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001 A000000 GOVERNMENT INCOME PORTFOLIO
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002 A000000 ELIZABETHAN SQUARE
002 B000000 GEORGETOWN
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080 A000000 CHUBB GROUP INSURANCE CO.
080 C000000 11750
<PAGE> PAGE 2
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SIGNATURE JOHN R. ELDER
TITLE TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000920843
<NAME> GOVERNMENT INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12 MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 83,369,009
<INVESTMENTS-AT-VALUE> 83,384,503
<RECEIVABLES> 786,083
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 242
<TOTAL-ASSETS> 84,170,828
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 84,146,784
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 84,146,784
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,937,543
<OTHER-INCOME> 0
<EXPENSES-NET> 235,954
<NET-INVESTMENT-INCOME> 3,701,589
<REALIZED-GAINS-CURRENT> 495,657
<APPREC-INCREASE-CURRENT> 134,572
<NET-CHANGE-FROM-OPS> 4,331,818
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 48,935,387
<NUMBER-OF-SHARES-REDEEMED> (30,418,418)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 22,848,787
<ACCUMULATED-NII-PRIOR>
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 235,934
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269,660
<AVERAGE-NET-ASSETS> 67,411,369
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
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</TABLE>
To the Investors and Board of Trustees of The Premium
Portfolios with respect to its series: Balanced Portfolio,
International Equity Portfolio and Government Income Portfolio
12-Feb-99
In planning and performing our audits of the financial statements of Balanced
Portfolio, International Equity Portfolio and Government Income Portfolio
(three of the Funds constituting The Premium Portfolios, hereinafter referred
to as the Portfolios) for the year ended December 31, 1998, we considered
their internal control, including control activities for safeguarding
securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and
to comply with the requirements of Form N-SAR, not to provide
assurance on internal control.
The management of the Portfolios is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits
and related costs of controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding of assets
against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because
of changes in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce
to a relatively low level risk that misstatements caused by error or fraud in
amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees
in the normal course of performing their assigned functions. However, we
noted no matters involving internal control and its operation, including control
for safeguarding securities, that we consider to be material weaknesses as
defined above as of December 31, 1998.
This report is intended solely for the information and use of management and
the Board of Trustees of the Portfolios and the Securities and Exchange
Commission.
Chartered Accountants
