The outstanding balance of Japan's net overseas assets stood at 175.31 trillion yen at the end of last year, down 2.2 percent from a record high marked a year earlier and the first drop in three years, the Finance Ministry said Tuesday.

According to the latest available data, Japan maintained the world's top position in net overseas assets for the 12th year in a row, leaving Switzerland a distant second with the equivalent of 44.36 trillion yen as of the end of 2001, the ministry said.

Net overseas assets are the excess of assets held abroad by the government and private entities over their liabilities overseas.

Although Japanese financial institutions actively invested in foreign bonds and stocks in 2002, the strengthening of the yen pushed down the value of the foreign currency-denominated assets, leading to a drop in the net overseas assets, the ministry said.

The yen, which stood at 131.47 to the dollar at the end of 2001, was at 119.37 at the end of 2002.

Despite the drop, the net overseas balance was still the second largest on record, according to the report on assets and liabilities abroad that was submitted to a Cabinet meeting in the morning.

Gross assets held by the government and the private sector totaled 365.94 trillion yen at the end of 2002, down 3.6 percent.

Gross overseas liabilities fell 4.9 percent to 190.63 trillion yen, partly due to a drop in domestic share prices that reduced the value of Japanese shares held by foreign investors.