<PAGE>
THE JAPAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -----------
<S> <C> <C>
COMMON STOCK (85.5%)
BASIC INDUSTRIES (15.3%)
CHEMICALS (11.4%)
Bridgestone Corp.(s)............................. 3,000 $ 70,901
Dai Nippon Ink & Chemicals Inc.(s)............... 17,000 52,059
Ishihara Sangyo Kaisha Ltd.+(s).................. 10,000 13,834
Sekisui Chemical Co. Ltd.(s)..................... 9,000 46,042
Takeda Chemical Industries Ltd.(s)............... 4,000 106,352
-----------
289,188
-----------
METALS & MINING (3.9%)
Kawasaki Steel Corp.(s).......................... 21,000 37,828
Nippon Steel Corp.(s)............................ 21,000 36,920
Tokyo Steel Manufacturing Co. Ltd.(s)............ 5,000 25,723
-----------
100,471
-----------
TOTAL BASIC INDUSTRIES......................... 389,659
-----------
CONSUMER GOODS & SERVICES (18.4%)
AUTOMOTIVE (7.9%)
Honda Motor Co. Ltd.(s).......................... 2,000 71,189
Toyota Motor Corp. Ltd.(s)....................... 5,000 129,337
-----------
200,526
-----------
BROADCASTING & PUBLISHING (0.8%)
Toppan Printing Co. Ltd.(s)...................... 2,000 21,386
-----------
MERCHANDISING (3.4%)
Canon Sales Co., Inc.(s)......................... 1,000 13,589
Sony Music Entertainment Inc.(s)................. 1,700 72,148
-----------
85,737
-----------
RETAIL (6.3%)
Aoyama Trading Co. Ltd.(s)....................... 1,000 24,642
Ito - Yokado Co. Ltd.(s)......................... 2,000 94,102
Izumiya Co. Ltd.(s).............................. 5,000 32,100
Xebio Co. Ltd.(s)................................ 700 10,466
-----------
161,310
-----------
TOTAL CONSUMER GOODS & SERVICES................ 468,959
-----------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -----------
<S> <C> <C>
FINANCE (12.7%)
BANKING (5.0%)
Asahi Bank Ltd.(s)............................... 12,000 $ 52,743
Sumitomo Trust & Banking Co. Ltd.(s)............. 9,000 40,206
The Bank of Tokyo - Mitsubishi Ltd.(s)........... 400 4,234
The Sakura Bank Ltd.(s).......................... 4,000 10,376
Toyo Trust & Banking Co. Ltd.(s)................. 4,000 19,800
-----------
127,359
-----------
FINANCIAL SERVICES (3.3%)
Nomura Securities Co. Ltd.(s).................... 4,000 46,547
Takefuji Corp.(s)................................ 800 36,892
-----------
83,439
-----------
INSURANCE (1.6%)
Mitsui Marine & Fire Insurance Co. Ltd.(s)....... 2,000 10,044
Tokio Marine & Fire Insurance Co. Ltd.(s)........ 3,000 30,825
-----------
40,869
-----------
REAL ESTATE (2.8%)
Mitsubishi Estate Co. Ltd.(s).................... 8,000 70,325
-----------
TOTAL FINANCE.................................. 321,992
-----------
HEALTHCARE (2.5%)
PHARMACEUTICALS (2.5%)
Yamanouchi Pharmaceutical Co. Ltd.(s)............ 3,000 62,471
-----------
INDUSTRIAL PRODUCTS & SERVICES (13.5%)
CONSTRUCTION & HOUSING (6.3%)
Nishimatsu Construction Co. Ltd.(s).............. 7,000 34,298
Sekisui House Ltd.(s)............................ 3,000 23,237
Toda Construction Co.(s)......................... 4,000 15,996
Tostem Corp.(s).................................. 6,800 88,096
-----------
161,627
-----------
</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, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -----------
<S> <C> <C>
ELECTRICAL EQUIPMENT (2.8%)
Hitachi Ltd.(s).................................. 6,000 $ 39,125
Ricoh Co. Ltd.(s)................................ 3,000 31,581
-----------
70,706
-----------
MACHINERY (3.6%)
Ebara Corp.(s)................................... 4,000 35,566
Fanuc Ltd.(s).................................... 1,000 34,586
Kubota Corp.(s).................................. 1,000 2,306
Sanden Corp.(s).................................. 3,000 20,298
-----------
92,756
-----------
MANUFACTURING (0.8%)
Tsubakimoto Chain Co.(s)......................... 6,000 20,103
-----------
TOTAL INDUSTRIAL PRODUCTS & SERVICES........... 345,192
-----------
TECHNOLOGY (17.8%)
COMPUTER SYSTEMS (3.3%)
Fujitsu Ltd.(s).................................. 8,000 84,159
-----------
ELECTRONICS (8.1%)
Canon, Inc.(s)................................... 1,000 22,697
Fuji Photo Film Co. Ltd.(s)...................... 2,000 69,604
Pioneer Electronic Corp.(s)...................... 5,000 95,471
Sony Corp.(s).................................... 200 17,221
-----------
204,993
-----------
SEMICONDUCTORS (4.6%)
Tokyo Electron Ltd.(s)........................... 2,000 61,246
Tokyo Ohka Kogyo Co. Ltd.(s)..................... 2,000 56,778
-----------
118,024
-----------
TELECOMMUNICATIONS (1.8%)
DDI Corp.(s)..................................... 13 45,243
-----------
TOTAL TECHNOLOGY............................... 452,419
-----------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- -----------
<S> <C> <C>
TRANSPORTATION (5.3%)
RAILROADS (3.1%)
West Japan Railway Co.(s)........................ 22 $ 79,735
-----------
WHOLESALE & INTERNATIONAL TRADE (2.2%)
Mitsubishi Corp.(s).............................. 9,000 55,770
-----------
TOTAL TRANSPORTATION........................... 135,505
-----------
TOTAL COMMON STOCK (COST $2,779,566)........... 2,176,197
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN JPY)
-----------
<S> <C> <C>
FIXED INCOME SECURITIES (3.9%)
TECHNOLOGY (3.9%)
ELECTRONICS (3.9%)
Sony Corp., 1.4% due 03/31/05
(COST $103,600)................................ 9,000,000 99,542
-----------
CONVERTIBLE BONDS (4.0%)
FINANCE (3.1%)
FINANCIAL SERVICES (3.1%)
AB International Cayman Trust, 0.05% due
7/31/07(s)..................................... 2,000,000 13,366
Sanwa International Finance Trust, 1.25% due
07/31/05(s).................................... 9,000,000 66,308
-----------
TOTAL FINANCE.................................. 79,674
-----------
TECHNOLOGY (0.9%)
COMPUTER SYSTEMS (0.9%)
Ricoh Co. Ltd., 1.5% due 03/29/02................ 2,000,000 22,048
-----------
TOTAL CONVERTIBLE BONDS (COST $108,632)........ 101,722
-----------
</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, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY DESCRIPTION (IN USD) VALUE
- ------------------------------------------------- ----------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (0.8%)
U.S. TREASURY OBLIGATIONS (0.8%)
United States Treasury Bills, 5.03% due 08/20/98
(COST $19,863)(s).............................. $ 20,000 $ 19,863
-----------
TOTAL INVESTMENTS (COST $3,011,661) (94.2%)...................
2,397,324
OTHER ASSETS IN EXCESS OF LIABILITIES (5.8%)..................
147,110
-----------
NET ASSETS (100.0%)........................................... $ 2,544,434
-----------
-----------
</TABLE>
- ------------------------------
Note: The cost of investments for federal income tax purposes at June 30, 1998
was $3,013,214; the aggregate gross unrealized appreciation and depreciation was
$44,330 and $660,219, respectively, resulting in net unrealized depreciation of
$615,889.
+ Non-income producing security.
(s) Security is fully or partially segregated with custodian as collateral for
futures contracts or with broker as initial margin for futures contracts
$869,857 of the market value has been segregated.
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $3,011,661 ) $2,397,324
Cash 177,994
Foreign Currency at Value (Cost $36,391 ) 36,455
Receivable for Investments Sold 13,519
Variation Margin Receivable 5,990
Prepaid Trustees' Fees 779
Interest Receivable 488
Dividends Receivable 343
Prepaid Expenses and Other Assets 90
----------
Total Assets 2,632,982
----------
LIABILITIES
Payable to Advisor 51,770
Custody Fee Payable 8,400
Administrative Services Fee Payable 11,149
Advisory Fee Payable 2,227
Fund Services Fee Payable 2
Accrued Expenses 15,000
----------
Total Liabilities 88,548
----------
NET ASSETS
Applicable to Investors' Beneficial Interests $2,544,434
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE JAPAN EQUITY 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 $1,003) $ 22,897
Dividend Income (Net of Foreign Withholding Tax
of $2,425) 9,898
------------
Investment Income 32,795
EXPENSES
Advisory Fee $ 66,322
Custodian Fees and Expenses 15,346
Professional Fees and Expenses 7,750
Printing Expenses 5,000
Administrative Services Fee 3,066
Fund Services Fee 478
Trustees' Fees and Expenses 256
Administration Fee 215
Insurance Expense 66
Amortization of Organization Expenses 351
Miscellaneous 1,500
------------
Total Expenses 100,350
Less: Reimbursement of Expenses (17,068)
------------
NET EXPENSES 83,282
------------
NET INVESTMENT LOSS (50,487)
NET REALIZED LOSS ON
Investment Transactions (50,178,052)
Futures Contracts (121,035)
Foreign Currency Contracts and Transactions (214,723)
------------
Net Realized Loss (50,513,810)
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF
Investments 54,402,031
Futures Contracts (15,048)
Foreign Currency Contracts and Translations 176,379
------------
Net Change in Unrealized Appreciation 54,563,362
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 3,999,065
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE JAPAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
DECREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income (Loss) $ (50,487) $ 548,681
Net Realized Loss on Investments, Futures and
Foreign Currency Contracts and Transactions (50,513,810) (96,176,243)
Net Change in Unrealized Appreciation of
Investments, Futures and Foreign Currency
Contracts and Transactions 54,563,362 4,789,345
------------- -----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,999,065 (90,838,217)
------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 1,274,331 198,329,912
Withdrawals (173,281,187) (317,285,028)
------------- -----------------
Net Decrease from Investors' Transactions (172,006,856) (118,955,116)
------------- -----------------
Total Decrease in Net Assets (168,007,791) (209,793,333)
NET ASSETS
Beginning of Period 170,552,225 380,345,558
------------- -----------------
End of Period $ 2,544,434 $ 170,552,225
------------- -----------------
------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS FOR THE FISCAL MARCH 28, 1995
ENDED YEAR ENDED (COMMENCEMENT OF
JUNE 30, DECEMBER 31, OPERATIONS)
1998 --------------- THROUGH
(UNAUDITED) 1997 1996 DECEMBER 31, 1995
----------- ------ ------ -----------------
<S> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.82%(a) 0.83% 0.81% 0.87%(a)
Net Investment Income (Loss) (0.49)%(a) 0.18% (0.03)% 0.12%(a)
Expense without Reimbursement 0.98%(a) -- -- --
Portfolio Turnover 5%(b) 93% 86% 60%(b)
</TABLE>
- ------------------------
(a) Annualized.
(b) Not Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Japan Equity Portfolio (the "portfolio"), is one of seven 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'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.The portfolio commenced operations on March 28, 1995. See Note 6 for
termination of operations of the portfolio subsequent to June 30, 1998.
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 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 either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchanges. 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 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 expense are
translated at the exchange rate prevailing on the respective dates of such
transactions. Translation gains and losses
25
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
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 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) 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.
e) 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 no open forward
foreign currency contracts.
f) 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 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
26
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
NET UNREALIZED PRINCIPAL AMOUNT
CONTRACTS LONG APPRECIATION OF CONTRACTS
-------------- -------------- ----------------
<S> <C> <C> <C>
Topix Index, expiring September 1998............. 2 $ 4,600 $ 176,460
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>
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.
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
0.65% of the portfolio's average daily net assets. For the six months
ended June 30, 1998, such fees amounted to $66,322.
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 $215.
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 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 an
investment advisor (the "master portfolios") and J.P.Morgan 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 that 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 $3,066.
27
<PAGE>
THE JAPAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1998
- --------------------------------------------------------------------------------
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 1.00% of the average daily net assets of the portfolio through April 30,
1999. For the six months ended June 30, 1998, Morgan has agreed to reimburse the
portfolio $17,068 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 $478 for the six months ended June 30, 1998.
e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the trust, the J.P.Morgan Funds, the J.P.Morgan Institutional
Funds, the master portfolios and J.P.Morgan Series Trust.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 $100.
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>
$ 1,364,063 2,888,210
</TABLE>
4. CREDIT AGREEMENT
The portfolio is party to a revolving line of credit agreement (the "Agreement")
as discussed more fully in Note 4 of the fund's Notes to the Financial
Statements which are included elsewhere in this report.
5. OTHER MATTERS
On January 16, 1998 the portfolio received a withdrawal request in the amount of
$167,623,751 as discussed in Note 5 of the fund's Notes to Financial Statements
which are included elsewhere in this report. This amount is included in
Withdrawals shown on the Statement of Changes in Net Assets. The withdrawal
which was made in-kind by transferring certain assets and liabilities, including
securities, directly to a non-U.S. fund resulted in a net realized loss on
transfer of the securities in the amount of $48,613,992, which is included in
the Net Realized Loss on Investment Transactions and Foreign Currency Contracts
and Transactions in the Statement of Operations.
6. TERMINATION OF PORTFOLIO
The trustees on July 8, 1998 approved a resolution to terminate the portfolio.
The liabilities incurred in connection with the termination and any liabilities
which arise after the termination date will be paid by Morgan. The portfolio
will be liquidated on or about August 14, 1998.
28
