FIRST GLOBAL EQUITY PORTFOLIO, POS AMI, 1997-01-10

FIRST GLOBAL EQUITY PORTFOLIO
POS AMI, 1997-01-10

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FILE NO. 811-9072

As filed with the Securities and Exchange Commission on January 10, 1997

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

AMENDMENT NO. 3 [X]
-----

(CHECK APPROPRIATE BOX OR BOXES)

FIRST GLOBAL EQUITY PORTFOLIO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

80 HARCOURT STREET, DUBLIN, IRELAND
(ADDRESS OF GENERAL BUSINESS OFFICES)

(011) 353-1 790-3500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NEW YORK 10019
(NAME AND ADDRESS OF AGENT FOR SERVICE)

COPIES TO:

ROBERT W. HELM, ESQ.
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, DC 20005

AND

DAVID HARTMAN, ESQ.
AMERICAN INTERNATIONAL GROUP, INC.
70 PINE STREET
NEW YORK, NEW YORK 10270
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EXPLANATORY NOTE

This Registration Statement is being filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940, as amended. However,
beneficial interests in the Registrant are not being registered under the
Securities Act of 1933 (the "Securities Act") because such interests will be
offered and sold solely in private placement transactions which do not
involve any "public offering" within the meaning of Section 4(2) of the
Securities Act. Investments in the Registrant may be made only by investment
companies, insurance company separate accounts, common or commingled trust
funds or similar organizations or entities which are "accredited investors"
within the meaning of Regulation D under the Securities 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.

This Amendment No. 3 is being filed to include audited financial
statements of the Registrant for the fiscal year ended November 30, 1996 and
the independent auditors' report thereon.
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FIRST GLOBAL EQUITY PORTFOLIO

PART A

ITEM 1. COVER PAGE. Not applicable.

ITEM 2. SYNOPSIS. Not applicable.

ITEM 3. CONDENSED FINANCIAL INFORMATION. Not applicable.

ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.

First Global Equity Portfolio, a Delaware Business Trust (the "Equity
Portfolio") is registered as a diversified, open-end management investment
company.

The investment objective of the Equity Portfolio is to achieve total
return on capital through both capital growth (realized and unrealized) and
income. The Equity Portfolio seeks to achieve its objective by making global
investments in securities of issuers from around the world. This investment
objective is a fundamental policy and cannot be changed without approval of
the owners of beneficial interests in the Equity Portfolio. There can be no
assurance that the Equity Portfolio will achieve its investment objective of
maximizing total return on capital.

Under normal conditions at least 80% of the Equity Portfolio's assets
will be invested in securities of issuers organized in one or more of the
following countries: the United States, the United Kingdom, Canada,
Australia, Japan, France, Germany, Italy, the Netherlands, Spain, Sweden,
Switzerland, Hong Kong, Singapore and Malaysia. The Manager has selected the
securities markets of these 15 countries because they are among the largest
in the world. The Equity Portfolio may, however, invest in securities of
issuers incorporated or organized in any country. Under normal conditions,
the assets of the Equity Portfolio will be invested in securities of issuers
organized in at least three countries; no more than 30% of the Equity
Portfolio's assets may be invested in securities of issuers incorporated or
organized in any one country, except that, for temporary defensive purposes,
substantially all of such assets may be invested in securities of issuers
organized in the United States. Securities may be included in the Equity
Portfolio without regard to minimum capitalization of their issuers.

In allocating investments among geographic regions and individual
countries, AIG Capital Management Corp. (the "Manager") will normally
consider such factors as the relative economic growth potential of the
various economies and securities markets; expected levels of inflation;
financial, social and political conditions influencing the investment
opportunities; and the outlook for currency relationships.

The Equity Portfolio may invest in all types of securities (subject
to the limitations discussed below and in Part B of this Registration
Statement), many of which will be denominated in currencies other than the
U.S. dollar. The Equity Portfolio will normally invest its assets in equity
securities, including common stock, securities convertible into common stock,
depositary receipts for these securities, and warrants. The Equity Portfolio
will not ordinarily invest in nonconvertible debt securities. The Equity
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Portfolio, may, however, invest up to 25% of its assets in preferred stock.
Dividends may also be considered in selecting securities when the Manager
believes that such income will favorably influence the market value of a
security in light of the Equity Portfolio's objective of total return.
Equity securities in which the Equity Portfolio will invest may be listed on
a U.S. or foreign stock exchange or traded in U.S. or foreign over-the-
counter markets, although the Equity Portfolio may also invest in securities
for which there is no active trading market (subject to the limitations
discussed below and in Part B of this Registration Statement).

The Equity Portfolio may invest in securities represented by European
Depositary Receipts ("EDRs"), American Depositary Receipts ("ADRs") and
Global Depositary Receipts ("GDRs"). ADRs are receipts generally issued by a
domestic bank or trust company that represent the deposit of a security of a
foreign issuer. EDRs are typically issued by foreign banks or trust
companies and traded in Europe. GDRs may be issued by a domestic or foreign
bank or trust company and may be traded in several markets. For purposes of
the Equity Portfolio's investment policies, an investment in Depositary
Receipts will be deemed to be an investment in the underlying security.

The Equity Portfolio may make certain negotiated investments with
American International Group, Inc., ("AIG"), an affiliate of the Manager,
and/or its affiliates, subject to obtaining any necessary regulatory
approval.

As a matter of fundamental policy, the Equity Portfolio will not
engage in transactions intended to hedge foreign exchange risk. See "Risk
Factors - Foreign Currencies." The Equity Portfolio is also subject to an
operating policy which prohibits it from borrowing any amount more than 5% of
its total assets. This effectively limits the ability of the Equity
Portfolio to "leverage" its assets by borrowing money and investing in
additional securities.

RISK FACTORS

Foreign Investment. Investments in securities of foreign issuers may
involve risks that are not associated with domestic investments, and there
can be no assurance that the Equity Portfolio's foreign investments will
present less risk than a portfolio of domestic securities. Foreign issuers
may lack uniform accounting, auditing and financial reporting standards,
practices and requirements, and there is generally less publicly available
information about foreign issuers than there is about U.S. issuers.
Governmental regulation and supervision of foreign stock exchanges, brokers
and listed companies may be less pervasive than is customary in the United
States. Securities of some foreign issuers are less liquid, and their prices
are more volatile, than securities of comparable domestic issuers. Foreign
securities settlements may in some instances be subject to delays and related
administrative uncertainties which could result in temporary periods when
assets of the Equity Portfolio are uninvested and no return is earned thereon
and may involve a risk of loss to the Equity Portfolio. Foreign securities
markets may have substantially less volume than U.S. markets and far fewer
traded issues. Fixed brokerage commissions on foreign securities exchanges
are generally higher than in the United States and transaction costs with
respect to smaller capitalization companies may be higher than

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those of larger capitalization companies. Income from foreign securities may
be reduced by tax withheld at source or other foreign taxes. In some
countries, there may also be the possibility of expropriation or confiscatory
taxation (in which the Equity Portfolio could lose its entire investment in a
certain market), limitations on the removal of moneys or other assets of the
Equity Portfolio, political or social instability or revolution, or
diplomatic developments that could affect investments in those countries. In
addition, it may be difficult to obtain and enforce a judgment in a court
outside the U.S.

Some of the risks described in the preceding paragraph may be more
severe for investments in emerging or developing countries. By comparison
with the United States and other developed countries, emerging or developing
countries may have relatively unstable governments. Companies in emerging
markets may generally be smaller, less experienced and more recently
organized than many domestic companies. Prices of securities traded in the
securities markets of emerging or developing countries tend to be volatile.
Furthermore, foreign investors are subject to many restrictions in emerging
or developing countries. These restrictions may require, among other things,
governmental approval prior to making investments or repatriating income or
capital, or may impose limits on the amount or type of securities held by
foreigners or on the companies in which the foreigners may invest.

The economies of individual emerging countries may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
domestic product, rates of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payment position and
may be based on a substantially less diversified industrial base. Further,
the economies of developing countries generally are heavily dependent on
international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments
in relative currency values and other protectionist measures imposed or
negotiated by the countries with which they trade. These economies also have
been, and may continue to be, adversely affected by economic conditions in
the countries with which they trade.

Depositary Receipts. The Equity Portfolio may invest in ADRs, EDRs
and GDRs. ADRs may be publicly traded on exchanges or over-the-counter in
the United States and are quoted and settled in dollars at a price that
generally reflects the dollar equivalent of the home country share price.
EDRs are typically issued by foreign banks or trust companies and traded in
Europe. GDRs may be issued by a domestic or foreign bank or trust company
and may be traded in several markets. Depositary Receipts may be issued as
sponsored or unsponsored programs. In sponsored programs, the issuer has
made arrangements to have its securities traded in the form of a Depositary
Receipt. In unsponsored programs, the issuer may not be directly involved in
the creation of the program. Although the regulatory requirements with
respect to sponsored and unsponsored programs are generally similar, the
issuers of unsponsored Depositary Receipts are not obligated to disclose
material information in the United States and, therefore, the import of such
information may not be reflected in the market value of such securities.
Depositary Receipts also involve the risks of other investments in foreign
securities, as discussed above.

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Foreign Currencies. As a matter of fundamental policy, the Equity
Portfolio will not engage in transactions intended to hedge foreign exchange
risk. The Equity Portfolio may, however, enter into forward foreign currency
contracts to provide for its obligations at the time of settlement of
securities transactions. Investments in foreign securities will usually be
denominated in foreign currency, and the Equity Portfolio may temporarily
hold funds in foreign currencies. The value of the Equity Portfolio's
investments denominated in foreign currencies may be affected, favorably or
unfavorably, by the relative strength of the U.S. dollar, changes in foreign
currency and U.S. dollar exchange rates and exchange control regulations.
The Equity Portfolio may incur costs in connection with conversions between
various currencies. The Equity Portfolio's net asset value will be affected
by changes in currency exchange rates. Changes in foreign currency exchange
rates may also affect the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to owners of beneficial interests by the
Equity Portfolio. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets (which in turn are affected by interest rates, trade flow
and numerous other factors, including, in some countries, local government
intervention).

OTHER INVESTMENT POLICIES

Except where specifically noted below, the following investment
policies of the Equity Portfolio are not fundamental and the Trustees of the
Equity Portfolio may change such policies without the vote of a majority of
outstanding voting securities of the Equity Portfolio. A more detailed
description of the Equity Portfolio's investment policies, including a list
of those restrictions of the Equity Portfolio's investment activities which
cannot be changed without such a vote, appears in Part B of this Registration
Statement. Under the 1940 Act, a "vote of a majority of the outstanding
securities" of the Equity Portfolio means the affirmative vote of the lesser
of (1) more than 50% of the outstanding beneficial interests in the Equity
Portfolio, or (2) 67% or more of the beneficial interests in the Equity
Portfolio present at a meeting of holders, if more than 50% of the
outstanding beneficial interests in the Equity Portfolio are represented at
the meeting in person or by proxy.

Borrowing. The Equity Portfolio may from time to time borrow money
from banks for extraordinary or emergency purposes and may invest the funds
in additional securities. Such borrowing will not exceed 5% of the Equity
Portfolio's total assets and will be made at prevailing interest rates. This
policy is fundamental and may not be changed without the vote of a majority
of outstanding voting securities of the Equity Portfolio.

Repurchase Agreements. The Equity Portfolio may enter into
repurchase agreements with commercial banks or broker/dealers under which the
Equity Portfolio acquires a U.S. Government security subject to resale at a
mutually agreed upon price and time. The resale price reflects an agreed
upon interest rate effective for the period the Equity Portfolio holds the
instrument that is unrelated to the interest rate on the instrument.

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The Equity Portfolio's repurchase agreements will at all times be
fully collateralized by U.S. Government securities, and the Equity Portfolio
will make payment for such securities only upon physical delivery or evidence
of book entry transfer to the account of its custodian. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default of the seller, including possible delays and expenses in liquidating
the underlying security, decline in the value of the underlying security and
loss of interest. The Equity Portfolio's policy on repurchase agreements is
fundamental and may not be changed without the vote of a majority of the
outstanding voting securities of the Equity Portfolio.

Illiquid Securities. The Equity Portfolio may invest up to 15% of
its net assets in illiquid securities, including restricted securities (i.e.,
securities not readily marketable without registration under the Securities
Act of 1933 (the "1933 Act")) and other securities that are not readily
marketable, such as repurchase agreements of more than one week's duration.
The Equity Portfolio may purchase restricted securities that may be offered
and sold only to "qualified institutional buyers" under Rule 144A of the 1933
Act, and the Equity Portfolio's Trustees may determine, when appropriate,
that specific Rule 144A securities are liquid and not subject to the 15%
limitation on illiquid securities. Should the Equity Portfolio's Trustees
make this determination, it will carefully monitor the security (focusing on
such factors, among others, as trading activity and availability of
information) to determine that the Rule 144A security continues to be liquid.
It is not possible to predict with assurance exactly how the market for Rule
144A securities will further evolve. This investment practice could have the
effect of increasing the level of illiquidity in the Equity Portfolio to the
extent that qualified institutional buyers become for a time uninterested in
purchasing Rule 144A securities.

Short Sales. The Equity Portfolio may sell securities short only
"against-the-box." A short sale "against-the-box" is a short sale in which
the Equity Portfolio owns an equal amount of the securities sold short or
securities convertible into or exchangeable without payment or further
consideration for securities of the same issue as, and equal in amounts to,
the securities sold short. This is a fundamental policy of the Equity
Portfolio.

Temporary Investments. When the Manager believes that the market
conditions warrant a temporary defensive position, the Equity Portfolio may
invest up to 100% of its assets in short-term instruments such as commercial
paper, bank certificates of deposit, bankers' acceptances, or repurchase
agreements for such securities and securities of the U.S. Government and its
agencies and instrumentalities, as well as cash and cash equivalents
denominated in foreign currencies. Investments in domestic bank certificates
of deposit and bankers' acceptances will be limited to banks that have total
assets in excess of $500 million and are subject to regulatory supervision by
the U.S. Government or state governments. The Equity Portfolio's investments
in commercial paper of U.S. issuers will be limited to (a) obligations rated
Prime-1 by Moody's or A-1 by Standard & Poor's or (b) unrated obligations
issued by companies having an outstanding unsecured debt issue currently
rated A or better by Standard & Poor's. The Equity Portfolio's investments
in foreign short-term instruments will be limited to those that, in the
opinion of the Manager, equate generally to the standards established for
U.S. short-term instruments.

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PORTFOLIO TURNOVER. A change in securities held by the Equity
Portfolio is known as "portfolio turnover", which may result in the payment
by the Equity Portfolio of dealer spreads or underwriting commissions and
other transaction costs on the sale of securities as well as on the
reinvestment of the proceeds in other securities. Although it is the policy
of the Equity Portfolio to hold securities for investment, changes will be
made from time to time when the Manager or a Subadvisor believes such changes
will strengthen the investments of the Equity Portfolio. The portfolio
turnover of the Equity Portfolio is not expected to exceed 100% per annum.

VALUATION. The net asset value of the beneficial interests in the
Equity Portfolio is determined each day, Monday through Friday, as of the
close of regular trading on the NYSE (usually 4:00 p.m. New York City Time)
on each day that the NYSE is open. Securities traded on a foreign exchange or
over-the-counter market are valued at the last sales price on the primary
exchange or market in which they are traded. Securities for which there are
no recent sales transactions are valued based on quotations provided by
primary market makers in such securities. Any securities for which recent
market quotations are not readily available are valued at fair value
determined in accordance with procedures approved by the Trustees of the
Equity Portfolio. Short term holdings maturing in 60 days or less are
generally valued at amortized costs if their original maturity was 60 days or
less. Short-term holdings with more than 60 days remaining to maturity will
be valued at current market value until the 61st day prior to maturity, and
will then be valued on an amortized cost basis based on the value as of such
date unless the Trustees of the Equity Portfolio determines that this
amortized cost value does not represent fair market value.

ITEM 5. MANAGEMENT OF THE FUND.

The business and affairs of the Equity Portfolio are managed under
the Equity Portfolio's Board of Trustees.

THE MANAGER

The Manager, an investment adviser registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), is an indirect wholly
owned subsidiary of AIG. AIG is a holding company which through its
subsidiaries is primarily engaged in a broad range of insurance and
insurance-related and financial services activities in the United States and
abroad. AIG's primary activities include both general and life insurance
operations. Other significant activities of AIG are financial services, and
agency and service fee operations. At September 30, 1996, members of the
Manager's Investment Committee and their teams of investment professionals
supervised the management of assets in excess of $68 billion, of which more
than $10 billion represented third party funds. See "-The Investment
Process" and "- The Subadvisors" below.

The Manager also manages the AIG Children's World Fund - 2005 and the
AIG Retiree Fund - 2003, series of AIG All Ages Funds, Inc., and the AIG
Money

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Market Fund, each of which is a registered investment company. The principal
business address of the Manager is 70 Pine Street, New York, New York 10270.

The Manager serves as the Equity Portfolio's investment adviser, is
responsible for the management of the assets of the Equity Portfolio and
continually reviews and supervises the Equity Portfolio's investment program,
subject to the supervision of, and policies established by, the Board and the
Trustees of the Equity Portfolio. The Manager is assisted in the performance
of these services by an affiliated Subadvisor. See "- The Subadvisor" below.
The Manager is entitled to a fee, which is calculated daily and paid monthly,
at annual rate of 1.20% of the average daily net assets of the Equity
Portfolio. The Equity Portfolio will be responsible for all expenses other
than those assumed by the Manager including those for necessary professional
and brokerage services, costs of regulatory compliance, costs associated with
maintaining corporate existence, custody, shareholder relations and insurance
costs.

THE INVESTMENT PROCESS

The Manager has established a committee (the "Investment Committee")
that is responsible for the asset allocation of the Equity Portfolio and
carrying out its investment policies. The members of the Investment
Committee are officers of the Manager, affiliated investment advisors (see "-
- The Subadvisor" below) or regional affiliates of the Manager to whom the
Manager has access under service arrangements. The members of the Investment
Committee meet monthly, and meet in person quarterly, to determine
collectively the allocation of the assets of the Equity Portfolio on a
regional basis. Members of the Investment Committee, assisted by a team of
investment professionals, are primarily responsible for the Equity
Portfolio's country and stock selection within their respective global
regions. Currently the members of the Investment Committee are:

IAN P. BUTTER. Mr. Butter has been a Director of AIG Global
Investment Corp. (Europe) Ltd. ("AIG Global Europe") in London since January
1992, where he also served in a trading capacity since 1988. In January
1996, Mr. Butter transferred to AIG Global Europe's Japanese affiliate where
he currently serves as Chief Investment Officer of AIG Global Investment
Corp. (Japan).

IAN M. COULMAN. Mr. Coulman is Director of Global and Emerging
Market Fixed Income of AIG Global Europe. Prior to joining AIG Global Europe
in 1991, he was a multicurrency fixed income portfolio manager at Lombard
Odier Investment Management in London.

PATRICK DEMPSEY. Mr. Dempsey is Managing Director, Fixed Income, of
AIG Global Europe in London. He has been a Director of AIG Global Europe
since he joined it at its inception in 1988 as a founding Director.

ARTHUR DJANG. Mr. Djang is Vice President, Global Risk Management of
AIG Global Investment Corp. ("AIG Global"), which he joined in 1996. Prior
to joining

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AIG Global, he was Vice President and head of the Portfolio Advisory Group at
J.P. Morgan Securities, Inc. in New York.

JIM GIBBONS. Mr. Gibbons is Managing Director and Fixed Income
Portfolio Supervisor of AIG Global, which he joined in 1987, and is also a
Director of AIG Global Europe. Prior to joining AIG Global, he worked in the
Corporate Treasury Department at Unilever Corp.

BRIAN MCCARTHY. Mr. McCarthy is Vice President, International Fixed
Income of AIG Global, which he joined in March 1994. Prior to joining AIG
Global, he was Vice President, International Fixed Income Research of
Alliance Capital.

ROBERT B. MEYER. Mr. Meyer is Managing Director and U.S. Equity
Portfolio Manager of AIG Global, which he joined in 1979. Prior to joining
AIG Global, he was a security analyst for Royal Insurance Company in New
York.

WIN J. NEUGER. Mr. Neuger, who acts as Chairman of the Investment
Committee, is Chief Investment Officer of AIG, which he joined in February
1995, and Chief Investment Officer of the Manager, which he joined in August
1995. Mr. Neuger has been a Director, Chairman of the Board and President of
AIG Global since March 1995 and has served as a Director of AIG Global Europe
since April 1995. Prior to joining these companies, Mr. Neuger was with
Bankers Trust Company, where he was a Senior Vice President and, since
October 1991, a Managing Director in the investment management area.

YUKIHIRO NISHIMIYA. Mr. Nishimiya has been a portfolio manager for
AIG Global since July 1996. From October 1990 until July 1996, he was a
portfolio manager for AIG Global Investment Corp. (Japan).

PETER SOO. Mr. Soo is Regional Director, Fund Management, of AIG
Global Investment Corp. (Asia) Limited, which does business in Asia as AIG
Investment Corporation (Asia), Limited, and which he joined in 1989.

A member of the Investment Committee will be responsible for the day-
to-day implementation of the Investment Committee's strategy. Generally, the
regional allocations within the Equity Portfolio will be managed between the
regular meetings in accordance with the policy established at the most recent
meeting; however, in exceptional circumstances, such as subsequent market
developments of a material nature, an ad hoc meeting will be called to review
policy.

THE SUBADVISOR

The Manager has entered into a subadvisory agreement with AIG Global,
which is a wholly owned subsidiary of AIG and registered under the Advisers
Act. AIG Global is referred to as the "Subadvisor." Pursuant to the
subadvisory agreement, the Subadvisor provides investment advisory services
to the Manager in respect of the management of the assets of the Equity
Portfolio, and officers of the Subadvisor

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provide representation on the Investment Committee (see "Investment
Process"). Under the subadvisory agreement, the Manager pays AIG Global a fee
which is calculated daily and paid monthly at an annual rate of 0.15% of the
average daily net assets of the Equity Portfolio. These fees are all paid
from the management fee paid to the Manager. The principal office of the
Subadvisor is 70 Pine Street, New York, New York 10270.

PORTFOLIO TRANSACTIONS

The Equity Portfolio's agreement with the Manager recognizes that in
the purchase and sale of portfolio securities, the Manager and the Subadvisor
will seek the most favorable price and execution and, consistent with that
policy, may give consideration to the research, statistical and other
services furnished by brokers or dealers to the Manager or the Subadvisor.
The use of brokers who provide investment and market research and securities
and economic analysis may result in higher brokerage charges than the use of
brokers selected on the basis of the most favorable brokerage commission
rates, and research and analysis received may be useful to the Manager and
the Subadvisor in connection with their services to other clients as well as
the Equity Portfolio. In over-the-counter markets, orders are placed with
primary market-makers unless a more favorable execution price is believed to
be obtainable.

Consistent with the rules of the National Association of Securities
Dealers, Inc., and subject to seeking the most favorable price and execution
available and such other policies as the Trustees of the Equity Portfolio may
determine, the Manager and the Subadvisor may consider sales of shares of
other mutual funds managed by the Manager as a factor in the selection of
brokers or dealers to execute portfolio transactions for the Equity
Portfolio.

THE ADMINISTRATOR

PFPC International Ltd. serves as the Equity Portfolio's
administrator and accounting agent. PFPC International Ltd.'s principal
business address is 80 Harcourt Street, Dublin, Ireland. Pursuant to the
administration and accounting agreement with the Fund, it assists the Equity
Portfolio in all aspects of its administration and operation, including
matters relating to the maintenance of financial records and Equity Portfolio
accounting.

CUSTODIAN

State Street Bank and Trust Company ("State Street"), 1776 Heritage
Drive, North Quincy, Massachusetts 02171, serves as custodian of the assets
of the Equity Portfolio. State Street is authorized to establish and has
established separate accounts in foreign currencies and to cause securities
of the Equity Portfolio to be held in separate accounts outside the United
States in the custody of non-U.S. banks. Rules adopted under the 1940 Act
permit the Equity Portfolio to maintain their securities and cash in the
custody of certain eligible banks and securities depositories. Pursuant to
those rules,

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the Equity Portfolio's securities and cash, when invested in securities of
foreign countries, are held by subcustodians who are approved by the Trustees
of the Equity Portfolio in accordance with the rules of the Securities and
Exchange Commission. Selection of the subcustodians is made by the Trustees
following a consideration of a number of factors, including, but not limited
to, the reliability and financial stability of an institution, the ability of
the institution to capably perform custodial services for the Equity
Portfolio, the reputation of the institution in its national market, and the
political and economic stability of the countries in which the subcustodians
will be located. In addition, the 1940 Act requires that foreign
subcustodians, among other things, have stockholders' equity in excess of
$200 million, have no lien on the assets of the Equity Portfolio, and
maintain adequate and accessible records.

ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Not applicable.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

The Equity Portfolio was organized in June 1995 as a Delaware
business trust. The Equity Portfolio's Declaration of Trust authorizes the
Board of Trustees to issue an unlimited number of shares of beneficial
interest into one or more classes of shares. The Board of Trustees may
similarly classify or reclassify any class of shares into one or more series.
No stock certificates will be issued to evidence such shares of beneficial
interest.

VOTING RIGHTS

Each investor is entitled to one vote for each full share of
beneficial interest held and fractional votes for fractional shares of
beneficial interest held, and will vote in the aggregate and not by class or
series except as required by the 1940 Act or other applicable law or when
permitted by the Board of Trustees. Investors are entitled to participate in
the net distributable assets of the Equity Portfolio in which they hold
shares of beneficial interest on liquidation. Shares of beneficial interest
have no preemptive rights and only such conversion and exchange rights as the
Board of Trustees may grant at its discretion. Shares of beneficial interest
of the Equity Portfolio also do not have cumulative voting rights for the
election of Trustees. The Equity Portfolio does not presently intend to hold
annual meetings of holders of beneficial interests, but will do so if
requested by the holders of at least ten percent of its outstanding
beneficial interests for the purpose of voting upon the removal of a trustee
or trustees as required by the 1940 Act.

DIVIDENDS AND DISTRIBUTIONS

Dividends consisting of substantially all of the Equity Portfolio's
net investment income, if any, are declared and paid annually. The Equity
Portfolio may also declare an additional dividend of net investment income
and net short term capital gains in a given year to the extent necessary to
avoid the imposition of federal excise taxes on investors in the Equity
Portfolio. Distributions consisting of substantially all the realized net
capital gains for the Equity Portfolio are declared and paid on an annual
basis, except that an additional capital gain distribution may be made in a
given year to the extent necessary

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to avoid the imposition of federal excise tax on investors the Equity
Portfolio. Declared dividends and distributions are payable to the investor
of record on the record date.

Dividends and capital gain distributions paid by the Equity Portfolio
are automatically reinvested in additional shares of beneficial interest of
the Equity Portfolio unless the investor has elected to have them paid in
cash. Dividends and distributions to be paid in cash are mailed by check or
are wire transferred in accordance with the shareholder's instructions.

TAXES

The Equity Portfolio will be classified as a partnership for United
States federal income tax purposes. As a consequence, the Equity Portfolio
itself will not be subject to United States federal income tax, but each
investor in the Equity Portfolio will be required to take into account its
distributive share of items of partnership income, gain, loss, deduction and
credit substantially as though such items had been realized directly by the
investor and without regard to whether any distribution from the Equity
Portfolio has been or will be received.

The Equity Portfolio will file an information return on Internal
Revenue Service Form 1065 and will provide information on Schedule K-1 to
each investor following the close of the Equity Portfolio's taxable year.
Each investor will be responsible for the preparation and filing of the
investor's own income tax return.

The Equity Portfolio intends to conduct its affairs in a manner such
that an investor that is not otherwise subject to United States federal net
income tax will not become subject to such tax as a result of its ownership
of interests in the Equity Portfolio.

Subject to the preceding paragraph, investors may be subject to
state, local and foreign taxes in jurisdictions where the Equity Portfolio
makes its investments and should therefore consult their own tax advisors
with respect to the specific federal, state, local and foreign tax
consequences of the purchase and ownership of interests in the Equity
Portfolio.

ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.

Beneficial interests in the Equity Portfolio are issued solely in
private placement transactions which do not involve any "public offering"
within the meaning of Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act). Investments in the Equity Portfolio may only be made by
investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which 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.

An investment in the Equity Portfolio may be made without any sales
load. All investments are made at net asset value next determined after an
order is received by

A-11
<PAGE>

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

The Equity Portfolio reserves the right to cease accepting
investments at any time or to reject any investment order.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in the Equity Portfolio may withdraw all or any portion
of its investment at any time at the net asset value next determined after a
withdrawal request in proper form is furnished by the investor to the Equity
Portfolio. The proceeds of a withdrawal will be paid by the Equity Portfolio
in federal funds normally on the business day the withdrawal is effected, but
in any event within seven days. Investments in the Equity Portfolio may not
be transferred.

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

ITEM 9. PENDING LEGAL PROCEEDINGS. Not applicable.

A-12
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

PART B

ITEM 10. COVER PAGE.

This Part B is not a prospectus and should be read in conjunction
with Part A. All terms used in this Part B that are not otherwise defined
herein have the meaning assigned to them in Part A.
<TABLE>
<CAPTION>

ITEM 11. TABLE OF CONTENTS.

Section Page
------- ----
<S> <C>
General Information and History B-1
Investment Objectives and Policies B-1
Management of the Fund B-5
Control Persons and Principal Holders of Securities B-8
Investment Advisory and Other Services B-8
Brokerage Allocation and Other Practices B-9
Capital Stock and Other Securities B-10
Purchase, Redemption and Pricing of Securities Being Offered B-11
Tax Status B-12
Underwriters B-12
Calculation of Performance Data B-12
Financial Statements B-13
</TABLE>

ITEM 12. GENERAL INFORMATION AND HISTORY. Not applicable.

ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.

The investment objective of the Equity Portfolio is to provide total
return on capital measured by a combination of capital growth (realized and
unrealized) and income. The Equity Portfolio seeks to achieve its objective
by making global investments in securities of issuers from around the world.
This investment objective is a fundamental policy and cannot be changed
without approval of the owners of beneficial interests in the Equity
Portfolio. There can be no assurance that the Equity Portfolio will achieve
its investment objective of maximizing total return on capital.

Foreign Currency Transactions. The Equity Portfolio may enter into
forward foreign currency exchange contracts to fix the US dollar value of a
security it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for.
A forward foreign currency exchange contract is an agreement to purchase or
sell a specific currency at a future date and at a price set at the time the
contract is entered into.
<PAGE>

The Equity Portfolio is not required to enter into forward contracts
with regard to settlement of its foreign currency-denominated securities and
will not do so unless deemed appropriate by the Manager or the Subadvisor.
Forward foreign currency exchange contracts do not eliminate fluctuations in
the underlying price of the securities. They simply establish a rate of
exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to fluctuations in the value of the currency
being traded, at the same time, they tend to limit any potential gain which
might result from an increase in the value of that currency.

Investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may
offer to sell a foreign currency to the Equity Portfolio at one rate, while
offering a lesser rate of exchange should the Equity Portfolio desire to
resell that currency to the dealer.

Borrowing. The Equity Portfolio may from time to time borrow money
for extraordinary or emergency purposes in an amount up to 5% of its total
assets from banks at prevailing interest rates. This policy is fundamental.
Should the Equity Portfolio, for any reason, have borrowings that do not meet
this test, then within three business days, the Equity Portfolio must reduce
such borrowings so as to meet the foregoing test. Under these circumstances,
the Equity Portfolio may have to liquidate its holdings at a time when it is
disadvantageous to do so. Gains made with additional funds borrowed will
generally cause the net asset value of the Equity Portfolio to rise faster
than could be the case without borrowings, Conversely, if investment results
fail to cover the cost of borrowings, the net asset value of the Equity
Portfolio could decrease faster than if there had been no borrowings.

Lending of Portfolio Securities. The Equity Portfolio may not lend
its holdings of securities. This policy is fundamental.

Except as noted above, the foregoing investment policies of the
Equity Portfolio are not fundamental and the Trustees of the Portfolio may
change such policies without the vote of a majority of outstanding voting
securities (as defined below) of the Equity Portfolio.

Portfolio Turnover. The Equity Portfolio may generally change its
portfolio investments at any time in accordance with the Manager's or the
Subadvisor's appraisal of factors affecting any particular issuer or the
market economy in general. The Equity Portfolio anticipates that the annual
rate of portfolio turnover will not exceed 100% per annum.

INVESTMENT RESTRICTIONS FOR THE EQUITY PORTFOLIO

Except as expressly indicated otherwise, the following restrictions
are fundamental policies which cannot be changed without the approval of the
holders of a majority of the outstanding voting securities of the Equity
Portfolio. Under the 1940 Act, a "vote of a majority of the outstanding
voting securities" means the affirmative vote of the lesser of (1) more than
50% of the outstanding shares, or (2) 67% or more of the shares

B-2
<PAGE>

present at a shareholder's meeting, if more than 50% of the outstanding
shares are represented at the meeting in person or in proxy.

The Equity Portfolio may not:

(1) Issue senior securities (i.e., any security evidencing
indebtedness or any stock of a class having priority over any
other class as to distribution of assets or payment of
dividends), provided that the Equity Portfolio may borrow money
as described in clause (5) below.

(2) Make short sales of securities except short sales against the
box.

(3) Purchase securities on margin, except for such short-term
credits as are necessary for the clearance of purchases and
sales of its portfolio securities.

(4) Write put or call options on securities.

(5) Borrow money, except from banks for extraordinary or emergency
purposes, or invest borrowed funds in additional securities.
Such borrowing may not exceed 5% of the Equity Portfolio's total
assets.

(6) Engage in the underwriting of securities, except insofar as the
Equity Portfolio may be deemed an underwriter under the
Securities Act in disposing of a portfolio security.

(7) Purchase, sell or hold any real estate, real estate mortgage
loans or real estate limited partnerships, provided that the
Equity Portfolio may invest in the securities of companies that
are engaged in businesses related to real estate and real estate
mortgage loans.

(8) Purchase or sell any commodities or commodity contracts,
including commodity futures contracts, provided that the Equity
Portfolio may enter into forward foreign currency contracts to
provide for its obligations at the time of settlement of
securities transactions.

(9) Make loans or lend portfolio securities except as described in
Part A of this Registration Statement under "Other Investment
Policies -Repurchase Agreements."

(10) Invest more than 25% of the market value of its total assets in
securities of issuers principally engaged in the same industry
(except Treasury Securities).

(11) As to 75% of the value of its total assets, invest more than 5%
of its total assets, at market value, in the securities of any
one issuer (except Treasury Securities).

B-3
<PAGE>

(12) Own more than 10% of the outstanding voting securities of any
issuer, or more than 10% of any class of securities of one
issuer.

(13) Invest more than 5% of the value of its total assets, at market
value, in the securities of issuers which, with their
predecessors, have been in business less than three years,
provided that securities guaranteed by a company that has been
in operation at least three continuous years shall be excluded
from this limitation, or in equity securities the resale of
which is restricted by law. This policy is not fundamental.

(14) Purchase securities of open-end or closed-end investment
companies, except as permitted by the 1940 Act, and only in open
market purchases where no commission or profit to a sponsor or
dealer results other than customary brokers' commissions.

(15) Invest in warrants if, at the time of acquisition, the
investment in warrants, valued at the lower of cost or market
value, would exceed 5% of the Equity Portfolio's total assets.
For purposes of this restriction, warrants acquired by the
Equity Portfolio in units attached to securities or distributed
as dividends on another security may be deemed to have been
purchased without cost. This policy is not fundamental.

(16) Invest in companies for the purpose of exercising control or
management.

(17) Purchase or retain securities of any issuer if those officers
and trustees of the Equity Portfolio and the officers and
directors of the Manager or any Subadvisor who individually own
beneficially more than 1/2 of 1% of the outstanding securities
of such issuer, together own beneficially more than 5% of such
outstanding securities. This policy is not fundamental.

(18) Invest in oil, gas or other mineral exploration or development
programs or leases.

Part A of this Registration Statement states that the Equity
Portfolio may invest up to 15% of its assets in illiquid securities and that
the Trustees may determine that certain securities sold under Rule 144A of
the 1933 Act are not subject to this 15% limitation.

With respect to limitation (5) above, the trustees have only
authorized the Equity Portfolio to borrow money to meet requests for
redemptions by holders of beneficial interests of the Equity Portfolio and to
meet nonrecurring operating expenses.

B-4
<PAGE>

ITEM 14. MANAGEMENT OF THE FUND.

Trustees and officers of the Equity Portfolio, together with
information as to their principal business occupations during the past five
years, are shown below. Each Trustee who is an "interested person" of the
Equity Portfolio, as defined in the 1940 Act, is indicated by reference to
footnote one (1).
<TABLE>
<CAPTION>
POSITION
WITH
EQUITY PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE PORTFOLIO DURING PAST 5 YEARS
- ------------------------- ------------- -------------------------------------------
<S> <C> <C>
Roger T. Wickers (61) Chairman of Retired; formerly Senior Vice President and
339 Forest Road the Board of General Counsel, Keystone Investments,
Wolfeboro, New Hampshire Trustees and Inc.
03894 Trustee

Paul H. Friedman (42) Trustee Partner, Arter & Hadden, law firm.
1801 K Street N.W., Suite
400k
Washington, D.C 20006-
1301

Linda-Ann S. Goodwin/1/ (48) Trustee Executive Vice President, AIG Capital
70 Pine Street Management Corp.; Senior Vice President,
New York, New York 10270 AIG Asset Management Services, Inc.;
formerly Marketing Executive, Kemper
Financial; Marketing Executive, Coca Cola
USA.

Charles Vinick (49) Trustee Independent Consultant; Director, Jean-
214 South Venice Blvd. Michel Cousteau Productions; Director,
Venice, California 90291 Passage International Incorporated; Advisory
Board Member, SMR Energy, Inc.; formerly
Vice President, The Cousteau Society.

Gary M. Gardner (45) Secretary Chief Counsel, PNC Bank, N.A.; formerly
400 Bellevue Parkway Attorney, Federated Investors, Inc., Sun
Wilmington, Delaware 19809 America Asset Management Corp. and the
Boston Company.
</TABLE>

- ---------------------
1 "Interested" trustee, as defined in the 1940 Act by reason of
affiliation with the Manager.

B-5
<PAGE>

<TABLE>
<CAPTION>
POSITION
WITH
EQUITY PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE PORTFOLIO DURING PAST 5 YEARS
- ------------------------- ------------- -------------------------------------------
<S> <C> <C>
David T. Goss (48) Vice President, AIG Asset Management Services,
70 Pine Street President Inc.; Director and Vice Chairman, AIG
New York, New York Capital Management Corp.; Director and
10270 Chairman, AIG Asset Management Ltd. and
AIG Asset Management Services Ltd.;
formerly Director Equitilink Australia;
Director, Equitilink, Ltd; Chairman, Equitilink
Pacific, Ltd; President, Equitilink USA, Inc.;
Director, Valufi (Pty), Ltd.

Daniel K. Kingsbury (38) President President, AIG Asset Management, Inc.;
70 Pine Street President, AIG Capital Management Corp;
New York, New York 10270 Senior Vice President, AIG Asset
Management Services, Inc.; Vice President,
AIG Equity Sales Corp; Executive Director,
AIG Asset Management Ltd. and AIG Asset
Management Services Ltd.; formerly Director
of Strategy and Business Development, AIG
Investment Corporation; formerly Director of
Strategy, AIG Asset Management
International.
</TABLE>

B-6
<PAGE>

<TABLE>
<CAPTION>
POSITION
WITH
EQUITY PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE PORTFOLIO DURING PAST 5 YEARS
- ------------------------- ------------- -------------------------------------------
<S> <C> <C>
J. Fergus McKeon (35) Treasurer General Manager, PFPC International;
80 Harcourt Street formerly Chief Accountant, SBC-ISL;
Dublin, Ireland Director, Emerging Markets Fixed Income
Fund.

David Hartman (32) Assistant Assistant General Counsel, AIG; formerly
70 Pine Street Secretary Associate, Simpson Thacher & Bartlett.
New York, New York
10270

Elizabeth M. Tuck (41) Assistant Assistant Secretary, AIG; Corporate
70 Pine Street Secretary Secretary for various domestic affiliates and
New York, New York subsidiaries of AIG.
10270

Jay F. Nusblatt (35) Assistant Vice President and Director of Fund
103 Bellevue Parkway Treasurer Accounting and Administration, PFPC Inc.;
Wilmington, Delaware formerly Assistant Vice President of
19809 Fund/Plan Services, Inc. and PFPC Inc.

Eugene Cichanowsky (50) Assistant Vice President Financial and Administration,
70 Pine Street Treasurer AIG Asset Management Services, Inc.;
New York, New York formerly Vice President, Delaware
10270 Management Holdings Inc.; formerly Vice
President and Controller, Delaware
Management Holdings Inc.
</TABLE>

Pursuant to the terms of the Management Agreement with the Equity
Portfolio, the Manager pays all compensation of officers and employees of the
Equity Portfolio as well as the fees and expenses of all Trustees of the
Company who are affiliated persons of the Manager.

The following table sets forth the aggregate compensation the Equity
Portfolio paid to the Trustees and the aggregate compensation paid to such
Trustees for service on the Registrant's board and the boards of other
companies in the family of funds sponsored by the Manager for the fiscal year
ended November 30, 1996.

B-7
<PAGE>

<TABLE>
<CAPTION>
COMPENSATION TABLE

PENSION TOTAL
RETIREMENT COMPEN-
BENEFITS SATION FROM
AGGREGATE ACCRUED ESTIMATED EQUITY
COMPEN- AS PART ANNUAL PORTFOLIO AND
SATION OF BENEFITS FUND
FROM EQUITY UPON COMPLEX PAID
EQUITY PORTFOLIO RETIRE- TO DIRECTORS/
NAME AND POSITION PORTFOLIO EXPENSES MENT TRUSTEES
- ------------------- ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Roger T. Wickers $14,166 None N/A $28,333
Trustee

Paul H. Friedman $14,166 None N/A $28,333
Trustee

Linda-Ann S. 0 None N/A 0
Goodwin
Trustee

Charles Vinick $14,166 None N/A $28,333
Trustee
</TABLE>

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of December 31, 1996, the Trustees and officers of the Equity
Portfolio, as a group, owned no shares of the Equity Portfolio.

As of December 31, 1996, there were two beneficial owners, the AIG
Children's World Fund - 2005 (44.99%) and the AIG Retiree Fund - 2003
(54.97%), that directly or indirectly held more than 5% of the outstanding
shares of any class.

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

As indicated in Part A, under the Equity Portfolio's agreement with
the Manager dated September 15, 1995, subject to the oversight of the
Trustees of the Equity Portfolio, the Manager administers the business and
other affairs of the Equity Portfolio. The Manager provides the Equity
Portfolio with such office space, administrative and other services and
executive and other personnel as are necessary for the operations of the
Equity Portfolio. The Manager pays all of the compensation of Trustees of
the Portfolio who are employees, consultants and/or directors of the Manager
and of the officers and employees of the Equity Portfolio. The Equity
Portfolio pays the Manager a management fee, calculated daily and payable
monthly equal to 1.20% per annum of the average daily net assets of the
Equity Portfolio. Fees paid by the Manager to the Subadvisor (which do not
affect the fees paid by the Equity Portfolio) are described in Part A.

B-8
<PAGE>

The Equity Portfolio pays all of its expenses other than those
assumed by the Manager and the Subadvisor, including brokerage commissions;
administration, fees and expenses of independent auditors and counsel; taxes
and governmental fees; expenses of repurchase or redemption of shares;
expenses of printing and distributing reports, notices and proxy materials to
shareholders; expenses of printing and filing reports and other documents
with governmental agencies; expenses of shareholders' meetings; expenses of
corporate data processing and related services; disbursements of custodians;
expenses of distributing dividends and distributions; fees and expenses of
Trustees of the Equity Portfolio not employed by (or serving as a Director
of) the Manager or its affiliates; insurance premiums; and extraordinary
expenses such as litigation expenses.

The Equity Portfolio's agreement with the Manager provides that the
Manager will not be liable to the Equity Portfolio for any error of judgment
or mistake of law, or for any loss arising out of any investment, or for any
act or omission in performing its duties under that Agreement, except for
willful misfeasance, bad faith, gross negligence, or reckless disregard of
its obligations and duties under that Agreement.

The Equity Portfolio's agreement with the Manager and the Subadvisory
agreement were approved by the Trustees of the Equity Portfolio at a meeting
held on June 29, 1995, and by the sole owner of a beneficial interest in the
Equity Portfolio on July 1, 1995. These agreements will continue in effect
for a period of more than two years from the day they were entered into only
so long as (1) such continuance is approved in the manner required by the
1940 Act (i.e., by a vote of the majority of the Trustees, or of the
outstanding voting securities of the Equity Portfolio and by a vote of a
majority of the Trustees who are not parties to the agreement being voted
upon or interested persons of any such party) and (2) if the Adviser or
Subadvisor, as relevant, has not notified the Equity Portfolio at least 60
days prior to June 30 of any year that it does not desire such continuance.
The Fund and the Equity Portfolio can terminate any of these agreements to
which it is a party, without penalty, on 60 days' written notice to the
relevant counterparty and all these agreements will terminate automatically
in the event of its assignment.

CUSTODIAN AND ADMINISTRATOR. State Street Bank and Trust Company,
1776 Heritage Drive, North Quincy, Massachusetts 02171, serves as Custodian
for the Equity Portfolio. PFPC International Ltd., 80 Harcourt Street,
Dublin, Ireland, as Administrator, maintains, under the general supervision
of the Manager, certain accounting records and determines the net asset value
for the Equity Portfolio and also acts as Transfer Agent and Dividend
Disbursing Agent.

ACCOUNTANTS. Coopers & Lybrand L.L.P., independent auditors, serve
as auditors of the Equity Portfolio. Their address is 1301 Avenue of the
Americas, New York, New York 10019.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

The Equity Portfolio's agreement with the Manager recognizes that in
the purchase and sale of portfolio securities, the Manager and Subadvisor
will seek the most

B-9
<PAGE>

favorable price and execution and, consistent with that policy, may give
consideration to the research, statistical and other services furnished by
brokers or dealers to the Manager or Subadvisor for their use. Such services
include supplemental investment research, analysis and reports concerning
issuers, industries and securities deemed by the Manager and Subadvisor to be
beneficial to the Equity Portfolio. In addition, the Manager and the
Subadvisor are authorized to place orders with brokers who provide
supplemental investment and market research and statistical and economic
analysis through the use of such brokers selected solely on the basis of
seeking the most favorable price and execution, although such research and
analysis may be useful to the Manager and the Subadvisor in connection with
their services to clients other than the Equity Portfolio.

In over-the-counter markets, the Equity Portfolio deals with primary
market-makers unless a more favorable execution or price is believed to be
obtainable. The Equity Portfolio may buy securities from or sell securities
to dealers acting as principal, except dealers with which their directors
and/or officers are affiliated.

When two or more investment advisory clients of the Manager or the
Subadvisor desire to buy or sell the same security at the same time, the
securities purchased or sold are allocated by the Manager and the Subadvisor
in a manner believed to be equitable to each client. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions readily obtainable or saleable.

During the fiscal year ended November 30, 1996, the Equity Portfolio
paid brokerage commissions in the aggregate amount of $13,039.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Shares of beneficial interest in the Equity Portfolio have no
preemptive rights and only such conversion or exchange rights as the Board of
Trustees may grant in its discretion. When issued for payment as described
in Part A, the shares will be fully paid and nonassessable.

Investors are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the aggregate
and not by class or series except as otherwise required by the 1940 Act or
other applicable law or when permitted by the Board of Trustees.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an
investment company such as the Equity Portfolio shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each class or series affected by such matter. Rule
18f-2 further provides that a class or series shall be deemed to be affected
by a matter unless it is clear that the interests of each class or series in
the matter are substantially identical or that the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distributing
contracts and the election of directors from the separate voting requirements
of the Rule.

B-10
<PAGE>

The Equity Portfolio reserves the right to create and issue a number
of series, in which case the investments in each series would participate
equally in the earnings and assets of the particular series. Investors in
each series would be entitled to vote separately to approve advisory
agreements or changes in investment policy, but investors of all series would
vote together in the election or selection of Trustees, principal
underwriters and accountants for the Equity Portfolio. Upon liquidation of
the Portfolio, the investors in each series would be entitled to share pro
---
rata in the net assets of their respective series available for distribution
----
to investors.

ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.

Net asset value per share is determined as of the close of the New
York Stock Exchange ("NYSE") (currently 4:00 p.m. New York City time), on
each business day that the NYSE is open. Currently, the NYSE is closed on
New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

The net asset value per share is determined by dividing the market
value of the Equity Portfolio's securities as of the close of trading plus
any cash or other assets (including dividends and accrued interest
receivable) less all liabilities (including accrued expenses), by the number
of shares outstanding. Equity Portfolio securities are valued at the last
sales price on the securities exchange or securities market on which such
securities are primarily traded. Securities traded on a foreign exchange or
over-the-counter market are valued at the last sales price on the primary
exchange or market on which they are traded. Securities for which there are
not recent sales transactions are valued based on quotations provided by
primary market makers in such securities. Any securities for which recent
market quotations are not readily available are valued at fair value
determined in accordance with procedures approved by the Trustees. Short-
term obligations with less than sixty days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than
sixty days remaining to maturity will be valued at current market value until
the sixtieth day prior to maturity, and will then be valued on an amortized
cost basis based on the value on such date unless the Trustees determines
that this amortized cost value does not represent fair market value.
Expenses and fees, including the investment management fee are accrued daily
and taken into account for the purpose of determining the net asset value of
the Equity Portfolio shares.

Generally, trading in foreign securities, as well as U.S. Government
securities, money market instruments and repurchase agreements, is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value of
the Equity Portfolio shares are determined at such times. Foreign currency
exchange rates are also generally determined prior to the close of the NYSE.
Occasionally, events affecting the value of such securities and such exchange
rates may occur between the times at which they are determined and the close
of the NYSE, which will not be reflected in the computation of net asset
value. If during such periods events occur which materially affect the value
of such securities, the securities will

B-11
<PAGE>

be valued at their fair market value as determined in accordance with
procedures approved by the Trustees.

For purposes of determining the net asset value per share of the
Equity Portfolio, all assets and liabilities initially expressed in foreign
currencies will be converted into US dollars at the mean between the bid and
offer prices of such currencies against US dollars quoted by a major bank
that is a regular participant in the foreign exchange market or on the basis
of a pricing service that takes into account the quotes provided by a number
of such major banks.

ITEM 20. TAX STATUS.

ITEM 21. UNDERWRITERS.

The placement agent for the Equity Portfolio is AIG Equity Sales
Corp., 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 Equity Portfolio.

ITEM 22. CALCULATION OF PERFORMANCE DATA. Not applicable.

B-12
<PAGE>

ITEM 23. FINANCIAL STATEMENTS.

The financial statements included herein have been included in reliance
upon the report of Coopers & Lybrand L.L.P., independent accountants, as
experts in accounting and auditing.

B-13
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
FINANCIAL STATEMENTS
TABLE OF CONTENTS

<S> <C>
PORTFOLIO OF INVESTMENTS B-15
STATEMENT OF ASSETS AND LIABILITIES B-18
STATEMENT OF OPERATIONS B-19
STATEMENT OF CHANGES IN NET ASSETS B-20
FINANCIAL HIGHLIGHTS B-21
NOTES TO FINANCIAL STATEMENTS B-22
REPORT OF ACCOUNTANTS B-27
</TABLE>

B-14
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Portfolio of Investments
November 30, 1996
- -----------------------------------------------------------------------------------

Value
Description Shares (Note 2a)
--------------- ---------- -------------
<S> <C> <C>
COMMON STOCKS - 99.1%

Australia - 0.4%
News Corp Ltd.................................... 2,500 $ 13,317
----------

Canada - 4.3%
Canadian Pacific Ltd............................. 2,400 66,000
Philip Environmental, Inc........................ 5,000 65,000
----------
131,000
----------
France - 5.6%
Castorama Dubois Investissement.................. 180 31,708
Generale des Eaux................................ 300 36,993
Schneider........................................ 450 21,412
Societe Generale................................. 400 43,733
Total CIE Franc des Petroles B shares............ 500 39,990
----------
173,836
----------
Germany - 3.0%
Veba AG.......................................... 1,600 93,735
----------

Hong Kong - 7.7%
Cheung Kong Infrastructure....................... 48,000 116,710
DC Finance Holding............................... 90,000 56,163
DC Finance Warrants.............................. 9,000 1,047
Hutchinson Whampoa............................... 8,000 61,821
----------
235,741
----------
Japan - 27.1%
Advantest........................................ 500 21,353
Aoki International............................... 2,000 39,016
Bank of Tokyo - Mitsubishi Ltd................... 2,000 40,949
Canon, Inc....................................... 1,000 21,090
Chiba Bank....................................... 5,000 37,917
Fanuc............................................ 500 16,301
Hitachi.......................................... 4,000 37,258
Hitachi Zosen Corp............................... 2,000 9,262
Kajima Corp...................................... 3,000 23,990
Kao Corp......................................... 1,000 11,599
Katokichi........................................ 2,000 40,773
Kuraray Co....................................... 2,000 19,332
Marui Co......................................... 1,000 18,981
Matsushita Electrical Works...................... 3,000 27,944
Mitsubishi Heavy Industries...................... 1,000 8,172
Mitsubishi Motors................................ 5,000 39,148
NEC Corp......................................... 2,000 24,253
Nippon Electric Glass............................ 2,000 30,229
Nippon Steel Corp................................ 5,000 15,114
Nippon Telegraph and Telephone Corp.............. 3 21,406
Nomura Securities................................ 1,000 16,872
</TABLE>

See Accompanying Notes to Financial Statements.

B-15
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

- -------------------------------------------------------------------------
Portfolio of Investments - Continued
November 30 , 1996
- -------------------------------------------------------------------------

<TABLE>
<CAPTION>
Value
Description Shares (Note 2a)
------------- -------- -----------
<S> <C> <C>
Japan- Continued
Sakura Bank.................................... 4,000 $ 36,555
Sankyo Co. Ltd................................. 1,000 26,801
Showa Shell Sekiyu............................. 2,000 19,156
Sumitomo....................................... 4,000 44,288
Toagosei Co. Ltd............................... 4,000 17,153
Tokio Marine & Fire............................ 2,000 22,144
Tokyo Electric Power........................... 1,800 40,650
Tokyo Ohka Kogyo............................... 700 16,485
Tomen Corporation.............................. 5,000 15,905
Tonami Transport............................... 5,000 28,515
Toto........................................... 1,000 13,093
Toyo Trust and Banking......................... 2,000 17,276
Yodogawa Steel Works........................... 3,000 18,111
----------
837,091
----------
Malaysia - 1.0%
Hong Leong Credit.............................. 5,000 30,861
----------

Mexico - 3.8%
Cementos de Mexico............................. 35,000 116,378
----------

Netherlands - 4.8%
Getronics NV................................... 2,000 53,578
Hunter Douglas NV.............................. 500 32,703
Koninklijke Ahold NV........................... 1,000 62,565
----------
148,846
----------
Philippines - 0.9%
Universal Rightfield Properties................213,000 27,551
----------

Spain - 2.5%
Bankinter SA................................... 300 39,382
Corporacion Mapfre Compania.................... 700 37,027
----------
76,409
Sweden - 1.3%
Astra AB A - Free Shares...................... 800 38,376
----------

Switzerland - 2.0%
Roche Holdings AG.............................. 8 61,553
----------

United Kingdom - 8.5%
Cable & Wireless PLC........................... 5,000 39,991
Glynwed International PLC...................... 6,500 38,172
Laporte PLC.................................... 3,000 34,480
National Westminster........................... 3,500 40,491
Stanley Leisure Org. PLC....................... 9,000 38,638
Tarmac PLC..................................... 25,000 37,177
Vaux Group PLC................................. 8,000 33,875
----------
262,824
----------
</TABLE>

See Accompanying Notes to Financial Statements.

B-16
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

Value
Description Shares (Note 2a)
------------- -------- -----------

United States - 26.2%
Allstate Corp.................................. 1,000 $ 60,250
Bellsouth Corp................................. 900 36,338
Cooper Industries, Inc......................... 1,000 41,500
Emerson Electric Co............................ 600 58,875
Federal National Mortgage Association.......... 900 37,125
Flowers Industries, Inc........................ 3,000 70,875
Kroger Co...................................... 1,065 49,123
Nabisco Holdings Corp.......................... 1,200 46,500
Octel Communications Corp...................... 1,000 18,000
Pall Corp...................................... 1,800 47,025
Penney (J.C.), Inc............................. 1,000 53,750
Public Storage, Inc............................ 2,000 50,750
Snap - On, Inc................................. 1,500 54,375
Ultramar Diamond............................... 1,600 50,800
Unifi, Inc..................................... 1,800 54,675
Union Pacific Corp............................. 700 40,775
Union Pacific Resources........................ 1,300 38,837
----------
809,573
----------

Total Common Stocks (Cost $2,876,960) - 99.1% ...... 3,057,091
Other Assets in Excess of Liabilities - 0.9%........ 28,299
----------
NET ASSETS - 100% .................................. $3,085,390
==========

* For federal income tax purposes, cost is substantially the same as for
net unrealized appreciation is as follows:

Unrealized appreciation: $ 265,596
Unrealized depreciation: (85,465)
---------

Net unrealized appreciation: $ 180,131
=========

See Accompanying Notes to Financial Statements

B-17
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

- ----------------------------------------------------------------------
Statement of Assets and Liabilities
November 30, 1996
- ----------------------------------------------------------------------

ASSETS:
Investment in securities at value (cost $2,876,960) $ 3,057,091
Deferred organization costs ........................ 163,636
Cash................................................ 118,511
Receivable for investment securities sold........... 42,899
Dividends and interest receivable................... 3,863
------------
Total Assets ................................. 3,386,000
------------

LIABILITIES:
Payable for investment securities purchased ........ 158,927
Due to Manager...................................... 58,534
Accrued legal fees ................................. 24,999
Accrued administration expenses .................... 17,659
Miscellaneous accrued expenses ..................... 40,491
------------
Total Liabilities............................ 300,610
------------

NET ASSETS..............................................$ 3,085,390
============

COMPOSITION OF NET ASSETS:
Capital paid in.....................................$ 2,905,056
Netunrealized appreciation on investments
and foreign currency transactions and forward
foreign currency contracts........................ 180,334
------------
Net Assets..............................................$ 3,085,390
============

See Accompanying Notes to the Financial Statements.

B-18
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

- ------------------------------------------------------------------------------
Statement of Operations
For the period from December 15, 1995* to November 30, 1996
- ------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends .................................................$ 13,228
Interest .................................................. 3,404
-------------
16,632
-------------

EXPENSES:
Administrative expense..................................... 95,423
Directors' fees and expenses............................... 50,000
Organization expense....................................... 40,909
Insurance expense.......................................... 29,195
Legal expense.............................................. 25,000
Investment advisory expense................................ 12,776
Audit expense.............................................. 12,500
Registration expense....................................... 3,044
Miscellaneous accrued expenses............................. 7,208
-------------

Total expenses before reductions....................... 276,055
-------------

Less: Fee waivers and expense reimbursements by Manager.... (195,435)
Less: Fee waivers by Administrator......................... (57,591)
Less: Fee waivers by Transfer Agent........................ (1,763)
-------------

Net expenses............................................... 21,266
-------------

Net Investment Loss .............................. (4,634)
-------------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and foreign
currency transactions.................................... 59,180
Net unrealized appreciation on investments and
foreign currency transactions............................ 180,334
-------------
Net realized and unrealized gain on investments
and foreign currency transactions............... 239,514
-------------
Net Increase in Net Assets Resulting
from Operations.........................$ 234,880
=============
</TABLE>

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

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

B-19
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the period from December 15, 1995* to November 30, 1996
- ---------------------------------------------------------------------------------------------------
<S> <C>
OPERATIONS:
Net investment loss...........................................................$ (4,634)
Net realized gain on investments and foreign currency transactions............ 59,180
Net unrealized appreciation on investments and foreign currency transactions.. 180,334
---------------
Net Increase in Net Assets Resulting from Operations..................... 234,880
---------------

CAPITAL TRANSACTIONS:
Proceeds from capital invested................................................ 2,749,510
---------------

Total Increase in Net Assets ........................................... 2,984,390

Net assets at the beginning of the period......................................... 101,000
---------------

NET ASSETS at the end of the period...............................................$ 3,085,390
===============
</TABLE>

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

*Commencement of Operations.

See Accompanying Notes to the Financial Statements.

B-20
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO

- ---------------------------------------------------------------------------
Financial Highlights
For the period from December 15, 1995* to November 30, 1996
- ---------------------------------------------------------------------------

Net assets, end of period (000's) .....$ 3,085

Ratio of expenses to average net assets 2.00%(a)(b)
Ratio of net investment loss to average (0.44%)(a)(b)

Portfolio turnover rate................ 26.31%(c)

Average commission rate paid...........$ 0.0069 (d)

- ----------

*Commencement of Operations.
(a) Net of fee waivers and expense reimbursements which had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 25.74 percentage
points (annualized).
(b) Annualized.
(c) This figure is calculated for the period during which there were equity
holdings.
(d) Represents total commissions paid on portfolio securities divided by the
total number of shares purchased and sold on which commissions are charged.

See Accompanying Notes to the Financial Statements.

B-21
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
______________________________________________________________________________
Notes to Financial Statements
November 30, 1996
______________________________________________________________________________

NOTE 1 - ORGANIZATION

First Global Equity Portfolio (the "Equity Portfolio"), a Delaware Business
Trust, is registered under the Investment Company Act of 1940, as amended, as an
open-end diversified management investment company. The Equity Portfolio was
organized on June 26, 1995 and commenced operations on December 15, 1995.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the
Equity Portfolio in the preparation of its financial statements. 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 in the financial statements. Actual
results could differ from those estimates.

All the net investment income and unrealized and realized gains and losses from
securities and foreign currency transactions of the Equity Portfolio are
allocated pro-rata amongst the investors in the Equity Portfolio at the time of
such determination.

A) SECURITY VALUATIONS:

Securities traded on a foreign exchange or over-the-counter market are
valued at the last sales price on the primary exchange or market in which
they are traded. Securities for which there are no recent sales
transactions are valued based on quotations provided by primary market
makers in such securities. Any securities for which recent market
quotations are not readily available are valued at fair value determined in
accordance with procedures approved by the Board of Trustees of the Equity
Portfolio. Short-term securities with less than sixty days remaining to
maturity when acquired are valued at amortized cost, which approximates
value. Short-term securities with more than sixty days remaining to
maturity are valued at current market value until the sixtieth day prior to
maturity, and are then valued on an amortized cost basis.

B-22
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
_______________________________________________________________________________
Notes to Financial Statements
November 30, 1996
______________________________________________________________________________

NOTE 2 - CONTINUED

B) INVESTMENT INCOME AND SECURITY TRANSACTIONS:

Security transactions of the Equity Portfolio are accounted for on a trade
date basis. Realized gains and losses on securities transactions are
determined on the identified cost basis. Interest income, including
accretion of discount and amortization of premium, is accrued daily.
Dividend income is recognized on the ex-dividend date.

C) FOREIGN CURRENCY TRANSACTIONS:

The Equity Portfolio's investment valuations and other assets and
liabilities initially expressed in foreign currencies are converted each
day into U.S. dollars based upon currency exchange rates determined prior
to the close of the New York Stock Exchange. Purchases and sales of
foreign investments and income and expenses are converted into U.S. dollars
based upon currency exchange rates prevailing on the respective dates of
such transactions. The Equity Portfolio does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices
of securities held. Such fluctuations are included in net realized and
unrealized gains or losses on securities.

The Equity Portfolio may enter into forward foreign currency exchange
contracts to fix the U.S. dollar value of a security it has agreed to buy
or sell for the period between the date the trade was entered into and the
date the security is delivered and paid for. A forward foreign currency
exchange contract is an agreement to purchase or sell a specific currency
at a future date and at a price set at the time the contract is entered
into.

The Equity Portfolio is not required to enter into forward contracts with
regard to settlement of its foreign currency-denominated securities and
will not do so unless deemed appropriate by AIG Capital Management Corp.
(the "Manager") or AIG Global Investment Corp. ("AIG Global"), the
subadvisor. Forward foreign currency exchange contracts do not eliminate
fluctuations in the underlying price of the securities. They simply
establish a rate of exchange at a future date. Additionally, although such
contracts tend to minimize the risk of loss due to fluctuations in the
value of the currency being traded, at the same time, they tend to limit
any potential gain which might result from an increase in the value of that
currency. With respect to forward foreign currency exchange contracts,
losses in excess of amounts recognized in the statement of assets and
liabilities may arise due to changes in value of the foreign currency or if
the counterparty does not perform under the contract.

B-23
<PAGE>

NOTE 2 - CONTINUED

D) FEDERAL INCOME TAXES:

The Equity Portfolio will be classified as a partnership for United States
federal income tax purposes. As a consequence, the Equity Portfolio itself
will not be subject to United States federal income tax, but each investor
in the Equity Portfolio will be required to take into account its
distributive share of items of partnership income, gain, loss, deduction
and credit substantially as though such items had been realized directly by
the investor and without regard to whether any distribution from the Equity
Portfolio has been or will be received.

E) ORGANIZATION EXPENSES:

Expenses of $204,545 incurred in connection with the organization of the
Equity Portfolio are being amortized on a straight line basis over a five
year period beginning December 15, 1995. The amount paid by the fund on
any redemption by AIG Asset Management Services, Inc. will be reduced by a
proportion of any unamortized organizational expenses determined by the
proportion of the amount of capital withdrawn and the amount of initial
capital of the Equity Portfolio owned by such holder, outstanding
immediately prior to such withdrawal.

NOTE 3 - AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

The Manager, an indirect wholly owned subsidiary of American International
Group, Inc. ("AIG"), serves as the Equity Portfolio's investment adviser and is
responsible for the management of the assets of the Equity Portfolio in
conformity with its stated objectives and policies. For its services, the
Manager is entitled to a fee calculated daily and paid monthly, at an annual
rate of 1.20% of the average daily net assets of the Equity Portfolio. The
Manager has voluntarily agreed to waive its management fee or reimburse the
Equity Portfolio's expenses to the extent that its total operating expenses
exceed 2.00% of average daily net assets for a limited period. For the period
ended November 30, 1996, the Manager waived its entire fee as adviser and
reimbursed the Equity Portfolio in the aggregate amount of $195,435.

B-24
<PAGE>

NOTE 3 - CONTINUED

The Manager has entered into a subadvisory agreement with AIG Global, a wholly
owned subsidiary of AIG which is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"). Pursuant to its subadvisory agreement,
AIG Global provides investment advisory services to the Manager in respect of
the management of the assets of the Equity Portfolio and officers of AIG Global
provide representation on the Manager's Investment Committee. Under the
subadvisory agreement, the Manager is required to pay AIG Global a fee at an
annual rate of 0.15% of the average daily net assets of the Equity Portfolio.
These fees are paid from the management fee paid to the Manager.

The Manager was previously party to a subadvisory agreement with AIG Global
Investment Corp. (Europe) Ltd., ("AIG Global Europe"), a wholly owned subsidiary
of AIG. Effective May 28, 1996, AIG Global Europe deregistered under the
Advisers Act and the subadvisory agreement was replaced with a service agreement
pursuant to which AIG Global Europe agreed to provide investment advisory
services.

The Manager serves as the Equity Portfolio's investment adviser and is
responsible for the management of the assets and review and supervision of the
investment program. In addition to the subadvisory agreements, the Manager has
entered into service agreements with certain affiliates, including AIG Global
Europe, whereby such affiliates provide investment advisory services under the
direction of the Manager. Certain officers of these affiliates provide
representation on the Manager's Investment Committee. Under the terms of the
service agreements, the Manager is required to pay the service providers a total
combined fee at an annual rate of 0.45% of the average daily net assets of the
Equity Portfolio. These fees are paid from the management fee paid to the
Manager. There have been no such fees paid through the period ended November
30, 1996.

PFPC International Ltd. serves as the Equity Portfolio's administrator and
accounting agent. For the period ended November 30, 1996, PFPC International
Ltd. voluntarily waived $57,591 of its fee. State Street Bank and Trust Company
serves as custodian of the Equity Portfolio's assets.

Certain trustees and officers of the Equity Portfolio are also directors and/or
officers of the Manager. These trustees and officers are paid no compensation
by the Equity Portfolio.

B-25
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO
__________________________________________________________________________
Notes to Financial Statements
November 30, 1996
__________________________________________________________________________

NOTE 4 - SECURITIES TRANSACTIONS

For the period ended November 30, 1996, purchases of portfolio securities (other
than short-term securities) were $3,312,710. Sales of portfolio securities were
$499,298.

NOTE 5 - FORWARD FOREIGN CURRENCY CONTRACTS AS OF NOVEMBER 30, 1996
<TABLE>
<CAPTION>

Unrealized
Market Value Contract Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Price Date (Depreciation)
- ----------------- ------------------------------------------------------
<S> <C> <C> <C> <C>
British Pound Sterling $ 41,483 0.59382 12/03/96 $ (49)
British Pound Sterling 37,951 0.59382 12/03/96 (44)
Spanish Peseta 35,517 129.50000 12/03/96 (140)
------- -----
Total Contracts to Buy: 114,951 (233)

Contracts to Sell:
- ------------------
British Pound Sterling 42,933 0.59382 12/03/96 51
-----
Total Unrealized Depreciation $ (182)
=======
</TABLE>

B-26
<PAGE>

FIRST GLOBAL EQUITY PORTFOLIO

REPORT OF
INDEPENDENT ACCOUNTANTS

To the Holders of Beneficial Interest and Board of Trustees of First Global
Equity Portfolio:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of First Global Equity Portfolio as of November
30, 1996, and the related statement of operations, the statement of changes in
net assets and the financial highlights for the period from December 15, 1995
(commencement of operations) to November 30, 1996. These financial statements
and the financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosure in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1996, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
First Global Equity Portfolio as of November 30, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
period from December 15, 1995 (commencement of operations) to November 30, 1996,
in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New York, New York
January 2, 1997

B-27
<PAGE>

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements and Schedules:

The financial statements included in Part B, Item 23 of this
Registration Statement are as follows:

Portfolio of Investments, Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, Financial
Highlights, Notes to the Financial Statements and the Report of
Independent Accountants thereon of First Global Equity Portfolio
as of November 30, 1996.

(b) EXHIBITS:

(1) Declaration of Trust of the Registrant./2/

(2) By-laws of Registrant./2/

(3) (Not applicable)

(4) (Not applicable)

(5)(a) Form of Management Agreement./2/
(5)(b) Form of Subadvisory Agreement with AIG Global Investment Corp./2/

(6) (Not applicable)

(7) (Not applicable)

(8) Form of Custody Agreement./3/

(9)(a) Form of Administration and Accounting Services Agreement./2/
(9)(b) Form of Transfer Agency Agreement./2/
(9)(c) Form of Exclusive Private Placement Agreement./2/

(10) (Not Applicable)

(11) Consent of Independent Accountants./3/

(12) (Not applicable)

(13) Form of Agreement with Respect to Provision of Initial Capital./2/

(14) (Not Applicable)

(15) (Not applicable)

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

/2/ Filed with the initial filing of this Registration Statement on July 21,
1995.
/3/ Filed herewith.

c-i
<PAGE>

PART C. OTHER INFORMATION (CONTINUED)

(16) (Not applicable)

(17) Financial Data Schedule for First Global Equity Portfolio./3/

(18) (Not applicable)

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

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

As of December 31, 1996, there were three holders of Beneficial Interests of
the Registrant.

ITEM 27. INDEMNIFICATION

Title 12, Section 3817 of the Delaware Code provides that the Registrant may
indemnify its directors, officers, employees and agents. Article V of the
Registrant's Declaration of Trust and Article VII of the Registrant's By-Laws
provide that the Registrant shall indemnify to the fullest extent permitted
by law any person made or threatened to be made a party to any action, suit
or proceeding by reason of the fact that such person or such person's
testator or intestate is or was a trustee, officer or employee of the
Registrant, provided that no representative of the Registrant shall be
indemnified to the extent liability results from misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct
of such representative's office.

The Registrant maintains or intends to obtain, subject to availability and
the determination of the trustees as to the reasonableness of insurance
premiums from time to time, insurance insuring its officers and trustees
against certain liabilities incurred in their capacities as such, and
insuring the Registrant against any payments which it is obligated to make to
such persons under the foregoing indemnification provisions.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

AIG Capital Management Corp. (Manager)
----------------------------

AIG Capital Management Corp. is a U.S. registered investment advisor which
also manages the assets of the AIG Money Market Fund, a separate money market
investment portfolio of The Advisors' Inner Circle Fund, and the assets of
the AIG Children's World Fund - 2005 and the AIG Retiree Fund - 2003, each a
separate series of AIG All Ages Funds, Inc. Each of The Advisors' Inner
Circle Fund and AIG All Ages Funds, Inc. is an open end investment company
that is registered under the Investment Company Act of 1940.

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

/3/ Filed herewith.

c-ii
<PAGE>

PART C. OTHER INFORMATION (CONTINUED)

AIG Global Investment Corp. (Subadvisor)
----------------------------------------

AIG Global Investment Corp. is a U.S. registered investment advisor that
provides global asset management services primarily to AIG and its
subsidiaries, but also provides investment advisory services to third
parties.

The list required by this Item 28 of officers and directors of AIG Capital
Management Corp. and AIG Global Investment Corp., together with information
as to any other business, vocation, profession or employment of a substantial
nature engaged in by such officers and directors during the past two years,
is incorporated by reference to Schedules A and D of Form ADV filed by AIG
Capital Management Corp. and AIG Global Investment Corp., respectively,
pursuant to the Investment Advisers Act of 1940 (SEC File Nos. 801-47192 and
801-18759, respectively).

ITEM 29. PRINCIPAL UNDERWRITERS

Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS - All accounts, books and other
documents required to be maintained by Section 31(a) of the 1940 Act
and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder will
be maintained by the following:

AIG Capital Management Corp , 70 Pine Street, New York, New York 10270
(records relating to its function as investment adviser)

State Street Bank and Trust Company, 1776 Heritage Drive, North
Quincy, Massachusetts 02071 (records relating to its function as
custodian)

PFPC International Ltd., 80 Harcourt Street, Dublin, Ireland (records
relating to its functions as custodian and transfer agent)

ITEM 31. MANAGEMENT SERVICES - None not discussed in Part A or Part B of the
Registration Statement for the Registrant.

ITEM 32. UNDERTAKINGS

Not applicable.

c-iii
<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Grand Cayman, the
Cayman Islands, on the 5th day of January, 1997.

FIRST GLOBAL EQUITY PORTFOLIO

By: /s/ Daniel K. Kingsbury
------------------------------------
Daniel K. Kingsbury
President
<PAGE>

EXHIBIT INDEX

A complete list of exhibits is included in Part C, Item 24(b) of the
Registration Statement. The following exhibits are filed herewith.

EXHIBIT
-------

(8) Form of Custody Agreement

(11) Consent of Independent Accountants

(17) Financial Data Schedule for First Global Equity Portfolio.

<PAGE>

<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 2876960
<INVESTMENTS-AT-VALUE> 3057091
<RECEIVABLES> 46762
<ASSETS-OTHER> 282147
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3386000
<PAYABLE-FOR-SECURITIES> 158927
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 141683
<TOTAL-LIABILITIES> 300610
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2905056
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (4634)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 59180
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 180334
<NET-ASSETS> 3085390
<DIVIDEND-INCOME> 13228
<INTEREST-INCOME> 3404
<OTHER-INCOME> 0
<EXPENSES-NET> 21266
<NET-INVESTMENT-INCOME> (4634)
<REALIZED-GAINS-CURRENT> 59180
<APPREC-INCREASE-CURRENT> 180334
<NET-CHANGE-FROM-OPS> 234880
<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> 2984390
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12776
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 276055
<AVERAGE-NET-ASSETS> 1099445
<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> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

EXHIBIT 99.8

CUSTODIAN CONTRACT
Between
FIRST GLOBAL EQUITY PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY

Global/Corporation
21D
<PAGE>

TABLE OF CONTENTS
-----------------
Page
----

1. Employment of Custodian and Property to be
Held By It................................................. 1

2. Duties of the Custodian with Respect to Property of
the Fund Held by the Custodian in the United States........ 1

2.1 Holding Securities................................. 1
2.2 Delivery of Securities............................. 2
2.3 Registration of Securities......................... 4
2.4 Bank Accounts...................................... 4
2.5 Availability of Federal Funds...................... 5
2.6 Collection of Income............................... 5
2.7 Payment of Fund Monies............................. 5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased.................... 7
2.9 Appointment of Agents.............................. 7
2.10 Deposit of Securities in U.S. Securities System.... 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System....................................... 8
2.12 Segregated Account................................. 9
2.13 Ownership Certificates for Tax Purposes............ 10
2.14 Proxies............................................ 10
2.15 Communications Relating to Fund
Portfolio Securities............................... 10

3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States................. 10

3.1 Appointment of Foreign Sub-Custodians................. 10

3.2 Assets to be Held.................................... 11

3.3 Foreign Securities Systems........................... 11

3.4 Holding Securities................................... 11
<PAGE>

3.5 Agreements with Foreign Banking Institutions....... 11
3.6 Access of Independent Accountants of the Fund...... 12
3.7 Reports by Custodian............................... 12
3.8 Transactions in Foreign Custody Account............ 12
3.9 Liability of Foreign Sub-Custodians................ 12
3.10 Liability of Custodian............................. 13
3.11 Reimbursement for Advances......................... 13
3.12 Monitoring Responsibilities........................ 13
3.13 Branches of U.S. Banks............................. 14
3.14 Tax Law............................................ 14

4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund.............................. 14

5. Proper Instructions................................ 15

6. Actions Permitted Without Express Authority........ 15

7. Evidence of Authority.............................. 16

8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income......................................... 16

9. Records............................................ 16

10. Opinion of Fund's Independent Accountant........... 16

11. Reports to Fund by Independent Public Accountants.. 17

12. Compensation of Custodian.......................... 17

13. Responsibility of Custodian........................ 17

14. Effective Period, Termination and Amendment........ 19
<PAGE>

15. Successor Custodian................................ 19

16. Interpretive and Additional Provisions............. 20

17. Massachusetts Law to Apply......................... 20

18. Prior Contracts.................................... 20

19. Shareholder Communications Election................ 21

20. Notices............................................ 21
<PAGE>

CUSTODIAN CONTRACT
------------------

This Contract between First Global Equity Portfolio, a Delaware business
trust, having its principal place of business at 70 Pine Street, New York, New
York, 10270, hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",

WHEREAS, the Fund has appointed the Custodian as custodian of its assets;
and

NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------

The Fund hereby employs the Custodian as the custodian of its assets,
including securities which it desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside the
United States ("foreign securities"). The Fund agrees to deliver to the
Custodian all securities and cash of the Fund, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund from time to time, and the cash consideration
received by it for such new or treasury shares of beneficial interest of the
Fund ("Shares") as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Fund not delivered to the
Custodian.

Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable vote by the
Board of Trustees of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodians for the Fund's
foreign securities the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.

2. Duties of the Custodian with Respect to Property of the Fund Held By the
------------------------------------------------------------------------
Custodian in the United States
------------------------------

2.1 Holding Securities. The Custodian shall hold and segregate for the account
------------------
of the Fund all non-cash property, to be held by it in the United States,
including all domestic securities owned by the Fund, other than (a)
securities which are maintained pursuant to Section 2.10 in a clearing
agency which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, each a "U.S. Securities
System" and (b) commercial paper of an issuer for which the Custodian acts
as issuing and paying agent
<PAGE>

("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section 2.11.

2.2 Delivery of Securities. The Custodian shall release and deliver domestic
----------------------
securities owned by the Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book-
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:

1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;

2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;

3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;

4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;

5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;

6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;

7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of
<PAGE>

such securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement; provided
that, in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;

9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the
Custodian;

10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as agreed
--- ----
upon from time to time by the Custodian and the Fund, which may be in
the form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited to
the Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be held liable
or responsible for the delivery of securities owned by the Fund prior
to the receipt of such collateral;

11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only against
--- ----
receipt of amounts borrowed;

12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;

13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the
Fund;

14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and

15) For any other proper corporate purpose, but only upon receipt
--- ----
of, in

<PAGE>

addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.

2.3 Registration of Securities. Domestic securities held by the Custodian
---------------------------
(other than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a nominee to be used
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form. If, however, the Fund
directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the Fund on a best efforts basis
only of relevant corporate actions including, without limitation, pendency
of calls, maturities, tender or exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
--------------
account or accounts in the United States in the name of the Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Custodian for the Fund may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
--------
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds
to be deposited with each such bank or trust company shall on behalf of the
Fund be approved by vote of a majority of the Board of Trustees of the
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.

2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and
------------------------------
the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
<PAGE>

2.6 Collection of Income. Subject to the provisions of Section 2.3, the
---------------------
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which the
Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to which
the Fund is properly entitled.

2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
-----------------------
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:

1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities or evidence of title to
such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a custodian
and has been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the conditions
set forth in Section 2.11; (d) in the case of repurchase agreements
entered into between the Fund and the Custodian, or another bank, or
a broker-dealer which is a member of NASD, (i) against delivery of
the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Custodian along with
written evidence of the agreement by the Custodian to repurchase
such securities from the Fund or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant to Proper Instructions as
defined in Article 5;

2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
<PAGE>

3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Article 4 hereof;

4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;

5) For the payment of any dividends on Shares of the Fund declared
pursuant to the governing documents of the Fund;

6) For payment of the amount of dividends received in respect of
securities sold short;

7) For any other proper purpose, but only upon receipt of, in addition to
--- ----
Proper Instructions, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.

2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
--------------------------------------------------------------------
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
the Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund to
so pay in advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received
by the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in its
---------------------
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.

2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
------------------------------
deposit and/or maintain domestic securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board
<PAGE>

and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:

1) The Custodian may keep securities of the Fund in a U.S. Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;

2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Fund;

3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the U.S. Securities System that payment for
such securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund. Copies of all
advices from the U.S. Securities System of transfers of securities for
the account of the Fund shall identify the Fund, be maintained for the
Fund by the Custodian and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Fund.

4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;

5) The Custodian shall have received from the Fund the initial or annual
certificate, as the case may be, required by Article 14 hereof;

6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the U.S. Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the U.S. Securities System
or any other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the Fund has not
been made whole for any such loss or damage.
<PAGE>

2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
--------------------------------------------------------
deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:

1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;

2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;

3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;

4) The Custodian shall pay for securities purchased for the account of
the Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities sold for the
account of the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of the Fund;

5) The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the Direct Paper System
for the account of the Fund;

6) The Custodian shall provide the Fund with any report on its system of
internal accounting control as the Fund may reasonably request from
time to time.

2.12 Segregated Account. The Custodian shall upon receipt of Proper
-------------------
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance
with the provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any
<PAGE>

registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written
by the Fund or commodity futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the
--- ----
case of clause (iv), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees or of the Executive
Committee signed by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.

2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
---------------------------------------
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection
with transfers of securities.

2.14 Proxies. The Custodian shall, with respect to the domestic securities held
--------
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.

2.15 Communications Relating to Fund Portfolio Securities. Subject to the
-----------------------------------------------------
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund all written information (including, without limitation, pendency of
calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or sold
by the Fund) received by the Custodian from issuers of the securities being
held for the Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund all written information
received by the Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the Fund
shall notify the Custodian at least three business days prior to the date
on which the Custodian is to take such action.

3. Duties of the Custodian with Respect to Property of the Fund Held Outside
-------------------------------------------------------------------------
of the United States
--------------------

3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
--------------------------------------
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
<PAGE>

Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities depositories
to act as foreign sub-custodian. Upon receipt of Proper Instructions, the
Fund may instruct the Custodian to cease the employment of any one or more
such sub-custodians for maintaining custody of the Fund's assets.

3.2 Assets to be Held. The Custodian shall limit the securities and other
------------------
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.

3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
---------------------------
writing by the Custodian and the Fund, assets of the Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities held outside the
United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.

3.4 Holding Securities. The Custodian may hold securities and other non-cash
-------------------
property for all of its customers, including the Fund, with a foreign sub-
custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property belonging to the
Fund and (ii) the Custodian shall require that securities and other non-
cash property so held by the foreign sub-custodian be held separately from
any assets of the foreign sub-custodian or of others.

3.5 Agreements with Foreign Banking Institutions. Each agreement with a
---------------------------------------------
foreign banking institution shall provide that: (a) the assets of each
Fund will not be subject to any right, charge, security interest, lien or
claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets of each Fund will
be freely transferable without the payment of money or value other than for
custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to the Fund; (d) officers of or
auditors employed by, or other representatives of the
<PAGE>

Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the
books and records of the foreign banking institution relating to its
actions under its agreement with the Custodian; and (e) assets of the Funds
held by the foreign sub-custodian will be subject only to the instructions
of the Custodian or its agents.

3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
----------------------------------------------
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.

3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
---------------------
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Fund
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of the Fund indicating, as
to securities acquired for the Fund, the identity of the entity having
physical possession of such securities.

3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
----------------------------------------
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, mutatis mutandis to the foreign securities of
the Fund held outside the United States by foreign sub-custodians. (b)
Notwithstanding any provision of this Contract to the contrary, settlement
and payment for securities received for the account of the Fund and
delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and the Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.

3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
------------------------------------
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
<PAGE>

3.10 Liability of Custodian. The Custodian shall be liable for the acts or
-----------------------
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the foreign sub-custodian has otherwise
exercised reasonable care. Notwithstanding the foregoing provisions of
this paragraph 3.10, in delegating custody duties to State Street London
Ltd., the Custodian shall not be relieved of any responsibility to the Fund
for any loss due to such delegation, except such loss as may result from
(a) political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.

3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
---------------------------
cash or securities for any purpose for the benefit of the Fund including
the purchase or sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its nominee shall incur or
be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of the such Fund's assets to the extent
necessary to obtain reimbursement.

3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
----------------------------
Fund, during the month of June, information concerning the foreign sub-
custodians employed by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will promptly inform
the Fund in the event that the Custodian learns of a material adverse
change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or any event that would disqualify
the foreign sub-custodian as an "eligible foreign custodian" under Rule
17f-5 of the Investment Company Act of 1940 or in the case of any foreign
sub-custodian not the subject of an exemptive order from the Securities and
Exchange Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S.
<PAGE>

accounting principles).

3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
-----------------------
Contract, the provisions hereof shall not apply where the custody of the
Fund's assets are maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2(a)(5) of the Investment Company
Act of 1940 meeting the qualification set forth in Section 26(a) of said
Act. The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract. (b) Cash held for the Fund in
the United Kingdom shall be maintained in an interest bearing account
established for the Fund with the Custodian's London branch, which account
shall be subject to the direction of the Custodian, State Street London
Ltd. or both.

3.14 Tax Law. 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 thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use best efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information
and to comply with the obligations as to which the Custodian is notified as
aforesaid.

4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
----------------------------------------------------------------------

The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the Fund such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Fund.

From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.

5. Proper Instructions
-------------------
<PAGE>

Proper Instructions as used throughout this Contract means a writing signed
or initialed by one or more person or persons as the Board of Trustees shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the parties are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
For purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.12.

6. Actions Permitted without Express Authority
-------------------------------------------

The Custodian may in its discretion, without express authority from the
Fund:

1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
--------
the Fund;

2) surrender securities in temporary form for securities in definitive
form;

3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and

4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Trustees of the Fund.

7. Evidence of Authority
---------------------

The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
<PAGE>

8. Duties of Custodian with Respect to the Books of Account and Calculation of
---------------------------------------------------------------------------
Net Asset Value and Net Income
------------------------------

The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of the Fund.

9. Records
-------

The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.

10. Opinion of Fund's Independent Accountant
----------------------------------------

The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.

11. Reports to Fund by Independent Public Accountants
-------------------------------------------------

The Custodian shall provided the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, future contracts and options on future contracts, including
securities deposited and\or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.

12. Compensation of Custodian
-------------------------

The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.

13. Responsibility of Custodian
---------------------------
<PAGE>

So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice.

Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge or
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.

The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense,
<PAGE>

liability or claim resulting from, or caused by, the direction of or
authorization by the Fund to maintain custody of any securities or cash of the
Fund in a foreign country including, but not limited to, losses resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism.

If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement)
including the purchase or sale of foreign exchange or of contracts for foreign
exchange or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the
Fund's assets to the extent necessary to obtain reimbursement.

14. Effective Period, Termination and Amendment
-------------------------------------------

This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
any party by an instrument in writing delivered or mailed, postage prepaid to
the other parties, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
--------
Custodian shall not act under Section 2.10 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Trustees of the Fund has approved the initial use of a particular Securities
System by such Portfolio, as required by Rule 17f-4 under the Investment Company
Act of 1940, as amended and that the Custodian shall not act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Trustees has approved the initial use
of the Direct Paper System; provided further, however, that the Fund shall not
-------- -------
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Declaration of Trust, and further
provided, that the Fund may at any time by action of its Board of Trustees (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.

Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
<PAGE>

15. Successor Custodian
-------------------

If a successor custodian for the Fund shall be appointed by the Board of
Trustees of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities of the Fund then held by it hereunder and
shall transfer to an account of the successor custodian all of the securities of
the Fund held in a Securities System.

If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.

In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of the Fund and all instruments held
by the Custodian relative thereto and all other property held by it under this
Contract on behalf of the Fund and to transfer to an account of such successor
custodian all of the securities of the Fund held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.

In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.

16. Interpretive and Additional Provisions
--------------------------------------

In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
--------
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to
<PAGE>

be an amendment of this Contract.

17. Massachusetts Law to Apply
--------------------------

This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.

18. Prior Contracts
---------------

This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.

19. Shareholder Communications Election
-----------------------------------

Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or does not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consents or objects by checking one of the alternatives below.

YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.

NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.

20. Notices
-------

All notices and other communications shall be in writing or by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed to have
been given immediately. If notice is sent by first-class mail, it shall be
deemed to have been given five days after it has been mailed. If notice is sent
by messenger, it shall be deemed to have been given on the day it is delivered.
Notices shall be addressed (a) if to the Fund: 80 Harcourt Street, Dublin 2,
Ireland Attn: Fergus McKeon, with a copy to AIG Capital Management Corp,. 70
Pine Street, New York, NY 10270 Attn: Daniel K. Kingsbury, (b) if to the
Custodian, at 1776 Heritage Drive, North Quincy, Massachusetts 02171, Attn: or
(c) if to none of the foregoing, at such other address as shall have been given
by like notice
<PAGE>

to the sender of any such notice or other communication by the other party.
<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the15th day of February , 1996.

ATTEST FIRST GLOBAL EQUITY PORTFOLIO

- --------------------------- By____________________________

ATTEST STATE STREET BANK AND TRUST COMPANY

- -------------------------- By______________________________
Executive Vice President

<PAGE>

Schedule A
----------

The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of First Global
Equity Portfolio for use as foreign sub-custodians for the Fund's securities and
other assets:

(Insert banks and securities depositories)

Certified:

- --------------------------
Fund's Authorized Officer

Date:_____________________

<PAGE>

EXHIBIT 99.11

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Post-Effective Amendment No. 3 to the
Registration Statement of First Global Equity Portfolio on Form N-1A (File No.
811-9072) (the "Registration Statement") of our report dated January 2, 1997 on
our audit of the financial statements and financial highlights of First Global
Equity Portfolio. We also consent to the reference to our Firm under the
heading "Item 16. Investment Advisory and Other Services-Accountants" and "Item
23. Financial Statements" in the Statement of Additional Information (the "SAI")
which is part of the Registration Statement. We also consent to the reference
to our Firm as experts under the heading "Item 23. Financial Statements" in the
SAI which is part of this Registration Statement.

COOPERS & LYBRAND L.L.P.

New York, New York
January 10, 1997