses of its
Trustees, registration fees under federal and foreign securities laws,
custodian fees, brokerage expenses and extraordinary expenses applicable to
the Portfolio.

CUSTODIAN. State Street Bank and Trust Company ("State Street"), 40
King Street West, Toronto, Ontario, Canada M5H 3Y8, serves as the Portfolio's
Custodian and Transfer Agent. State Street also keeps the books of account
for the Portfolio.

Morgan has agreed that it will reimburse the Portfolio through at
least April 30, 1997 to the extent necessary to maintain the Portfolio's
total operating expenses at the annual rate of 1.00% of the Portfolio's
average daily net assets. This limit does not cover extraordinary expenses
during the period. There is no assurance that Morgan will continue this
waiver beyond the specified period, except as required by the following
sentence. Morgan has agreed to waive fees as necessary if in any fiscal year
the sum of the Portfolio's expenses exceeds the limits set by applicable
regulations of state securities commissions. Such annual limits are currently
2.5% of the first $30 million of average net assets, 2% of the next $70
million of such net assets and 1.5% of such net assets in excess of $100
million for any fiscal year.

For the period March 28, 1995 (commencement of operations) through
December 31, 1995 the Portfolio's total expenses were .90% of its average net
assets.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES

The Portfolio is a series of the Portfolio Trust, which is organized
as a trust under the laws of the State of New York. Under the Declaration of
Trust, the Trustees are authorized to issue beneficial interests in one or
more series. Currently, there are three active and seventeen inactive series
of the Portfolio Trust. Investments in the Portfolio may not be transferred,
but an investor may withdraw all or any portion of its investment at any time
at net asset value. The Declaration of Trust provides that investors in the
Portfolio (other investment companies, insurance company separate
accounts and common and commingled trust funds) are each liable for all
obligations of the Portfolio. However, the risk of an investor in the
Portfolio incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations.

As of September 30, 1996 JPM Europe Fund, Ltd. (a Bahamas
international business company) owned 99% of the total outstanding beneficial
interests of the European Equity Portfolio.

A-15

<PAGE>

Each investor in the Portfolio is entitled to a vote in proportion to
the amount of its investment in the Portfolio. Investors in the Portfolio will
vote as a separate class, except as to voting of Trustees, as otherwise required
by the 1940 Act, or if determined by the Trustees to be a matter which affects
all series. As to any matter which only affects a specific series, only
investors in that series are entitled to vote. Investments in the Portfolio have
no preemptive or conversion rights and are fully paid and nonassessable, except
as set forth below. The Portfolio is not required and has no current intention
of holding annual meetings of investors, but the Portfolio will hold special
meetings of investors when in the judgment of the Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies will be submitted to investors for approval. Investors have under
certain circumstances (E.G., upon application and submission of certain
specified documents to the Trustees by a specified percentage of the outstanding
interests in the Portfolio) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of removing
one or more Trustees. Investors also have the right to remove one or more
Trustees without a meeting by a declaration in writing by a specified percentage
of the outstanding interests in the Portfolio. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.

The net asset value of the Portfolio is determined each business day
other than the holidays listed in Part B ("Portfolio Business Day"). This
determination is made once each Portfolio Business Day as of 4:15 p.m. New York
time (the "Valuation Time").

The "net income" of the Portfolio will consist of (i) all income
accrued, less the amortization of any premium, on the assets of the Portfolio,
less (ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Income includes
dividends and interest, including discount earned (including both original issue
and market discount) on discount paper accrued ratably to the date of maturity
and any net realized and unrealized gains or losses on the assets of the
Portfolio. All the net income of the Portfolio is allocated pro rata among the
investors in the Portfolio.

The end of the Portfolio's fiscal year is December 31.

Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of such
share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.

It is intended that the Portfolio's assets, income and distributions
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 of
1986, as amended (the "Code") assuming that the investor invested all of its
assets in the Portfolio.

A-16

<PAGE>

Investor inquiries may be directed to FDI, in care of State
Street Cayman Trust Company, Ltd. at Elizabethan Square, Shedden Road, George
Town, Grand Cayman, Cayman Islands, B.W.I. ((809) 949-6644).

ITEM 7. PURCHASE OF SECURITIES

Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.

An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by the Portfolio Trust. The net asset value of the
Portfolio is determined at the Valuation Time on each Portfolio Business Day.

There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the account
of the Custodian by a Federal Reserve Bank.)

The Portfolio may, at its own option, accept securities in payment
for investments in its beneficial interests. The securities delivered in kind
are valued by the method described in Net Asset Value as of the business day
prior to the day the Portfolio receives the securities. Securities may be
accepted in payment for beneficial interests only if they are, in the
judgment of Morgan, appropriate investments for the Portfolio. In addition,
securities accepted in payment for beneficial interests must: (i) meet the
investment objective and policies of the Portfolio; (ii) be acquired by the
Portfolio for investment and not for resale; (iii) be liquid securities which
are not restricted as to transfer either by law or liquidity of market; and
(iv) if stock, have a value which is readily ascertainable as evidenced by a
listing on a stock exchange, OTC market or by readily available market
quotations from a dealer in such securities. The Portfolio reserves the right
to accept or reject at its own option any and all securities offered in
payment for beneficial interests.

The Portfolio and FDI reserve the right to cease accepting investments
at any time or to reject any investment order.

A-17

<PAGE>

then be recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio at the
Valuation Time on such day plus or minus, as the case may be, the amount of net
additions to or reductions in the investor's investment in the Portfolio
effected as of the Valuation Time, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the Valuation Time on such day,
plus or minus, as the case may be, the amount of net additions to or reductions
in the aggregate investments in the Portfolio by all investors in the Portfolio.
The percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the Valuation Time on the following
Portfolio Business Day.

ITEM 8. REDEMPTION OR REPURCHASE

An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio Trust. The proceeds of a
reduction will be paid by the Portfolio Trust in federal funds normally on the
next Portfolio Business Day after the reduction is effected, but in any event
within seven days. Investments in the Portfolio may not be transferred.

The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange (the "NYSE") is closed
(other than weekends or holidays) or trading on the NYSE is restricted or, to
the extent otherwise permitted by the 1940 Act, if an emergency exists.

The Portfolio Trust, on behalf of the Portfolio, reserves the right
under certain circumstances, such as accommodating requests for substantial
withdrawals or liquidations, to pay distributions in kind to investors (i.e., to
distribute portfolio securities as opposed to cash). If securities are
distributed, an investor could incur brokerage, tax or other charges in
converting the securities to cash. In addition, distribution in kind may result
in a less diversified portfolio of investments or adversely affect the liquidity
of the Portfolio or the investor's portfolio, as the case may be.

ITEM 9. PENDING LEGAL PROCEEDINGS

Not applicable.

A-18

<PAGE>

PART A (THE ASIA GROWTH PORTFOLIO)

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT

The Series Portfolio (the "Portfolio Trust") is an open-end management
investment company which was organized as a trust under the laws of the State of
New York on June 24, 1994. Beneficial interests of the Portfolio Trust are
divided into actual and potential series, only one of which, The Asia Growth
Portfolio (the "Portfolio") is described herein. The Portfolio is diversified
for purposes of the Investment Company Act of 1940, as amended (the "1940 Act").
Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933 (the "1933 Act"). Investments in the
Portfolio may only be made by other investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any "security" within the meaning
of the 1933 Act.

The Portfolio is advised by Morgan Guaranty Trust Company of New York
("Morgan" or the "Advisor").

Part B contains more detailed information about the Portfolio,
including information related to (i) the investment policies and restrictions of
the Portfolio, (ii) the Trustees, officers, Advisor and administrators of the
Portfolio, (iii) portfolio transactions, (iv) rights and liabilities of
investors and (v) the audited financial statements of the Portfolio at December
31, 1995, and the unaudited semi-annual financial statements at June 30, 1996.

The investment objective of the Portfolio is described below, together
with the policies it employs in its efforts to achieve this objective.
Additional information about the investment policies of the Portfolio appears in
Part B under Item 13. There can be no assurance that the investment objective of
the Portfolio will be achieved.

The Portfolio's investment objective is to achieve a high total return
from a portfolio of equity securities of companies in Asian growth markets.
Total return will consist of realized and unrealized capital gains and losses
plus income. Under certain market conditions, the Portfolio may not be able to
achieve its investment objective.

AA-1

<PAGE>

The Portfolio is designed for long-term investors who want access to
the rapidly growing Asian markets. The Portfolio does not represent a complete
investment program nor is the Portfolio suitable for all investors. Many
investments in Asian growth markets can be considered speculative and,
therefore, may offer higher potential for gains and losses and may be more
volatile than investments in the developed markets of the world. See Risk
Factors and Additional Investment Information.

The Advisor considers "Asian growth markets" to be Bangladesh, China,
India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Sri Lanka,
Thailand, Taiwan, Hong Kong, and Singapore.

A company in an Asian growth market is one that: (i) has its principal
securities trading market in an Asian growth market; or (ii) is organized under
the laws of an Asian growth market; or (iii) derives 50% or more of its total
revenue and/or profits from either goods produced, sales made or services
performed in Asian growth markets; or (iv) has at least 50% of its assets
located in Asian growth markets.

The Portfolio seeks to achieve its objective through country allocation
and company selection. Morgan uses a disciplined portfolio construction process
to seek to enhance returns and reduce volatility in the market value of the
Portfolio relative to its benchmark. The Portfolio's benchmark is a customized
index comprised of Morgan Stanley Capital International's indices for Hong Kong
and Singapore and the International Finance Corporation's Investable indices for
China, Indonesia, Malaysia, Philippines, South Korea, Taiwan and Thailand.

Based on fundamental research, quantitative valuation techniques and
experienced judgment, Morgan identifies those countries where economic and
political factors, including currency movements, are likely to produce
above-average returns. Drawing on this analysis, Morgan allocates the
Portfolio among Asian growth markets by overweighting or underweighting
selected countries against the benchmark. Currently, three Asian growth
markets-Hong Kong, Malaysia and Thailand-represent more than 60% of the
market value of the benchmark and of the Portfolio.

To select investments for the Portfolio, the Advisor ranks companies in
each Asian growth market within industrial sectors according to their relative
value. These valuations are based on the Advisor's fundamental research and use
of quantitative tools to project a company's long-term prospects for earnings
growth and its dividend paying capability. Based on this valuation, Morgan then
selects the companies which appear most attractive for the Portfolio. Typically,
the Portfolio's industrial sector weightings will be similar to those of its
benchmark.

AA-2

<PAGE>

increased transaction costs. The portfolio turnover rate for the Portfolio
for the period April 5, 1995 (commencement of operations) through
December 31, 1995 was 70%.

The Portfolio's investments are primarily in securities denominated
in foreign currencies, but it may also invest in securities denominated in
the U.S. dollar or multinational currency units such as the ECU. The Advisor
will not routinely attempt to hedge the Portfolio's foreign currency
exposure. However, the Advisor may from time to time engage in foreign
currency exchange transactions if, based on fundamental research, technical
factors, and the judgment of experienced currency managers, it believes the
transactions would be in the Portfolio's best interest. For further
information on foreign currency exchange transactions, see "Risk Factors and
Additional Investment Information."

EQUITY INVESTMENTS. In normal circumstances, the Advisor intends to
keep the Portfolio essentially fully invested with at least 65% of the value
of its total assets in equity securities of companies in Asian growth markets
consisting of common stocks and other securities with equity characteristics
comprised of preferred stock, warrants, rights, convertible securities, trust
certificates, limited partnership interests and equity participations. The
Portfolio's primary equity investments are the common stock of companies the
Advisor has identified as attractive in the Asian growth markets. Such
investments will be made in at least three different countries considered to
be Asian growth markets. The common stock in which the Portfolio may invest
includes the common stock of any class or series or any similar equity
interest, such as trust or limited partnership interests. These equity
investments may or may not pay dividends and may or may not carry voting
rights. The Portfolio invests in securities listed on foreign or domestic
securities exchanges and securities traded in foreign or domestic
over-the-counter (OTC) markets, and may invest in certain restricted or
unlisted securities.

Certain Asian growth markets are closed in whole or in part to
equity investments by foreigners except through specifically authorized
investment funds. Securities of other investment companies may be acquired by
the Portfolio to the extent permitted under the 1940 Act--that is, the
Portfolio may invest up to 10% of its total assets in securities of other
investment companies so long as not more than 3% of the outstanding voting
stock of any one investment company is held by the Portfolio. In addition,
not more than 5% of the Portfolio's total assets may be invested in the
securities of any one investment company. As a shareholder in an investment
fund, the Portfolio would bear its share of that investment fund's expenses,
including its advisory and administration fees. At the same time the
Portfolio and the Fund would continue to pay their own operating expenses.

The Portfolio may also invest in money market instruments
denominated in U.S. dollars and other currencies, purchase securities on a
when-issued or delayed delivery basis, enter into repurchase and reverse
repurchase agreements, loan its portfolio securities, purchase certain
privately placed securities and enter into forward foreign currency exchange
contracts. In addition, the Portfolio may use options on securities and
indexes of securities, futures contracts and options on futures contracts for
hedging and risk management purposes. Forward foreign currency exchange
contracts, options and futures

AA-3

<PAGE>

contracts are derivative instruments. For a discussion of these investments and
investment techniques, see Risk Factors and Additional Investment Information.

RISK FACTORS AND ADDITIONAL INVESTMENT INFORMATION

INVESTING IN ASIAN GROWTH MARKETS. The Portfolio invests primarily in
equity securities of companies in Asian growth markets. Investments in
securities of issuers in Asian growth markets may involve a high degree of risk
and many may be considered speculative. These investments carry all of the risks
of investing in securities of foreign issuers described below to a heightened
degree. These heightened risks include (i) greater risks of expropriation,
confiscatory taxation, nationalization, and less social, political and economic
stability; (ii) the small current size of the markets for securities of Asian
issuers and the currently low or nonexistent volume of trading, resulting in
lack of liquidity and in price volatility; (iii) certain national policies which
may restrict the Portfolio's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) the absence of developed legal structures governing private
or foreign investment and private property.

Different combinations of the above risks exist in each Asian growth
market. For example, the People's Republic of China (the "PRC") continues to
exercise significant centralized control over the economy. A delay in
implementing, or a reversal of, economic reforms could adversely affect economic
growth, opportunities for foreign investment and the prospects of private sector
enterprises. Actions by the PRC with respect to Hong Kong, both before and after
the reversion to Chinese rule, could have a negative effect on business
confidence, the performance of Hong Kong companies and the prices of Hong Kong
stocks.

The value of the Portfolio's investments could also be unfavorably
affected by limitations on the foreign ownership of stock imposed by Indonesia,
Malaysia, Thailand and Taiwan; by substantial delays in the settlement (through
physical delivery) of stock transactions in India; and Thailand's border
disputes with Laos and Cambodia. In addition, all of these countries have
experienced or may experience a significant degree of political instability and
volatility in the prices of their respective currencies. For additional
information, see Appendix C--Investing in Japan and Asian Growth Markets in Part
B.

OTHER FOREIGN INVESTMENT INFORMATION. Generally, investment in
securities of foreign issuers involves somewhat different investment risks from
those affecting securities of U.S. domestic issuers. There may be limited
publicly available information with respect to foreign issuers, and foreign
issuers are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to domestic companies.
Dividends and interest paid by foreign issuers may be subject to withholding and
other foreign taxes which may decrease the net return on foreign investments as
compared to dividends and interest paid to the Portfolio by domestic companies.

Investors should realize that the value of the Portfolio's investments
in foreign securities may be adversely affected by changes in political or
social

AA-4

<PAGE>

conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
In addition, changes in government administrations or economic or monetary
policies in the United States or abroad could result in appreciation or
depreciation of portfolio securities and could favorably or unfavorably affect
the Portfolio's operations. Furthermore, the economies of individual foreign
nations may differ from the U.S. economy, whether favorably or unfavorably, in
areas such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more difficult to obtain and enforce a judgment against a foreign
issuer. Any foreign investments made by the Portfolio must be made in compliance
with U.S. and foreign currency restrictions and tax laws restricting the amounts
and types of foreign investments.

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of domestic security exchanges. Accordingly, the Portfolio's foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. In buying and selling
securities on foreign exchanges, purchasers normally pay fixed commissions that
are generally higher than the negotiated commissions charged in the United
States. In addition, there is generally less government supervision and
regulation of securities exchanges, brokers and issuers located in foreign
countries than in the United States.

The Portfolio may invest in securities of foreign issuers directly or
in the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") or other similar securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a U.S. bank or
trust company evidencing ownership of the underlying foreign securities. Certain
such institutions issuing ADRs may not be sponsored by the issuer of the
underlying foreign securities. A non-sponsored depository may not provide the
same shareholder information that a sponsored depository is required to provide
under its contractual arrangements with the issuer of the underlying foreign
securities. EDRs are receipts issued by a European financial institution
evidencing a similar arrangement. Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets, and EDRs, in bearer form, are
designed for use in European securities markets.

Since the Portfolio's investments in foreign securities involve foreign
currencies, the value of its assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, including currency blockage. See Foreign Currency Exchange
Transactions.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the Portfolio buys and
sells securities and receives interest and dividends in currencies other than
the

AA-5

<PAGE>

U.S. dollar, the Portfolio may enter from time to time into foreign currency
exchange transactions. The Portfolio either enters into these transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or uses forward contracts to purchase or sell foreign
currencies. The cost of the Portfolio's spot currency exchange transactions is
generally the difference between the bid and offer spot rate of the currency
being purchased or sold.

A forward foreign currency exchange contract is an obligation by the
Portfolio to purchase or sell a specific currency at a future date, which may be
any fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are derivative instruments, as their value derives from the spot exchange rates
of the currencies underlying the contract. These contracts are entered into in
the interbank market directly between currency traders (usually large commercial
banks) and their customers. A forward foreign currency exchange contract
generally has no deposit requirement and is traded at a net price without
commission. The Portfolio will not enter into forward contracts for speculative
purposes. Neither spot transactions nor forward foreign currency exchange
contracts eliminate fluctuations in the prices of the Portfolio's securities or
in foreign exchange rates, or prevent loss if the prices of these securities
should decline.

The Portfolio may enter into foreign currency exchange transactions in
an attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or
anticipated securities transactions. The Portfolio may also enter into forward
contracts to hedge against a change in foreign currency exchange rates that
would cause a decline in the value of existing investments denominated or
principally traded in a foreign currency. To do this, the Portfolio would enter
into a forward contract to sell the foreign currency in which the investment is
denominated or principally traded in exchange for U.S. dollars or in exchange
for another foreign currency. The Portfolio will only enter into forward
contracts to sell a foreign currency in exchange for another foreign currency if
the Advisor expects the foreign currency purchased to appreciate against the
U.S. dollar.

Although these transactions are intended to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they
limit any potential gain that might be realized should the value of the hedged
currency increase. In addition, forward contracts that convert a foreign
currency into another foreign currency will cause the Portfolio to assume the
risk of fluctuations in the value of the currency purchased against the hedged
currency and the U.S. dollar. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of such securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

AA-6

<PAGE>

CONVERTIBLE SECURITIES. The convertible securities in which the
Portfolio may invest include any debt securities or preferred stock which may be
converted into common stock or which carry the right to purchase common stock.
Convertible securities entitle the holder to exchange the securities for a
specified number of shares of common stock, usually of the same company, at
specified prices within a certain period of time.

COMMON STOCK WARRANTS. The Portfolio may invest in common stock
warrants that entitle the holder to buy common stock from the issuer of the
warrant at a specific price (the strike price) for a specific period of time.
The market price of warrants may be substantially lower than the current
market price of the underlying common stock, yet warrants are subject to
similar price fluctuations. As a result, warrants may be more votatile
investments than the underlying common stock.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and for fixed income investments no interest
accrues to the Portfolio until settlement. At the time of settlement, a
when-issued security may be valued at less than its purchase price. The
Portfolio maintains with the Custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. When
entering into a when-issued or delayed delivery transaction, the Portfolio will
rely on the other party to consummate the transaction; if the other party fails
to do so, the Portfolio may be disadvantaged. It is the current policy of the
Portfolio not to enter into when-issued commitments exceeding in the aggregate
15% of the market value of the Portfolio's total assets less liabilities other
than the obligations created by these commitments.

REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
established by the Portfolio Trust's Trustees. In a repurchase agreement, the
Portfolio buys a security from a seller that has agreed to repurchase it at a
mutually agreed upon date and price, reflecting the interest rate effective for
the term of the agreement. The term of these agreements is usually from
overnight to one week. A repurchase agreement may be viewed as a fully
collateralized loan of money by the Portfolio to the seller. The Portfolio
always receives securities as collateral with a market value at least equal to
the purchase price plus accrued interest and this value is maintained during the
term of the agreement. If the seller defaults and the collateral value declines,
the Portfolio might incur a loss. If bankruptcy proceedings are commenced with
respect to the seller, the Portfolio's realization upon the disposition of
collateral may be delayed or limited. Investments in certain repurchase
agreements and certain other investments which may be considered illiquid are

AA-7

<PAGE>

limited. See Illiquid Investments; Privately Placed and other Unregistered
Securities below.

Loans of portfolio securities may be considered extensions of credit
by the Portfolio. The risks to the Portfolio with respect to borrowers of its
portfolio securities are similar to the risks to the Portfolio with respect
to the sellers in repurchase agreement transactions. See "Repurchase
Agreements" above. The Portfolio will not lend its securities to any officer,
Trustee, Director, employee or other affiliate of the Portfolio, the Advisor
or the exclusive placement agent or any affiliate thereof, unless otherwise
permitted by applicable law.

ILLIQUID INVESTMENTS; PRIVATELY PLACED AND OTHER UNREGISTERED
SECURITIES. The Portfolio may not acquire any illiquid securities if, as a
result thereof, more than 15% of the market value of the Portfolio's net assets
would be in illiquid investments. Subject to this non-fundamental policy
limitation, the Portfolio may acquire investments that are illiquid or have
limited liquidity, such as private placements or investments that are not
registered under the 1933 Act and cannot be offered for public sale in the
United States without first being registered under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which it is valued by
the Portfolio. The price the Portfolio pays for illiquid securities or receives
upon resale may be lower than the price paid or received for similar securities
with a more liquid market. Accordingly the valuation of these securities will
reflect any limitations on their liquidity.

AA-8

<PAGE>

and approved by the Trustees of the Portfolio Trust. The Trustees will monitor
the Advisor's implementation of these guidelines on a periodic basis.

FUTURES AND OPTIONS TRANSACTIONS. The Portfolio may (a) purchase and
sell (write) exchange traded and OTC put and call options on equity
securities or indexes of equity securities, (b) purchase and sell futures
contracts on indexes of equity securities, and (c) purchase and sell (write)
put and call options on futures contracts on indexes of equity securities.
Each of these instruments is a derivative instrument as its value derives
from the underlying asset or index.

The Portfolio may use futures contracts and options for hedging and
risk management purposes. The Portfolio may not use futures contracts and
options for speculation. For a more detailed description of these
transactions see "Options and Futures Transactions" in Item 13 in Part B.

The Portfolio may utilize options and futures contracts to manage its
exposure to changing interest rates and/or security prices. Some options and
futures strategies, including selling futures contracts and buying puts, tend to
hedge the Portfolio's investments against price fluctuations. Other strategies,
including buying futures contracts, writing puts and calls, and buying calls,
tend to increase market exposure. Options and futures contracts may be combined
with each other or with forward contracts in order to adjust the risk and return
characteristics of the Portfolio's overall strategy in a manner deemed
appropriate to the Advisor and consistent with the Portfolio's objective and
policies. Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and close
out.

The use of options and futures is a highly specialized activity which
involves investment strategies and risks different from those associated with
ordinary portfolio securities transactions, and there can be no guarantee that
their use will increase the Portfolio's return. While the use of these
instruments by the Portfolio may reduce certain risks associated with owning its
portfolio securities, these techniques themselves entail certain other risks. If
the Advisor applies a strategy at an inappropriate time or judges market
conditions or trends incorrectly, options and futures strategies may lower the
Portfolio's return. Certain strategies limit the Portfolio's possibilities to
realize gains as well as limiting its exposure to losses. The Portfolio could
also experience losses if the prices of its options and futures positions were
poorly correlated with its other investments or if it could not close out its
positions because of an illiquid secondary market. In addition, the Portfolio
will incur transaction costs, including trading commissions and option premiums,
in connection with its futures and options transactions and these transactions
could significantly increase the Portfolio's turnover rate.

AA-9

<PAGE>

futures contracts. The Portfolio may terminate its position in a put option
it has purchased by allowing it to expire or by exercising the option. The
Portfolio may also close out a put option position by entering into an
offsetting transaction, if a liquid market exists. If the option is allowed
to expire, the Portfolio will lose the entire premium it paid. If the
Portfolio exercises a put option on a security, it will sell the instrument
underlying the option at the strike price. If the Portfolio exercises an
option on an index, settlement is in cash and does not involve the actual
sale of securities. If an option is American style, it may be exercised on
any day up to its expiration date. A European style option may be exercise
only on its expiration date.

SELLING (WRITING) PUT AND CALL OPTIONS. When the Portfolio writes a
put option, it takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the Portfolio assumes the
obligation to pay the strike price for the instrument underlying the option
if the other party to the option chooses to exercise it. The Portfolio may
seek to terminate its position in a put option it writes before exercise by
purchasing an offsetting option in the market at its current price. If the
market is not liquid for a put option the Portfolio has written, however, the
Portfolio must continue to be prepared to pay the strike price while the
option is outstanding, regardless of price changes, and must continue to post
margin as discussed below.

AA-10

<PAGE>

If the price of the underlying instrument rises, a put writer would
generally expect to profit, although its gain would be limited to the amount of
the premium it received. If security prices remain the same over time, it is
likely that the writer will also profit, because it should be able to close out
the option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from purchasing
and holding the underlying instrument directly, however, because the premium
received for writing the option should offset a portion of the decline.

Writing a call option obligates the Portfolio to sell or deliver the
option's underlying instrument in return for the strike price upon exercise of
the option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium a call writer offsets part of the effect of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

The writer of an exchange traded put or call option on a security, an
index of securities or a futures contract is required to deposit cash or
securities or a letter of credit as margin and to make mark to market payments
of variation margin as the position becomes unprofitable.

For a number of reasons, a liquid market may not exist and thus the
Portfolio may not be able to close out an option position that it has previously
entered into. When the Portfolio purchases an OTC option, it will be relying on
its counterparty to perform its obligations, and the Portfolio may incur
additional losses if the counterparty is unable to perform.

FUTURES CONTRACTS. When the Portfolio purchases a futures contract, it
agrees to purchase a specified quantity of an underlying instrument at a
specified future date or to make a cash payment based on the value of a
securities index. When the Portfolio sells a futures contract, it agrees to sell
a specified quantity of the underlying instrument at a specified future date or
to receive a cash payment based on the value of a securities index. The price at
which the purchase and sale will take place is fixed when the Portfolio enters
into the contract. Futures can be held until their delivery dates or the
position can be (and normally is) closed out before then. There is no assurance,

AA-11

<PAGE>

however, that a liquid market will exist when the Portfolio wishes to close out
a particular position.

When the Portfolio purchases a futures contract, the value of the
futures contract tends to increase and decrease in tandem with the value of its
underlying instrument. Therefore, purchasing futures contracts will tend to
increase the Portfolio's exposure to positive and negative price fluctuations in
the underlying instrument, much as if it had purchased the underlying instrument
directly. When the Portfolio sells a futures contract, by contrast, the value of
its futures position will tend to move in a direction contrary to the value of
the underlying instrument. Selling futures contracts, therefore, will tend to
offset both positive and negative market price changes, much as if the
underlying instrument had been sold.

The purchaser or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract is held until
the delivery date. However, when the Portfolio buys or sells a futures contract
it will be required to deposit "initial margin" with its Custodian in a
segregated account in the name of its futures broker, known as a futures
commission merchant (FCM). Initial margin deposits are typically equal to a
small percentage of the contract's value. If the value of either party's
position declines, that party will be required to make additional "variation
margin" payments equal to the change in value on a daily basis. The party that
has a gain may be entitled to receive all or a portion of this amount. The
Portfolio may be obligated to make payments of variation margin at a time when
it is disadvantageous to do so. Furthermore, it may not always be possible for
the Portfolio to close out its futures positions. Until it closes out a futures
position, the Portfolio will be obligated to continue to pay variation margin.
Initial and variation margin payments do not constitute purchasing on margin for
purposes of the Portfolio's investment restrictions. In the event of the
bankruptcy of an FCM that holds margin on behalf of the Portfolio, the Portfolio
may be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to the
Portfolio.

The Portfolio will segregate liquid, assets in connection
with its use of options and futures contracts to the extent required by the
staff of the Securities and Exchange Commission. Securities held in a segregated
account cannot be sold while the futures contract or option is outstanding,
unless they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

AA-12

<PAGE>

purchase these securities to invest temporary cash balances or to maintain
liquidity to meet redemptions. However, the Portfolio may also invest in money
market instruments without limitation as a temporary defensive measure taken in
the Advisor's judgment during, or in anticipation of, adverse market conditions.
For more detailed information about these money market investments, see Item 13
in Part B.

INVESTMENT RESTRICTIONS

As a diversified investment company, 75% of the assets of the Portfolio
are subject to the following fundamental limitations: (a) the Portfolio may not
invest more than 5% of its total assets in the securities of any one issuer,
except U.S. Government securities, and (b) the Portfolio may not own more than
10% of the outstanding voting securities of any one issuer.

The investment objective of the Portfolio, together with the investment
restrictions described below and in Part B, except as noted, are deemed
fundamental policies, i.e., they may be changed only with the approval of the
holders of a majority of the outstanding voting securities of the Portfolio.

The Portfolio may not (i) purchase securities or other obligations
of issuers conducting their principal business activity in the same industry
if its investments in such industry would exceed 25% of the value of the
Portfolio's total assets, except this limitation shall not apply to
investments in U.S. Government securities. In addition, the Portfolio may not
borrow money except that the Portfolio may (a) borrow money from banks for
temporary or emergency purposes (not for leveraging purposes) and (b) enter
into reverse repurchase agreements for any purpose, provided that (a) and (b)
in total do not exceed one third of the Portfolio's total assets less
liabilities (other than borrowings); and the Portfolio may not issue senior
securities except as permitted by the 1940 Act or any rule, order or
interpretation thereunder. See "Risk Factors and Additional Investment
Information-Loans of Portfolio Securities" and "Reverse Repurchase
Agreements."

For a more detailed discussion of the above investment restrictions, as
well as a description of certain other investment restrictions, see Item 13 in
Part B.

ITEM 5. MANAGEMENT OF THE PORTFOLIO TRUST

The Portfolio Trust has not retained the services of a principal
underwriter or distributor, since interests in the Portfolio are offered solely
in private placement transactions. FDI, acting as agent for the Portfolio,
serves as exclusive placement agent of interests in the Portfolio. FDI receives
no additional compensation for serving as exclusive placement agent to the
Portfolio.

AA-13

<PAGE>

The Portfolio Trust has entered into an Amended and Restated
Portfolio Fund Services Agreement dated July 11, 1996 with Pierpont Group,
Inc. to assist the Trustees of the Portfolio Trust in exercising their
overall supervisory responsibilities for the Portfolio Trust's affairs. The
fees to be paid under the agreement approximate the reasonable cost of
Pierpont Group, Inc. in providing these services. Pierpont Group, Inc. was
organized in 1989 at the request of the Trustees of The Pierpont Funds for
the purpose of providing these services at cost to these funds. The principal
offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New York,
New York 10017. See Item 14 in Part B.

INVESTMENT ADVISOR. The Portfolio has retained the services of
Morgan as investment advisor. Morgan, with principal offices at 60 Wall
Street, New York, New York 10260, is a New York trust company which conducts
a general banking and trust business. Morgan is a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"), a bank holding company
organized under the laws of Delaware. Through offices in New York City and
abroad, J.P. Morgan, through the Advisor and other subsidiaries, offers a
wide range of services to governmental, institutional, corporate and
individual customers and acts as investment adviser to individual and
institutional clients with combined assets under management of over $179
billion (of which the Advisor advises over $28 billion). Morgan provides
investment advice and portfolio management services to the Portfolio. Subject
to the supervision of the Portfolio Trust's Trustees, Morgan, as Advisor,
makes the Portfolio's day-to-day investment decisions, arranges for the
execution of portfolio transactions and generally manages the Portfolio's
investments. See Item 16 in Part B.

The Advisor uses a sophisticated, disciplined, collaborative process
for managing all asset classes. For equity portfolios, this process utilizes
fundamental research, systematic stock selection, disciplined portfolio
construction and, in the case of foreign equities, country exposure and
currency management. Morgan has managed portfolios of equity securities of
companies in emerging markets, including Asian growth markets, since 1990.
The portfolio managers making investments in Asian growth markets work in
conjunction with Morgan's equity analysts focused on Asian growth markets, as
well as capital market, credit and economic research analysts, traders and
administrative officers. The Asian equity analysts, located in Singapore,
each cover a different industry, monitoring a universe of approximately 250
companies in the region.

The following persons are primarily responsible for the day-to-day
management and implementation of Morgan's process for the Portfolio
(the inception date of each person's responsibility for the Portfolio and his
business experience for the past five years is indicated parenthetically):
Steven T. Ho, Vice President (since March, 1995, employed by Morgan
since prior to 1991 as a portfolio manager of Asian investments and as an
investment research analyst) and Douglas J. Dooley, Managing Director (since
March, 1995, employed as a portfolio manager of emerging markets investments
since 1991).

AA-14

<PAGE>

and may be paid monthly, at the annual rate of 0.80% of the Portfolio's average
daily net assets. While the advisory fee for the Portfolio is higher than that
of most investment companies, it is similar to the advisory fees of other funds
of this type.

Under a separate agreement, Morgan provides administrative and
related services to the Portfolio Trust. See "Administrative Services Agent"
below.

CO-ADMNISTRATOR. Under a Co-Administration Agreement with the
Portfolio Trust, FDI serves as the Co-Administrator for the Portfolio and in
that capacity FDI (i) provides office space, equipment and clerical personnel
for maintaining the organization and books and records of the Portfolio; (ii)
provides officers for the Portfolio; (iii) files Portfolio regulatory
documents and mails Portfolio communications to Trustees and investors and
(iv) maintains related books and records. See "Administrative Services Agent"
below.

ADMINISTRATIVE SERVICES AGENT. Under an Administrative Services
Agreement with the Portfolio Trust, Morgan is responsible for certain
administrative and related services provided to the Portfolio, including
services related to taxes, financial statements, calculation of performance
data, oversight of service providers and certain regulatory and Board of
Trustees matters. Under the Administrative Services Agreement and the
Co-Administration Agreement, the Portfolio has agreed to pay Morgan and FDI
fees equal to its allocable share of an annual complex-wide charge. This
charge is calculated daily based on the aggregate net assets of the Portfolio
and the other portfolios (collectively the "Master Portfolios") in which
series of The JPM Institutional Funds, The Pierpont Funds or The JPM Advisor
Funds invest in accordance with the following annual schedule: 0.09% on the
first $7 billion of the Master Portfolios' aggregate average daily net assets
and 0.04% of the Master Portfolios' aggregate average daily net assets in excess
of $7 billion.

AA-15
<PAGE>

EXPENSES. In addition to the fees payable to Morgan, FDI and Pierpont
Group, Inc. under the various agreements discussed above, the Portfolio is
responsible for certain usual and customary expenses associated with its
operations. Such expenses include organization expenses, legal fees, accounting
expenses, insurance costs, the compensation and expenses of its Trustees,
registration fees under federal and foreign securities laws, custodian fees,
brokerage expenses and extraordinary expenses applicable to the Portfolio.

Morgan has agreed that it will reimburse the Portfolio through at
least April 30, 1997 to the extent necessary to maintain the Portfolio's
total operating expenses at the annual rate of 1.25% of the Portfolio's
average daily net assets. This limit does not cover extraordinary expenses
during the period. There is no assurance that Morgan will continue this
waiver beyond the specified period, except as required by the following
sentence. Morgan has agreed to waive fees as necessary if in any fiscal year
the sum of the Portfolio's expenses exceeds the limits set by applicable
regulations of state securities commissions. Such annual limits are currently
2.5% of the first $30 million of average net assets, 2% of the next $70
million of such net assets and 1.5% of such net assets in excess of $100
million for any fiscal year.

For the period April 5, 1995 (commencement of operations) through
December 31, 1995 the Portfolio's total expenses were 1.40% of its average
net assets.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES

The Portfolio is a series of the Portfolio Trust, which is organized as
a trust under the laws of the State of New York. Under the Declaration of Trust,
the Trustees are authorized to issue beneficial interests in one or more series.
Currently, there are three active and seventeen inactive series of the Portfolio
Trust. Investments in the Portfolio may not be transferred, but an investor may
withdraw all or any portion of its investment at any time at net asset value.
The Declaration of Trust provides that investors in the Portfolio (e.g., other
investment companies, insurance company separate accounts and common and
commingled trust funds) are each liable for all obligations of the Portfolio.
However, the risk of an investor in the Portfolio incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.

As of September 30, 1996, The JPM Asia Growth Fund, Ltd. (a Bahamas
international business company) and The JPM Institutional Asia Growth Fund
and the JPM Advisor Asia Growth Fund, (series of the JPM INstitutional Funds
and The Pierpont Funds, respectively) (the "Funds") owned 95% and 2% and 2% of
the total outstanding beneficial interests of the Asia Growth Portfolio.

AA-16

<PAGE>

holding annual meetings of investors, but the Portfolio will hold special
meetings of investors when in the judgment of the Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies will be submitted to investors for approval. Investors have under
certain circumstances (E.G., upon application and submission of certain
specified documents to the Trustees by a specified percentage of the
outstanding interests in the Portfolio) the right to communicate with other
investors in connection with requesting a meeting of investors for the
purpose of removing one or more Trustees. Investors also have the right to
remove one or more Trustees without a meeting by a declaration in writing by
a specified percentage of the outstanding interests in the Portfolio. Upon
liquidation of the Portfolio, investors would be entitled to share pro rata
in the net assets of the Portfolio available for distribution to investors.

The "net income" of the Portfolio will consist of (i) all income
accrued, less the amortization of any premium, on the assets of the
Portfolio, less (ii) all actual and accrued expenses of the Portfolio
determined in accordance with generally accepted accounting principles.
Income includes dividends and interest, including discount earned (including
both original issue and market discount) on discount paper accrued ratably to
the date of maturity and any net realized and unrealized gains or losses on
the assets of the Portfolio. All the net income of the Portfolio is allocated
pro rata among the investors in the Portfolio.

The end of the Portfolio's fiscal year is December 31.

Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any income tax. However, each investor in
the Portfolio will be taxable on its share (as determined in accordance with
the governing instruments of the Portfolio) of the Portfolio's ordinary
income and capital gain in determining its income tax liability. The
determination of such share will be made in accordance with the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations promulgated
thereunder.

It is intended that the Portfolio's assets, income and distributions
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 of
1986, as amended (the "Code"), assuming that the investor invested all of its
assets in the Portfolio.

Investor inquiries may be directed to FDI, in care of State
Street Cayman Trust Company Ltd., at Elizabethan Square, Shedden Road,
George Town, Grand Cayman, Cayman Islands, B.W.I. ((809) 949-6644).

AA-17

<PAGE>

ITEM 7. PURCHASE OF SECURITIES

The Portfolio and FDI reserve the right to cease accepting investments
at any time or to reject any investment order.

Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each Portfolio Business Day. At the Valuation Time on each such
day, the value of each investor's beneficial interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
reductions, which are to be effected at the Valuation Time on such day, will
then be effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be recomputed as the percentage equal to
the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio at the Valuation Time on such day plus or minus,
as the case may be, the amount of net additions to or reductions in the
investor's investment in the Portfolio effected

AA-18

<PAGE>

as of the Valuation Time, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the Valuation Time on such day, plus or
minus, as the case may be, the amount of net additions to or reductions in the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the Valuation Time on the following
Portfolio Business Day.

ITEM 8. REDEMPTION OR REPURCHASE

ITEM 9. PENDING LEGAL PROCEEDINGS

Not applicable.

AA-19

<PAGE>

PART A (THE JAPAN EQUITY PORTFOLIO)

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT

The Series Portfolio (the "Portfolio Trust") is an open-end management
investment company which was organized as a trust under the laws of the State of
New York on June 24, 1994. Beneficial interests of the Portfolio Trust are
divided into actual and potential series, only one of which, The Japan Equity
Portfolio (the "Portfolio") is described herein. The Portfolio is
non-diversified for purposes of the Investment Company Act of 1940 (the "1940
Act"). Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933 (the "1933 Act").
Investments in the Portfolio may only be made by other investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.

The Portfolio is advised by Morgan Guaranty Trust Company of New York
("Morgan" or the "Advisor").

Part B contains more detailed information about the Portfolio,
including information related to (i) the investment policies and restrictions of
the Portfolio, (ii) the Trustees, officers, Advisor and administrators of the
Portfolio, (iii) portfolio transactions, (iv) rights and liabilities of
investors and (v) the audited financial statements of the Portfolio at December
31, 1995, and its unaudited semi-annual financial statements at June 30, 1996.

The investment objective of the Portfolio is described below, together
with the policies it employs in its efforts to achieve this objective.
Additional information about the investment policies of the Portfolio appears in
Part B under Item 13. There can be no assurance that the investment objective of
the Portfolio will be achieved.

The Portfolio's investment objective is to provide a high total return
from a portfolio of equity securities of Japanese companies. Total return will
consist of realized and unrealized capital gains and losses plus income. Under
certain market conditions, the Portfolio may not be able to achieve its
investment objective.

AAA-1

<PAGE>

The Portfolio is designed for investors who want an actively managed
portfolio of Japanese equity securities that seeks to outperform the Tokyo
Stock Price Index (TOPIX), a composite market-capitalization weighted index
of all common stocks listed on the First Section of the Tokyo Stock Exchange.
The Portfolio does not represent a complete investment program nor is the
Portfolio suitable for all investors.

A Japanese company is one that: (i) has its principal securities
trading market in Japan; or (ii) is organized under the laws of Japan; or (iii)
derives 50% or more of its total revenues and/or profits from either goods
produced, sales made or services performed in Japan; or (iv) has at least 50% of
its assets located in Japan.

The Advisor seeks to enhance the Portfolio's total return relative
to that of the TOPIX through fundamental research, stock valuation and the
exploitation of underlying market inefficiencies. Based on internal fundamental
research, the Advisor uses a proprietary valuation model to establish the
relative valuation of individual Japanese companies within industrial sectors.
The Advisor then buys and sells securities within each industrial sector
based on this valuation process. In addition to stocks, the Advisor actively
uses convertible securities and warrants to seek to enhance overall portfolio
performance.

In addition, the Advisor uses a disciplined portfolio construction
process to seek to reduce the Portfolio's volatility relative to the TOPIX.
Morgan attempts to keep the industrial sector weightings, the average market
capitalization and other broad characteristics of the Portfolio comparable to
those of the TOPIX.

The Portfolio's equity investments will be primarily denominated in
yen, but the Portfolio may also invest in securities denominated in other
foreign currencies, the U.S. dollar or multinational currency units such as the
ECU. The Advisor will not routinely attempt to hedge the Portfolio's foreign
currency exposure. However, the Advisor may from time to time engage in foreign
currency exchange transactions if, based on fundamental research, technical
factors, and the judgment of experienced currency managers, it believes the
transactions would be in the Portfolio's best interest. For further information
on foreign currency exchange transactions, see Risk Factors and Additional
Investment Information.

EQUITY INVESTMENTS. In normal circumstances, the Advisor intends to
keep the Portfolio essentially fully invested with at least 65% of the
Portfolio's total assets invested in equity securities of Japanese companies
consisting of

AAA-2

<PAGE>

common stocks and other securities with equity characteristics comprised of
preferred stock, warrants, rights, convertible securities, trust
certificates, limited partnership interests and equity participations. The
Portfolio's primary equity investments are the common stock of established
Japanese companies. The common stock in which the Portfolio may invest
includes the common stock of any class or series or any similar equity
interest, such as trust or limited partnership interests. These equity
investments may or may not pay dividends and may or may not carry voting
rights. The Portfolio invests in securities listed on foreign or domestic
securities exchanges and securities traded in foreign or domestic
over-the-counter (OTC) markets, and may invest in certain restricted or
unlisted securities.

NON-DIVERSIFICATION. The Portfolio is registered as a non-diversified
investment company which means that the Portfolio is not limited by the 1940 Act
in the proportion of its assets that may be invested in the obligations of a
single issuer. Thus, the Portfolio may invest a greater proportion of its assets
in the securities of a smaller number of issuers and, as a result, may be
subject to greater risk with respect to its portfolio securities. The Portfolio,
however, will comply with the diversification requirements imposed by the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company.

RISK FACTORS AND ADDITIONAL INVESTMENT INFORMATION

INVESTING IN JAPAN. Investing in Japanese securities may involve
the risks associated with investing in foreign securities generally.
See "Other Foreign Investment Information." In addition, because the
Portfolio invests primarily in Japan, it will be subject to the general
economic and political conditions in Japan.

Despite recent increases, prices for exchange-listed and OTC stocks
of Japanese companies are currently depressed in comparison to their
historical peaks in 1989 and 1990. Nevertheless, Japanese stocks continue to
trade at high price earnings ratios relative to stocks of U.S. companies. In
addition, differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of U.S. companies. Because most of
the Portfolio's investments are denominated in yen, changes in currency
exchange rates will affect the U.S. dollar value of the Portfolio's assets.
The Japanese economy has experienced a substantial reduction in its rate of
growth. Economic growth and the prices of Japanese stocks could be adversely
affected by a reversal of

AAA-3

<PAGE>

Japan's historical success in exporting its products and maintaining low
inflation and interest rates. Recent political instability and any resulting
delay in implementing regulatory reforms could also have a negative effect on
Japanese stock prices. For additional information, see Appendix C--Investing in
Japan and Asian Growth Markets--Japan and its Securities Markets in Part B.

OTHER FOREIGN INVESTMENT INFORMATION. The Portfolio invests primarily
in foreign securities. Investment in securities of foreign issuers involves
somewhat different investment risks from those affecting securities of U.S.
domestic issuers. There may be limited publicly available information with
respect to foreign issuers, and foreign issuers are not generally subject to
uniform accounting, auditing and financial standards and requirements comparable
to those applicable to domestic companies. Interest paid by foreign issuers may
be subject to withholding and other foreign taxes which may decrease the net
return on foreign investments as compared to interest paid to the Portfolio by
domestic companies.

Investors should realize that the value of the Portfolio's investments
in foreign securities may be adversely affected by changes in political or
social conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
In addition, changes in government administrations or economic or monetary
policies in the United States or abroad could result in appreciation or
depreciation of portfolio securities and could favorably or unfavorably affect
the Portfolio's operations. Furthermore, the economies of individual foreign
nations may differ from the U.S. economy, whether favorably or unfavorably, in
areas such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more difficult to obtain and enforce a judgment against a foreign
issuer. Any foreign investments made by the Portfolio must be made in compliance
with U.S. and foreign currency restrictions and tax laws restricting the amounts
and types of foreign investments.

The Portfolio may invest in securities of foreign issuers directly or
in the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") or other similar securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a U.S. bank or
trust company evidencing ownership of the underlying foreign securities. Certain
such institutions issuing ADRs may not be sponsored by the issuer of the
underlying foreign securities. A non-sponsored depository may not provide the
same shareholder information that a sponsored depository is required to provide
under its contractual arrangements with the issuer of the underlying foreign
securities. EDRs are receipts issued by a European financial institution
evidencing a similar arrangement. Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets, and EDRs, in bearer form, are
designed for use in European securities markets.

AAA-4

<PAGE>

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the Portfolio buys
and sells securities and receives interest and dividends in currencies other
than the U.S. dollar-principally yen-the Portfolio may enter from time to
time into foreign currency exchange transactions. The Portfolio either enters
into these transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or uses forward contracts
to purchase or sell foreign currencies. The cost of the Portfolio's spot
currency exchange transactions is generally the difference between the bid
and offer spot rate of the currency being purchased or sold.

A forward foreign currency exchange contract is an obligation by the
Portfolio to purchase or sell a specific currency at a future date, which may be
any fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are derivative instruments, as their value derives from the spot exchange rates
of the currencies underlying the contract. These contracts are entered into in
the interbank market directly between currency traders (usually large commercial
banks) and their customers. A forward foreign currency exchange contract
generally has no deposit requirement and is traded at a net price without
commission. The Portfolio will not enter into forward contracts for speculative
purposes. Neither spot transactions nor forward foreign currency exchange
contracts eliminate fluctuations in the prices of the Portfolio's securities or
in foreign exchange rates, or prevent loss if the prices of these securities
should decline.

The Portfolio may enter into foreign currency exchange transactions in
an attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or
anticipated securities transactions. The Portfolio may also enter into forward
contracts to hedge against a change in foreign currency exchange rates that
would cause a decline in the value of existing investments denominated or
principally traded in a foreign currency. To do this, the Portfolio would enter
into a forward contract to sell the foreign currency in which the investment is
denominated or principally traded in exchange for U.S. dollars or in exchange
for another foreign currency. The Portfolio will only enter into forward
contracts to sell a foreign currency in exchange for another foreign currency if
the Advisor expects the foreign currency purchased to appreciate against the
U.S. dollar.

AAA-5

<PAGE>

the value of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of such securities between the date
the forward contract is entered into and the date it matures. The projection of
currency market movements is extremely difficult, and the successful execution
of a hedging strategy is highly uncertain.

CONVERTIBLE SECURITIES. The convertible securities in which the
Portfolio may invest include any debt securities or preferred stock which may be
converted into common stock or which carry the right to purchase common stock.
Convertible securities entitle the holder to exchange the securities for a
specified number of shares of common stock, usually of the same company, at
specified prices within a certain period of time.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and for fixed income investments no interest
accrues to the Portfolio until settlement. At the time of settlement, a
when-issued security may be valued at less than its purchase price. The
Portfolio maintains with the Custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. When
entering into a when-issued or delayed delivery transaction, the Portfolio will
rely on the other party to consummate the transaction; if the other party fails
to do so, the Portfolio may be disadvantaged. It is the current policy of the
Portfolio not to enter into when-issued commitments exceeding in the aggregate
15% of the market value of the Portfolio's total assets less liabilities other
than the obligations created by these commitments.

AAA-6

<PAGE>

always receives securities as collateral with a market value at least equal to
the purchase price plus accrued interest and this value is maintained during the
term of the agreement. If the seller defaults and the collateral value declines,
the Portfolio might incur a loss. If bankruptcy proceedings are commenced with
respect to the seller, the Portfolio's realization upon the disposition of
collateral may be delayed or limited. Investments in certain repurchase
agreements and certain other investments which may be considered illiquid are
limited. See Illiquid Investments; Privately Placed and other Unregistered
Securities below.

LOANS OF PORTFOLIO SECURITIES. Subject to applicable investment
restrictions, the Portfolio is permitted to lend its securities in an amount
up to 33 1/3% of the value of the Portfolio's net assets. The Portfolio may
lend its securities if such loans are secured continuously by cash or
equivalent collateral or by a letter of credit in favor of the Portfolio at
least equal at all times to 100% of the market value of the securities
loaned, plus accrued interest. While such securities are on loan, the
borrower will pay the Portfolio any income accruing thereon. Loans will be
subject to termination by the Portfolio in the normal settlement time,
generally three business days after notice, or by the borrower on one day's
notice. Borrowed securities must be returned when the loan is terminated. Any
gain or loss in the market price of the borrowed securities which occurs
during the term of the loan inures to the Portfolio and its respective
investors. The Portfolio may pay reasonable finders' and custodial fees in
connection with a loan. In addition, the Portfolio will consider all facts
and circumstances, including the creditworthiness of the borrowing financial
institution, and the Portfolio will not make any loans in excess of one year.
Loans of portfolio securities may be considered extensions of credit by the
Portfolio. The risks to the Portfolio with respect to borrowers of its
portfolio securities are similar to the risks to the Portfolio with respect
to the sellers in repurchase agreement transactions. See "Repurchase
Agreements" above. The Portfolio will not lend its securities to any officer,
Trustee, Director, employee or other affiliate of the Portfolio, the Advisor
or the exclusive placement agent or any affiliate thereof, unless otherwise
permitted by applicable law.

ILLIQUID INVESTMENTS; PRIVATELY PLACED AND OTHER UNREGISTERED
SECURITIES. The Portfolio may not acquire any illiquid securities if, as a
result thereof, more than 15% of the market value of the Portfolio's net assets
would be in illiquid investments. Subject to this non-fundamental policy
limitation, the Portfolio may acquire investments that are illiquid or have
limited liquidity, such as private placements or investments that are not
registered under the 1933 Act and cannot be offered for public sale in the
United States without first being registered under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which it is valued by
the Portfolio. The price the Portfolio pays for illiquid securities or receives
upon resale may be lower than

AAA-7

<PAGE>

the price paid or received for similar securities with a more liquid market.
Accordingly the valuation of these securities will reflect any limitations on
their liquidity.

The Portfolio may also purchase Rule 144A securities sold to
institutional investors without registration under the 1933 Act. These
securities may be determined to be liquid in accordance with guidelines
established by the Advisor and approved by the Trustees of the Portfolio Trust.
The Trustees will monitor the Advisor's implementation of these guidelines on a
periodic basis.

FUTURES AND OPTIONS TRANSACTIONS. The Portfolio may (a) purchase and
sell (write) exchange traded and OTC put and call options on equity
securities or indexes of equity securities, (b) purchase and sell futures
contracts on indexes of equity securities, and (c) purchase and sell (write) put
and call options on futures contracts on indexes of equity securities. Each of
these instruments is a derivative instrument as its value derives from the
underlying asset or index.

The Portfolio may utilize options and futures contracts to manage its
exposure to changing interest rates and/or security prices. Some options and
futures strategies, including selling futures contracts and buying puts, tend to
hedge the Portfolio's investments against price fluctuations. Other strategies,
including buying futures contracts, writing puts and calls, and buying calls,
tend to increase market exposure. Options and futures contracts may be combined
with each other or with forward contracts in order to adjust the risk and return
characteristics of the Portfolio's overall strategy in a manner deemed
appropriate to the Advisor and consistent with the Portfolio's objective and
policies. Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and close
out.

The use of options and futures is a highly specialized activity which
involves investment strategies and risks different from those associated with
ordinary portfolio securities transactions, and there can be no guarantee that
their use will increase the Portfolio's return. While the use of these
instruments by the Portfolio may reduce certain risks associated with owning its
portfolio securities, these techniques themselves entail certain other risks. If
the Advisor applies a strategy at an inappropriate time or judges market
conditions or trends incorrectly, options and futures strategies may lower the
Portfolio's return. Certain strategies limit the Portfolio's possibilities to
realize gains as well as limiting its exposure to losses. The Portfolio could
also experience losses if the prices of its options and futures positions were
poorly correlated with its other investments or if it could not close out its
positions because of an illiquid secondary market. In addition, the Portfolio
will incur transaction costs, including trading commissions and option premiums,
in connection with its futures and options transactions and these transactions
could significantly increase the Portfolio's turnover rate.

AAA-8

<PAGE>

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
Portfolio obtains the right (but not the obligation) to sell the instrument
underlying the option at a fixed strike price. In return for this right, the
Portfolio pays the current market price for the option (known as the option
premium). Options have various types of underlying instruments, including
specific securities, indexes of securities, indexes of securities prices, and
futures contracts. The Portfolio may terminate its position in a put option
it has purchased by allowing it to expire or by exercising the option. The
Portfolio may also close out a put option position by entering into an
offsetting transaction, if a liquid market exists. If the option is allowed
to expire, the Portfolio will lose the entire premium it paid. If the
Portfolio exercises a put option on a security, it will sell the instrument
underlying the option at the strike price. If the Portfolio exercises an
option on an index, settlement is in cash and does not involve the actual
sale of securities. If an option is American style, it may be exercised on
any day up to its expiration date. A European style option may be exercised
only on its expiration date.

The buyer of a typical put option can expect to realize a gain if the
price of the underlying instrument falls substantially. However, if the price of
the instrument underlying the option does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the instrument underlying the option at the option's
strike price. A call buyer typically attempts to participate in potential price
increases of the instrument underlying the option with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can expect to
suffer a loss if security prices do not rise sufficiently to offset the cost of
the option.

The Portfolio may purchase put and call options on securities, indexes
of securities and futures contracts, or purchase and sell futures contracts,
only if such options are written by other persons and if (i) the aggregate
premiums paid on all such options which are held at any time do not exceed 20%
of the Portfolio's net assets, and (ii) the aggregate margin deposits required
on all such futures or options thereon held at any time do not exceed 5% of the
Portfolio's total assets. In addition, the Portfolio will not purchase or sell
(write) futures contracts, options on futures contracts or commodity options for
risk management purposes if, as a result, the aggregate initial margin and
options premiums required to establish these positions exceed 5% of the net
asset value of the Portfolio. For more detailed information about these
transactions, see Item 13 in Part B.

AAA-9

<PAGE>

an offsetting option in the market at its current price. If the market is not
liquid for a put option the Portfolio has written, however, the Portfolio must
continue to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to post margin as discussed
below.

If the price of the underlying instrument rises, a put writer would
generally expect to profit, although its gain would be limited to the amount of
the premium it received. If security prices remain the same over time, it is
likely that the writer will also profit, because it should be able to close out
the option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from purchasing
and holding the underlying instrument directly, however, because the premium
received for writing the option should offset a portion of the decline.

Writing a call option obligates the Portfolio to sell or deliver the
option's underlying instrument in return for the strike price upon exercise of
the option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium a call writer offsets part of the effect of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

The writer of an exchange traded put or call option on a security, an
index of securities or a futures contract is required to deposit cash or
securities or a letter of credit as margin and to make mark to market payments
of variation margin as the position becomes unprofitable.

For a number of reasons, a liquid market may not exist and thus the
Portfolio may not be able to close out an option position that it has previously
entered into. When the Portfolio purchases an OTC option, it will be relying on
its counterparty to perform its obligations, and the Portfolio may incur
additional losses if the counterparty is unable to perform.

AAA-10

<PAGE>

a specified quantity of the underlying instrument at a specified future date or
to receive a cash payment based on the value of a securities index. The price at
which the purchase and sale will take place is fixed when the Portfolio enters
into the contract. Futures can be held until their delivery dates or the
position can be (and normally is) closed out before then. There is no assurance,
however, that a liquid market will exist when the Portfolio wishes to close out
a particular position.

When the Portfolio purchases a futures contract, the value of the
futures contract tends to increase and decrease in tandem with the value of its
underlying instrument. Therefore, purchasing futures contracts will tend to
increase the Portfolio's exposure to positive and negative price fluctuations in
the underlying instrument, much as if it had purchased the underlying instrument
directly. When the Portfolio sells a futures contract, by contrast, the value of
its futures position will tend to move in a direction contrary to the value of
the underlying instrument. Selling futures contracts, therefore, will tend to
offset both positive and negative market price changes, much as if the
underlying instrument had been sold.

The purchaser or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract is held until
the delivery date. However, when the Portfolio buys or sells a futures contract
it will be required to deposit "initial margin" with its Custodian in a
segregated account in the name of its futures broker, known as a futures
commission merchant (FCM). Initial margin deposits are typically equal to a
small percentage of the contract's value. If the value of either party's
position declines, that party will be required to make additional "variation
margin" payments equal to the change in value on a daily basis. The party that
has a gain may be entitled to receive all or a portion of this amount. The
Portfolio may be obligated to make payments of variation margin at a time when
it is disadvantageous to do so. Furthermore, it may not always be possible for
the Portfolio to close out its futures positions. Until it closes out a futures
position, the Portfolio will be obligated to continue to pay variation margin.
Initial and variation margin payments do not constitute purchasing on margin for
purposes of the Portfolio's investment restrictions. In the event of the
bankruptcy of an FCM that holds margin on behalf of the Portfolio, the Portfolio
may be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to the
Portfolio.

The Portfolio will segregate liquid assets in connection
with its use of options and futures contracts to the extent required by the
staff of the Securities and Exchange Commission. Securities held in a segregated
account cannot be sold while the futures contract or option is outstanding,
unless they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

AAA-11

<PAGE>

MONEY MARKET INSTRUMENTS. The Portfolio is permitted to invest in money
market instruments although it intends to stay invested in equity securities to
the extent practical in light of its objective. The Portfolio may invest in
money market instruments of foreign or domestic issuers denominated in U.S.
dollars and other currencies. Under normal circumstances the Portfolio will
purchase these securities to invest temporary cash balances or to maintain
liquidity to meet redemptions. However, the Portfolio may also invest in money
market instruments without limitation as a temporary defensive measure taken in
the Advisor's judgment during, or in anticipation of, adverse market conditions.
For more detailed information about these money market investments, see Item 13
in Part B.

INVESTMENT RESTRICTIONS.

The investment objective of the Portfolio, together with the investment
restrictions described below and in Part B, except as noted, are deemed
fundamental policies, i.e., they may be changed only with the approval of the
holders of a majority of the outstanding voting securities of the Portfolio.

For a more detailed discussion of the above investment restrictions, as
well as a description of certain other investment restrictions, see Item 13 in
Part B.

ITEM 5. MANAGEMENT OF THE PORTFOLIO TRUST

The Portfolio Trust has not retained the services of a principal
underwriter or distributor, since interests in the Portfolio are offered solely
in private placement transactions. FDI, acting as agent for the Portfolio,
serves as exclusive placement agent of interests in the Portfolio. FDI receives
no additional compensation for serving as exclusive placement agent to the
Portfolio.

AAA-12

<PAGE>

The Portfolio Trust has entered into an Amended and Restated
Portfolio Fund Services Agreement dated July 11, 1996 with Pierpont Group,
Inc. to assist the Trustees of the Portfolio Trust in exercising their
overall supervisory responsibilities for the Portfolio Trust's affairs. The
fees to be paid under the agreement approximate the reasonable cost of
Pierpont Group, Inc. in providing these services. Pierpont Group, Inc. was
organized in 1989 at the request of the Trustees of The Pierpont Funds for
the purpose of providing these services at cost to these funds. The principal
offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New York,
New York 10017. See Item 14 in Part B.

INVESTMENT ADVISOR. The Portfolio has retained the services of
Morgan as investment advisor. Morgan, with principal offices at 60 Wall
Street, New York, New York 10260, is a New York trust company which conducts
a general banking and trust business. Morgan is a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"), a bank holding company
organized under the laws of Delaware. Through offices in New York City and
abroad, J.P. Morgan, through the Advisor and other subsidiaries, offers a
wide range of services to governmental, institutional, corporate and
individual customers and acts as investment adviser to individual and
institutional clients with combined assets under management of over $179
billion (of which the Advisor advises over $28 billion). Morgan, as Advisor,
provides investment advice and portfolio management services to the
Portfolio. Subject to the supervision of the Portfolio Trust's Trustees,
Morgan makes the Portfolio's day-to-day investment decisions, arranges for
the execution of portfolio transactions and generally manages the Portfolio's
investments. See Item 16 in Part B.

The Advisor uses a sophisticated, disciplined, collaborative
process for managing all asset classes. For equity portfolios, this process
utilizes fundamental research, systematic stock selection and disciplined
portfolio construction. The Advisor has invested in equity securities of
Japanese companies on behalf of its clients for over a decade and has had a
research team in Tokyo since 1972. The portfolio managers making investments in
Japanese equity securities work in conjunction with Morgan's Japanese
equity analysts, as well as capital market, credit and economic research
analysts, traders and administrative officers. The Japanese equity analysts,
located in Tokyo, each cover a different industry, monitoring a universe of over
300 Japanese companies.

The following persons are primarily responsible for the day-to-day
management and implementation of Morgan's process for the Portfolio
(the inception date of each person's responsibility for the Portfolio and his
business experience for the past five years is indicated parenthetically):
Masato Degawa, Vice President (since August, 1995, employed by Morgan
since September, 1993 as a portfolio manager of Japanese equity investments and
by Morgan Stanley prior to September, 1993 as a senior analyst covering Japanese
utilities and special situations) and Yukiko Sugimoto, Vice President (since
March, 1995, employed by Morgan since prior to 1991 as a portfolio
manager of Japanese equity investments).

As compensation for the services rendered and related expenses borne by
Morgan under the Investment Advisory Agreement with the Portfolio Trust,

AAA-13

<PAGE>

the Portfolio has agreed to pay Morgan a fee, which is computed daily
and may be paid monthly, at the annual rate of 0.65% of the Portfolio's average
daily net assets.

Under a separate agreement, Morgan also provides administrative and
related services to the Portfolio Trust. See "Administrative Services Agent"
below.

ADMINISTRATIVE SERVICES AGENT. Under an Administrative Services
Agreement with the Portfolio Trust, Morgan is responsible for certain
administrative and related services provided to the Portfolio, including
services related to taxes, financial statements, calculation of performance
data, oversight of service providers and certain regulatory and Board of
Trustees matters. Under the Administrative Services Agreement and the
Co-Administration Agreement, the Portfolio has agreed to pay Morgan and FDI
fees equal to its allocable share of an annual complex-wide charge. This
charge is calculated daily based on the aggregate net assets of the Portfolio
and the other portfolios (collectively The "Master Portfolios") in which
series of The JPM Institutional Funds, The Pierpont Funds or The JPM Advisor
Funds invest in accordance with the following annual schedule: 0.09% on the
first $7 billion of the Master Portfolios' aggregate average daily net assets
and 0.04% of the Master Portfolios' Average Aggregate daily net assets in
excess of $7 billion.

AAA-14

<PAGE>

EXPENSES. In addition to the fees payable to Morgan, FDI and Pierpont
Group, Inc. under the various agreements discussed above, the Portfolio is
responsible for certain usual and customary expenses associated with its
operations. Such expenses include organization expenses, legal fees, accounting
expenses, insurance costs, the compensation and expenses of its Trustees,
registration fees under federal and foreign securities laws, custodian fees,
brokerage expenses and extraordinary expenses applicable to the Portfolio.

Morgan has agreed that it will reimburse the Portfolio through at
least April 30, 1997 to the extent necessary to maintain the Portfolio's
total operating expenses at the annual rate of 1.00% of the Portfolio's
average daily net assets. This limit does not cover extraordinary expenses
during the period. There is no assurance that Morgan will continue this
waiver beyond the specified period, except as required by the following
sentence. Morgan has agreed to waive fees as necessary, if in any fiscal year
the sum of the Portfolio's expenses exceeds the limits set by applicable
regulations of state securities commissions. Such annual limits are currently
2.5% of the first $30 million of average net assets, 2% of the next $70
million of such net assets and 1.5% of such net assets in excess of $100
million for any fiscal year.

For the period March 28, 1995 (commencement of operations) through
December 31, 1995 the Portfolio's total expenses were .87% of its average net
assets.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES

The Portfolio is a series of the Portfolio Trust, which is organized as
a trust under the laws of the State of New York. Under the Declaration of Trust,
the Trustees are authorized to issue beneficial interests in one or more series.
Currently, there are three active and seventeen inactive series of the Portfolio
Trust. Investments in the Portfolio may not be transferred, but an investor may
withdraw all or any portion of its investment at any time at net asset value.
The Declaration of Trust provides that investors in the Portfolio (e.g., other
investment companies, insurance company separate accounts and common and
commingled trust funds) are each liable for all obligations of the Portfolio.
However, the risk of an investor in the Portfolio incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.

As of September 30, 1996 the JPM Japan Equity Fund, Ltd. (a Bahamas
international business company) owned 99% of the total outstanding beneficial
interests of The Japan Equity Portfolio.

AAA-15

<PAGE>

meetings of investors when in the judgment of the Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies will be submitted to investors for approval. Investors have under
certain circumstances (E.G., upon application and submission of certain
specified documents to the Trustees by a specified percentage of the outstanding
interests in the Portfolio) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of removing
one or more Trustees. Investors also have the right to remove one or more
Trustees without a meeting by a declaration in writing by a specified percentage
of the outstanding interests in the Portfolio. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.

The end of the Portfolio's fiscal year is December 31.

It is intended that the Portfolio's assets, income and distributions
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 of
1986, as amended (the "Code"), assuming that the investor invested all of its
assets in the Portfolio.

Investor inquiries may be directed to FDI, in care of State
Street Cayman Trust Company, Ltd., at Elizabethan Square, Shedden Road, George
Town, Grand Cayman, Cayman Islands, B.W.I. ((809) 949-6644).

AAA-16

<PAGE>

ITEM 7. PURCHASE OF SECURITIES

An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by the Portfolio. The net asset value of the Portfolio
is determined at the Valuation Time on each Portfolio Business Day.

The Portfolio and FDI reserve the right to cease accepting investments
at any time or to reject any investment order.

Each investor in the Portfolio may add to or reduce its investment
in the Portfolio on each Portfolio Business Day. At the Valuation Time on
each such day, the value of each investor's beneficial interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, which represents that
investor's share of the aggregate beneficial interests in the Portfolio. Any
additions or reductions, which are to be effected at the Valuation Time on
such day, will then be effected. The investor's percentage of the aggregate
beneficial interests in the Portfolio will then be recomputed as the
percentage equal to the fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio at the Valuation Time on such day
plus or minus, as the case may be, the amount of net additions to or
reductions in the investor's investment in the Portfolio effected

AAA-17

<PAGE>

ITEM 8. REDEMPTION OR REPURCHASE

The Portfolio Trust, on behalf of the Portfolio, reserves the right
under certain circumstances, such as accommodating requests for substantial
withdrawals or liquidations, to pay distributions in kind to investors (i.e.,
to distribute portfolio securities as opposed to cash). If securities are
distributed an investor could incur brokerage, tax or other charges in
converting the securities to cash. In addition, distribution in kind may
result in a less diversified portfolio of investments or adversely affect the
liquidity of the Portfolio or the investor's portfolio, as the case may be.

ITEM 9. PENDING LEGAL PROCEEDINGS

Not applicable.

AAA-18

<PAGE>

PART B

ITEM 10. COVER PAGE.

Not applicable.

ITEM 11. TABLE OF CONTENTS. PAGE

General Information and History . . . . . . . . . . . B-1
Investment Objective and Policies . . . . . . . . . . B-1
Management of the Portfolio Trust . . . . . . . . . . B-19
Control Persons and Principal Holder
of Securities . . . . . . . . . . . . . . . . . . . . B-22
Investment Advisory and Other Services . . . . . . . B-23
Brokerage Allocation and Other Practices . . . . . . B-27
Capital Stock and Other Securities . . . . . . . . . B-29
Purchase, Redemption and Pricing of
Securities . . . . . . . . . . . . . . . . . . . . . B-31
Tax Status . . . . . . . . . . . . . . . . . . . . . B-32
Underwriters . . . . . . . . . . . . . . . . . . . . B-34
Calculations of Performance Data . . . . . . . . . . B-34
Financial Statements . . . . . . . . . . . . . . . . B-34

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.

References in this Part B to "Part A" are to the Parts A relating to
The European Equity Portfolio, The Asia Growth Portfolio and The Japan Equity
Portfolio, respectively (each a "Portfolio"; collectively the "Portfolios").
Unless the context otherwise requires, terms defined in Part A have the same
meaning in this Part B as in Part A.

Part A contains additional information about the investment objectives
and policies and management techniques of the Portfolios. This Part B should
only be read in conjunction with Part A of the registration statement.

The following supplements the information contained in Part A
concerning the investment objectives, policies and techniques of the Portfolios.

THE ASIA GROWTH PORTFOLIO (the "Asia Growth Portfolio") is designed for
long-term investors who want access to the rapidly growing Asian markets. The
Advisor considers Asian growth markets to be Bangladesh, China, India,
Indonesia, Korea, Malaysia, Pakistan, the Philippines, Sri Lanka, Thailand,
Taiwan, Hong Kong and Singapore. The Asia Growth Portfolio's investment
objective is to provide a high total return from a portfolio of equity
securities consisting of common stocks and other securities with equity
characteristics comprised of preferred stock, warrants, rights, convertible
securities, trust certificates, limited partnership interests and equity
participations (collectively, "Equity

B-1

<PAGE>

Securities") of companies in Asian growth markets. For additional information,
see "Appendix B - Investing in Japan and Asian Growth Markets."

The Asia Growth Portfolio seeks to achieve its investment objective by
investing primarily in the Equity Securities of companies in Asian growth
markets. Under normal circumstances, the Asia Growth Portfolio expects to invest
at least 65% of its total assets in such securities. The Asia Growth Portfolio
does not intend to invest in U.S. securities (other than money market
instruments), except temporarily, when extraordinary circumstances prevailing at
the same time in a significant number of countries considered to be Asian growth
markets render investments in such countries inadvisable.

INVESTMENT PROCESS

Country allocation: Morgan's country allocation decision begins with a
forecast of equity risk premiums, which provide a valuation signal by measuring
the relative attractiveness of stocks versus bonds. Using a proprietary
approach, Morgan calculates this risk premium for each of the nations in the
Portfolio's universe, determines the extent of its deviation -- if any -- from
its historical norm, and then ranks countries according to the size of these
deviations. Countries with high (low) rankings are overweighted (underweighted)
to reflect the above-average (below average) attractiveness of their stock
markets. In determining weightings, Morgan analyzes a variety of qualitative
factors as well -- including the liquidity, earnings momentum and interest rate
climate of the market at hand. These qualitative assessments can change the
magnitude but not the direction of the country allocations called for by the
risk-premium forecast. In an effort to contain risk, Morgan places limits on the
total size of the Portfolio's country over- and under-weightings.

Stock selection: Morgan's six Asian equity analysts focused on Asian
markets -- each an industry and country specialist -- forecast normalized,
long-term earnings and dividend payouts for approximately 250 companies in
this region. These forecasts are converted into comparable expected returns
by a dividend discount model, and then companies are ranked from most to
least attractive by industry and country, and are grouped into quintiles. A
diversified portfolio is constructed using disciplined buy and sell rules.
The portfolio manager's objective is to concentrate purchases in the top 20%
of the rankings, and to keep sector weightings close to those of the
benchmark. Once a stock falls into the third quintile -- because its price
has risen or its fundamentals have deteriorated -- it generally becomes a
candidate for sale. Where available, warrants and convertibles are purchased
when they appear to have the potential to add value over common stock.

THE EUROPEAN EQUITY PORTFOLIO (the "European Equity Portfolio") is
designed for investors who want an actively managed portfolio of European Equity
Securities that seeks to outperform the Morgan Stanley Capital International
Europe Index which is comprised of more than 500 companies in fourteen European
countries. The European Equity Portfolio's investment objective is to provide a
high total return from a portfolio of Equity Securities of European companies.

B-2

<PAGE>

The European Equity Portfolio seeks to achieve its investment objective
by investing primarily in the Equity Securities of European companies. Under
normal circumstances, the European Equity Portfolio expects to invest at least
65% of its total assets in such securities. The European Equity Portfolio does
not intend to invest in U.S. securities (other than money market instruments),
except temporarily, when extraordinary circumstances prevailing at the same time
in a significant number of European countries render investments in such
countries inadvisable.

INVESTMENT PROCESS

Country allocation: Morgan's country allocation decision begins with a
forecast of equity risk premiums, which provide a valuation signal by measuring
the relative attractiveness of stocks versus bonds. Using a proprietary
approach, Morgan calculates this risk premium for each of the nations in the
Portfolio's universe, determines the extent of its deviation -- if any -- from
its historical norm, and then ranks countries according to the size of those
deviations. Countries with high (low) rankings are overweighted (underweighted)
in comparison to the Morgan Stanley Capital International Europe Index to
reflect the above-average (below-average) attractiveness of their stock markets.
In determining weightings, Morgan analyzes a variety of qualitative factors as
well -- including the liquidity, earnings momentum and interest rate climate of
the market at hand. These qualitative assessments can change the magnitude but
not the direction of the country allocations called for by the risk-premium
forecast. In an effort to contain risk, Morgan place limits on the total size of
the Portfolio's country over- and under-weightings.

Stock selection: Morgan's 15 European equity analysts, each an
industry and country specialist, forecast normalized earnings and dividend
payouts for roughly 600 companies, taking a long-term perspective rather than
the short time frame common to consensus estimates. The analysts' forecasts
are converted into comparable expected returns by a dividend discount model,
and then companies are ranked from most to least attractive by industry and
country. A diversified portfolio is constructed using disciplined buy and
sell rules. The portfolio manager's objective is to concentrate purchases in
the top third of the rankings, and to keep sector weightings close to those
of the benchmark. Once a stock falls into the bottom third of the rankings --
because its price has risen or its fundamentals have deteriorated -- it
generally becomes a candidate for sale.

THE JAPAN EQUITY PORTFOLIO (the "Japan Equity Portfolio") is designed
for investors who want an actively managed portfolio of Japanese Equity
Securities that seeks to outperform the Tokyo Stock Price Index ("TOPIX"), a
composite market-capitalization weighted-index of all common stocks listed on
the First Section of the Tokyo Stock Exchange. The Japan Equity Portfolio's
investment objective is to provide a high total return from a portfolio of
Equity Securities of Japanese companies. For additional information, see
"Appendix B - Investing in Japan and Asian Growth Markets."

The Japan Equity Portfolio seeks to achieve its investment objective by
investing primarily in the Equity Securities of Japanese companies. Under normal
circumstances, the Japan Equity Portfolio expects to invest at least 65% of its

B-3

<PAGE>

total assets in such securities. The Japan Equity Portfolio does not intend to
invest in U.S. securities (other than money market instruments), except
temporarily, when extraordinary circumstances prevailing in Japan render
investments there inadvisable.

INVESTMENT PROCESS

Systematic valuation: Morgan's ten Japanese equity analysts in Tokyo --
each an industry specialist -- follow a total of over 300 Japanese companies.
The most attractive names in that universe are identified by a multifactor model
which screens for low price/earnings ratios, high earnings growth rates and high
sales/price ratios. Within each sector, this subset of the universe is ranked by
these three measures and broken into quintiles; the companies in the top
quintile are considered the most attractive ones from both a growth and
valuation viewpoint. To provide an additional check on the valuation of selected
companies, the analysts prepare normalized, long-term earnings and dividend
forecasts which are converted into comparable expected returns by a dividend
discount model.

Warrant/convertible strategy: Once a company has been identified as a
buy candidate, the portfolio manager analyzes the yields on the company's
available equity vehicles -- stocks, warrants and convertibles -- to determine
which appears the most attractive means of purchase. In an effort to enhance
potential returns, the Portfolio also trades among these vehicles -- a strategy
that seeks to capitalize on the inefficiencies that pervade the Japanese equity
market. If the Portfolio invests in a warrant, it will set aside cash in an
amount approximately equal to the difference in the price of the warrant and the
market value of the underlying common stock. The cash is invested in money
market instruments.

Disciplined portfolio construction: The Portfolio is constructed using
disciplined buy and sell rules. The portfolio manager's objective is to
concentrate purchases in the top 20% of the rankings; the specific companies
selected reflect the portfolio manager's judgment concerning the liquidity of an
issue, the soundness of the underlying forecasts, and the magnitude of the risks
versus the rewards. Once a stock falls into the third quintile -- because its
price has risen or its fundamentals have deteriorated it generally becomes a
sale candidate. The portfolio manager strives to hold sector weightings close to
those of the benchmark in an effort to contain risk.

The following discussion supplements the information regarding the
investment objective of each of the Portfolios and the policies to be employed
to achieve this objective as set forth above and in the Part A.

MONEY MARKET INSTRUMENTS

As discussed in Part A, each Portfolio may invest in money market
instruments to the extent consistent with its investment objective and
policies. A description of the various types of money market instruments that
may be purchased by the Portfolios appears below. Also see "Quality and
Diversification Requirements."

B-4

<PAGE>

U.S. TREASURY SECURITIES. Each of the Portfolios may invest in direct
obligations of the U.S. Treasury, including Treasury bills, notes and bonds, all
of which are backed as to principal and interest payments by the full faith and
credit of the United States.

ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. Each of the Portfolios may
invest in obligations issued or guaranteed by U.S. Government agencies or
instrumentalities. These obligations may or may not be backed by the "full faith
and credit" of the United States. In the case of securities not backed by the
full faith and credit of the United States, each Portfolio must look principally
to the federal agency issuing or guaranteeing the obligation for ultimate
repayment, and may not be able to assert a claim against the United States
itself in the event the agency or instrumentality does not meet its commitments.
Securities in which each Portfolio may invest that are not backed by the full
faith and credit of the United States include, but are not limited to,
obligations of the Tennessee Valley Authority, the Federal Home Loan Mortgage
Corporation and the U.S. Postal Service, each of which has the right to borrow
from the U.S. Treasury to meet its obligations, and obligations of the Federal
Farm Credit System and the Federal Home Loan Banks, both of whose obligations
may be satisfied only by the individual credits of each issuing agency.
Securities which are backed by the full faith and credit of the United States
include obligations of the Government National Mortgage Association, the Farmers
Home Administration and the Export-Import Bank.

FOREIGN GOVERNMENT OBLIGATIONS. Each of the Portfolios, subject to its
applicable investment policies, may also invest in short-term obligations of
foreign sovereign governments or of their agencies, instrumentalities,
authorities or political subdivisions. These securities may be denominated in
the U.S. dollar or in another currency. See "Foreign Investments."

BANK OBLIGATIONS. Each of the Portfolios, unless otherwise noted in the
Part A or below, may invest in negotiable certificates of deposit, time deposits
and bankers' acceptances of (i) banks, savings and loan associations and savings
banks which have more than $2 billion in assets and are organized under the laws
of the United States or any state, (ii) foreign branches of these banks or of
foreign banks (Euros) and (iii) U.S. branches of foreign banks (Yankees). The
Portfolio will not invest in obligations for which the Advisor, or any of its
affiliated persons, is the ultimate obligor or accepting bank. The Portfolio may
also invest in obligations of international banking institutions designated or
supported by national governments to promote economic reconstruction,
development or trade between nations (e.g., the European Investment Bank, the
Inter-American Development Bank, or the World Bank).

COMMERCIAL PAPER. Each of the Portfolios may invest in commercial
paper, including master demand obligations. Master demand obligations are
obligations that provide for a periodic adjustment in the interest rate paid and
permit daily changes in the amount borrowed. Master demand obligations are
governed by agreements between the issuer and the Advisor acting as agent, for
no additional fee, in its capacity as investment advisor to the Portfolios and
as fiduciary for other clients for whom it exercises investment discretion. The
monies loaned to the borrower come from accounts managed by the Advisor or its
affiliates,

B-5

<PAGE>

pursuant to arrangements with such accounts. Interest and principal payments are
credited to such accounts. The Advisor, acting as a fiduciary on behalf of its
clients, has the right to increase or decrease the amount provided to the
borrower under an obligation. The borrower has the right to pay without penalty
all or any part of the principal amount then outstanding on an obligation
together with interest to the date of payment. Since these obligations typically
provide that the interest rate is tied to the Federal Reserve commercial paper
composite rate, the rate on master demand obligations is subject to change.
Repayment of a master demand obligation to participating accounts depends on the
ability of the borrower to pay the accrued interest and principal of the
obligation on demand which is continuously monitored by the Advisor. Since
master demand obligations typically are not rated by credit rating agencies, a
Portfolio may invest in such unrated obligations only if at the time of an
investment the obligation is determined by the Advisor to have a credit quality
which satisfies the Portfolio's quality restrictions. See "Quality and
Diversification Requirements." Although there is no secondary market for master
demand obligations, such obligations are considered by the Portfolios to be
liquid because they are payable upon demand. The Portfolios do not have any
specific percentage limitation on investments in master demand obligations.

REPURCHASE AGREEMENTS. Each of the Portfolios may enter into repurchase
agreements with brokers, dealers or banks that meet the credit guidelines
approved by the Portfolio's Trustees. In a repurchase agreement, a Portfolio
buys a security from a seller that has agreed to repurchase the same security at
a mutually agreed upon date and price. The resale price normally is in excess of
the purchase price, reflecting an agreed upon interest rate. This interest rate
is effective for the period of time the Portfolio is invested in the agreement
and is not related to the coupon rate on the underlying security. A repurchase
agreement may also be viewed as a fully collateralized loan of money by a
Portfolio to the seller. The period of these repurchase agreements will usually
be short, from overnight to one week, and at no time will the Portfolios invest
in repurchase agreements for more than thirteen months. The securities which are
subject to repurchase agreements, however, may have maturity dates in excess of
thirteen months from the effective date of the repurchase agreement. Each
Portfolio always will receive securities as collateral whose market value is,
and during the entire term of the agreement remains, at least equal to 100% of
the dollar amount invested by the Portfolio in each agreement plus accrued
interest, and the Portfolio will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of the
Portfolio's custodian (the "Custodian").

Each of the Portfolios may make investments in other debt securities
with remaining effective maturities of not more than thirteen months, including
without limitation corporate and foreign bonds, asset-backed securities and
other obligations described herein or in Part A.

CORPORATE BONDS AND OTHER DEBT SECURITIES

As discussed in Part A, the European Equity Portfolio may invest in
bonds and other debt securities of domestic and foreign issuers to the extent
consistent with its investment objective and policies. A description of these

B-6

<PAGE>

investments appears in Part A and below. See "Quality and Diversification
Requirements." For information on short-term investments in these securities,
see "Money Market Instruments."

ASSET-BACKED SECURITIES. Asset-backed securities directly or indirectly
represent a participation interest in, or are secured by and payable from, a
stream of payments generated by particular assets such as motor vehicle or
credit card receivables. Payments of principal and interest may be guaranteed up
to certain amounts and for a certain time period by a letter of credit issued by
a financial institution unaffiliated with the entities issuing the securities.
The asset-backed securities in which a Portfolio may invest are subject to the
Portfolio's overall credit requirements. However, asset-backed securities, in
general, are subject to certain risks. Most of these risks are related to
limited interests in applicable collateral. For example, credit card debt
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts on credit card debt
thereby reducing the balance due. Additionally, if the letter of credit is
exhausted, holders of asset-backed securities may also experience delays in
payments or losses if the full amounts due on underlying sales contracts are not
realized. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.

EQUITY INVESTMENTS

As discussed in Part A, the Portfolios invest primarily in Equity
Securities. The Equity Securities in which the Portfolios invest include
those listed on any domestic or foreign securities exchange or traded in the
over-the-counter OTC market as well as certain restricted or unlisted
securities. A discussion of the various types of equity investments which may
be purchased by these Portfolios appears in Part A and below. See "Quality
and Diversification Requirements."

EQUITY SECURITIES. The Equity Securities in which the Portfolios may
invest may or may not pay dividends and may or may not carry voting rights.
Common stock occupies the most junior position in a company's capital structure.

The convertible securities in which the Portfolios may invest include
any debt securities or preferred stock which may be converted into common stock
or which carry the right to purchase common stock. Convertible securities
entitle the holder to exchange the securities for a specified number of shares
of common stock, usually of the same company, at specified prices within a
certain period of time.

The terms of any convertible security determine its ranking in a
company's capital structure. In the case of subordinated convertible debentures,
the holders' claims on assets and earnings are subordinated to the claims of
other creditors, and are senior to the claims of preferred and common
shareholders. In the case of convertible preferred stock, the holders' claims on
assets and

B-7

<PAGE>

earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.

FOREIGN INVESTMENTS

The Portfolios make substantial investments in foreign countries.
Foreign investments may be made directly in securities of foreign issuers or in
the form of American Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs"). Generally, ADRs and EDRs are receipts issued by a bank or
trust company that evidence ownership of underlying securities issued by a
foreign corporation and that are designed for use in the domestic, in the case
of ADRs, or European, in the case of EDRs, securities markets.

Since investments in foreign securities may involve foreign currencies,
the value of a Portfolio's assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, including currency blockage. Each of the Portfolios may enter into
forward commitments for the purchase or sale of foreign currencies in connection
with the settlement of foreign securities transactions or to manage the
Portfolio's currency exposure related to foreign investments as described in the
relevant Part A. The Portfolios will not enter into such commitments for
speculative purposes.

For a description of the risks associated with investing in foreign
securities, see "Risk Factors and Additional Investment Information" in Part A.

INVESTING IN JAPAN. Investing in Japanese securities may involve the
risks associated with investing in foreign securities generally. In addition,
because the Japan Equity Portfolio invests in Japan, it will be subject to the
general economic and political conditions in Japan. It is not expected that the
Asia Growth Portfolio will invest in Japan (see "Investment Objective and
Policies" in the relevant Part A).

Share prices of companies listed on Japanese stock exchanges and on the
Japanese OTC market reached historical peaks (which were later referred to as
the "bubble") as well as historically high trading volumes in 1989 and 1990.
Since then, stock prices in both markets decreased significantly. There can be
no assurance that additional market corrections will not occur.

The common stocks of many Japanese companies continue to trade at high
price earnings ratios in comparison with those in the United States, even after
the recent market decline. Differences in accounting methods make it difficult
to compare the earnings of Japanese companies with those of companies in other
countries, especially the United States.

Since the Japan Equity Portfolio invests in securities denominated in
yen, changes in exchange rates between the U.S. dollar and the yen affect the
U.S. dollar value of its assets. Although the Japanese economy has grown
substantially over the past four decades, recently the rate of growth had slowed
substantially. See Foreign Currency Exchange Transactions.

B-8

<PAGE>

Japan's success in exporting its products has generated a sizeable
trade surplus. Such trade surplus has caused tensions at times between Japan and
some of its trading partners. In particular, Japan's trade relations with the
United States have recently been the subject of discussion and negotiation
between the two nations. The United States has imposed certain measures designed
to address trade issues in specific industries. These measures and similar
measures in the future may adversely affect the performance of the Japan Equity
Portfolio.

Japan's economy has typically exhibited low inflation and low interest
rates. There can be no assurance that low inflation and low interest rates will
continue, and it is likely that a reversal of such factors would adversely
affect the Japanese economy. Moreover, the Japanese economy may differ,
favorably or unfavorably, from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position.

Japan has a parliamentary form of government. In 1993 a coalition
government was formed which, for the first time since 1955, did not include the
Liberal Democratic Party. Since mid-1993, there have been several changes in
leadership in Japan. What, if any, effect the current political situation will
have on prospective regulatory reforms of the economy in Japan cannot be
predicted. Recent and future developments in Japan and neighboring Asian
countries may lead to changes in policy that might adversely affect these
Portfolios.

ADDITIONAL INVESTMENTS

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each of the Portfolios may
purchase securities on a when-issued or delayed delivery basis. For example,
delivery of and payment for these securities can take place a month or more
after the date of the purchase commitment. The purchase price and the interest
rate payable, if any, on the securities are fixed on the purchase commitment
date or at the time the settlement date is fixed. The value of such securities
is subject to market fluctuation and for money market investments no interest
accrues to a Portfolio until settlement takes place. At the time a Portfolio
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, it will record the transaction, reflect the value each day of such
securities in determining its net asset value and, if applicable, calculate the
maturity for the purposes of average maturity from that date. At the time of
settlement, a when-issued security may be valued at less than the purchase
price. To facilitate such acquisitions, each Portfolio will maintain with the
Custodian a segregated account with liquid assets, consisting of cash, U.S.
Government securities or other appropriate securities, in an amount at least
equal to such commitments. On delivery dates for such transactions, each
Portfolio will meet its obligations from maturities or sales of the securities
held in the segregated account and/or from cash flow. If a Portfolio chooses to
dispose of the right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio obligation, incur a
gain or loss due to market fluctuation. It is the current policy of each
Portfolio not to enter into when-issued commitments exceeding in the aggregate
15% of the market value of the

B-9

<PAGE>

Portfolio's total assets, less liabilities other than the obligations created by
when-issued commitments.

INVESTMENT COMPANY SECURITIES. Securities of other investment companies
may be acquired by each of the Portfolios to the extent permitted under the 1940
Act. These limits require that, as determined immediately after a purchase is
made, (i) not more than 5% of the value of the Portfolio's total assets will be
invested in the securities of any one investment company, (ii) not more than 10%
of the value of its total assets will be invested in the aggregate in securities
of investment companies as a group, and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Portfolio. As a shareholder of another investment company, a Portfolio would
bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the advisory and other expenses that the Portfolio bears directly
in connection with its own operations.

REVERSE REPURCHASE AGREEMENTS. Each of the Portfolios may enter into
reverse repurchase agreements. In a reverse repurchase agreement, a Portfolio
sells a security and agrees to repurchase the same security at a mutually
agreed upon date and price. For purposes of the 1940 Act, a reverse
repurchase agreement is also considered as the borrowing of money by the
Portfolio and, therefore, a form of leverage. The Portfolios will invest the
proceeds of borrowings under reverse repurchase agreements. In addition, a
Portfolio will enter into a reverse repurchase agreement only when the
interest income to be earned from the investment of the proceeds is greater
than the interest expense of the transaction. A Portfolio will not invest the
proceeds of a reverse repurchase agreement for a period which exceeds the
duration of the reverse repurchase agreement. A Portfolio may not enter into
reverse repurchase agreements exceeding in the aggregate one-third of the
market value of its total assets, less liabilities other than the obligations
created by reverse repurchase agreements. Each Portfolio will establish and
maintain with the Custodian a separate account with a segregated portfolio of
securities in an amount at least equal to its purchase obligations under its
reverse repurchase agreements. See "Investment Restrictions" for the
Portfolios' limitation on reverse repurchase agreements and on bank
borrowings.

LOANS OF PORTFOLIO SECURITIES. Each of the Portfolios may lend its
securities if such loans are secured continuously by cash or equivalent
collateral or by a letter of credit in favor of the Portfolio at least equal at
all times to 100% of the market value of the securities loaned, plus accrued
interest. While such securities are on loan, the borrower will pay the Portfolio
any income accruing thereon. Loans will be subject to termination by the
Portfolios in the normal settlement time, generally three business days after
notice, or by the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities which occurs during the term of the loan inures to a
Portfolio and its respective investors. The Portfolios may pay reasonable
finders' and custodial fees in connection with a loan. In addition, a Portfolio
will consider all facts and circumstances including the creditworthiness of the
borrowing financial institution, and no Portfolio will make any loans in excess
of one year. The Portfolios will not lend their securities to any officer,

B-10

<PAGE>

Trustee, Director, employee or other affiliate of the Portfolios, the Advisor or
the exclusive placement agent unless otherwise permitted by applicable law.

PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. Each of the
Portfolios may invest in privately placed, restricted, Rule 144A or other
unregistered securities as described in Part A.

As to illiquid investments, a Portfolio is subject to a risk that
should the Portfolio decide to sell them when a ready buyer is not available at
a price the Portfolio deems representative of their value, the value of the
Portfolio's net assets could be adversely affected. Where an illiquid security
must be registered under the 1933 Act before it may be sold, a Portfolio may be
obligated to pay all or part of the registration expenses, and a considerable
period may elapse between the time of the decision to sell and the time the
Portfolio may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
a Portfolio might obtain a less favorable price than prevailed when it decided
to sell.

QUALITY AND DIVERSIFICATION REQUIREMENTS

Each of the Portfolios, except the Japan Equity Portfolio, intends to
meet the diversification requirements of the 1940 Act. To meet these
requirements, 75% of the assets of each of these Portfolios is subject to the
following fundamental limitations: (1) the Portfolio may not invest more than 5%
of its total assets in the securities of any one issuer, except obligations of
the U.S. Government, its agencies and instrumentalities, and (2) the Portfolio
may not own more than 10% of the outstanding voting securities of any one
issuer. As for the other 25% of the Portfolio's assets not subject to the
limitation described above, there is no limitation on investment of these assets
under the 1940 Act, so that all of such assets may be invested in securities of
any one issuer, subject to the limitation of any applicable state securities
laws. Investments not subject to the limitations described above could involve
an increased risk to a Portfolio should an issuer, or a state or its related
entities, be unable to make interest or principal payments or should the market
value of such securities decline.

Although the Japan Equity Portfolio is not limited by the
diversification requirements of the 1940 Act, the Portfolio will comply with the
diversification requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code"), for qualification as a regulated investment company. To
meet these requirements, the Portfolio must diversify its holdings so that, with
respect to 50% of the Portfolio's assets, no more than 5% of its assets are
invested in the securities of any one issuer other than the U.S. Government at
the close of each quarter of the Portfolio's taxable year. The Portfolio may,
with respect to the remaining 50% of its assets, invest up to 25% of its assets
in the securities of any one issuer (except this limitation does not apply to
U.S. Government securities).

The Portfolios may invest in convertible debt securities for which
there are no specific quality requirements. In addition, at the time the
Portfolio invests in any commercial paper, bank obligation or repurchase
agreement, the

B-11

<PAGE>

issuer must have outstanding debt rated A or higher by Moody's or Standard &
Poor's, the issuer's parent corporation, if any, must have outstanding
commercial paper rated Prime-1 by Moody's or A-1 by Standard & Poor's, or if no
such ratings are available, the investment must be of comparable quality in the
Advisor's opinion. At the time the Portfolio invests in any other short-term
debt securities, they must be rated A or higher by Moody's or Standard & Poor's,
or if unrated, the investment must be of comparable quality in the Advisor's
opinion.

In determining suitability of investment in a particular unrated
security, the Advisor takes into consideration asset and debt service coverage,
the purpose of the financing, history of the issuer, existence of other rated
securities of the issuer and other relevant conditions, such as comparability to
other issuers.

OPTIONS AND FUTURES TRANSACTIONS

EXCHANGE TRADED AND OVER-THE-COUNTER OPTIONS. All options purchased
or sold by the Portfolios will be traded on a securities exchange or will be
purchased or sold by securities dealers (OTC options) that meet
creditworthiness standards approved by the Portfolio's Board of Trustees.
While exchange-traded options are obligations of the Options Clearing
Corporation, in the case of OTC options, a Portfolio relies on the dealer
from which it purchased the option to perform if the option is exercised.
Thus, when a Portfolio purchases an OTC option, it relies on the dealer from
which it purchased the option to make or take delivery of the underlying
securities. Failure by the dealer to do so would result in the loss of the
premium paid by the Portfolio as well as loss of the expected benefit of the
transaction.

The staff of the Securities and Exchange Commission (the "SEC") has
taken the position that, in general, purchased OTC options and the underlying
securities used to cover written OTC options are illiquid securities. However, a
Portfolio may treat as liquid the underlying securities used to cover written
OTC options, provided it has arrangements with certain qualified dealers who
agree that the Portfolio may repurchase any option it writes for a maximum price
to be calculated by a predetermined formula. In these cases, the OTC option
itself would only be considered illiquid to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Portfolios
permitted to enter into futures and options transactions may purchase or sell
(write) futures contracts and purchase put and call options, including put and
call options on futures contracts. In addition, the Portfolios may sell (write)
uncovered put and call options on futures. Futures contracts obligate the buyer
to take and the seller to make delivery at a future date of a specified quantity
of a financial instrument or an amount of cash based on the value of a
securities index. Currently, futures contracts are available on various types of
fixed income securities, including but not limited to U.S. Treasury bonds, notes
and bills, Eurodollar certificates of deposit and on indexes of fixed income
securities and indexes of equity securities.

B-12

<PAGE>

Unlike a futures contract, which requires the parties to buy and sell a
security or make a cash settlement payment based on changes in a financial
instrument or securities index on an agreed date, an option on a futures
contract entitles its holder to decide on or before a future date whether to
enter into such a contract. If the holder decides not to exercise its option,
the holder may close out the option position by entering into an offsetting
transaction or may decide to let the option expire and forfeit the premium
thereon. The purchaser of an option on a futures contract pays a premium for the
option but makes no initial margin payments or daily payments of cash in the
nature of "variation" margin payments to reflect the change in the value of the
underlying contract as does a purchaser or seller of a futures contract.

The seller of an option on a futures contract receives the premium paid
by the purchaser and may be required to pay initial margin. Amounts equal to the
initial margin and any additional collateral required on any options on futures
contracts sold by a Portfolio are paid by the Portfolio into a segregated
account, in the name of the Futures Commission Merchant, as required by the 1940
Act and the SEC's interpretations thereunder.

COMBINED POSITIONS. The Portfolios permitted to purchase and write
options may do so in combination with each other, or in combination with futures
or forward contracts, to adjust the risk and return characteristics of the
overall position. For example, a Portfolio may purchase a put option and write a
call option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial price
increase. Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and close
out.

CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that the
standardized options and futures contracts available will not match a
Portfolio's current or anticipated investments exactly. A Portfolio may invest
in options and futures contracts based on securities with different issuers,
maturities or other characteristics from the securities in which it typically
invests, which involves a risk that the options or futures position will not
track the performance of the Portfolio's other investments.

Options and futures contracts prices can also diverge from the prices
of their underlying instruments, even if the underlying instruments match the
Portfolio's investments well. Options and futures contracts prices are affected
by such factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until expiration
of the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options and
futures markets and the securities markets, from structural differences in how
options and futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A Portfolio may purchase or sell options
and futures contracts with a greater or lesser value than the securities it

B-13

<PAGE>

wishes to hedge or intends to purchase in order to attempt to compensate for
differences in volatility between the contract and the securities, although this
may not be successful in all cases. If price changes in a Portfolio's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.

LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid market will exist for any particular option or futures contract at any
particular time even if the contract is traded on an exchange. In addition,
exchanges may establish daily price fluctuation limits for options and futures
contracts and may halt trading if a contract's price moves up or down more than
the limit in a given day. On volatile trading days when the price fluctuation
limit is reached or a trading halt is imposed, it may be impossible for a
Portfolio to enter into new positions or close out existing positions. If the
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions and
could potentially require a Portfolio to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, the
Portfolio's access to other assets held to cover its options or futures
positions could also be impaired. (See "Exchange Traded and Over-the-Counter
Options" above for a discussion of the liquidity of options not traded on an
exchange.)

POSITION LIMITS. Futures exchanges can limit the number of futures and
options on futures contracts that can be held or controlled by an entity. If an
adequate exemption cannot be obtained, a Portfolio or the Advisor may be
required to reduce the size of its futures and options positions or may not be
able to trade a certain futures or options contract in order to avoid exceeding
such limits.

ASSET COVERAGE FOR FUTURES CONTRACTS AND OPTIONS POSITIONS. The
Portfolios intend to comply with Section 4.5 of the regulations under the
Commodity Exchange Act, which limits the extent to which a Portfolio can commit
assets to initial margin deposits and option premiums. In addition, the
Portfolios will comply with guidelines established by the SEC with respect to
coverage of options and futures contracts by mutual funds, and if the guidelines
so require, will set aside appropriate liquid assets in a segregated custodial
account in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures contract or option is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility that
segregation of a large percentage of a Portfolio's assets could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

RISK MANAGEMENT. The Portfolios may employ non-hedging risk management
techniques. Examples of such strategies include synthetically altering the
duration of a portfolio or the mix of securities in a portfolio. For example, if
the Advisor wishes to extend maturities in a fixed income portfolio in order to
take advantage of an anticipated decline in interest rates, but does not wish to
purchase the underlying long-term securities, it might cause the Portfolio to
purchase futures contracts on long-term debt securities. Similarly, if the
Advisor wishes to decrease fixed income securities or purchase equities, it
could

B-14

<PAGE>

cause the Portfolio to sell futures contracts on debt securities and purchase
futures contracts on a stock index. Such non-hedging risk management techniques
are not speculative, but because they involve leverage include, as do all
leveraged transactions, the possibility of losses as well as gains that are
greater than if these techniques involved the purchase and sale of the
securities themselves rather than their synthetic derivatives.

PORTFOLIO TURNOVER

Set forth below are the portfolio turnover rates for the Portfolios. A
rate of 100% indicates that the equivalent of all of the Portfolio's assets have
been sold and reinvested in a year. High portfolio turnover may result in the
realization of substantial net capital gains or losses. To the extent net short
term capital gains are realized, any distributions resulting from such gains are
considered ordinary income for federal income tax purposes. See Item 20 below.

THE EUROPEAN EQUITY PORTFOLIO -- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: 36%.

THE JAPAN EQUITY PORTFOLIO -- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: 60%

THE ASIA GROWTH PORTFOLIO -- For the period April 5, 1995 (commencement of
operations) through December 31, 1995: 70%.

INVESTMENT RESTRICTIONS

The investment restrictions below have been adopted by the Portfolio
Trust with respect to each Portfolio. Except where otherwise noted, these
investment restrictions are "fundamental" policies which, under the 1940 Act,
may not be changed without the vote of a majority of the outstanding voting
securities of the Portfolio. A "majority of the outstanding voting securities"
is defined in the 1940 Act as the lesser of (a) 67% or more of the voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (b) more
than 50% of the outstanding voting securities. The percentage limitations
contained in the restrictions below apply at the time of the purchase of
securities.

Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC
staff interpretations thereof are amended or modified, each of the Asia Growth
and European Equity Portfolios may not:

1. Purchase any security if, as a result, more than 25% of the value of
the Portfolio's total assets would be invested in securities of issuers
having their principal business activities in the same industry. This
limitation shall not apply to obligations issued or guaranteed by the
U.S.
Government, its agencies or instrumentalities;

2. Borrow money, except that the Portfolio may (i) borrow money from banks
for temporary or emergency purposes (not for leveraging purposes) and
(ii)

B-15

<PAGE>

enter into reverse repurchase agreements for any purpose; provided that
(i) and (ii) in total do not exceed 33 1/3% of the value of the
Portfolio's total assets (including the amount borrowed) less
liabilities (other than borrowings). If at any time any borrowings come
to exceed 33 1/3% of the value of the Portfolio's total assets, the
Portfolio will reduce its borrowings within three business days to the
extent necessary to comply with the 33 1/3% limitation;

3. With respect to 75% of its total assets, purchase any security if, as a
result, (a) more than 5% of the value of the Portfolio's total assets
would be invested in securities or other obligations of any one issuer;
or (b) the Portfolio would hold more than 10% of the outstanding voting
securities of that issuer. This limitation shall not apply to
Government securities (as defined in the 1940 Act);

4. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities and participation in
repurchase agreements;

5. Purchase or sell physical commodities or contracts thereon, unless
acquired as a result of the ownership of securities or instruments, but
the Portfolio may purchase or sell futures contracts or options
(including options on futures contracts, but excluding options or
futures contracts on physical commodities) and may enter into foreign
currency forward contracts;

6. Purchase or sell real estate, but the Portfolio may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in real
estate;

7. Underwrite securities of other issuers, except to the extent the
Portfolio, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the 1933 Act; or

8. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder.

Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC
staff interpretations thereof are amended or modified, the Japan Equity
Portfolio may not:

2. Borrow money, except that the Portfolio may (i) borrow money from banks
for temporary or emergency purposes (not for leveraging purposes) and
(ii) enter into reverse repurchase agreements for any purpose; provided
that (i) and (ii) in total do not exceed 33 1/3% of the value of the

B-16

<PAGE>

Portfolio's total assets (including the amount borrowed) less
liabilities (other than borrowings). If at any time any borrowings come
to exceed 33 1/3% of the value of the Portfolio's total assets, the
Portfolio will reduce its borrowings within three business days to the
extent necessary to comply with the 33 1/3% limitation;

3. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities and participation in
repurchase agreements;

4. Purchase or sell physical commodities or contracts thereon, unless
acquired as a result of the ownership of securities or instruments, but
the Portfolio may purchase or sell futures contracts or options
(including options on futures contracts, but excluding options or
futures contracts on physical commodities) and may enter into foreign
currency forward contracts;

5. Purchase or sell real estate, but the Portfolio may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in real
estate;

6. Underwrite securities of other issuers, except to the extent the
Portfolio, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the 1933 Act; or

7. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - ALL PORTFOLIOS. The
investment restriction described below is not a fundamental policy of each
Portfolio and may be changed by the Trustees of the Portfolio Trust. This
non-fundamental investment policy requires that each Portfolio may not:

(i) acquire any illiquid securities, such as repurchase agreements with
more than seven days to maturity or fixed time deposits with a duration of over
seven calendar days, if as a result thereof, more than 15% of the market value
of the Portfolio's total assets would be in investments that are illiquid.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - ASIA GROWTH AND EUROPEAN
EQUITY PORTFOLIOS. The investment restrictions described below are not
fundamental policies of these Portfolios and may be changed by the Trustees of
the Portfolio Trust. These non-fundamental investment policies require that each
of these Portfolios may not:

(i) Acquire securities of other investment companies, except as
permitted by the 1940 Act or any rule, order or interpretation thereunder, or in
connection with a merger, consolidation, reorganization, acquisition of assets
or an offer of exchange;

B-17

<PAGE>

(ii) Purchase any security if, as a result, the Portfolio would then
have more than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for fewer than
three years;

(iii) Invest in warrants (other than warrants acquired by the Portfolio
as part of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would exceed 5%
of the value of the Portfolio's net assets or if, as a result, more than 2% of
the Portfolio's net assets would be invested in warrants not listed on a
recognized U.S. or foreign stock exchange, to the extent permitted by applicable
state securities laws;

(iv) Sell any security short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold or unless it
covers such short sales as required by the current rules or positions of the SEC
or its staff. Transactions in futures contracts and options shall not constitute
selling securities short;

(v) Purchase securities on margin, but the Portfolio may obtain such
short term credits as may be necessary for the clearance of transactions;

(vi) Purchase or retain securities of any issuer if, to the knowledge
of the Portfolio, any of the Portfolio's officers or Trustees or any officer of
the Advisor individually owns more than 1/2 of 1% of the issuer's outstanding
securities and such persons owning more than 1/2 of 1% of such securities
together beneficially own more than 5% of such securities, all taken at market;
or

(vii) Invest in real estate limited partnerships or purchase interests
in oil, gas or mineral exploration or development programs or leases.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - JAPAN EQUITY PORTFOLIO. The
investment restrictions described below are not fundamental policies of the
Japan Equity Portfolio and may be changed by the Trustees of the Portfolio
Trust. These non-fundamental investment policies require that the Portfolio may
not:

(iii) Sell any security short, unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold or unless
it covers such short sales as required by the current rules or positions of the
SEC or its staff. Transactions in futures contracts and options shall not
constitute selling securities short;

B-18

<PAGE>

(iv) Purchase securities on margin, but the Portfolio may obtain such
short term credits as may be necessary for the clearance of transactions;

(v) Purchase or retain securities of any issuer if, to the knowledge of
the Portfolio, any of the Portfolio's officers or Trustees or any officer of the
Advisor individually owns more than 1/2 of 1% of the issuer's outstanding
securities and such persons owning more than 1/2 of 1% of such securities
together beneficially own more than 5% of such securities, all taken at market;
or

(vi) Invest in real estate limited partnerships or purchase interests
in oil, gas or mineral exploration or development programs or leases.

ALL PORTFOLIOS. There will be no violation of any investment
restriction if that restriction is complied with at the time the relevant action
is taken notwithstanding a later change in market value of an investment, in net
or total assets, in the securities rating of the investment or any other later
change.

ITEM 14. MANAGEMENT OF THE PORTFOLIO TRUST.

The Trustees and officers of the Portfolio Trust, their addresses
and principal occupations during the past five years and dates of birth are
set forth below. Their titles may have varied during that period. An asterisk
indicates that a Trustee is an "interested person" (as defined in the 1940
Act) of the Portfolio.

TRUSTEES AND OFFICERS

FREDERICK S. ADDY--Trustee; Retired; Executive Vice President and Chief
Financial Officer from January 1990 to April 1994, Amoco Corporation. His
address is 5300 Arbutus Cove, Austin, TX 78746, and his date of birth is
January 1, 1932.

WILLIAM G. BURNS--Trustee; Retired; Former Vice Chairman and Chief
Financial Officer, Nynex. His address is 2200 Alaqua Drive, Longwood, FL
32779, and his date of birth is November 2, 1932.

ARTHUR C. ESCHENLAUER--Trustee; Retired; Senior Vice President, Morgan
Guaranty Trust Company of New York until 1987. His address is 14 Alta Vista
Drive, RD #2, Princeton, NJ 08540, and his date of birth is May 23, 1934.

MATTHEW HEALEY (*)--Trustee; Chairman and Chief Executive Officer;
Chairman, Pierpont Group, Inc., since 1989. His address is Pine Tree Club
Estates, 10286 Saint Andrews Road, Boynton Beach, FL 33436, and his date of
birth is August 23, 1937.

MICHAEL P. MALLARDI--Trustee; Retired; Senior Vice President,
Capital Cities/ ABC, Inc., and President, Broadcast Group, since 1986. His
address is 10 Charnwood Drive, Suffern, NY 10910, and his date of birth is
March 17, 1934.

- ------------------------
(*) Mr. Healey is an "interested person" of the Portfolio Trust as that term is
defined in the 1940 Act.

B-19

<PAGE>

Each Trustee is paid an annual fee as follows for serving as Trustee
of The Pierpont Funds, The JPM Institutional Funds and the Master Portfolios
(as defined below), and is reimbursed for expenses incurred in connection
with service as a Trustee. The compensation paid to each Trustee for the
calendar year ended December 31, 1995 is set forth below. The Trustees may
hold various other directorships unrelated to the Portfolio Trust.

<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT FROM THE MASTER PORTFOLIOS (*),
COMPENSATION BENEFITS THE PIERPONT FUNDS AND
FROM THE ACCRUED AS PART ESTIMATED THE JPM INSTITUTIONAL FUNDS
PORTFOLIO TRUST OF PORTFOLIO TRUST ANNUAL BENEFITS PAID TO TRUSTEES
NAME OF TRUSTEE DURING 1995 EXPENSES UPON RETIREMENT DURING 1995
<S> <C> <C> <C> <C>
Frederick S. Addy, Trustee $10,965 None None $62,500

William G. Burns, Trustee $10,965 None None $62,500

Arthur C. Eschenlauer, Trustee $10,965 None None $62,500

Matthew Healey, Trustee,
Chairman and Chief Executive
Officer(**) $10,965 None None $62,500

Michael P. Mallardi, Trustee $10,965 None None $62,500
</TABLE>

------------------------------------

(*) Includes the Portfolio Trust and 15 other portfolios (collectively the
"Master Portfolios") for which Morgan acts as investment advisor.

(**) During 1995, Pierpont Group, Inc. paid Mr. Healey, in his role as
Chairman of Pierpont Group, Inc., compensation in the amount of $140,000,
contributed $21,000 to a defined contribution plan on his behalf, and paid
$20,000 in insurance premiums for his benefit.

As of April 1, 1995 the annual fee paid to each Trustee for serving
as a Trustee of each of the Master Portfolios, The JPM Institutional Funds
and The Pierpont Funds was adjusted to $65,000. Currently there are 17
investment companies (14 investment companies comprising the Master
Portfolios, The Pierpont Funds, The JPM Institutional Funds and The JPM
Advisor Funds) in the fund complex. The JPM Advisor Funds has a separate,
unrelated board.

The Trustees, in addition to reviewing actions of the Portfolio Trust's
service providers, decide upon matters of general policy. The Portfolio Trust
has entered into a Portfolio Fund Services Agreement with Pierpont Group, Inc.
to assist the Trustees in exercising their overall supervisory responsibilities
for the Portfolio Trust's affairs. Pierpont Group, Inc. was organized in July
1989 to provide services for The Pierpont Funds. The Portfolio Trust has agreed
to pay Pierpont Group, Inc. a fee in an amount representing its reasonable costs
in performing these services. These costs are periodically reviewed by the
Trustees. The aggregate fees paid by each Portfolio during the indicated fiscal
years are set forth below:

ASIA GROWTH PORTFOLIO--For the period April 5, 1995 (commencement of operations)
through December 31, 1995: $4,788.

EUROPEAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $19,953.

JAPAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $21,727.

B-20

<PAGE>

The Portfolio Trust has no employees; its officers listed below,
with the exception of the Chief Executive Officer, are provided and
compensated by Funds Distributor, Inc. ("FDI"), a wholly owned indirect
subsidiary of Boston Institutional Group, Inc. The Portfolio Trust's officers
conduct and supervise the business operations of the Portfolio Trust. The
Trustees of the Portfolio Trust are equal and sole shareholders of Pierpont
Group, Inc.

The officers of the Portfolio Trust, their principal occupations
during the past five years and their dates of birth are set forth below. The
business address of each of the officers unless otherwise noted is 60 State
Street, Boston, Massachusetts 02109.

MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont Group, Inc.,
since 1989. His address is Pine Tree Club Estates, 10286 Saint Andrews Road,
Boynton Beach, FL 33436. His date of birth is August 23, 1937.

ELIZABETH A. BACHMAN; Vice President and Assistant Secretary.
Counsel FDI and Premier Mutual Fund Services, Inc. ("Premier Mutual") and an
officer of RCM Capital Funds, Inc., RCM Equity Funds, Inc., Waterhouse
Investors Cash Management Fund, Inc. and certain investment companies advised
or administered by the Dreyfus Corporation ("Dreyfus"). Prior to September
1995, Ms. Bachman was enrolled at Fordham University School of Law and
received her JD in May 1995. Prior to September 1992, Ms. Bachman was an
assistant at the National Association for Public Interest Law. Address: FDI,
200 Park Avenue, New York, New York 10166. Her date of birth is September
14, 1969.

MARIE E. CONNOLLY; Vice President and Assistant Treasurer. President
and Chief Executive Officer and Director of FDI, Premier Mutual and an
officer of RCM Capital Funds, Inc., RCM Equity Funds, Inc. and certain
investment companies advised or administered by Dreyfus. From December 1991
to July 1994, she was President and Chief Compliance Officer of FDI. Prior
to December 1991, she served as Vice President and Controller, and later as
Senior Vice President of The Boston Company Advisors, Inc. ("TBCA"). Her
date of birth is August 1, 1957.

DOUGLAS C. CONROY; Vice President and Assistant Treasurer. Supervisor
of Treasury Services and Administration of FDI and an officer of certain
investment companies advised or administered by Dreyfus. From April 1993 to
January 1995, Mr. Conroy was a Senior Fund Accountant for Investors Bank &
Trust Company. Prior to March 1993, Mr. Conroy was employed as a fund
accountant at The Boston Company. His date of birth is March 31, 1969.

JACQUELINE HENNING; Assistant Secretary and Assistant Treasurer.
Managing Director, State Street Cayman Trust Company, Ltd. since October
1994. Prior to October 1994, Mrs. Henning was head of mutual funds at Morgan
Grenfell in Cayman and for five years was Managing director of Bank of Nova
Scotia Trust Company (Cayman) Limited from September 1988 to September 1993.
Address: P.O. Box 2508 GT, Elizabethan Square, 2nd Floor, Shedden Road, George
Town, Grand Cayman, Cayman Islands. Her date of birth is March 24, 1942.

RICHARD W. INGRAM; President and Treasurer. Senior Vice President
and Director of Client Services and Treasury Administration of FDI, Senior
Vice President of Premier Mutual and an officer of RCM Capital Funds, Inc.,
RCM Equity Funds, Inc., Waterhouse Investors Cash Management Fund, Inc. and
certain investment companies advised or administered by Dreyfus. From March
1994 to November 1995, Mr. Ingram was Vice President and Division Manager of
First Data Investor Services Group, Inc. From 1989 to 1994, Mr. Ingram was Vice
President, Assistant Treasurer and Tax Director -- Mutual Funds of The Boston
Company. His date of birth is September 15, 1955.

KAREN JACOPPO-WOOD; Vice President and Assistant Secretary. Assistant
Vice President of FDI and an officer of RCM Capital Funds, Inc. and RCM
Equity Funds, Inc. From June 1994 to January 1996, Ms. Jacoppo was a Manager,
SEC Registration, Scudder, Stevens & Clark, Inc. From 1988 to May 1994, Ms.
Jacoppo was a senior paralegal at TBCA. Her date of birth is December 29,
1966.

CHRISTOPHER J. KELLEY; Vice President and Assistant Secretary.
Vice President and Associate General Counsel of FDI. From April 1994 to July
1996, Mr. Kelley was Assistant Counsel at Forum Financial Group. From 1992
to 1994, Mr. Kelley was employed by Putnam Investments in the Global Fixed
Income Group and the Legal Department. His date of birth is December 24, 1964.

LENORE J. MCCABE; Assistant Secretary and Assistant Treasurer.
Assistant Vice President, State Street Bank and Trust Company since November
1994. Assigned as Operations Manager, State Street Cayman Trust Company,
Ltd. since February 1995. Prior to November, 1994, employed by Boston
Financial Data Services, Inc. as Control Group Manager. Address: P.O. Box
2508 GT, Elizabethan Square, 2nd Floor, Shedden Road, George Town, Grand
Cayman, Cayman Islands. Her date of birth is May 31, 1961.

MARY A. NELSON; Vice President and Assistant Treasurer. Vice
President and Manager of Treasury Services and Administration of FDI, an
officer of RCM Capital Funds, Inc., RCM Equity Funds, Inc. and certain
investment companies advised or administered by Dreyfus. From 1989 to 1994,
Ms. Nelson was an Assistant Vice President and client manager for The Boston
Company. Her date of birth is April 22, 1964.

JOHN E. PELLETIER; Vice President and Secretary. Senior Vice
President and General Counsel of FDI and Premier Mutual and an officer of RCM
Capital Funds, Inc., RCM Equity Funds, Inc., Waterhouse Investors Cash
Management Fund, Inc. and certain investment companies advised or
administered by Dreyfus. From February 1992 to April 1994, Mr. Pelletier
served as Counsel for TBCA. From August 1990 to February 1992, Mr. Pelletier
was employed as an Associate at Ropes & Gray. His date of birth is June 24,
1964.

JOSEPH F. TOWER III; Vice President and Assistant Treasurer.
Senior Vice President, Treasurer and Chief Financial Officer of FDI and
Premier Mutual and an officer of Waterhouse Investors Cash Management Fund,
Inc. and certain investment companies advised or administered by Dreyfus.
From July 1988 to November 1993, Mr. Tower was Financial Manager of The
Boston Company. His date of birth is June 13, 1964.

B-21
<PAGE>

The Portfolio Trust's Declaration of Trust provides that it will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Portfolio, unless, as to liability to the Portfolio or its
investors, it is finally adjudicated that they engaged in wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
their offices, or unless with respect to any other matter it is finally
adjudicated that they did not act in good faith in the reasonable belief that
their actions were in the best interests of the Portfolio. In the case of
settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have not engaged
in wilful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of September 16, 1996, the following entities owned the percentages
of total outstanding beneficial interests noted below for each of the
Portfolios:

European Equity Portfolio: JPM Europe Fund, Ltd., 99%

Asia Growth Portfolio: JPM Asia Growth Fund, Ltd., 95%

Japan Equity Portfolio: JPM Japan Equity Fund, Ltd., 99%

So long as each of these Funds controls its corresponding Portfolio, it
may take actions without the approval of any other holder of beneficial
interests in the Portfolio. Each of the Funds has informed the Portfolio Trust
that whenever it is requested to vote on matters pertaining to its corresponding
Portfolio (other than a vote by the Portfolio to continue the operation of the
Portfolio upon the withdrawal of another investor in the Portfolio), it will
hold a meeting of its shareholders and will cast its vote as instructed by those
shareholders. The officers and Trustees of the Portfolio Trust own none of the
outstanding beneficial interests in any Portfolio.

B-22

<PAGE>

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

INVESTMENT ADVISOR. The investment advisor to the Portfolios is
Morgan Guaranty Trust Company of New York, a wholly owned subsidiary of J.P.
Morgan, a bank holding company organized under the laws of the State of
Delaware. The Advisor, whose principal offices are at 60 Wall Street, New York,
New York 10260, is a New York trust company which conducts a general banking
and trust business. The Advisor is subject to regulation by the New York
State Banking Department and is a member bank of the Federal Reserve System.
Through offices in New York City and abroad, the Advisor offers a wide
range of services, primarily to governmental, institutional, corporate and
high net worth individual customers in the United States and throughout the
world.

J.P. Morgan, through the Advisor and other subsidiaries, acts as
investment advisor to individuals, governments, corporations, employee benefit
plans, mutual funds and other institutional investors with combined assets under
management of $179 billion (of which the Advisor advises over $28 billion).

J.P. Morgan has a long history of service as adviser, underwriter and
lender to an extensive roster of major companies and as a financial advisor to
national governments. The firm was founded in and has been managing investments
since 1913.

The basis of the Advisor's investment process is fundamental
investment research as the firm believes that fundamentals should determine an
asset's value over the long term. J.P. Morgan currently employs over 100 full
time research analysts in its investment management divisions located in New
York, London, Tokyo, Frankfurt, Melbourne and Singapore to cover countries,
industries and countries on site. The conclusions of the equity analysts'
fundamental research is quantified into a set of projected returns through the
use of a dividend discount model. These returns are projected for a number of
years to enable analysts to take a long term view. These returns, or normalized
earnings, are used to establish relative values among stocks in each industrial
sector. This provides the basis for ranking the attractiveness of the companies
in an industry according to five distinct quintiles or rankings. This ranking is
the basis for determining the stocks purchased and sold in each sector. The
Advisor's fixed income investment process is based on analysis of real rates,
sector diversification and quantitative and credit analysis.

The investment advisory services the Advisor provides to the Portfolios
are not exclusive under the terms of the Investment Advisory Agreement. The
Advisor is free to and does render similar investment advisory services to
others. The Advisor serves as investment advisor to personal investors and other
investment companies and acts as fiduciary for trusts, estates and employee
benefit plans. Certain of the assets of trusts and estates under management are
invested in common trust funds for which the Advisor serves as trustee. The
accounts which are managed or advised by the Advisor have varying investment
objectives and the Advisor invests assets of such accounts in investments
substantially similar to, or the same as, those which are expected to constitute
the principal investments of the Portfolios. Such accounts are supervised by
officers and employees of the Advisor who may also be acting in similar
capacities for the Portfolios. See Item 17.

B-23

<PAGE>

Sector weightings are generally similar to a Portfolio's benchmark with
the emphasis on security selection as the method to achieve investment
performance superior to the benchmark. The benchmarks for the Portfolios are
currently: The European Equity Portfolio--the MSCI Europe Index; The Japan
Equity Portfolio--the TOPIX; and The Asia Growth Portfolio--the MSCI indexes for
Hong Kong and Singapore and the International Finance Corporation Investable
indexes for China, Indonesia, Malaysia, Philippines, South Korea, Taiwan and
Thailand.

J.P. Morgan Investment Management Inc., a wholly-owned subsidiary of
J.P. Morgan & Co. Incorporated, is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, which manages employee benefit
funds of corporations, labor unions and state and local governments and the
accounts of other institutional investors, including investment companies.
Certain of the assets of employee benefit accounts under its management are
invested in commingled pension trust funds for which the Advisor serves as
trustee. J.P. Morgan Investment Management Inc. advises the Advisor on
investment of the commingled pension trust funds.

The Portfolios are managed by officers of the Advisor who, in acting
for their customers, including the Portfolios, do not discuss their investment
decisions with any personnel of J.P. Morgan & Co. Incorporated or any personnel
of other divisions of the Advisor or with any of its affiliated persons, with
the exception of J.P. Morgan Investment Management Inc.

As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by the Advisor under the Investment
Advisory Agreement, the Portfolio Trust on behalf of each Portfolio has agreed
to pay the Advisor a fee, which is computed daily and may be paid monthly, equal
to the annual rate of the Portfolio's average daily net assets shown below.

Asia Growth Portfolio: 0.80%

European Equity Portfolio: 0.65%

Japan Equity Portfolio: 0.65%

The table below sets forth for each Portfolio listed the advisory fees
to the Advisor for the fiscal periods indicated.

ASIA GROWTH PORTFOLIO--For the period April 5, 1995 (commencement of operations)
through December 31, 1995: $528,956.

EUROPEAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $1,675,355.

JAPAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $1,777,126.

B-24

<PAGE>

The Investment Advisory Agreement provides that it will continue in
effect with respect to each Portfolio for a period of two years after execution
only if specifically approved annually thereafter (i) by a vote of the holders
of a majority of the Portfolio's outstanding securities or by the Portfolio
Trust's Trustees and (ii) by a vote of a majority of the Trustees who are not
parties to the Advisory Agreement or "interested persons" as defined by the 1940
Act cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement will terminate automatically if
assigned and is terminable with respect to each Portfolio at any time without
penalty by a vote of a majority of the Trustees of the Portfolio Trust or by a
vote of the holders of a majority of the Portfolio's outstanding securities on
60 days' written notice to Morgan and by Morgan on 90 days'
written notice to the Portfolio.

The Glass-Steagall Act and other applicable laws generally prohibit
banks such as Morgan from engaging in the business of underwriting or
distributing securities, and the Board of Governors of the Federal Reserve
System has issued an interpretation to the effect that under these laws a bank
holding company registered under the federal Bank Holding Company Act or certain
subsidiaries thereof may not sponsor, organize or control a registered open-end
investment company continuously engaged in the issuance of its shares, such as
the Portfolio Trust. The interpretation does not prohibit a holding company or a
subsidiary thereof from acting as investment advisor and custodian to such an
investment company. Morgan believes that it may perform the services
for the Portfolios contemplated by the Investment Advisory Agreement without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations. State laws on this issue may differ from the interpretation of
relevant federal law, and banks and financial institutions may be required to
register as dealers pursuant to state securities laws. However, it is possible
that future changes in either federal or state statutes and regulations
concerning the permissible activities of banks or trust companies, as well as
further judicial or administrative decisions and interpretations of present and
future statutes and regulations, might prevent Morgan from continuing
to perform such services for the Portfolios.

If Morgan were prohibited from acting as investment advisor to
any Portfolio, it is expected that the Trustees of the Portfolio Trust would
recommend to investors that they approve the Portfolio Trust's entering into a
new investment advisory agreement with another qualified investment advisor
selected by the Trustees.

Under a separate agreement, Morgan also provides administrative and
related services to the Portfolio Trust (See "Administrative Services Agent")
in Part A above.

B-25

<PAGE>

CO-ADMINISTRATOR. Under the Portfolio Trust's Co-Administration
Agreement dated August 1, 1996, FDI serves as the Portfolio Trust's
Co-Administrator. The Co-Administration Agreement may be renewed or amended
by the Trustees without an investor vote. The Co-Administration Agreement is
terminable at any time without penalty by a vote of a majority of the
Trustees of the Portfolio Trust on not more than 60 days' written notice nor
less than 30 days' written notice to the other party. The Co-Administrator
may, subject to the consent of the Trustees of the Portfolio Trust,
subcontract for the performance of its obligations, provided, however, that
unless the Portfolio Trust expressly agrees in writing, the Co-Administrator
shall be fully responsible for the acts and omissions of any subcontractor as
it would for its own acts or omissions. See "Administrative Services Agent"
below.

The following administrative fees were paid by each of the
Portfolios to Signature Broker-Dealer Services, Inc. ("SBDS") (which provided
placement agent and administrative services to the Portfolios prior to August
1, 1996):

ASIA GROWTH PORTFOLIO--For the period April 5, 1995 (commencement of
operations) through December 31, 1995: $4,037.

EUROPEAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement
of operations) through December 31, 1995: $15,623.

JAPAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $17,418.

ADMINISTRATIVE SERVICES AGENT. The Portfolio Trust has entered into an
Administrative Services Agreement (the "Administrative Services Agreement")
with Morgan effective December 29, 1995, as amended August 1, 1996, pursuant
to which Morgan is responsible for certain administrative and related
services provided to each Portfolio.

Under the amended Administrative Services Agreement and the
Co-Administration Agreement, each Portfolio has agreed to pay Morgan and FDI
fees equal to its allocable 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: 0.09% on the
first $7 billion of the Master Portfolios' aggregate average daily net assets
and 0.04% of the Master Portfolios' aggregate average daily net assets in
excess of $7 billion.

Under administrative services agreements in effect with Morgan from
December 29, 1995 through July 31, 1996, each Master Portfolio paid Morgan a
fee equal to its proportionate share of an annual complex-wide charge. This
charge was calculated daily based on the aggregate net assets of the Master
Portfolios in accordance with the following schedule: 0.06% of the first $7
billion of the Master Portfolios' aggregate average daily net assets, and
0.03% of the Master Portfolios' aggregate average daily net assets in excess
of $7 billion. Prior to December 29, 1995, the Portfolio Trust had entered
into a Financial and Fund Accounting Services Agreement with Morgan, the
provisions of which included certain of the activities described above and,
prior to September 1, 1995, also included reimbursement of usual and
customary expenses. Below are set forth for each Portfolio the fees paid to
Morgan, net of fee waivers and reimbursements, as services agent.

ASIA GROWTH PORTFOLIO--For the period April 5, 1995 (commencement of operations)
through December 31, 1995: $21,823.

EUROPEAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $128,335.

JAPAN EQUITY PORTFOLIO--For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $147,974.

B-26

<PAGE>

CUSTODIAN. State Street Bank and Trust Company ("State Street"), 40
King Street West, Toronto, Ontario, Canada M5H 3Y8, serves as the Portfolio
Trust's Custodian and Transfer Agent. Pursuant to the Custodian Contract,
State Street is responsible for maintaining the books of account and records
of portfolio transactions and holding portfolio securities and cash. In the
case of foreign assets held outside the United States, the Custodian employs
various subcustodians who were approved by the Trustees in accordance with
the regulations of the SEC. The Custodian maintains portfolio transaction
records, calculates book and tax allocations for the Portfolio Trust and
computes the value of the interest of each investor. The Portfolios are
responsible for the fees of State Street as the custodian for the Portfolios.

INDEPENDENT ACCOUNTANTS. The independent accountants of the
Portfolio Trust are Price Waterhouse, LLP, 1177 Avenue of the Americas, New
York, New York 10036. Price Waterhouse LLP conducts an annual audit of the
financial statements of each of the Portfolios, assists in the preparation
and/or review of each Portfolio's federal and state income tax returns and
consults with the Portfolio Trust as to matters of accounting and federal and
state income taxation.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

The Advisor places orders for the Portfolios for all purchases and
sales of portfolio securities, enters into repurchase agreements and may
enter into reverse repurchase agreements and execute loans of portfolio
securities on behalf of the Portfolios. See Item 13 above.

Fixed income and debt securities and municipal bonds and notes are
generally traded at a net price with dealers acting as principal for their own
accounts without a stated commission. The price of the security usually includes
profit to the dealers. In underwritten offerings, securities are purchased at a
fixed price which includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or discount. On occasion,
certain securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid.

B-27

<PAGE>

In connection with portfolio transactions for the Portfolios, the
Advisor intends to seek best price and execution on a competitive basis for
both purchases and sales of Securities.

In selecting a broker, the Advisor considers a number of factors
including: the price per unit of the security; the broker's reliability for
prompt, accurate confirmations and on-time delivery of securities; the firm's
financial condition; as well as the commissions charged. A broker may be paid
a brokerage commission in excess of that which another broker might have
charged for effecting the same transaction if, after considering the
foregoing factors, the Advisor decides that the broker chosen will provide
the best possible execution. The Advisor monitors the reasonableness of the
brokerage commissions paid in light of the execution received. The Trustees
of the Portfolio Trust review regularly the reasonableness of commissions and
other transaction costs incurred by the Portfolios in light of facts and
circumstances deemed relevant from time to time, and, in that connection,
will receive reports from the Advisor and published data concerning
transaction costs incurred by institutional investors generally. Research
services provided by brokers to which the Advisor has allocated brokerage
business in the past include economic statistics and forecasting services,
industry and company analyses, portfolio strategy services, quantitative
data, and consulting services from economists and political analysts.
Research services furnished by brokers are used for the benefit of all the
Advisor's clients and not solely or necessarily for the benefit of a
Portfolio. The Advisor believes that the value of research services received
is not determinable and does not significantly reduce its expenses. The
Portfolios do not reduce their fee to the Advisor by any amount that might be
attributable to the value of such services. The portfolio turnover rate for
The European Equity Portfolio for the period March 28, 1995 (commencement of
operations) through December 31, 1995 was 60%, the portfolio turnover rate
for The Asia Growth Portfolio for the period April 5, 1995 (commencement of
operations) through December 31, 1995 was 70%, and the portfolio turnover rate
for The Japan Equity Portfolio for the period March 28, 1995 (commencement of
operations) through December 31, 1995 was 60%.

The Portfolios paid the following approximate brokerage commissions for
the indicated fiscal periods:

ASIA GROWTH PORTFOLIO (December): 1995: $27,322.

EUROPEAN EQUITY PORTFOLIO (December): 1995: $143,417.

JAPAN EQUITY PORTFOLIO (December): 1995: $0.

Subject to the overriding objective of obtaining the best possible
execution of orders, the Advisor may allocate a portion of a Portfolio's
brokerage transactions to affiliates of the Advisor. In order for affiliates
of the Advisor to effect any portfolio transactions for a Portfolio, the
commissions, fees or other remuneration received by such affiliates must be
reasonable and fair compared to the commissions, fees, or other remuneration
paid to other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange during a
comparable period of time. Furthermore, the Trustees of the Portfolio Trust,
including a majority of the Trustees who are not "interested persons," have
adopted procedures which are reasonably designed to provide that any
commissions, fees, or other remuneration paid to such affiliates are
consistent with the foregoing standard.

B-28

<PAGE>

The Portfolio Trust's portfolio securities will not be purchased
from or through or sold to or through the Exclusive Placement Agent or
Advisor or any other "affiliated person" (as defined in the 1940 Act) of the
Exclusive Placement Agent or Advisor when such entities are acting as
principals, except to the extent permitted by law. In addition, the
Portfolios will not purchase securities during the existence of any
underwriting group relating thereto of which the Advisor or an affiliate of
the Advisor is a member, except to the extent permitted by law.

On those occasions when the Advisor deems the purchase or sale of a
security to be in the best interests of a Portfolio as well as other
customers, including other Portfolios, the Advisor to the extent permitted by
applicable laws and regulations may, but is not obligated to, aggregate the
securities to be sold or purchased for a Portfolio with those to be sold or
purchased for other customers in order to obtain best execution, including
lower brokerage commissions if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction will be made by the Advisor in the manner it considers to be most
equitable and consistent with its fiduciary obligations to a Portfolio. In
some instances, this procedure might adversely affect a Portfolio.

If a Portfolio effects a closing purchase transaction with respect to
an option written by it, normally such transaction will be executed by the same
broker-dealer who executed the sale of the option. The writing of options by a
Portfolio will be subject to limitations established by each of the exchanges
governing the maximum number of options in each class which may be written by a
single investor or group of investors acting in concert, regardless of whether
the options are written on the same or different exchanges or are held or
written in one or more accounts or through one or more brokers. The number of
options which a Portfolio may write may be affected by options written by the
Advisor for other investment advisory clients. An exchange may order the
liquidation of positions found to be in excess of these limits, and it may
impose certain other sanctions.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Each Portfolio is a series of The Series Portfolio (the "Portfolio
Trust"), which is organized as a trust under the laws of the State of New York.
Under the Portfolio Trust's Declaration of Trust, the Trustees are authorized to
issue beneficial interests in one or more series (each a "Series"), including
the Portfolios. Investors in a Series will be held personally liable for the
obligations and liabilities of that Series (and of no other Series), subject,
however, to indemnification by the Portfolio Trust in the event that there is
imposed upon an investor a greater portion of the liabilities and obligations of
the Series than its proportionate beneficial interest in the Series. The
Declaration of Trust also provides that the Portfolio Trust shall maintain
appropriate insurance (for example, a fidelity bond and errors and omissions
insurance) for the protection of the Portfolio Trust, its investors, Trustees,
officers, employees and agents, and covering possible tort and other
liabilities. Thus, the risk of an investor incurring financial loss on account
of investor liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio Trust itself was unable to meet its
obligations.

B-29

<PAGE>

Investors in a Series are entitled to participate pro rata in
distributions of taxable income, loss, gain and credit of their respective
Series only. Upon liquidation or dissolution of a Series, investors are entitled
to share pro rata in that Series' (and no other Series) net assets available for
distribution to its investors. The Portfolio Trust reserves the right to create
and issue additional Series of beneficial interests, in which case the
beneficial interests in each new Series would participate equally in the
earnings, dividends and assets of that particular Series only (and no other
Series). Any property of the Portfolio Trust is allocated and belongs to a
specific Series to the exclusion of all other Series. All consideration received
by the Portfolio Trust for the issuance and sale of beneficial interests in a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings and proceeds thereof, and any funds
or payments derived from any reinvestment of such proceeds, is held by the
Trustees in a separate subtrust (a Series) for the benefit of investors in that
Series and irrevocably belongs to that Series for all purposes. Neither a Series
nor investors in that Series possess any right to or interest in the assets
belonging to any other Series.

Investments in a Series have no preference, preemptive, conversion or
similar rights and are fully paid and nonassessable, except as set forth below.
Investments in a Series may not be transferred. Certificates representing an
investor's beneficial interest in a Series are issued only upon the written
request of an investor.

Each investor is entitled to a vote in proportion to the amount of its
investment in each Series. Investors in a Series do not have cumulative voting
rights, and investors holding more than 50% of the aggregate beneficial
interests in all outstanding Series may elect all of the Trustees if they choose
to do so and in such event other investors would not be able to elect any
Trustees. Investors in each Series will vote as a separate class except as to
voting of Trustees, as otherwise required by the 1940 Act, or if determined by
the Trustees to be a matter which affects all Series. As to any matter which
does not affect the interest of a particular Series, only investors in the one
or more affected Series are entitled to vote. The Portfolio Trust is not
required and has no current intention of holding annual meetings of investors,
but the Portfolio Trust will hold special meetings of investors when in the
judgment of the Portfolio Trust's Trustees it is necessary or desirable to
submit matters for an investor vote. The Portfolio Trust's Declaration of Trust
may be amended without the vote of investors, except that investors have the
right to approve by affirmative majority vote any amendment which would affect
their voting rights, alter the procedures to amend the Declaration of Trust of
the Portfolio Trust, or as required by law or by the Portfolio Trust's
registration statement, or as submitted to them by the Trustees. Any amendment
submitted to investors which the Trustees determine would affect the investors
of any Series shall be authorized by vote of the investors of such Series and no
vote will be required of investors in a Series not affected.

The Portfolio Trust or any Series (including any Portfolio) may enter
into a merger or consolidation, or sell all or substantially all of its assets,
if approved by the vote of two thirds of its investors (with the vote of each
being in proportion to its percentage of the beneficial interests in the
Series), except that if the Trustees recommend such sale of assets, the approval
by vote of a majority of the investors (with the vote of each being in
proportion to its

B-30

<PAGE>

percentage of the beneficial interests in the Series) will be sufficient. The
Portfolio Trust or any Series (including any Portfolio) may also be terminated
(i) upon liquidation and distribution of its assets if approved by the vote of
two thirds of its investors (with the vote of each being in proportion to the
amount of its investment) or (ii) by the Trustees by written notice to its
investors.

The Portfolio Trust's Declaration of Trust provides that obligations of
the Portfolio Trust are not binding upon the Trustees individually but only upon
the property of the Portfolio Trust and that the Trustees will not be liable for
any action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.

ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.

Beneficial interests in each Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act.

The value of investments listed on a domestic securities exchange,
other than options on stock indexes, is generally based on the last sale
prices on the New York Stock Exchange at 4:00 P.M. or, in the absence of
recorded sales, at the average of readily available closing bid and asked
prices on such exchange. 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. The value of each security for
which readily available market quotations exist is based on a decision as to
the broadest and most representative market for such security. For purposes
of calculating net asset value per share, all assets and liabilities
initially expressed in foreign currencies will be converted into U.S. dollars
at the prevailing market rates available at the time of valuation.

Options on stock indexes traded on national securities exchanges are
valued at the close of options trading on such exchanges which is currently 4:10
P.M., New York time. Stock index futures and related options, which are traded
on commodities exchanges, are valued at their last sales price as of the close
of such commodities exchanges which is currently 4:15 P.M., New York time.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision and responsibility of the Trustees. Such procedures
include the use of independent pricing services which use prices based upon
yields or prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Short-term
investments which mature in 60 days or less are valued at amortized cost if
their original maturity was 60 days or less, or by amortizing their value on the
61st day prior to maturity, if their original maturity when acquired by the
Portfolio was more than 60 days, unless this is determined not to represent fair
value by the Trustees.

Trading in securities on most foreign exchanges and OTC markets is
normally completed before the close of trading on the New York Stock Exchange
and

B-31

<PAGE>

may also take place on days on which the New York Stock Exchange is closed. If
events materially affecting the value of 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 Trustees.

If a Portfolio determines that it would be detrimental to the best
interest of the remaining investors in the Portfolio to make payment wholly or
partly in cash, payment of the redemption price may be made in whole or in part
by a distribution in kind of securities from the Portfolio, in lieu of cash, in
conformity with the applicable rule of the SEC. If interests are redeemed in
kind, the redeeming investor might incur transaction costs in converting the
assets into cash. The method of valuing portfolio securities is described above
and such valuation will be made as of the same time the redemption price is
determined. A Portfolio will not redeem in kind except in circumstances in which
an investor is permitted to redeem in kind.

ITEM 20. TAX STATUS.

The Portfolio Trust is organized as a New York trust. The Portfolio
Trust should not be subject to any income or franchise tax in the State of
New York. Each Portfolio should be taxed as a partnership for Federal income
tax purposes and should not be subject to Federal income tax. Each investor
in a Portfolio will be required to include in its own tax return its share
(as determined in accordance with the governing instruments of the Portfolio)
of the Portfolio's ordinary income, capital gains and losses, deductions and
other items of income in determining its income tax liability. The
determination of such share will be made in accordance with The Internal
Revenue Code of 1986, as amended ("the Code"), and regulations promulgated
thereunder.

Although, as described above, each Portfolio will not be subject to
federal income tax, it will file appropriate income tax returns.

It is intended that a 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 Code. To ensure that investors will be able to satisfy
the requirements of subchapter M, a Portfolio must satisfy certain gross
income and diversification requirements, including, among other things, a
requirement that a Portfolio derive less than 30% of its gross income from
the sale of stock, securities, options, futures or forward contracts held
less than three months.

Gains or losses on sales of securities by a Portfolio will be treated
as long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where the Portfolio acquires a put or
writes a call thereon. Other gains or losses on the sale of securities will be
short-term capital gains or losses. Gains and losses on the sale, lapse or other
termination of options on securities will be treated as gains and losses from
the sale of securities. If an option written by a Portfolio lapses or is
terminated through a closing transaction, such as the repurchase of the option
by the Portfolio of the option from its holder, that Portfolio will realize a
short-term capital gain or loss, depending on whether the premium income is
greater or less than the amount paid by the Portfolio in the closing
transaction. If securities are purchased by a Portfolio pursuant to the exercise
of a put option written by it, the Portfolio will subtract the premium received
from its cost basis in the securities purchased.

B-32

<PAGE>

Under the Code, gains or losses attributable to disposition of foreign
currency or to foreign currency contracts, or to fluctuations in exchange rates
between the time a Portfolio accrues income or receivables or expenses or other
liabilities denominated in a foreign currency and the time that Portfolio
actually collects such income or pays such liabilities, are treated as ordinary
income or ordinary loss. Similarly, gains or losses on the disposition of debt
securities held by a Portfolio, if any, denominated in foreign currency, to the
extent attributable to fluctuations in exchange rates between the acquisition
and disposition dates are also treated as ordinary income or loss.

Forward currency contracts, options and futures contracts entered into
by a Portfolio may create "straddles" for U.S. federal income tax purposes and
this may affect the character and timing of gains or losses realized by that
Portfolio on forward currency contracts, options and futures contracts or on the
underlying securities. Straddles may also result in the loss of the holding
period of underlying securities for purposes of the 30% of gross income test
described above, and therefore, a Portfolio's ability to enter into forward
currency contracts, options and futures contracts may be limited.

Certain options, futures and foreign currency contracts held by a
Portfolio at the end of each fiscal year will be required to be "marked to
market" for federal income tax purposes--i.e., treated as having been sold at
market value. For options and futures contracts, 60% of any gain or loss
recognized on these deemed sales and on actual dispositions will be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss regardless of how long the Portfolio has held such options
or futures. Any gain or loss recognized on foreign currency contracts will be
treated as ordinary income.

The Portfolio Trust may invest in equity securities of foreign
issuers. If the Portfolio Trust purchases shares in certain foreign
investment funds (referred to as passive foreign investment companies
("PFICs") under the Code), investors who are U.S. persons generally would be
subject to special rules on any "excess distribution" from such foreign
investment fund or gain from the disposition of such shares. Under these
special rules, (i) the gain or excess distribution would be allocated ratably
over the investor's holding period for such shares, (ii) the amount allocated
to the taxable year in which the gain or excess distribution was realized
would be taxable as ordinary income, (iii) the amount allocated to each prior
year, with certain exceptions, would be subject to tax at the highest tax
rate in effect for that year and (iv) the interest charge generally
applicable to underpayments of tax would be imposed in respect of the tax
attributable to each such year. Alternatively, an investor may, if certain
conditions are met, include in its income each year a pro rata portion of the
foreign investment fund's income, whether or not distributed to the Portfolio
Trust.

FOREIGN INVESTORS. It is intended that the Portfolio Trust will
conduct its affairs such that its income and gains will not be effectively
connected with the conduct of a U.S. trade or business. Provided the Portfolio
Trust conducts its affairs in such a manner, allocations of U.S. source
dividend income to an investor who, as to the United States, is a foreign
trust, foreign corporation or other foreign investor will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate), and allocations of
portfolio interest (as defined in the Code) or short term or net long term
capital gains to such investors generally will not be subject to U.S. tax.

STATE AND LOCAL TAXES. A Portfolio may be subject to state or local
taxes in jurisdictions in which the Portfolio is deemed to be doing business. In
addition, the treatment of the Portfolio and its investors in those states which
have income tax laws might differ from treatment under the federal income tax

B-33

<PAGE>

laws. Investors should consult their own tax advisors with respect to any state
or local taxes.

FOREIGN TAXES. A Portfolio may be subject to foreign withholding taxes
with respect to income received from sources within foreign countries. Investors
are advised to consult their own tax advisers with respect to the reporting of
such foreign taxes on the investors' income tax returns.

OTHER TAXATION. The investment by an investor in a Portfolio does not
cause the investor to be liable for any income or franchise tax in the State of
New York arising solely from such investment. Investors are advised to consult
their own tax advisors with respect to the particular tax consequences to them
of an investment in a Portfolio.

ITEM 21. UNDERWRITERS.

The placement agent for the Portfolio Trust is FDI, which receives no
additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the Portfolio
Trust.

ITEM 22. CALCULATIONS OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL STATEMENTS.

The Portfolio Trust's current annual and semi-annual reports to
investors filed with the SEC pursuant to Section 30(b) of the 1940 Act and
Rule 30b2-1 thereunder are incorporated herein by reference.

B-34

<PAGE>

APPENDIX A

DESCRIPTION OF SECURITY RATINGS

STANDARD & POOR'S

CORPORATE AND MUNICIPAL BONDS

AAA - Debt rated AAA has the highest ratings assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.

BB - Debt rated BB is regarded as having less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designations 1, 2, and 3 to indicate the relative degree of safety.

A-1 - This designation indicates that the degree of safety regarding timely
payment is very strong.

SHORT-TERM TAX-EXEMPT NOTES

SP-1 - The short-term tax-exempt note rating of SP-1 is the highest rating
assigned by Standard & Poor's and has a very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics are given a "plus" (+) designation.

SP-2 - The short-term tax-exempt note rating of SP-2 has a satisfactory capacity
to pay principal and interest.

Appendix-1

<PAGE>

MOODY'S

CORPORATE AND MUNICIPAL BONDS

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

Prime-1 - Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:

- - Leading market positions in well established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structures with moderate reliance on debt and
ample asset protection. - Broad margins in earnings coverage of fixed financial
charges and high internal cash generation. - Well established access to a range
of financial markets and assured sources of alternate liquidity.

Appendix-2

<PAGE>

SHORT-TERM TAX EXEMPT NOTES

MIG-1 - The short-term tax-exempt note rating MIG-1 is the highest rating
assigned by Moody's for notes judged to be the best quality. Notes with this
rating enjoy strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.

MIG-2 - MIG-2 rated notes are of high quality but with margins of protection not
as large as MIG-1.

Appendix-3

<PAGE>

APPENDIX B
INVESTING IN JAPAN AND ASIAN GROWTH MARKETS

JAPAN AND ITS SECURITIES MARKETS

The Japan Equity Portfolio will be subject to general economic and
political conditions in Japan. These include future political and economic
developments, the possible imposition of, or changes in, exchange controls or
other Japanese governmental laws or restrictions applicable to such investments,
diplomatic developments, political or social unrest and natural disasters.

Japan is largely dependent upon foreign economies for raw materials.
For instance, almost all of its oil is imported, the majority from the Middle
East. Oil prices therefore have a major impact on the domestic economy, as is
evidenced by the current account deficits triggered by the two oil crises of the
1970s. While Japan is working to reduce its dependence on foreign materials, its
lack of natural resources poses a significant obstacle to this effort.

GEOLOGICAL FACTORS. The islands of Japan lie in the western Pacific
Ocean, off the eastern coast of the continent of Asia. Japan has in the past
experienced earthquakes and tidal waves of varying degrees of severity, and the
risks of such phenomena, and damage resulting therefrom, continue to exist.

ASIAN GROWTH MARKETS

The Asia Growth Portfolio will be subject to certain risks and special
considerations, including those set forth below, which are not typically
associated with investing in securities of U.S. companies. In particular,
securities markets in Asian growth markets have been subject to substantial
price volatility, often without warning. This potential for sudden market
declines should be weighed and balanced against the potential for rapid growth
in Asian growth markets. Further, certain securities that the Portfolio may
purchase, and investment techniques in which the Portfolio may engage, involve
risks, including those set forth below.

INVESTMENT AND REPATRIATION RESTRICTIONS

Foreign investment in the securities markets of several Asian growth
markets is restricted or controlled to varying degrees. These restrictions may
limit investment in certain of the Asian growth markets and may increase
expenses of the Portfolio. For example, certain countries may require
governmental approval prior to investments by foreign persons in a particular
company or industry sector or limit investment by foreign persons to only a
specific class of securities of a company which may have less advantageous terms
(including price) than securities of the company available for purchase by
nationals. Certain countries may restrict or prohibit investment opportunities
in issuers or industries deemed important to national interests. In addition,
the repatriation of both investment income and capital from several of the Asian
growth markets is subject to restrictions such as the need for certain
government consents. Even where there is no outright restriction on repatriation
of capital, the mechanics of repatriation may affect certain aspects of the
operation of the Portfolio. For example, Taiwan imposes a waiting period on the

Appendix-4

<PAGE>

repatriation of investment capital for certain foreign investors. Although these
restrictions may in the future make it undesirable to invest in the countries to
which they apply, the Advisor does not believe that any current repatriation
restrictions would preclude the Portfolio from effectively managing its assets.

If, because of restrictions on repatriation or conversion, the
Portfolio were unable to distribute substantially all of its net investment
income and long-term capital gains within applicable time periods, the Portfolio
could be subject to U.S. Federal income and excise taxes which would not
otherwise be incurred and may cease to qualify for the favorable tax treatment
afforded to regulated investment companies under the Code, in which case it
would become subject to U.S. federal income tax on all of its income and gains.

Generally, there are restrictions on foreign investment in certain
Asian growth markets, although these restrictions vary in form and content. In
India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand, the
Portfolio may be limited by government regulation or a company's charter to a
maximum percentage of equity ownership in any one company.

The Advisor intends to apply for approval from Indian governmental
authorities to invest in India on behalf of the Portfolio as a foreign
institutional investor (an "FII"). Under the guidelines that apply currently for
FIIs, no FII (or members of an affiliated group investing through one or more
FIIs) may hold more than 5% of the total issued capital of any Indian company.
In addition, all non-resident portfolio investments, including those of all FIIs
and their clients, may not exceed 24% of the issued share capital of any Indian
company; however, the 24% limit does not apply to investments by FIIs through
authorized offshore funds and offshore equity issues. Further, at least 70% of
the total investments made by an FII pursuant to its FII authorization must be
in equity and equity related instruments such as convertible debentures and
tradeable warrants. Under a recently adopted policy, FIIs may purchase new
issues of equity securities directly from an Indian company, subject to certain
conditions. The procedures for such direct subscription by FIIs of such equity
securities are unclear and it is likely that a further limit, in addition to the
24% limit referred to above, may be imposed. The guidelines that apply for FIIs
are relatively recent and thus experience as to their application has been
limited. At present, FII authorizations are granted for five years and may be
renewed with the approval of India governmental authorities.

Korea generally prohibits foreign investment in Won-denominated debt
securities and Sri Lanka prohibits foreign investment in government debt
securities. In the Philippines, the Portfolio may generally invest in "B" shares
of Philippine issuers engaged in partly nationalized business activities, which
shares are made available to foreigners, and the market prices, liquidity and
rights of which may vary from shares owned by nationals. Similarly, in the
People's Republic of China (the "PRC"), the Portfolio may only invest in "B"
shares of securities traded on The Shanghai Securities Exchange and The Shenzhen
Stock Exchange, currently the two officially recognized securities exchanges in
the PRC. "B" shares traded on The Shanghai Securities Exchange are settled in
U.S. dollars and those traded on The Shenzhen Stock Exchange are generally
settled in Hong Kong dollars.

Appendix-5

<PAGE>

In Hong Kong, Korea, the Philippines, Taiwan and Thailand, there are
restrictions on the percentage of permitted foreign investment in shares of
certain companies, mainly those in highly regulated industries, although in
Taiwan there are limitations on foreign ownership of shares of any listed
company. In addition, Korea also prohibits foreign investment in specified
telecommunications companies and the Philippines prohibits foreign investment in
mass media companies and companies providing certain professional services.

MARKET CHARACTERISTICS

DIFFERENCES BETWEEN THE U.S. AND ASIAN SECURITIES MARKETS. The
securities markets of Asian growth markets have substantially less volume than
the New York Stock Exchange, and equity and debt securities of most companies in
Asian growth markets are less liquid and more volatile than equity and debt
securities of U.S. companies of comparable size. Some of the stock exchanges in
Asian growth markets, such as those in the PRC, are in the earliest stages of
their development. Many companies traded on securities markets in Asian growth
markets are smaller, newer and less seasoned than companies whose securities are
traded on securities markets in the United States. Investments in smaller
companies involve greater risk than is customarily associated with investing in
larger companies. Smaller companies may have limited product lines, markets or
financial or managerial resources and may be more susceptible to losses and
risks of bankruptcy. Additionally, market making and arbitrage activities are
generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity of such markets. Accordingly, each of these
markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States. To the extent that any Asian
growth market experiences rapid increases in its money supply and investment in
equity securities for speculative purposes, the equity securities traded in any
such country may trade at price-earnings multiples higher than those of
comparable companies trading on securities markets in the United States, which
may not be sustainable. Securities markets in Asian growth markets may also be
subject to substantial governmental control, which may cause sudden or prolonged
disruptions in market prices unrelated to supply and demand considerations. This
may also be true of currency markets.

Brokerage commissions and other transaction costs on securities
exchanges in Asian growth markets are generally higher than in the United
States. In addition, security settlements may in some instance be subject to
delays and related administrative uncertainties, including risk of loss
associated with the credit of local brokers.

GOVERNMENT SUPERVISION OF ASIAN SECURITIES MARKETS; LEGAL SYSTEMS.
There is less government supervision and regulation of foreign securities
exchanges, listed companies and brokers in Asian growth markets than exists in
the United States. Less information, therefore, may be available to the Fund
than in respect of investments in the United States. Further, in certain Asian
growth markets, less information may be available to the Fund than to local
market participants. Brokers in Asian growth markets may not be as well
capitalized as those in the United States, so that they are more susceptible to
financial failure in times of market, political, or economic stress. In
addition, existing

Appendix-6

<PAGE>

laws and regulations are often inconsistently applied. As legal systems in some
of the Asian growth markets develop, foreign investors may be adversely affected
by new laws and regulations, changes to existing laws and regulations and
preemption of local laws and regulations by national laws. In circumstances
where adequate laws exist, it may not be possible to obtain swift and equitable
enforcement of the law. Currently a mixture of legal and structural restrictions
affect the securities markets of certain Asian growth markets.

Korea, in an attempt to avoid market manipulation, requires
institutional investors to deposit in their broker's account a percentage of the
amount to be invested prior to execution of a purchase order. That deposit
requirement will expose the Fund to the broker's credit risk. These examples
demonstrate that legal and structural developments can be expected to affect the
Portfolio, potentially affecting liquidity of positions held by the Portfolio,
in unexpected and significant ways from time to time.

FINANCIAL INFORMATION AND STANDARDS. Issuers in Asian growth markets
generally are subject to accounting, auditing and financial standards and
requirements that differ, in some cases significantly, from those applicable to
U.S. issuers. In particular, the assets and profits appearing on the financial
statements of an Asian growth market issuer may not reflect its financial
position or results of operations in accordance with U.S. generally accepted
accounting principles. In addition, for an issuer that keeps accounting records
in local currency, inflation accounting rules may require, for both tax and
accounting purposes, that certain assets and liabilities be restated on the
issuer's balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits. Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the real condition of
those issuers and securities markets. Moreover, substantially less information
may be publicly available about issuers in Asian growth markets than is
available about U.S.
issuers.

SOCIAL, POLITICAL AND ECONOMIC FACTORS

Asian growth markets may be subject to a greater degree of social,
political and economic instability than is the case in the United States and
Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or military involvement in
political and economic decision-making, and changes in government through extra-
constitutional means; (ii) popular unrest associated with demand for improved
political, economic and social conditions; (iii) internal insurgencies, (iv) war
or hostile relations with neighboring countries; and (v) ethnic, religious and
racial disaffection. Such social, political and economic instability could
significantly disrupt the principal financial markets in which the Portfolio
invests and adversely affect the value of the Portfolio's assets. In addition,
there may be the possibility of asset expropriations or future confiscatory
levels of taxation affecting the Portfolio.

Few Asian growth markets have western-style or fully democratic
governments. Some governments in the region are authoritarian and influenced by
security forces. During the course of the last 25 years, governments in the

Appendix-7

<PAGE>

region have been installed or removed as a result of military coups, while
others have periodically demonstrated repressive police state characteristics.
Disparities of wealth, among other factors, have also led to social unrest in
some Asian growth markets, accompanied, in certain cases, by violence and labor
unrest. Ethnic, religious and racial disaffection, as evidenced in India,
Pakistan and Sri Lanka, have created social, economic and political problems.

Several Asian growth markets have or in the past have had hostile
relationships with neighboring nations or have experienced internal insurgency.
Thailand has experienced border conflicts with Laos and Cambodia, and India is
engaged in border disputes with several of its neighbors, including the PRC and
Pakistan. Tension between the Tamil and Sinhalese communities in Sri Lanka has
resulted in periodic outbreaks of violence. An uneasy truce exists between North
Korea and South Korea, and the recurrence of hostilities remains possible.
Reunification of North Korea and South Korea could have a detrimental effect on
the economy of South Korea. Also, the PRC continues to claim sovereignty over
Taiwan. The PRC is acknowledged to possess nuclear weapons capability; North
Korea is alleged to possess or be in the process of developing such a
capability.

The economies of most Asian growth markets are heavily dependent upon
international trade and are accordingly affected by protective barriers and the
economic conditions of their trading partners, principally, the United States,
Japan, the PRC and the European Community. The enactment by the United States or
other principal trading partners of protectionist trade legislation, reduction
of foreign investment in the local economies and general declines in the
international securities markets could have a significant adverse effect upon
the securities markets of the Asian growth markets. In addition, the economies
of some Asian growth markets, Indonesia and Malaysia, for example, are
vulnerable to weakness in world prices for their commodity exports, including
crude oil.

Governments in certain Asian growth markets participate to a
significant degree, through ownership interest or regulation, in their
respective economies. Action by these governments could have a significant
adverse effect on market prices of securities and payment of dividends.

The PRC has only recently permitted private economic activities and the
PRC government has exercised and continues to exercise substantial control over
virtually every sector of the PRC economy through regulation and state
ownership. Continued economic growth and development in the PRC, as well as
opportunities for foreign investment, and prospects of private sector
enterprises, in the PRC, will depend in many respects on the implementation of
the PRC's current program of economic reform, which cannot be assured.

In Hong Kong, British proposals to extend limited democracy have caused
a political rift with the PRC, which is scheduled to assume sovereignty over the
colony in 1997. Although the PRC has committed by treaty to preserve the
economic and social freedoms enjoyed in Hong Kong for 50 years after regaining
control of Hong Kong, the continuation of the current form of the economic
system in Hong Kong after the reversion will depend on the actions of the
government of the PRC. In addition, such reversion has increased sensitivity in
Hong Kong to political developments and statements by public figures in the PRC.
Business confidence in Hong Kong, therefore, can be significantly affected by
such

Appendix-8

<PAGE>

developments and statements, which in turn can affect markets and business
performance.

With respect to investments in Taiwan, it should be noted that Taiwan
lacks formal diplomatic relations with many nations, although it conducts trade
and financial relations with most major economic powers. Both the government of
the PRC and the government of the Republic of China in Taiwan claim sovereignty
over all of China. Although relations between Taiwan and the PRC are currently
peaceful, renewed frictions or hostility could interrupt operations of Taiwanese
companies in which the Portfolio invests and create uncertainty that could
adversely affect the value and marketability of its Taiwan investments.

With regard to India, agriculture occupies a more prominent position in
the Indian economy than in the United States, and the Indian economy therefore
is more susceptible to adverse changes in weather. The government of India has
exercised and continues to exercise significant influence over many aspects of
the economy, and the number of public sector enterprises in India is
substantial. Accordingly government actions in the future could have a
significant effect on the Indian economy which could affect private sector
companies, market conditions and prices and yields of securities held by the
Portfolio. Religious and ethnic unrest persists in India. The long standing
grievances between the Hindu and Muslim populations resulted in communal
violence during 1993 in the aftermath of the destruction of a mosque in Ayodhya
by radical elements of the Hindu population. The Indian government is also
confronted by separatist movements in several states and the long standing
border dispute with Pakistan over the State of Jammu and Kashmir, a majority of
whose population is Muslim, remains unsolved. In addition, Indian stock
exchanges have in the past been subject to repeated closure including for ten
days in December 1993 due to a broker's strike, and there can be no assurance
that this will not recur.

THINLY TRADED MARKETS

Compared to securities traded in the United States, all securities of
Asian growth market issuers may generally be considered to be thinly traded.
Even relatively widely held securities in such countries may not be able to
absorb trades of a size customarily transacted by institutional investors,
without price disruptions. Accordingly, the Portfolio's ability to reposition
itself will be more constrained than would be the case for a typical equity
mutual fund.

SETTLEMENT PROCEDURES AND DELAYS

Settlement procedures in Asian growth markets are less developed and
reliable than those in the United States and in other developed markets, and the
Portfolio may experience settlement delays or other material difficulties. This
problem is particularly severe in India where settlement is through physical
delivery and, where currently, a severe shortage of vault capacity exists among
custodial banks, although efforts are being undertaken to alleviate the
shortage. In addition, significant delays are common in registering transfers of
securities, and the Portfolio may be unable to sell such securities until the
registration process is completed and may experience delays in receipt of
dividends and other entitlement. The recent and anticipated inflow of funds into
the Indian securities market has placed added strains on the settlement system
and transfer process. In addition, the Portfolio may be subject to significant

Appendix-9

<PAGE>

limitations in the future on the volume of trading during any particular period,
imposed by its sub-custodian in India or otherwise as a result of such physical
or other operational constraints.

Appendix-10

<PAGE>

PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS

The audited financial statements included in Part B of this Registration
Statement are as follows:

THE ASIA GROWTH PORTFOLIO

Schedule of Investments at December 31, 1995
Statement of Assets and Liabilities at December 31, 1995
Statement of Operations for the period April 4, 1995 (commencement of
operations) through December 31, 1995
Statement of Changes in Net Assets
Supplementary Data at December 31, 1995
Notes to Financial Statements at December 31, 1995

THE EUROPEAN EQUITY PORTFOLIO

Schedule of Investments at December 31, 1995
Statement of Assets and Liabilities at December 31, 1995
Statement of Operations for the period March 28, 1995 (commencement of
operations) through December 31, 1995
Statement of Changes in Net Assets
Supplementary Data at December 31, 1995
Notes to Financial Statements at December 31, 1995

THE JAPAN EQUITY PORTFOLIO

C-1
<PAGE>

The unaudited financial statements included in Part B of this Registration
Statement are as follows:

THE ASIA GROWTH PORTFOLIO

Schedule of Investments at June 30, 1996.
Statement of Assets and Liabilities at June 30, 1996
Statement of Operations for the period January 1, 1996
through June 30, 1996
Statement of Changes in Net Assets
Supplementary Data at June 30, 1996
Notes to Financial Statements at June 30, 1996

THE EUROPEAN EQUITY PORTFOLIO

Schedule of Investments at June 30, 1996
Statement of Assets and Liabilities at June 30, 1996
Statement of Operations for the period January 1, 1996
through June 30, 1996
Statement of Changes in Net Assets
Supplementary Data at June 30, 1996
Notes to Financial Statements at June 30, 1996

THE JAPAN EQUITY PORTFOLIO

<PAGE>
(B) EXHIBITS

1 Declaration of Trust of the Registrant.2

2 By-Laws of the Registrant as amended.2

5 Investment Advisory Agreement between the Registrant and Morgan
Guaranty Trust Company of New York ("Morgan Guaranty").2

8 Custodian Contract between the Registrant and State Street Bank and
Trust Company ("State Street").1

8(b) Amendment (dated July 1, 1996) to the Custodian Contract between the
Registrant and State Street.3

9(a) Co-Administration Agreement between the Registrant and Funds
Distributor, Inc. dated August 1, 1996.3

9(b) Transfer Agency and Service Agreement between the Registrant and State
Street.1

9(c) Restated Administrative Services Agreement between the Registrant
and Morgan dated August 1, 1996.3

9(d) Amended and Restated Portfolio Fund Services Agreement between the
Registrant and Pierpont Group, Inc. dated July 11, 1996.3

9(e) Administrative Services Agreement between the Registrant and Morgan
Guaranty.2

13 Investment representation letters of initial investors.1

17.1 Financial Data Schedule for The Asia Growth Portfolio.3

17.2 Financial Data Schedule for The European Equity Portfolio.3

17.3 Financial Data Schedule for The Japan Equity Portfolio.3

----------------------

1 Incorporated herein by reference from the Registrant's initial Registration
Statement as filed with the Securities and Exchange Commission on March 28,
1995.

2 Incorporated herein by reference from the Registrant's Registration
Statement as filed with the Securities and Exchange Commission on May 1, 1996.

3 Filed herewith.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

No person is controlled by or under common control with the Registrant.

C-2

<PAGE>

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

Title of Class: Beneficial Interests

As of September 16, 1996, the number of record holders were as follows:

The Asia Growth Portfolio 4
The European Equity Portfolio 4
The Japan Equity Portfolio 4

ITEM 27. INDEMNIFICATION.

Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an exhibit herewith.

The Trustees and officers of the Registrant and the personnel of the
Registrant's co-administrator are insured under an errors and omissions
liability insurance policy. The Registrant and its officers are also insured
under the fidelity bond required by Rule 17g-1 under the Investment Company Act
of 1940, as amended.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Morgan is a New York trust company which is a wholly-owned
subsidiary of J.P. Morgan & Co. Incorporated. Morgan conducts a
general Banking and trust business.

To the knowledge of the Registrant, none of the directors, except
those set forth below, or executive officers of Morgan is or has been during
the past two fiscal years engaged in any other business, profession, vocation
or employment of a substantial nature, except that certain officers and
directors of Morgan also hold various positions with, and engage in business
for, J.P. Morgan & Co. Incorporated, which owns all the outstanding stock of
Morgan. Set forth below is the name, address, and principal business of each
director of Morgan who is engaged in another business, profession,
vocation or employment of a substantial nature.

Riley P. Bechtel: Chairman and Chief Executive Officer, Bechtel
Group, Inc. (architectural design and construction). HIs address is Bechtel
Group, Inc., P.O. Box 193965, San Francisco, CA 94119-3965.

Martin Feldstein: President and Chief Executive Officer, National
Bureau of Economic Research, Inc. (national research institution). His
address is National Bureau of Economic Research, Inc., 1050 Massachusetts
Avenue, Cambridge, MA 02138-5398.

Hanna H. Gray: President Emeritus, The University of Chicago
(academic institution). Her address is Department of History, The University
of Chicago, 1126 East 59th Street, Chicago, IL 60637.

James R. Houghton: Retired Chairman, Corning Incorporated (glass
products). His Address is R.D. #2 Spencer Hill Road, Corning, NY 14830.

James L. Ketelsen: Retired Chairman and Chief Executive Officer,
Tenneco Inc. (oil, pipe-lines, and manufacturing). His address is Tenneco,
Inc., P.O. Box 2511, Houston, TX 77252-2511.

Lee R. Raymond: Chairman and Chief Executive Officer, Exxon
Corporation (oil, natural gas, and other petroleum products). His address is
Exxon Corporation, 5959 Las Colinas Boulevard, Irving, TX 75039-2298.

C-3

<PAGE>

Richard D. Simmons: Former President, The Washington Post Company and
International Herald Tribune (newspapers). His address is P.O. Box 242,
Sperryville, VA 22740.

Douglas C. Yearley: Chairman, President, and Chief Executive
Officer, Phelps Dodge Corporation (chemicals). His address is Phelps Dodge
Corporation, 2600 N. Central Avenue, Phoenix, AZ 85004-3014.

ITEM 29. PRINCIPAL UNDERWRITERS.

Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:

Pierpont Group, Inc., 461 Fifth Avenue, New York, New York 10017
(records relating to its assisting the Trustees in carrying out their duties in
supervising the Registrant's affairs).

Morgan Guaranty Trust Company of New York, 60 Wall Street, New York,
NY 10260-0060 and 522 Fifth Avenue, New York, NY 10036 (records relating to
its functions as investment advisor and administrative services agent).

State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02109 or 40 King Street West, Toronto, Ontario, Canada M5H 3Y8
(records relating to its functions as custodian and transfer agent).

Funds Distributor, Inc., in care of State Street Cayman Trust
Company, Ltd., at Elizabethan Square, Shedden Road, George Town, Grand
Cayman, Cayman Islands (records relating to its functions as co-administrator
and exclusive placement agent).

C-4

<PAGE>

ITEM 31. MANAGEMENT SERVICES.

Not applicable.

ITEM 32. UNDERTAKINGS.

Not applicable.

C-5

<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of George Town, Grand Cayman, Cayman Islands, B.W.I., on the 8th day of
October, 1996.

THE SERIES PORTFOLIO

By /S/LENORE J. MCCABE
------------------------
Lenore J. McCabe
Assistant Secretary and
Assistant Treasurer

<PAGE>

Index to Exhibits

Exhibit No.

Ex-99.B8(b) Amendment to Custodian Contract
Ex-99.B9(a) Co-Administration Agreement
Ex-99.B9(c) Restated Administrative Services Agreement
Ex-99.B9(d) Amended and Restated Portfolio Fund Services Agreement
Ex-27.1 Financial Data Schedule for The Asia Growth Portfolio
Ex-27.2 Financial Data Schedule for The European Equity Portfolio
Ex-27.3 Financial Data Schedule for The Japan Equity Portfolio

<PAGE>

AMENDMENT TO CUSTODIAN CONTRACT

Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and the funds listed on Exhibit A hereto (each, a "Fund")

WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated and, as applicable amended, as of the date set forth on Exhibit A (each,
the "Custodian Contract");

WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions [of the] Custodian Contract pursuant to which the custodian provides
services to the Fund;

NOW, THEREFORE, in consideration of the promises and covenants contained
herein, the Custodian and the Fund hereby agree as follows:

1. The existing Section 3.13 of the Custodian Contract shall be amended and
restated in its entirety to read as follows:

3.13 TAX LAW.

(a) UNITED STATES TAXES. The Custodian shall have no responsibility
or liability for any obligations now or hereafter imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of the United
States of America or any state or political subdivision [t]hereof.
The Custodian will be responsible for informing the Fund of the income
received by the Fund which is United States source income and which is
not United States source income.

(b) CLAIMING FOR EXEMPTION OR REFUND UNDER THE TAX LAWS OF NONUNITED
STATES JURISDICTIONS. The sole responsibility of the Custodian with
regard to the tax laws of non-United States jurisdictions shall be to
identify the income of the Fund which has been subject to withholding
and other tax assessments or other governmental charges by such
jurisdictions and the amount thereof and to use reasonable efforts to
assist the Fund or its investors with respect to any claim for
exemption or refund of such charges that can be made on behalf of the
Fund or its investors.

2. The existing Article 8 of the Custodian Contract shall be amended and
restated in its entirety to read as follows:

8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET INCOME. The Custodian shall keep the books of
account of the Fund and shall perform the following duties as
described
<PAGE>

in Part A of its Registration Statement under the 1940 Act and in
accordance with written procedures as may be agreed upon by the Fund
and the Custodian from time to time:

(a) record general ledger entries;
(b) calculate daily net income;
(c) reconcile activity to the trial balance;
(d) calculate book capital account balances;
(e) calculate and provide to the Fund the daily net asset value
of the Fund and the SEC yield of the Fund and the allocation
of its various components to investors of the Fund;
(f) prepare capital allocation reports in accordance with
Regulation 1.704-3(e)(3) (special aggregation rule for
securities partnerships) under the U.S. Internal Revenue
Code, based upon tax adjustments supplied by the Fund; and
(g) prepare account balances.

The Custodian shall advise the Fund daily of the total amounts of such
net income, including the categorization of such net income by source.
The calculation of the Fund's net income and its components shall
include, but may not be limited to, accounting for purchases and sales
of portfolio securities, calculation of realized and unrealized gains
and losses, accruals of income on portfolio investments, [Portfolio
level] expense accruals and calculations of market value of portfolio
securities. All accounting functions to be performed by the Custodian
hereunder shall be performed outside the United States.

3. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian contract shall continue to apply with full force and
effect.

IN WITNESS WHEREOF, each of the parties has caused this amendment to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative as of this first day of July, 1996.

STATE STREET BANK AND TRUST
COMPANY

BY: /s/ Ronald E. Logue
[Ronald E. Logue
Executive Vice President]

EACH OF THE PORTFOLIOS OF THE
FUNDS LISTED ON EXHIBIT A

BY: /s/ Matthew Healey
[Matthew Healey
Chief Executive Officer]

[W:\Morin\offshore.96\jpm-am2.mto
JPM525]
<PAGE>

Exhibit A

Master Funds
advised by J.P. Morgan

The Money Market Portfolio
The Short Term Bond Portfolio
The U.S. Fixed Income Portfolio
The Selected U.S. Equity Portfolio
The U.S. Small Company Portfolio
The Non-U.S. Equity Portfolio
The Diversified Portfolio
The Non-U.S. Fixed Income Portfolio
The Emerging Markets Equity Portfolio
The Asia Growth Portfolio, a series of The Series Portfolio
The Japan Equity Portfolio, a series of The Series Portfolio
The European Equity Portfolio, a series of The Series Portfolio

<PAGE>

PORTFOLIOS LISTED IN EXHIBIT I
CO-ADMINISTRATION AGREEMENT

CO-ADMINISTRATION AGREEMENT, dated as of August 1, 1996 by and between each
of the Portfolios listed on Exhibit I, each a New York trust (a "Portfolio"),
and Funds Distributor, Inc., a Massachusetts corporation (the "Co-
Administrator").

W I T N E S S E T H:

WHEREAS, each Portfolio is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act");

WHEREAS, each Portfolio wishes to engage the Co-Administrator to provide
certain administrative and management services, and the Co-Administrator is
willing to provide such administrative and management services to the Portfolio,
on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:

1. DUTIES OF CO-ADMINISTRATOR FOR EACH PORTFOLIO. Subject to the general
direction and control of the Board of Trustees of the Portfolio, the Co-
Administrator shall perform the following administrative and management
services: (a) providing or obtaining office space, equipment and clerical
personnel necessary for maintaining the organization of the Portfolio and for
performing the administrative and management functions herein set forth; (b)
arranging for Directors, officers and employees of the Co-Administrator or its
agents, reasonably acceptable to the Trustees, to serve as Trustees, officers or
agents of the Portfolio and perform the duties incident to their office if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law; (c) filing documents with regulatory
authorities or mailing documents to investors in or Trustees of the Portfolio to
the extent requested by the Portfolio; (d) maintaining books and records of the
Portfolio related to the foregoing. In the performance of its duties under this
Agreement, the Co-Administrator will comply with the provisions of the
Declaration of Trust and By-Laws of the Portfolio and the Portfolio's stated
investment objective, policies and restrictions, and will use its best efforts
to safeguard and promote the welfare of the Portfolio, and to comply with other
policies which the Board of Trustees may from time to time determine.
Notwithstanding the foregoing, the Co-Administrator shall not be deemed to have
assumed any duties not specified in this Agreement, including, without
limitation, any responsibility for the management of the Portfolio's assets or
the rendering of investment advice and supervision with respect thereto, nor
shall the Co-Administrator be deemed to have assumed or have any responsibility
with respect to functions specifically assumed by any transfer agent, custodian
or other administrative service provider of the Portfolio. The Co-Administrator
undertakes to comply with all applicable requirements

1
<PAGE>

of the U.S. federal securities laws and any other laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by it hereunder. Where the Portfolio's address is outside the United
States as indicated on Exhibit 1, the Co-Administrator further undertakes to
perform its duties, or cause its duties to be performed, outside of the United
States, as requested by the Trustees.

2. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Co-Administrator hereby agrees that all records which it
maintains for a Portfolio are the property of the Portfolio and further agrees
to surrender promptly to the Portfolio any such records upon the Portfolio's
request.

3. ALLOCATION OF CHARGES AND EXPENSES. The Co-Administrator shall pay
the entire salaries and wages of all of the Portfolio's Trustees, officers and
agents who devote part or all of their time to the affairs of the Co-
Administrator or its affiliates, and the wages and salaries of such persons
shall not be deemed to be expenses incurred by the Portfolio for purposes of
this Section 3. Except as provided in the foregoing sentence, the Co-
Administrator shall not pay other expenses relating to the Portfolio including,
without limitation, compensation of Trustees not affiliated with the Co-
Administrator; governmental fees; interest charges; taxes; membership dues in
the Investment Company Institute allocable to the Portfolio; fees and expenses
of the Portfolio's independent auditors, of legal counsel and of any transfer
agent or registrar of the Portfolio; expenses of preparing, printing and mailing
reports, notices, proxy statements and reports to investors and government
officers and commissions; expenses of preparing and mailing agendas and
supporting documents for meetings of Trustees and committees of Trustees;
expenses connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the Portfolio's custodian
for all services to the Portfolio, including safekeeping of funds and securities
and maintaining required books and accounts; expenses of calculating the net
asset value of the Portfolio; expenses of meetings of investors in the
Portfolio; and expenses relating to the issuance, registration and qualification
of interests in the Portfolio.

4. COMPENSATION OF CO-ADMINISTRATOR. For the services to be rendered and
the facilities to be provided by the Co-Administrator hereunder, the Co-
Administrator will receive a fee from each Portfolio as agreed by the Co-
Administrator and the Portfolio from time to time as set forth on Schedule A
attached hereto. This fee will be payable as agreed by the Portfolio and the
Co-Administrator, but not more frequently than monthly.

5. LIMITATION OF LIABILITY OF THE CO-ADMINISTRATOR. The Co-Administrator
shall not be liable for any error of judgment or mistake of law or for any act
or omission in the administration or management of any Portfolio or the
performance of its duties hereunder, except for wilful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of the reckless
disregard of its obligations and duties hereunder. As used in this Section 5,
the term "Co-Administrator" shall include Funds Distributor, Inc. and/or any of
its affiliates and the Directors, officers and employees of Funds Distributor,
Inc. and/or of its affiliates.

6. ACTIVITIES OF THE CO-ADMINISTRATOR. The services of the Co-
Administrator to the Portfolios are not to be deemed to be exclusive, the Co-
Administrator being free to render administrative and/or other services to other
parties. It is understood that Trustees, officers, and

2
<PAGE>

investors of a Portfolio are or may become interested in the Co-Administrator
and/or any of its affiliates as Directors, officers, employees, or otherwise,
and that Directors, officers and employees of the Co-Administrator and/or any of
its affiliates are or may become similarly interested in the Portfolio and that
the Co-Administrator and/or any of its affiliates may be or become interested in
the Portfolio as an investor or otherwise.

7. TERMINATION. This Agreement may be terminated at any time with
respect to a Portfolio, without the payment of any penalty, by the Board of
Trustees of the Portfolio or by the Co-Administrator, in each case on not more
than 60 days' nor less than 30 days' written notice to the other party.

8. SUBCONTRACTING BY THE CO-ADMINISTRATOR. The Co-Administrator may
subcontract for the performance of its obligations hereunder with any one or
more persons; PROVIDED, HOWEVER, that the Co-Administrator may subcontract
hereunder only with the prior consent of the Trustees of the Portfolio; and
PROVIDED, FURTHER, that, unless the Portfolio otherwise expressly agrees in
writing, the Co-Administrator shall be as fully responsible to the Portfolio for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.

9. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.

10. AMENDMENTS. This Agreement may be amended only by mutual written
consent.

11. CONFIDENTIALITY. The Co-Administrator agrees on behalf of itself and
its employees to treat confidentially and as proprietary information of each
Portfolio all records and other information not otherwise publicly available
relative to the Portfolio and its prior, present or potential investors and not
to use such records and information for any purpose other than performance of
its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Portfolio, which approval shall not be
unreasonably withheld and may not be withheld where the Co-Administrator may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Portfolio.

12. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. Should any part of this Agreement be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.

13. NOTICE. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Co-Administrator at 60 State
Street, 13th Floor, Boston, Massachusetts 02109, Attention: President with a
copy to General Counsel; or (2) to the Portfolio at the Portfolio's address
listed on Exhibit I, Attention: Treasurer, or at such other address as either

3
<PAGE>

party may from time to time specify to the other party pursuant to this section,
with a copy to Morgan Guaranty Trust Company of New York, 522 Fifth Avenue, New
York, New York 10036, Attention: Funds Management.

14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned officer of each Portfolio has executed this Agreement not
individually, but as an officer of the Portfolio under the Portfolio's
Declaration of Trust, dated as set forth on Exhibit I, and the obligations of
this Agreement are not binding upon any of the Trustees or investors of the
Portfolio individually, but bind only the trust estate.

EACH PORTFOLIO LISTED ON EXHIBIT I

By /s/ John E. Pelletier
John E. Pelletier, Vice President
and Secretary
Attest: /s/ L. McCabe
Lenore J. McCabe

FUNDS DISTRIBUTOR, INC.

By /s/ Marie E. Connolly
Marie E. Connolly, President and
Chief Executive Officer

MASADMI[N]2

4
<PAGE>

SCHEDULE A

The Co-Administrator's annual fee charged to and payable by each Covered
Entity as defined below is its share of an annual complex-wide charge. The
annual complex-wide charge is:

(a) $425,000 for all Covered Entities, PROVIDED that such charge shall be
increased by $5,000 for each Covered Entity in excess of 100, plus

(b) out-of-pocket charges for any services subcontracted pursuant to co-
administration agreements with Covered Entities.

The portion of this charge payable by each Covered Entity is (i) in the case of
any charges described in paragraph (b) directly attributable to a particular
Covered Entity, the amount attributable to such Covered Entity, plus (ii) in the
case of all other amounts, the amount determined by the proportionate share that
such Covered Entity's net assets bear to the total net assets of the Covered
Entities.

A Covered Entity is any series of The Pierpont Funds, The JPM Institutional
Funds, The JPM Advisor Funds, the Portfolios in which they invest, and each
other current or future mutual fund (or series thereof) for which both (1) a tax
return is filed with the Internal Revenue Service under United States tax law
and (2) Morgan Guaranty Trust Company of New York provides investment advice
and/or administrative services and the Co-Administrator provides administration
services.

Approved: July 11, 1996
Effective August 1, 1996

MASADMI[N]2
<PAGE>

EXHIBIT I

DATE OF DECLARATION
PORTFOLIO OF TRUST ADDRESS EFFECTIVE DATE
<S> <C> <C> <C>

The Treasury Money Market Portfolio . . . . . . . . . 11/4/92 60 State Street, Boston, MA 02109 8/1/96

The Money Market Portfolio . . . . . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Tax Exempt Money Market Portfolio . . . . . . . . 1/29/93 60 State Street, Boston, MA 02109 8/1/96

The Short Term Bond Portfolio . . . . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The U.S. Fixed Income Portfolio . . . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Tax Exempt Bond Portfolio . . . . . . . . . . . . 1/29/93 60 State Street, Boston, MA 02109 8/1/96

The Selected U.S. Equity Portfolio . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The U.S. Small Company Portfolio . . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Non-U.S. Equity Portfolio . . . . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Diversified Portfolio . . . . . . . . . . . . . . 1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Non-U.S. Fixed Income Portfolio . . . . . . . . . 6/16/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Emerging Markets Equity Portfolio . . . . . . . . 6/16/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The New York Total Return Bond Portfolio . . . . . . 6/16/93 60 State Street, Boston, MA 02109 8/1/96

The Series Portfolio--The Asia Growth Portfolio* . . 6/24/94 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--The Japan Equity Portfolio* . . 6/24/94 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--The European Equity Portfolio* 6/24/94 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

</TABLE>

*In the case of The Series Portfolio, references to the "Portfolio" refer to its
individual series as the context requires.

<PAGE>

PORTFOLIOS LISTED ON EXHIBIT I
RESTATED ADMINISTRATIVE SERVICES AGREEMENT

RESTATED ADMINISTRATIVE SERVICES AGREEMENT, dated as of August 1, 1996, by
and between each of the Portfolios listed on Exhibit I, each a New York trust (a
"Portfolio"), and Morgan Guaranty Trust Company of New York, a New York trust
company ("Morgan").

W I T N E S S E T H:

WHEREAS, each Portfolio wishes to engage Morgan to provide certain
administrative services for the Portfolio, and Morgan is willing to provide such
services for the Portfolio, on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:

1. DUTIES OF MORGAN. Subject to the general direction and control of the
Board of Trustees of the Portfolio, Morgan shall perform such administrative and
related services as may from time to time be reasonably requested by the
Portfolio, which shall include without limitation: a) arranging for the
preparation and filing of the Portfolio's tax returns and preparing financial
statements and other financial reports for review by the Portfolio's independent
auditors; b) coordinating the Portfolio's annual audit; c) developing the
Portfolio's budget and establishing its rate of expense accrual; d) overseeing
the Portfolio's custodian (the "Custodian") and transfer agent and other service
providers, including monitoring the daily income accrual and collection, expense
accrual and disbursement, and computation of the Portfolio's net asset value;
verifying the calculation of performance data for the Portfolio; monitoring the
trade reporting for portfolio securities transactions; monitoring the pricing of
portfolio securities and compliance with amortized cost procedures, if
applicable; monitoring the computation of the Portfolio's income and capital
gains (losses) and confirming that they have been properly allocated to the
holders of record; and monitoring services provided by the Custodian under
Article 8 of its Custodian Contract; e) taking responsibility for compliance
with all applicable federal securities and other regulatory requirements; f)
taking responsibility for monitoring the tax status of the Portfolio so that its
investors can qualify as regulated investment companies under the Internal
Revenue Code of 1986; g) arranging for preparation of agendas and

1
<PAGE>

supporting documents for and minutes of meetings of Trustees, committees of
Trustees, and investors; h) maintaining books and records relating to such
services; and i) providing such other related services as the Portfolio may
reasonably request, to the extent permitted by applicable law. Morgan shall
provide all personnel and facilities necessary in order for it to provide the
services contemplated by this paragraph.

Morgan assumes no responsibilities under this Agreement other than to
render the services called for hereunder, on the terms and conditions provided
herein. In the performance of its duties under this Agreement, Morgan will
comply with the provisions of the Declaration of Trust and By-Laws of the
Portfolio and the Portfolio's stated investment objective, policies and
restrictions, and will use its best efforts to safeguard and promote the welfare
of the Portfolio, and to comply with other policies which the Board of Trustees
may from time to time determine.

2. BOOKS AND RECORDS. Morgan shall with respect to each Portfolio create
and maintain all records relating to its activities and obligations under this
Agreement in such manner as will meet the obligations of the Portfolio under the
1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Portfolio and
shall at all times during the regular business hours of Morgan be open for
inspection by duly authorized officers, employees or agents of the Securities
and Exchange Commission. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Morgan hereby agrees that all records which it maintains for
the Portfolio are the property of the Portfolio and further agrees to surrender
promptly to the Portfolio any such records upon the Portfolio's request.

3. LIAISON WITH AND OPINION OF THE PORTFOLIO'S INDEPENDENT PUBLIC
ACCOUNTANTS.

3.1. Morgan shall act as liaison with the Portfolio's independent public
accountants and shall provide, upon request, account analyses, fiscal year
summaries and other audit-related schedules. Morgan shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their opinion, as such may be required by the Portfolio from time
to time.

3.2. Morgan shall take all reasonable action, as the Portfolio may from
time to time request, to obtain from year to year favorable opinions from the
Portfolio's independent public accountants with respect to its activities
hereunder in connection with the preparation of the Portfolio's registration
statement on Form N-1A, reports on Form N-SAR or other periodic reports to the
Securities and Exchange Commission and with respect to any other requirements of
such Commission.

4. ALLOCATION OF CHARGES AND EXPENSES. Morgan shall bear all of the
expenses incurred in connection with carrying out its duties hereunder. The
Portfolio shall pay the usual, customary or extraordinary expenses incurred by
the Portfolio, including without limitation

2
<PAGE>

compensation of Trustees; federal and state governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Portfolio; fees and expenses of any provider other than Morgan of services to
the Portfolio under a co-administration agreement (the "Co-Administrator"),
Morgan pursuant to the Investment Advisory Agreement and this Agreement,
Pierpont Group, Inc. pursuant to the Portfolio Fund Services Agreement, the
Custodian for all services to the Portfolio (including safekeeping of funds and
securities and maintaining required books and accounts), independent auditors,
legal counsel and of any transfer agent, registrar or dividend disbursing agent
of the Portfolio; brokerage expenses; expenses of preparing, printing and
mailing reports, notices, proxy statements and reports to investors and
governmental offices and commissions; expenses of preparing, printing and
mailing agendas and supporting documents for meetings of Trustees and committees
of Trustees; insurance premiums; expenses of calculating the net asset value of
interests in the Portfolio; expenses of meetings of investors in the Portfolio;
expenses relating to the issuance of interests in the Portfolio; and litigation
and indemnification expenses.

5. COMPENSATION OF MORGAN. For the services to be rendered and the
expenses to be borne by Morgan hereunder, the Portfolio shall pay Morgan a fee
at an annual rate as set forth on Schedule A attached hereto. This fee will be
computed daily and payable as agreed by the Portfolio and Morgan, but no more
frequently than monthly.

6. LIMITATION OF LIABILITY OF MORGAN. Morgan shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
performance of its duties hereunder, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of the
reckless disregard of its obligations and duties hereunder.

7. ACTIVITIES OF MORGAN. The services of Morgan to the Portfolio are not
to be deemed to be exclusive, Morgan being free to engage in any other business
or to render services of any kind to any other corporation, firm, individual or
association.

8. TERMINATION. This Agreement may be terminated at any time, without the
payment of any penalty, by the Board of Trustees of the Portfolio or by Morgan,
in each case on not more than 60 days' nor less than 30 days' written notice to
the other party.

9. SUBCONTRACTING BY MORGAN. Morgan may subcontract for the performance
of its obligations hereunder with any one or more persons; PROVIDED, HOWEVER,
that, unless the Portfolio otherwise expressly agrees in writing, Morgan shall
be as fully responsible to the Portfolio for the acts and omissions of any
subcontractor as it would be for its own acts or omissions.

10. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.

11. AMENDMENTS. This Agreement may be amended only by mutual written
consent.

3
<PAGE>

12. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements,
terminations, extensions or other understandings relating to Morgan's provision
of financial, fund accounting oversight or administrative services for the
Portfolio. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. Should any part of this
Agreement be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding and shall inure to the benefit of the parties hereto
and their respective successors, to the extent permitted by law.

13. NOTICE. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid (1) to Morgan at Morgan Guaranty Trust Company
of New York, 522 Fifth Avenue, New York, New York 10036, Attention: Funds
Management, or (2) to the Portfolio at its principal place of business as
provided to Morgan, Attention: Treasurer.

14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

15. ADDITIONAL PORTFOLIOS. This agreement may be made applicable to any
additional Portfolio from time to time by agreement of Morgan and each such
Portfolio and the adding of such Portfolio to Exhibit I.

By /s/ John E. Pelletier
John E. Pelletier, Vice President
and Secretary
Attest: /s/ L. McCabe
Lenore J. McCabe
MORGAN GUARANTY TRUST COMPANY OF NEW YORK

By /s/ Stephen H. Hopkins
Stephen H. Hopkins, Vice President
RMMFFAS5

4
<PAGE>

SCHEDULE A

ADMINISTRATIVE SERVICES FEES
PORTFOLIOS LISTED ON EXHIBIT I

The annual administrative services fee charged to and payable by each
Portfolio listed on Exhibit I, as amended from time to time (the "Master
Portfolios"), is 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 and in accordance with the following annual schedule:

0.09% on the first $7 billion of the Master Portfolios' aggregate
average daily net assets; and
0.04% of the Master Portfolios' aggregate average daily net assets in
excess of $7 billion
LESS the complex-wide charge of the Co-Administrator.

The portion of this charge payable by each Master Portfolio is determined by the
proportionate share that its net assets bear to the total of the net assets of
the Master Portfolios, The Pierpont Funds, The JPM Institutional Funds, The JPM
Advisor Funds and other investors in the Master Portfolios for which Morgan
provides similar services.

Approved: July 11, 1996
Effective August 1, 1996

RMMFFAS5

<PAGE>

EXHIBIT I

DATE OF EFFECTIVE
PORTFOLIO DECLARATION OF TRUST DATE
- --------- -------------------- ----

The Treasury Money Market Portfolio 11/4/92 8/1/96
The Money Market Portfolio 1/29/93 8/1/96
The Tax Exempt Money Market Portfolio 1/29/93 8/1/96
The Short Term Bond Portfolio 1/29/93 8/1/96
The U.S. Fixed Income Portfolio 1/29/93 8/1/96
The Tax Exempt Bond Portfolio 1/29/93 8/1/96
The Selected U.S. Equity Portfolio 1/29/93 8/1/96
The U.S. Small Company Portfolio 1/29/93 8/1/96
The Non-U.S. Equity Portfolio 1/29/93 8/1/96
The Diversified Portfolio 1/29/93 8/1/96
The Non-U.S. Fixed Income Portfolio 6/16/93 8/1/96
The Emerging Markets Equity Portfolio 6/16/93 8/1/96
The New York Total Return Bond Portfolio 6/16/93 8/1/96
The Series Portfolio* 6/24/94 8/1/96
The Asia Growth Portfolio
The Japan Equity Portfolio
The European Equity Portfolio

*In the case of The Series Portfolio, references to the "Portfolio" refer to its
individual series as the context requires.

<PAGE>

AMENDED AND RESTATED
PORTFOLIO FUND SERVICES AGREEMENT

FUND SERVICES AGREEMENT made as of the 15th day of January, 1994, as
amended and restated as of July 11, 1996, between each of the trusts set forth
on Schedule I (individually, a "Trust"), and PIERPONT GROUP, INC., a New York
corporation (the "Group").

WITNESSETH:

WHEREAS, each Trust is an open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act");

WHEREAS, the Trust has retained organizations to be its custodian, transfer
agent, exclusive placement agent and services agent, and an administrator to
administer and manage all aspects of the Trust's day-to-day operations (except
for providing a Chief Executive Officer pursuant to this Agreement and for those
services provided pursuant to the Trust's Investment Advisory Agreement and
Administrative Services Agreement, each with Morgan Guaranty Trust Company of
New York ("Morgan")); and

WHEREAS, the Trust and its Trustees wish to engage the Group to assist the
Trustees in carrying out their duties as Trustees in supervising the Trust's
affairs;

NOW, THEREFORE, the Trust and the Group hereby agree as follows:

1. Beginning on the date hereof, the Group shall provide facilities and
personnel to assist the Trustees in carrying out their duties as Trustees in
supervising the affairs of the Trust, including without limitation:

a) Organization of the times and participation in the preparation of
agendas for Trustees' meetings;

b) Providing personnel acceptable to the Trustees to act in the
capacity of Chief Executive Officer when so requested by the Trustees; and

c) Oversight and review of the performance of services to the Trust
by others, including review of registration statements, annual and semi-annual
reports to shareholders, proxies, compliance procedures with applicable legal,
regulatory, and financial requirements,

1
<PAGE>

current market and legal developments in the investment management industry,
materials presented to the Trustees for approval, and any other matters as
directed by the Trustees.

2. In return for the services provided hereunder, the Trust will pay the
Group a fee in an amount representing the reasonable costs of the Group in
providing services hereunder, payable in a manner corresponding as closely as
practicable to the Trust's receipt of such services, all as determined from time
to time by the Trustees.

3. The Group shall not be liable for any error of judgment or for any
loss suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or for reckless
disregard by it of its obligations and duties under this Agreement.

4. This Agreement shall continue in effect for a period of two years from
July 11, 1996, and may be renewed by the Trustees; PROVIDED, HOWEVER, that this
Agreement may be terminated by the Trust at any time without the payment of any
penalty by the Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Trust, upon not less than six (6)
months' written notice to the Group, or by the Group at any time, without the
payment of any penalty, upon not less than six (6) months' written notice to the
Trust. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).

5. The Group's activities will be limited to performing the services
hereunder for the Trust and any other registered investment company which has
the same Trustees as the Trust. No employee of the Group shall engage in any
other business or devote his time and attention in part to the management or
other aspects of any business whether of a similar or dissimilar nature except
with the consent of the Trustees of the Trust.

6. The Trustees have authorized the execution of this Agreement not
individually, but as Trustees under the Trust's Declaration of Trust, and the
Group agrees that the obligation of this Agreement are not binding upon any of
the Trustees or shareholders individually, but bind only the trust estate.

7. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid (1) to the Group at 461 Fifth Avenue, New York, NY 10017,
Attention: President or (2) to the Trust at the address set forth on the cover
of its Registration Statement as then in effect or at such other address as
either party shall designate by notice to the other party.

8. One or more additional trusts may become party to this Agreement by
execution of an addendum which states that such trust shall be added to Schedule
I, specifies the effective date with respect to such trust and is signed by such
trust and Group.

2
<PAGE>

9. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Fund Services Agreement to be executed by their officers designated
below as of July 11, 1996.

THE TREASURY MONEY MARKET PORTFOLIO
THE TAX EXEMPT MONEY MARKET PORTFOLIO
THE TAX EXEMPT MONEY MARKET PORTFOLIO
THE NEW YORK TOTAL RETURN BOND
PORTFOLIO

By /s/ Matthew Healey
Matthew Healey, Chairman and
Chief Executive Officer

EACH OTHER PORTFOLIO LISTED SCHEDULE I

By /s/ John E. Pelletier
John E. Pelletier, Vice President
and Secretary
Attest: /s/ L. McCabe
Lenore J. McCabe

PIERPONT GROUP, INC.

By /s/ Nina O. Shenker
Nina O. Shenker, President

PORTARFS.WP5

3
<PAGE>

SCHEDULE I

STATE OF EFFECTIVE
PORTFOLIO ORGANIZATION DATE
- --------- ------------ ---------

The Treasury Money Market Portfolio New York 1/15/94
The Money Market Portfolio New York 1/15/94
The Tax Exempt Money Market Portfolio New York 1/15/94
The Short Term Bond Portfolio New York 1/15/94
The U.S. Fixed Income Portfolio New York 1/15/94
The Tax Exempt Bond Portfolio New York 1/15/94
The Selected U.S. Equity Portfolio New York 1/15/94
The U.S. Stock Portfolio New York 1/15/94
The U.S. Small Company Portfolio New York 1/15/94
The Non-U.S. Equity Portfolio New York 1/15/94
The Emerging Markets Equity Portfolio New York 1/15/94
The Diversified Portfolio New York 1/15/94
The New York Total Return Bond Portfolio New York 4/10/94
The Non-U.S. Fixed Income Portfolio New York 9/24/94
The Series Portfolio New York 3/21/95

PORTARFS.WP5

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE REPORT ON FORM
N-SAR DATED JUNE 30, 1996 FOR THE ASIA GROWTH PORTFOLIO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> ASIA GROWTH PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 103245
<INVESTMENTS-AT-VALUE> 110283
<RECEIVABLES> 1349
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 111696
<PAYABLE-FOR-SECURITIES> 992
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262
<TOTAL-LIABILITIES> 1254
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 110442
<DIVIDEND-INCOME> 1157
<INTEREST-INCOME> 135
<OTHER-INCOME> 0
<EXPENSES-NET> 650
<NET-INVESTMENT-INCOME> 642
<REALIZED-GAINS-CURRENT> 3018
<APPREC-INCREASE-CURRENT> 4623
<NET-CHANGE-FROM-OPS> 8283
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 414
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 657
<AVERAGE-NET-ASSETS> 104078
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 1.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE REPORT ON FORM
N-SAR DATED JUNE 30, 1996 FOR THE EUROPEAN EQUITY PORTFOLIO AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> EUROPEAN EQUITY PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 538443
<INVESTMENTS-AT-VALUE> 597044
<RECEIVABLES> 13916
<ASSETS-OTHER> 2415
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 613375
<PAYABLE-FOR-SECURITIES> 20741
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 529
<TOTAL-LIABILITIES> 21270
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 592105
<DIVIDEND-INCOME> 8130
<INTEREST-INCOME> 555
<OTHER-INCOME> 0
<EXPENSES-NET> 2204
<NET-INVESTMENT-INCOME> 6481
<REALIZED-GAINS-CURRENT> 9448
<APPREC-INCREASE-CURRENT> 21672
<NET-CHANGE-FROM-OPS> 37601
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1670
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2204
<AVERAGE-NET-ASSETS> 516710
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE REPORT ON FORM
N-SAR DATED JUNE 30, 1996 FOR THE JAPAN EQUITY PORTFOLIO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 003
<NAME> JAPAN EQUITY PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 466661
<INVESTMENTS-AT-VALUE> 480597
<RECEIVABLES> 16879
<ASSETS-OTHER> 16929
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 514405
<PAYABLE-FOR-SECURITIES> 4147
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 917
<TOTAL-LIABILITIES> 5064
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 509341
<DIVIDEND-INCOME> 1747
<INTEREST-INCOME> 458
<OTHER-INCOME> 0
<EXPENSES-NET> 1950
<NET-INVESTMENT-INCOME> 255
<REALIZED-GAINS-CURRENT> 10279
<APPREC-INCREASE-CURRENT> 6614
<NET-CHANGE-FROM-OPS> 17148
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1581
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1950
<AVERAGE-NET-ASSETS> 489181
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .8
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>