<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT{::} SECURITY DESCRIPTION VALUE
- ---------------- ------------------------------------------------- -------------
<C> <S> <C>
CONVERTIBLE BONDS (1.9%)
MEXICO (1.9%)
$ 227,000 Banamex S.A., Callable 07/15/00, (144A), 11.00%
due 07/15/03 (cost $237,190)................... $ 230,973
-------------
CORPORATE OBLIGATIONS (12.0%)
ARGENTINA (5.2%)
ARS 100,000 Compania Internacional de Telecommunicaciones,
(144A), 10.375% due 08/01/04................... 81,256
515,000 Telefonica de Argentina, 11.875% due 11/01/04.... 553,599
-------------
634,855
-------------
BRAZIL (1.6%)
220,000 Companhia de Saneamento Basico de Sao Paulo,
(144A), 10.00% due 07/28/05.................... 191,400
-------------
MEXICO (2.6%)
75,000 Axa S.A. de CV, (144A), 9.00% due 08/04/04....... 69,750
236,000 Copamex Industrias S.A. de C.V., Series B,
Callable 04/30/02, 11.38% due 04/30/04......... 245,440
-------------
315,190
-------------
PHILIPPINES (1.6%)
200,000 Ce Casecnan Water & Energy, Inc., Series B,
Callable, (144A), 11.95% due 11/15/10.......... 202,264
-------------
TURKEY (1.0%)
136,000 Pera Financial Services Co., (144A), 9.375% due
10/15/02....................................... 122,400
-------------
TOTAL CORPORATE OBLIGATIONS (COST
$1,570,628)................................. 1,466,109
-------------
SOVEREIGN BONDS (67.5%)
ARGENTINA (13.4%)
ARS 68,000 City of Buenos Aires, (144A), 10.50% due
05/28/04....................................... 57,120
68,000 Province of Mendoza, (144A), 10.00% due
09/04/07....................................... 63,738
305,964 Republic of Argentina - Bocon, Series PRE2,
Callable 08/12/98, 5.635% due 04/01/01(v)...... 292,638
479,750 Republic of Argentina Bearer, FRB, Callable
09/30/98, Sinking Fund, 6.625% due
03/31/05(v).................................... 424,579
500,000 Republic of Argentina Global Bonds, 9.75% due
09/19/27....................................... 465,000
320,000 Republic of Argentina Global Bonds, 11.375% due
01/30/17....................................... 340,800
-------------
1,643,875
-------------
BRAZIL (21.9%)
363,148 Republic of Brazil C Bonds, Callable 10/15/98,
Sinking Fund, 8.00% due 04/15/14(v)............ 267,822
679,000 Republic of Brazil EI Bonds, Series L, Callable
10/15/98, Sinking Fund, 6.625% due
04/15/06(v).................................... 559,360
380,000 Republic of Brazil Global Bonds, 10.125% due
05/15/27....................................... 327,940
948,388 Republic of Brazil MYDFA Trust Certificates,
Series REGS, Sinking Fund, 6.563% due
09/15/07(v).................................... 767,605
1,005,000 Republic of Brazil NMB-1994L Bearer, Callable
10/15/98, Sinking Fund, 6.688% due
04/15/09(v).................................... 768,825
-------------
2,691,552
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT{::} SECURITY DESCRIPTION VALUE
- ---------------- ------------------------------------------------- -------------
<C> <S> <C>
BULGARIA (2.5%)
$ 180,000 Republic of Bulgaria PDI, FRB, Callable 01/28/99,
Sinking Fund, 6.563% due 07/28/11(v)........... $ 128,250
228,000 Republic of Bulgaria, Series B, Callable
01/28/99, 7.063% due 07/28/24(v)............... 174,135
-------------
302,385
-------------
ECUADOR (1.8%)
389,435 Republic of Ecuador Global Bearer PDI Bonds,
Callable 08/28/98, Sinking Fund, 6.625% due
02/27/15(v).................................... 223,925
-------------
KOREA (1.8%)
100,000 Republic of Korea, 8.75% due 04/15/03............ 94,360
133,000 Republic of Korea, 8.875% due 04/15/08........... 121,801
-------------
216,161
-------------
MEXICO (13.1%)
600,000 Banco Nacional de Comercio Exterior SNC, 7.25%
due 02/02/04................................... 558,000
400,000 United Mexican States Global Bonds, 9.875% due
01/15/07....................................... 416,000
318,000 United Mexican States Global Bonds, 11.375% due
09/15/16....................................... 354,252
250,000 United Mexican States Global Bonds, 11.50% due
05/15/26....................................... 284,250
-------------
1,612,502
-------------
MOROCCO (1.5%)
220,000 Government of Morroco - Restructuring &
Consolidation Agreement, Series A, Sinking
Fund, 6.563% due 01/01/09...................... 187,550
-------------
PANAMA (1.6%)
200,000 Republic of Panama, 8.25% due 04/22/08........... 195,000
-------------
PERU (2.1%)
420,000 Republic of Peru PDI, Sinking Fund, 4.00% due
03/07/17....................................... 260,400
-------------
RUSSIA (4.8%)
130,000 City of Moscow, (144A), 9.50% due 05/31/00....... 110,338
250,000 Ministry of Finance Russia, (144A), 12.75% due
06/24/28....................................... 222,500
32,624 Russia IAN, Sinking Fund, 6.625% due 12/15/15.... 18,107
493,000 Russia Principal Loans, Sinking Fund, 6.625% due
12/15/20....................................... 234,175
-------------
585,120
-------------
VENEZUELA (3.0%)
478,000 Republic of Venezuela Global Bonds, 9.25% due
09/15/27....................................... 369,972
-------------
TOTAL SOVEREIGN BONDS (COST $8,756,339)...... 8,288,442
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT{::} SECURITY DESCRIPTION VALUE
- ---------------- ------------------------------------------------- -------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS (4.0%)
U.S. TREASURY BONDS (1.6%)
$ 175,000 United States Treasury Bonds, 6.75% due
08/15/26....................................... $ 200,205
-------------
U.S. TREASURY STRIPS (2.4%)
1,100,000 (Principal Only), Due 11/15/21................... 290,411
-------------
TOTAL U.S. TREASURY OBLIGATIONS (COST
$463,430)................................... 490,616
-------------
<CAPTION>
<C> <S> <C>
SHORT-TERM INVESTMENTS (4.4%)
EURO DOLLAR TIME DEPOSITS (4.3%)
526,000 State Street Bank Euro Dollar, 3.0% due
7/01/98........................................ 526,000
-------------
U.S. TREASURY OBLIGATIONS (0.1%)
10,000 U.S. Treasury Bills, 5.404% due 07/23/98(y)...... 9,968
-------------
TOTAL SHORT-TERM INVESTMENTS (COST
$535,968)................................... 535,968
-------------
TOTAL INVESTMENTS (COST $11,563,555) (89.8%)..... 11,012,108
OTHER ASSETS IN EXCESS OF LIABILITIES (10.2%).... 1,246,386
-------------
NET ASSETS (100.0%).............................. $ 12,258,494
-------------
-------------
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $11,814,151 for Federal Income Tax
purposes at June 30, 1998, the aggregate gross unrealized appreciation and
depreciation was $30,695 and $832,738, respectively, resulting in net unrealized
depreciation of $802,043.
(v) Rate shown reflects current rate on variable or floating rate instrument or
instrument with step coupon rate.
(y) Yield to maturity.
{::} Denominated in USD unless otherwise indicated.
144A - Securities restricted for resale to Qualified Institutional Buyers.
ARS - Argentine Peso.
C - Capitalization.
El - Eligible Interest.
FRB - Floating Rate Bond.
IAN - Interest in Arrears Note.
MYFDA - Multi-Year Refinancing Agreement.
NMB - New Money Bonds.
PDI - Past Due Interest.
USD - United States Dollar.
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $11,562,479 ) $11,012,108
Cash 50,489
Foreign Currency at Value (Cost $1,300 ) 1,233
Receivable for Investments Sold 1,254,204
Unrealized Appreciation of Forward Foreign
Currency Contracts 5,510
Interest Receivable 245,826
Deferred Organization Expenses 11,945
Receivable for Expense Reimbursement 8,710
Variation Margin Receivable 3,251
Prepaid Trustees' Fees 304
-----------
Total Assets 12,593,580
-----------
LIABILITIES
Payable for Investments Purchased 226,733
Custody Fee Payable 48,952
Organization Expenses Payable 14,200
Advisory Fee Payable 7,472
Administrative Services Fee Payable 304
Fund Services Fee Payable 11
Accrued Expenses 37,414
-----------
Total Liabilities 335,086
-----------
NET ASSETS
Applicable to Investors' Beneficial Interests $12,258,494
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income (Net of Foreign Withholding Tax
of $22 ) $ 710,283
EXPENSES
Advisory Fee $ 45,508
Custodian Fees and Expenses 28,507
Professional Fees and Expenses 25,666
Printing Expenses 2,782
Administrative Services Fee 1,910
Amortization of Organization Expense 1,602
Insurance Expense 550
Fund Services Fee 204
Administration Fee 127
Trustees' Fees and Expenses 61
Miscellaneous 398
--------
Total Expenses 107,315
Less: Reimbursement of Expenses (26,049)
--------
NET EXPENSES 81,266
---------
NET INVESTMENT INCOME 629,017
NET REALIZED GAIN (LOSS) ON
Investment Transactions (785,958)
Futures Contracts (1,337)
Foreign Currency Contracts and Transactions 214,345
--------
Net Realized Loss (572,950)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF
Investments (307,130)
Futures Contracts 1,531
Foreign Currency Contracts and Translations (19,447)
--------
Net Change in Unrealized Depreciation (325,046)
---------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(268,979)
---------
---------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED MARCH 7, 1997
JUNE 30, (COMMENCEMENT OF
1998 OPERATIONS) THROUGH
(UNAUDITED) DECEMBER 31, 1997
------------ -------------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 629,017 $ 8,917,209
Net Realized Loss on Investments, Futures and
Foreign Currency Contracts and Transactions (572,950) (5,256,573)
Net Change in Unrealized Depreciation of
Investments, Futures and Foreign Currency
Contracts and Translations (325,046) (225,247)
------------ -------------------
Net Decrease in Net Assets Resulting from
Operations (268,979) 3,435,389
------------ -------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 2,794,392 178,496,163
Withdrawals (2,438,461) (169,760,010)
------------ -------------------
Net Increase from Investors' Transactions 355,931 8,736,153
------------ -------------------
Total Increase in Net Assets 86,952 12,171,542
NET ASSETS
Beginning of Period 12,171,542 --
------------ -------------------
End of Period $ 12,258,494 $ 12,171,542
------------ -------------------
------------ -------------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE MARCH 7, 1997
SIX MONTHS ENDED (COMMENCEMENT OF
JUNE 30, 1998 OPERATIONS) THROUGH
(UNAUDITED) DECEMBER 31, 1997
---------------- -------------------
<S> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 1.25%(a) 0.91%(a)
Net Investment Income 9.68%(a) 9.57%(a)
Expenses without Reimbursement 1.65%(a) 0.91%(a)
Portfolio Turnover 137%(b) 182%(b)
</TABLE>
- ------------------------
(a) Annualized.
(b) Not annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Emerging Markets Debt Portfolio (the "portfolio") is one of eight subtrusts
(portfolios) comprising The Series Portfolio (the "Series Portfolio"). The
Series Portfolio is registered under the Investment Company Act of 1940, as
amended, as a no-load 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 7, 1997 and received a contribution of
certain assets and liabilities, including securities, with a value of
$113,127,989 on that date from the JPM Emerging Markets Debt Fund, Ltd. in
exchange for a beneficial interest in the portfolio. The portfolio's investment
objective is high total return from a portfolio of fixed income securities of
emerging markets issuers. The Declaration of Trust permits the trustees to issue
an unlimited number of beneficial interests in the portfolio.
Investments in emerging markets may involve certain considerations and risks not
typically associated with investments in the United States. Future economic and
political developments in emerging market countries 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 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
exist is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based on the
most recent sale price, or, in the absence of recorded sales, at the
closing bid price. 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 quoted bid price 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 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. All short-term 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 assets are 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 prevailing exchange rates
at the end of the period. Purchases, sales, income and expenses are
translated at the
23
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
exchange rates 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 as of the time that the
relevant ex-dividend date and amount become 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 at the current foreign exchange
rates, and the change in the market value is recorded by the portfolio as
unrealized appreciation or depreciation of forward foreign currency
contract translations. At June 30, 1998, the portfolio had open forward
currency contracts as follows:
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
VALUE AT APPRECIATION/
PURCHASE CONTRACTS COST/PROCEEDS 6/30/98 (DEPRECIATION)
- ------------------------------------------------- ------------- ----------- --------------
<S> <C> <C> <C>
German Mark 100,000, expiring 8/5/98............. $ 55,596 $ 55,522 $ (74)
German Mark 126,521, expiring 8/12/98............ 70,367 70,275 (92)
Mexican Peso 1,424,924, expiring 9/22/98......... 160,230 159,620 (610)
</TABLE>
<TABLE>
<CAPTION>
SALES CONTRACTS
- -------------------------------------------------
<S> <C> <C> <C>
German Mark 100,000, expiring 8/5/98............. $ 55,497 $ 55,522 $ (25)
German Mark 126,521, expring 8/12/98............. 71,417 70,275 1,142
Mexican Peso 1,424,924, expiring 9/22/98......... 164,789 159,620 5,169
--------------
NET UNREALIZED APPRECIATION ON FORWARD FOREIGN
CURRENCY CONTRACTS.............................. $ 5,510
--------------
--------------
</TABLE>
e) Futures -- A futures contract is an agreement to purchase/sell a specified
quantity of an underlying instrument at a specified future date or to
make/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. Upon entering into such a contract,
the portfolio is required to pledge to the broker an amount of cash and/or
liquid securities equal to the minimum "initial margin" requirements
24
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
of the exchange. Pursuant to the contract, the portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation
in the value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the portfolio as unrealized gains
or losses. When the contract is closed, the portfolio records a realized
gain or loss equal to the difference between the value of the contract at
the time it was opened and the value at the time when it was closed. The
portfolio invests in futures contracts for the purpose of hedging its
existing portfolio securities, or securities the portfolio intends to
purchase, against fluctuations in value caused by changes in prevailing
market interest rates or securities movements. The use of futures
transactions involves the risk of imperfect correlation in movements in
the price of futures contracts, interest rates and the underlying hedged
assets, and the possible inability of counterparties to meet the terms of
their contracts. At June 30, 1998, the portfolio had open future contracts
as follows:
SUMMARY OF OPEN CONTRACTS AT JUNE 30, 1998
<TABLE>
<CAPTION>
NET UNREALIZED PRINCIPAL AMOUNT
CONTRACTS LONG APPRECIATION OF CONTRACTS
-------------- -------------- ----------------
<S> <C> <C> <C>
Five - Year U.S. Treasury, expiring September
1998............................................ 26 $ 1,531 $ 2,850,344
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>
f) The portfolio may engage in swap transactions, specifically interest rate,
currency, index and total return swaps. The portfolio will use these
transactions to preserve a return or spread on a particular investment or
portion of its investments, to protect against currency fluctuations, as a
duration management technique, to protect against any increase in the
price of securities the portfolio anticipates purchasing at a later date,
or to gain exposure to certain markets in the most economical way
possible. An interest rate swap is an agreement between two parties to
exchange interest payments on a specified amount ("the notional amount")
for a specified period. If a swap agreement provides for payments in
different currencies, the parties might agree to exchange the notional
amount as well. Risks associated with swap transactions include the
ability of counterparties to meet the terms of their contracts, and the
amount of the portfolio's potential gain or loss on swap transaction is
not subject to any fixed limit.
g) The portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the portfolio will be taxed on its
share of the portfolio's ordinary income and capital gains. It is intended
that the portfolio's assets will be managed in such a way that an investor
in the portfolio will be able to satisfy the requirements of Subchapter M
of the Internal Revenue Code. The portfolio earns foreign income which may
be subject to foreign withholding taxes at various rates.
h) The portfolio incurred organization expenses in the amount of $16,200.
Morgan Guaranty Trust Company of New York ("Morgan") has paid the
organization expenses of the portfolio. The portfolio has agreed to
reimburse Morgan for these costs which are being deferred and amortized on
a straight-line basis over a period not to exceed five years beginning
with the commencement of operations of the portfolio.
25
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
i) Expenses incurred by the Series Portfolio with respect to any two or more
portfolios in the Series Portfolio are allocated in proportion to the net
assets of each portfolio in the Series Portfolio, except where allocations
of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that
portfolio.
2. TRANSACTIONS WITH AFFILIATES
a) The portfolio has an Investment Advisory Agreement with Morgan. Under the
terms of the agreement, the portfolio pays Morgan at an annual rate of
0.70% of the portfolio's average daily net assets. For the six months
ended June 30, 1998, this fee amounted to $45,508.
b) The portfolio has retained Funds Distributor, Inc. ("FDI"), a registered
broker-dealer, to serve as the co-administrator and exclusive placement
agent. Under a Co-Administration Agreement between FDI and the portfolio,
FDI provides administrative services necessary for the operations of the
portfolio, furnishes office space and facilities required for conducting
the business of the portfolio and pays the compensation of the officers
affiliated with FDI. The portfolio has agreed to pay FDI fees equal to its
allocable share of an annual complex-wide charge of $425,000 plus FDI's
out-of-pocket expenses. The amount allocable to the portfolio is based on
the ratio of the portfolio's net assets to the aggregate net assets of the
portfolio and certain other investment companies subject to similar
agreements with FDI. For the six months ended June 30, 1998, the fee for
these services amounted to $127.
c) The portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is responsible for overseeing
certain aspects of the administration and operation of the portfolio.
Under the Services Agreement, the portfolio has agreed to pay Morgan a fee
equal to its allocable share of an annual complex-wide charge. This charge
is calculated based on the aggregate average daily net assets of the
portfolio and certain other portfolios for which Morgan acts as investment
advisor (the "master portfolios") and J.P. Morgan Series Trust (formerly
JPM Series Trust) in accordance with the following annual schedule: 0.09%
on the first $7 billion of their aggregate average daily net assets and
0.04% of their aggregate average daily net assets in excess of $7 billion
less the complex-wide fees payable to FDI. The portion of this charge
payable by the portfolio is determined by the proportionate share its net
assets bear to the net assets of the master portfolios, other investors in
the master portfolios for which Morgan provides similar services and J.P.
Morgan Series Trust. For the six months ended June 30, 1998, the fee for
these services amounted to $1,910.
In addition, Morgan has agreed to reimburse the portfolio to the extent
necessary to maintain the total operating expenses of the portfolio at no
more than 1.25% of the average daily net assets of the portfolio at least
through April 30, 1999. For the six months ended June 30, 1998, Morgan has
agreed to reimburse the portfolio $26,049 for expenses under this
agreement.
d) The portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the trustees in exercising their overall supervisory
responsibilities for the portfolio's affairs. The trustees of the
portfolio represent all the existing shareholders of Group. The
portfolio's allocated portion of Group's costs in performing its services
amounted to $204 for the six months ended June 30, 1998.
26
<PAGE>
THE EMERGING MARKETS DEBT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the J.P. Morgan Funds (formerly the JPM Pierpont Funds), the
J.P. Morgan Institutional Funds (formerly the JPM Institutional Funds),
the master portfolios and J.P. Morgan Series Trust. The Trustees' Fees and
Expenses shown in the financial statements represents the portfolio's
allocated portion of the total fees and expenses. The portfolio's Chairman
and Chief Executive Officer also serves as Chairman of Group and receives
compensation and employee benefits from Group in his role as Group's
Chairman. The allocated portion of such compensation and benefits included
in the Fund Services Fee shown in the financial statements was $50.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- ----------------- -----------
<S> <C>
$18,019,960....... $19,426,684
</TABLE>
4. CREDIT AGREEMENT
The portfolio is party to a revolving line of credit agreement as discussed more
fully in Note 4 of the fund's Notes to the Financial Statements which are
included elsewhere in this report.
27
