<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
COMMON STOCK (85.1%)
BASIC INDUSTRIES (8.8%)
CHEMICALS (3.2%)
Daido Hoxan Inc. ........... 90,000 $ 579,314
Hitachi Chemical Co.
Ltd. ..................... 100,000 984,669
Japan Synthetic Rubber ..... 150,000 1,079,034
Kyowa Hakko Kogyo Co. Ltd. . 200,000 1,914,635
Matsumoto Yushi-Seiyaku
Co. ...................... 37,000 944,553
Mitsui Petrochemical
Industries ............... 150,000 1,203,485
Mitsui Toatsu Chemicals .... 1,248,000 4,926,848
Nippon Zeon Company,
Ltd.+ .................... 403,000 2,498,507
Tosoh Corp.+ ............... 400,000 1,776,052
------------
15,907,097
------------
DIVERSIFIED MANUFACTURING (1.3%)
Itoki Crebio Corp. ......... 62,000 560,186
Organo Corp. ............... 20,000 215,169
Sun Wave Corp. ............. 100,000 1,431,417
Ube Industries Ltd.+ ....... 1,219,000 4,634,538
------------
6,841,310
------------
FOREST PRODUCTS & PAPER (1.3%)
Chuetsu Pulp & Paper Co.
Ltd.+ .................... 9,000 55,634
Daiken Corp. ............... 25,000 211,977
Honshu Paper Co. Ltd. ...... 432,000 3,060,352
Mitsubishi Pencil Co.
Ltd. ..................... 10,000 97,555
Sumitomo Forestry Co. ...... 200,000 2,972,243
------------
6,397,761
------------
METALS & MINING (2.9%)
Daido Steel Co. Ltd. ....... 416,000 2,055,698
Komai Tekko Inc. ........... 32,000 288,836
Mitsui Mining & Smelting Co.
Ltd.+ .................... 580,000 2,369,041
Nippon Steel Corp. ......... 2,824,000 9,680,977
Sumitomo Light Metal
Industries Ltd.+ ......... 100,000 405,720
------------
14,800,272
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
PACKAGING & CONTAINERS (0.1%)
Hokkai Can Co. Ltd. ........ 94,000 $ 741,328
------------
TOTAL BASIC INDUSTRIES ... 44,687,768
------------
CAPITAL GOODS (13.2%)
BUILDING MATERIALS (0.7%)
Asahi Glass Co. Ltd. ....... 100,000 1,194,367
Sankyo Aluminium Industries
Co. Ltd. ................. 380,000 2,224,259
Yokogawa Bridge Corp. ...... 25,000 341,899
------------
3,760,525
------------
COMPUTER SYSTEMS (0.3%)
Fujitsu Ltd. ............... 165,000 1,504,356
------------
CONSTRUCTION & HOUSING (2.9%)
Hitachi Plant Engineering
and Construction Co.
Ltd. ..................... 130,000 1,037,094
Kawasaki Heavy
Industries ............... 200,000 1,012,021
Matsui Construction Co.
Ltd. ..................... 200,000 1,597,352
Nippon Hodo ................ 115,000 1,950,192
Nishimatsu Construction Co.
Ltd. ..................... 257,000 2,811,778
Sekisui House Ltd. ......... 100,000 1,139,664
SXL Corp. .................. 50,000 492,335
Toenec Corp. ............... 125,000 1,162,457
Tokyo Denki Komusho Co.
Ltd. ..................... 103,100 1,080,994
Toyo Construction Co.
Ltd. ..................... 520,000 2,650,219
------------
14,934,106
------------
ELECTRICAL EQUIPMENT (3.5%)
Alps Electric Co. Ltd. ..... 200,000 2,425,204
Fuji Electric Co., Ltd. .... 1,142,000 6,174,296
Hitachi .................... 798,000 7,421,125
Matsushita Refrigeration
Co. ...................... 10,000 78,227
Murata Manufacturing Co.,
Ltd. ..................... 26,000 983,758
Ricoh Corp. Ltd. ........... 71,000 750,902
------------
17,833,512
------------
INDUSTRIAL (0.5%)
Okamura Corp. .............. 300,000 2,508,172
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
MACHINERY (4.6%)
Aichi Corp. ................ 184,000 $ 1,979,550
Daikin Industries Ltd. ..... 300,000 3,282,231
Ebara Corp. ................ 309,000 4,930,185
Kitz Corp. ................. 370,000 1,922,840
Mitsubishi Heavy Industries
Ltd. ..................... 734,000 6,377,576
NSK Corp. .................. 73,000 551,752
Sanden Corp. ............... 280,000 2,139,285
Shin Nippon Machinery ...... 48,000 328,223
Yaskawa Electric Corp.+ .... 370,000 1,808,145
------------
23,319,787
------------
MANUFACTURING (0.7%)
Topy Industries Co. Ltd. ... 230,000 1,121,885
Tsubakimoto Chain .......... 350,000 2,383,720
------------
3,505,605
------------
TOTAL CAPITAL GOODS ...... 67,366,063
------------
CONSUMER GOODS & SERVICES (15.4%)
APPARELS & TEXTILES (0.4%)
Tomiya Apparel Co. Ltd. .... 229,000 1,983,471
Toyobo Co. Ltd. ............ 25,000 93,680
------------
2,077,151
------------
AUTOMOTIVE (4.8%)
Honda Motor Co. ............ 165,000 4,272,371
Nissan Diesel Motor Co.+ ... 450,000 2,662,710
Nissan Motor Co. Ltd. ...... 600,000 5,322,685
Toyota Auto Body Co.
Ltd. ..................... 61,000 661,825
Toyota Motor Corp. ......... 324,000 8,093,982
Yokohama Rubber Company
Ltd. ..................... 400,000 2,505,436
------------
23,519,009
------------
AUTOMOTIVE SUPPLIES (0.4%)
Achilles Corp. ............. 209,000 851,766
Nissan Shatai Co. .......... 21,000 132,301
Sumitomo Rubber Industries
Ltd. ..................... 150,000 1,297,849
------------
2,281,916
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
BROADCASTING & PUBLISHING (0.9%)
Gakken Co. Ltd. ............ 273,000 $ 2,021,089
Toppan Printing Co. Ltd. ... 172,000 2,509,083
------------
4,530,172
------------
COMMERCIAL SERVICES (0.4%)
Japan Airport Terminal ..... 133,000 1,879,533
------------
CONSTRUCTION & HOUSING (0.3%)
Mitsui Home Co. ............ 30,000 486,864
Sanyo Industries ........... 198,000 1,265,464
------------
1,752,328
------------
ENTERTAINMENT, LEISURE & MEDIA (0.5%)
Daiwa Kosho Lease Co.
Ltd. ...................... 15,000 160,009
Kinki Nippon Tourist Co.
Ltd.+ .................... 192,000 1,540,460
Kyodo Printing Co. ......... 90,000 1,058,520
------------
2,758,989
------------
FOOD, BEVERAGES & TOBACCO (2.9%)
Itoham Foods Inc. .......... 444,000 3,380,151
Japan Tobacco, Inc. ........ 434 3,323,806
Nippon Suisan Kaisha
Ltd.+ .................... 400,000 1,703,113
Pokka Corporation .......... 30,000 361,045
Q.P. Corporation ........... 125,000 1,208,043
Snow Brand Milk Products Co.
Ltd. ..................... 509,000 3,457,329
Yamazaki Baking Co. Ltd. ... 73,000 1,351,094
------------
14,784,581
------------
HOUSEHOLD PRODUCTS (0.7%)
Nippon Sheet Glass ......... 336,000 1,645,054
Uni-Charm Corp. ............ 80,000 2,056,865
------------
3,701,919
------------
MISCELLANEOUS (0.3%)
Canon Sales Co. Inc. ....... 57,000 1,585,044
------------
MULTI - INDUSTRY (0.3%)
Fuji Denki Reiki ........... 135,450 1,728,915
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
RETAIL (3.5%)
Familymart Co. ............. 54,500 $ 2,424,839
Izumi Co. .................. 97,000 1,936,790
Izumiya Co. Ltd. ........... 201,000 4,031,674
Kansai Super Market
Ltd.+ .................... 70,000 778,618
Keiyo Co. Ltd. ............. 75,000 943,641
Mizuno Corp. ............... 59,000 554,059
Nichii Co. Ltd. ............ 150,000 2,489,025
Seiyu Ltd. ................. 130,000 1,647,498
Takashimaya Co. Ltd. ....... 200,000 3,099,885
Tokyu Store Chain .......... 17,000 151,739
------------
18,057,768
------------
TOTAL CONSUMER GOODS &
SERVICES ................ 78,657,325
------------
ENERGY (0.9%)
OIL-PRODUCTION (0.9%)
Cosmo Oil Company Ltd. ..... 650,000 4,017,998
Showa Shell Sekiyu K. K. ... 31,000 322,206
------------
4,340,204
------------
TOTAL ENERGY ............. 4,340,204
------------
FINANCE (27.1%)
BANKING (20.4%)
Asahi Bank Ltd. ............ 831,000 9,622,134
Bank of Iwate Limited ...... 4,300 248,556
Bank of Ryukyus ............ 45,000 1,608,293
Bank of Tokyo-Mitsubishi ... 400 9,300
Chuo Trust & Banking Co.
Ltd. ..................... 331,000 3,259,256
Dai-Ichi Kangyo Bank
Ltd. ..................... 1,305,000 24,272,099
Daiwa Bank Ltd. ............ 1,333,000 9,212,256
Fukui Bank ................. 688,000 3,958,079
Fukushima Bank Ltd. ........ 45,000 180,523
Hokkaido Takushoku Bank .... 1,675,000 5,070,135
Hyakugo Bank ............... 400,000 2,673,195
Juroku Bank ................ 291,000 1,591,882
Kagawa Bank ................ 122,000 1,179,050
Keiyo Bank ................. 150,000 882,100
Kita-Nippon Bank ........... 19,000 1,108,665
Kyushu Bank ................ 69,000 290,012
Mitsui Trust & Banking ..... 200,000 2,334,031
Miyazaki Bank .............. 146,000 1,031,623
Nanto Bank Ltd. ............ 252,000 1,812,776
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
</TABLE>
BANKING (CONTINUED)
<TABLE>
<S> <C> <C>
North Pacific Bank ......... 71,000 $ 388,397
Sakura Bank Ltd. ........... 976,000 10,856,162
San-In Godo Bank ........... 31,000 253,808
Sanwa Bank Ltd. ............ 423,000 7,828,942
Shinwa Bank ................ 89,000 547,722
Sumitomo Bank Ltd. ......... 257,000 4,967,474
Sumitomo Trust & Bank ...... 74,000 1,012,021
Suruga Bank Ltd. ........... 103,000 684,591
Toyo Trust & Banking Co.
Ltd. ..................... 220,000 2,266,563
Yasuda Trust & Banking Co.
Ltd. ..................... 759,000 4,795,586
------------
103,945,231
------------
COMMERCIAL SERVICES (0.3%)
Asatsu Inc. ................ 30,000 1,299,216
------------
FINANCIAL SERVICES (3.6%)
Daiwa Securities Co.
Ltd. ...................... 150,000 1,928,311
Diamond Lease Co. Ltd. ..... 100,000 1,358,479
Nomura Securities Co.
Ltd. ..................... 760,000 14,828,391
------------
18,115,181
------------
INSURANCE (1.7%)
Chiyoda Fire & Marine
Insurance Co. Ltd. ....... 271,000 1,593,660
Fuji Fire & Marine ......... 335,000 1,863,122
Koa Fire & Marine Insurance
Co. Ltd. ................. 150,000 972,361
Tokio Marine & Fire
Insurance Co. Ltd. ....... 328,000 4,366,097
------------
8,795,240
------------
REAL ESTATE (1.1%)
Daikyo Inc. ................ 65,000 482,989
Daiwa Danchi Co. Ltd.+ ..... 208,000 1,335,066
Heiwa Real Estate .......... 182,500 1,497,518
Mitsui Fudosan Co. Ltd. .... 180,000 2,428,851
------------
5,744,424
------------
TOTAL FINANCE ............ 137,899,292
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
HEALTHCARE (2.2%)
PHARMACEUTICALS (2.2%)
Chugai Pharmaceutical Co.
Ltd. ..................... 568,000 $ 5,541,135
Dai Ichi Pharmaceutical Co.
Ltd. ..................... 100,000 1,540,825
Eisai Co. Ltd. ............. 5,000 94,364
Kissei Pharmaceutical
Co. ...................... 2,500 69,975
Ono Pharmaceutical ......... 115,000 3,952,809
------------
11,199,108
------------
TOTAL HEALTHCARE ......... 11,199,108
------------
TECHNOLOGY (8.5%)
ELECTRONICS (6.3%)
Canon Inc. ................. 88,000 1,829,297
Kyocera Corp. .............. 47,000 3,320,980
Matsushita Electric
Industries Co. Ltd. ...... 478,000 8,890,470
Ryoyo Electro Corp. ........ 50,000 1,075,842
Sony Corp. ................. 130,000 8,545,653
TDK Corp. .................. 90,000 5,366,448
Tokai Rika Denki Co. ....... 147,000 1,581,488
Victor Company of Japan,
Ltd.+ .................... 100,000 1,431,417
------------
32,041,595
------------
SEMICONDUCTORS (0.3%)
Rohm Company ............... 26,000 1,716,242
------------
TELECOMMUNICATIONS (1.9%)
Nippon Telegraph & Telephone
Corp. .................... 1,277 9,453,956
------------
TOTAL TECHNOLOGY ......... 43,211,793
------------
TRANSPORTATION (5.5%)
RAILROADS (2.5%)
East Japan Railway Co. ..... 1,552 8,136,286
Nishi-Nippon Railroad ...... 418,000 1,734,021
Tobu Railway Co. ........... 425,000 2,786,022
------------
12,656,329
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
TRANSPORT & SERVICES (2.4%)
Hitachi Transport System ... 150,000 $ 1,641,116
Itochu Warehouse Co.
Ltd. ..................... 47,000 269,964
Kawasaki Kisen Kaisha
Ltd.+ .................... 873,000 2,944,982
Marubeni Corp. ............. 700,000 3,829,270
Nippon Express Co. Ltd. .... 150,000 1,463,328
Sankyu Inc. ................ 300,000 1,367,596
Senko Co. Ltd. ............. 136,000 841,929
------------
12,358,185
------------
WHOLESALE & INTERNATIONAL TRADE (0.6%)
Kamei Corp. ................ 10,000 121,260
Kawasho Corp.+ ............. 152,000 737,262
Tomen Corp. ................ 402,000 1,543,032
Toyota Tsusho
Corporation .............. 73,000 499,173
------------
2,900,727
------------
TOTAL TRANSPORTATION ..... 27,915,241
------------
UTILITIES (3.5%)
ELECTRIC (2.6%)
Shikoku Electric Power
Inc. ...................... 139,780 3,096,834
Tohoku Electric Power Co.
Inc. ..................... 178,300 3,982,760
Tokyo Electric Power ....... 200,000 5,069,224
Yurtec Corp. ............... 75,000 1,319,730
------------
13,468,548
------------
NATURAL GAS (.9%)
Hokuriku Gas ............... 204,000 799,770
Osaka Gas Co. .............. 1,075,000 3,930,244
------------
4,730,014
------------
TOTAL UTILITIES .......... 18,198,562
------------
TOTAL COMMON STOCK (COST
$420,502,552) ........... 433,475,356
------------
WARRANTS (2.2%)
CONSUMER GOODS & SERVICES (1.0%)
APPARELS & TEXTILES (0.1%)
Kuraray Co. Ltd.
(Expire 1/26/99) ......... 800 710,000
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
CONSTRUCTION & HOUSING (0.5%)
Maeda Corp. (Expire
2/5/97) ................... 515 $ 778,937
Misawa Homes (Expire
10/29/99) ................ 3,000 814,930
------------
1,593,867
------------
MERCHANDISING (0.1%)
Canon Sales Co. Inc. (Expire
11/11/97) ................ 4,500 737,032
------------
MISCELLANEOUS (0.1%)
Yuasa Trading Co. Ltd.
(Expire 1/12/97) .......... 4,550 748,857
------------
RETAIL (0.2%)
Parco (Expire 7/21/99) ..... 500 843,750
Marutomi Group Co. Ltd.
(Expire 11/24/99) ........ 340 97,792
------------
941,542
------------
TOTAL CONSUMER GOODS &
SERVICES ................ 4,731,298
------------
BASIC INDUSTRIES (0.8%)
FOREST PRODUCTS & PAPER (0.0%)
New Oji Paper Co., Ltd.
(Expire 7/30/98) .......... 100 161,376
------------
INDUSTRIAL (0.3%)
Lion Corp. (Expire
6/18/99) .................. 6,020 1,322,664
------------
METALS & MINING (0.5%)
Dowa Mining Co., Ltd.
(Expire 12/9/97) .......... 1,043 1,212,488
Yodogawa Steel Works (Expire
12/10/97) ................ 1,000 1,487,500
------------
2,699,988
------------
TOTAL BASIC INDUSTRIES ... 4,184,028
------------
TRANSPORTATION (0.2%)
RAILROADS (0.2%)
Nagoya Railroad Co. Ltd.
(Expire 1/22/97) ......... 662 976,450
------------
TOTAL TRANSPORTATION ..... 976,450
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
TECHNOLOGY (0.2%)
SEMICONDUCTORS (0.2%)
Rohm Company (Expire
11/20/97) ................ 1,100 $ 1,043,630
Sanken Electric Co. (Expire
4/2/99) .................. 930 204,332
------------
1,247,962
------------
TOTAL TECHNOLOGY ......... 1,247,962
------------
TOTAL WARRANTS (COST
$11,300,028) ............ 11,139,738
------------
<CAPTION>
FIXED INCOME PRINCIPAL
SECURITIES (0.1%) AMOUNT
------------
<S> <C> <C>
CAPITAL GOODS (0.1%)
CONSTRUCTION & HOUSING (0.1%)
Nishimatsu Construction Co.
Ltd., 0.5% due
09/30/09 ................. 75,000,000 683,798
------------
TOTAL FIXED INCOME
SECURITIES (COST
$694,627) ............... 683,798
------------
CONVERTIBLE BONDS (7.0%)
BASIC INDUSTRIES (0.4%)
DIVERSIFIED MANUFACTURING (0.1%)
Ryobi Ltd., 2.8% due
03/29/02 ................. 48,000,000 512,903
------------
COMMERCIAL SERVICES (0.3%)
Yamanouchi Pharmacuetical,
1.25% due 03/31/14 ....... 140,000,000 1,534,899
------------
TOTAL BASIC INDUSTRIES ................... 2,047,802
------------
CAPITAL GOODS (2.5%)
COMPUTER SYSTEMS (1.5%)
NEC Corp., 1.9% due
03/30/01 ................. 696,000,000 7,722,652
------------
CONSTRUCTION & HOUSING (0.3%)
SXL Corp., 2.7% due
03/29/02 ................. 150,000,000 1,586,412
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (0.7%)
Hitachi Ltd., 2.7% due
03/31/97 ................. $289,000,000 $ 3,351,596
------------
TOTAL CAPITAL GOODS ...... 12,660,660
------------
CONSUMER GOODS & SERVICES (1.8%)
AUTOMOTIVE (1.3%)
Toyota Motor Corp., 1.2% due
01/28/98 ................. 500,000,000 6,550,786
------------
RETAIL (0.5%)
Izumiya Co. Ltd., 0.8% due
08/31/99 ................. 173,000,000 2,429,033
------------
TOTAL CONSUMER GOODS &
SERVICES ................ 8,979,819
------------
FINANCE (2.3%)
FINANCIAL SERVICES (2.1%)
BOT Cayman Finance Ltd.,
4.25% due 03/24/03 ....... 780,000,000 10,685,030
------------
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ---------------------------- ------------ ------------
<S> <C> <C>
REAL ESTATE (0.2%)
Sekisui House Ltd., 2.5% due
01/31/02 ................. $ 75,000,000 $ 925,179
------------
TOTAL FINANCE ............ 11,610,209
------------
TOTAL CONVERTIBLE BONDS
(COST $34,163,749) ...... 35,298,490
------------
TOTAL INVESTMENTS (COST $466,660,957)
(94.4%) ................................ 480,597,382
OTHER ASSETS IN EXCESS OF LIABILITIES
(5.6%) ................................. 28,743,528
------------
NET ASSETS (100.0%) ...................... $509,340,910
------------
------------
</TABLE>
- ------------------------------
+Non-Income Producing Security.
Note: For Federal Income Tax purposes, the cost of securities owned at June 30,
1996 was substantially the same as the cost of securities for financial
statement purposes.
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $466,660,957) $480,597,382
Cash 1,317,104
Foreign Currency at Value (Cost $13,528,027) 13,396,202
Receivable for Investments Sold 16,879,005
Dividends Receivable 1,990,435
Interest Receivable 199,757
Deferred Organization Expenses 25,316
------------
Total Assets 514,405,201
------------
LIABILITIES
Payable for Investments Purchased 4,147,222
Advisory Fee Payable 282,102
Custody Fee Payable 127,179
Administrative Services Fee Payable 22,845
Unrealized Depreciation on Open Spot Foreign Currency Contract 18,099
Administration Fee Payable 5,571
Organization Expenses Payable 3,488
Fund Services Fee Payable 1,552
Accrued Expenses & Other Liabilities 456,233
------------
Total Liabilities 5,064,291
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $509,340,910
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of $436,764 Foreign Withholding Taxes) $ 1,747,055
Interest Income (Net of $50,082 Foreign Withholding Taxes) 458,046
-----------
Investment Income 2,205,101
EXPENSES
Advisory Fee $ 1,581,190
Custodian Fees and Expenses 221,591
Administrative Services Fee 60,965
Professional Fees 30,781
Administration Fee 30,693
Fund Services Fee 13,641
Trustees' Fees and Expenses 4,631
Amortization of Organization Expense 2,638
Printing Expenses 1,691
Insurance Expense 1,316
Registration Fees 344
Miscellaneous 1,128
-----------
Total Expenses (1,950,609)
-----------
NET INVESTMENT INCOME 254,492
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Investment Transactions 10,439,727
Foreign Currency Transactions (160,282)
-----------
Net Realized Gain 10,279,445
NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS
Investment 6,839,111
Foreign Currency Contracts and Translations (225,135)
-----------
Net Change in Unrealized Appreciation 6,613,976
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $17,147,913
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 28, 1995
FOR THE SIX (COMMENCEMENT
MONTHS ENDED OF
JUNE 30, OPERATIONS) TO
1996 DECEMBER 31,
(UNAUDITED) 1995
------------ --------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 254,492 $ 314,783
Net Realized Gain on Investments and Foreign Currency
Transactions 10,279,445 5,011,111
Net Change in Unrealized Appreciation of Investments and
Foreign Currency Translations 6,613,976 7,075,578
------------ --------------
Net Increase in Net Assets Resulting from Operations 17,147,913 12,401,472
------------ --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 244,370,378 465,133,508
Withdrawals (164,668,585) (65,143,876)
------------ --------------
Net Increase from Investors' Transactions 79,701,793 399,989,632
------------ --------------
Total Increase in Net Assets 96,849,706 412,391,104
NET ASSETS
Beginning of Period 412,491,204 100,100
------------ --------------
End of Period $509,340,910 $412,491,204
------------ --------------
------------ --------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MARCH 28, 1995
MONTHS ENDED (COMMENCEMENT OF
JUNE 30, 1996 OPERATIONS)
(UNAUDITED) THROUGH DECEMBER 31, 1995
------------- ---------------------------
<S> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80%(a) 0.87%(a)
Net Investment Income 0.10%(a) 0.12%(a)
Portfolio Turnover 44.07%(b) 60%(b)
</TABLE>
- ------------------------
(a)Annualized
(b)Not Annualized
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Japan Equity Portfolio (the "Portfolio"), one of three portfolios comprising
The Series Portfolio (the "Series Portfolio"), is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load,
diversified, open-end management investment company which was organized as a
trust under the laws of the State of New York on June 24, 1994. The Portfolio
commenced operations on March 28, 1995. The Portfolio's investment objective is
to provide a high total return from a portfolio of equity securities of issuers
that have their principal activities in Japan or are organized under Japanese
law. The Declaration of Trust permits the Trustees to issue an unlimited number
of beneficial interests in the Portfolio.
Investments in Japanese markets may involve certain considerations and risks not
typically associated with investments in the United States. Future economic and
political developments in Japan could adversely affect the liquidity or value,
or both, of such securities in which the Portfolio is invested. The ability of
the issuers of the debt securities held by the Portfolio to meet their
obligations may be affected by economic and political developments in a specific
industry or region.
The preparation of financial statements prepared in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual amounts
could differ from those estimates. The following is a summary of the significant
accounting policies of the Portfolio:
a)The value of each security for which readily available market quotations
exists is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the readily available closing bid price on
such exchanges, or at the quoted bid price in the over-the-counter market.
Securities listed on a foreign exchange are valued at the last quoted sale
price available before the time when net assets are valued. Unlisted
securities are valued at the average of the quoted bid and asked prices in
the over-the-counter market. Securities or other assets for which market
quotations are not readily available are valued at fair value in
accordance with procedures established by the Portfolio's Trustees. Such
procedures may include the use of independent pricing services, which use
prices based upon yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers;
operating data and general market conditions. All portfolio securities
with a remaining maturity of less than 60 days are valued by the amortized
cost method.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the exchange on which they are traded closes and the time
when the Portfolio's net asset value is calculated, such securities will
be valued at fair value in accordance with procedures established by and
under the general supervision of the Portfolio's Trustees.
b)The books and records of the Portfolio are maintained in U.S. dollars. The
market value of investment securities, other assets and liabilities and
foreign currency contracts are translated at the
26
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
prevailing exchange rates at the end of the period. Purchases, sales,
income and expense are translated at the exchange rate prevailing on the
respective dates of such transactions. Translation gains and losses
resulting from changes in exchange rates during the reporting period and
gains and losses realized upon settlement of foreign currency transactions
are reported in the Statement of Operations.
Although the net assets of the Portfolio are presented at the exchange
rates and market values prevailing at the end of the period, the Portfolio
does not isolate the portion of the results of operations arising as a
result of changes in foreign exchange rates from the fluctuations arising
from changes in the market prices of securities during the period.
c)Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or at the time that the
relevant ex-dividend date and amount becomes known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d)The Portfolio may enter into forward and spot foreign currency contracts
to protect securities and related receivables and payables against
fluctuations in future foreign currency rates. A forward contract is an
agreement to buy or sell currencies of different countries on a specified
future date at a specified rate. Risks associated with such contracts
include the movement in the value of the foreign currency relative to the
U.S. Dollar and the ability of the counterparty to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily based on procedures established
by and under the general supervision of the Portfolio's Trustees and the
change in the market value is recorded by the Portfolio as unrealized
appreciation or depreciation of forward and spot foreign currency contract
translations. At June 30, 1996 the Portfolio had open spot foreign
currency contract as follows:
SUMMARY OF OPEN CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
VALUE APPRECIATION
FOREIGN CURRENCY SALE CONTRACTS PROCEEDS AT 6/30/96 (DEPRECIATION)
- ------------------------------------------------------------------- ------------- ------------- --------------
<S> <C> <C> <C>
Japanese Yen, 1,098,800,000, expiring 7/2/96 $ 10,000,000 $ 10,018,099 ($18,099)
</TABLE>
e)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxable on
its share of the Portfolio's ordinary income and capital gains. It is
intended that the Portfolio's assets will be managed in such a way that an
investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code.
f)The Portfolio incurred organization expenses in the amount of $33,000.
These costs were deferred and are being amortized on a straight-line basis
over a five year period from the commencement of operations.
27
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an Investment Advisory Agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the agreement,
the Portfolio pays Morgan at an annual rate of 0.65% of the Portfolio's
average daily net assets. For the six months ended June 30, 1996, such
fees amounted to $1,581,190.
b)The Portfolio has retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and exclusive placement agent.
Signature provides administrative services necessary for the operations of
the Portfolio, furnishes office space and facilities required for
conducting the business of the Portfolio and pays the compensation of the
Portfolio's officers affiliated with Signature. The Administration
Agreement provides for a fee to be paid to Signature equal to the
Portfolio's proportionate share of a complex-wide fee based on the
following annual schedule: 0.03% on the first $7 billion of the aggregate
average daily net assets of the Portfolio and the other portfolios (the
"Master Portfolios") in which The JPM Institutional Funds, The Pierpont
Funds or The JPM Advisor Funds invest and 0.01% on the aggregate average
daily net assets of the Master Portfolios in excess of $7 billion. The
portion of this charge payable by the Portfolio is determined by the
proportionate share its net assets bear to the total net assets of The JPM
Institutional Funds, The Pierpont Funds, The JPM Advisor Funds and the
Master Portfolios. For the six months ended June 30, 1996, such fees
amounted to $30,693.
Effective August 1, 1996, administrative functions provided by Signature
will be provided by Funds Distributor, Inc. ("FDI"), a registered
broker-dealer, and by Morgan. FDI will also become the Portfolio's
exclusive placement agent. Under a Co-Administration Agreement between FDI
and the Portfolio, FDI's fees are to be paid by the Portfolio. (see Note
2c).
c)The Portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is responsible for certain
aspects of the administration and operation of the Portfolio. Under the
Services Agreement, the Portfolio has agreed to pay Morgan a fee equal to
its proportionate share of an annual complex-wide charge. This charge is
calculated daily based on the aggregate net assets of the Master
Portfolios in accordance with the following annual schedule: 0.06% on the
first $7 billion of the Master Portfolios aggregate average daily net
assets and 0.03% of the aggregate average daily net assets in excess of $7
billion. The portion of this charge payable by the Portfolio is determined
by the proportionate share that the Portfolio's net assets bear to the net
assets of the Master Portfolios and other investors in the Master
Portfolios for which Morgan provides similar services. For the six months
ended June 30, 1996, such fees amounted to $60,965.
Effective August 1, 1996, the Services Agreement will be amended such that
the aggregate complex-wide fees to be paid by the Portfolio under both the
amended Services Agreement and the Co-Administration Agreement (see Note
2b) will be calculated daily based on the aggregate average daily 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 aggregate average
daily net assets in excess of $7 billion.
d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The
28
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
Trustees of the Portfolio represent all the existing shareholders of
Group. The Portfolio's allocated portion of Group's costs in performing
its services amounted to $13,641 for the six months ended June 30, 1996.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds and the
Master Portfolios. The Trustees' Fees and Expenses shown in the financial
statements represent the Portfolio's allocated portion of the total fees
and expenses. The Portfolio's Chairman and Chief Executive Officer also
serves as Chairman of Group and received compensation and employee
benefits from Group in his role as Group's Chairman. The allocated portion
of such compensation and benefits included in the Fund Services Fee shown
in the financial statements was $1,750.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
COST OF PURCHASES PROCEEDS FROM SALES
- ----------------- -------------------
<S> <C>
$ 288,823,423 $ 215,905,276
</TABLE>
29
