<PAGE>
- - --------------------------------------------------------------------------------
Landmark International Equity Fund
________________________________________________________________________________
PORTFOLIO OF INVESTMENTS December 31, 1994
- - --------------------------------------------------------------------------------
Issuer/Industry Shares Value
- - --------------------------------------------------------------------------------
COMMON STOCK -- 95.1%
AMERICAN DEPOSITORY RECEIPTS (ADR) - 13.8%
Amway Asia Pacific Ltd.*
Merchandising .................................. 20,000 $ 650,000
Banco Frances Del Rio La Plata*
Financial Services ............................. 20,000 427,500
Belize Holdings Inc.*
Basic Goods .................................... 25,000 390,625
Cemex S.A
Construction Materials ......................... 25,311 269,294
EK Chor China Motorcycle Co. Ltd
Machinery ...................................... 25,000 340,625
Fila Holdings S.P.A.*
Merchandising .................................. 30,000 592,500
Grupo Mexicano De Desarrol*
Construction Materials ......................... 34,446 305,708
Iochphe-Maxion
Machinery ...................................... 30,000 522,441
Luxottica Group S.P.A
Health & Personal Care ......................... 15,000 511,875
Petersburg Long Distance*
Telecommunications ............................. 70,000 446,250
-------------
4,456,818
-------------
GLOBAL DEPOSITORY RECEIPTS (GDR) - 4.2%
Samsung Electronics Co. Ltd
Electronics .................................... 10,000 507,500
Samsung Electronics Co. Ltd
Electronics--Warrants .......................... 506 25,680
Samsung Electronics Co. Ltd
Electronics--Rights ............................ 434 16,614
Turkiye Garanti Bankasi A.S.*
Financial Services ............................. 300,000 787,500
-------------
1,337,294
-------------
Issuer/Industry Shares Value
- - --------------------------------------------------------------------------------
AUSTRALIA - 4.5%
Amcor Ltd.
Paper Goods .................................... 71,250 $ 514,938
News Corp
Media-Publishing ............................... 120,058 460,660
West Australian Newspaper Holding Ltd
Media-Publishing ............................... 175,000 474,968
-------------
1,450,566
-------------
AUSTRIA - 0.9%
Maculan Holdings AG
Construction ................................... 3,400 280,541
-------------
BELGIUM - 2.5%
Barco NV*
Electronics .................................... 10,109 794,482
-------------
CANADA - 2.4%
Future Shop Ltd.*
Merchandising .................................. 25,000 378,720
Royal Plastics Group Ltd
Machinery ...................................... 50,000 392,085
-------------
770,805
-------------
FINLAND - 2.3%
Nokia AB
Telecommunications ............................. 5,000 736,893
-------------
FRANCE - 4.8%
Castorama DuBois
Merchandising .................................. 6,000 749,789
Louis Vuitton-Moet Henney
Consumer Products .............................. 5,000 789,696
-------------
1,539,485
-------------
GREECE - 1.3%
Hellenic Bottling Company
Food Retail-Merchandising ...................... 12,000 424,823
-------------
<PAGE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
PORTFOLIO OF INVESTMENTS December 31, 1994 continued
- - --------------------------------------------------------------------------------
Issuer/Industry Shares Value
- - --------------------------------------------------------------------------------
HONG KONG - 3.6%
Citic Pacific Ltd.
Diversified Financial Holding
Company ....................................... 200,000 $ 482,060
Sun Hung Kai Properties Ltd
Real Estate .................................... 50,000 298,545
Swire Pacific Limited "A"
Diversified Financial Holding
Company ....................................... 60,000 373,764
-------------
1,154,369
-------------
INDONESIA - 2.3%
PT Hanjaya Mandala Sampoerna
Tobacco ........................................ 150,000 737,040
-------------
JAPAN - 21.5%
Amway Japan Ltd
Merchandising .................................. 20,000 689,100
DDI Corporation
Consumer Products .............................. 100 863,887
East Japan Rail
Consumer Products .............................. 150 750,377
Ito Yokado Co. Ltd
Merchandising .................................. 15,000 803,114
Marui Co.
Merchandising .................................. 50,000 914,115
Rohm Co. Ltd
Electronics .................................... 8,000 339,126
Secom Co. Ltd
Business Services .............................. 10,000 622,803
Shohkoh Fund
Diversified Financial Holding
Company ....................................... 3,300 682,873
Shimachu Co. Ltd
Merchandising .................................. 12,000 432,748
Ten Allied Co. Ltd
Merchandising .................................. 15,000 421,899
Issuer/Industry Shares Value
- - --------------------------------------------------------------------------------
Uniden Corp.
Electronics .................................... 15,000 $ 378,203
-------------
6,898,245
-------------
MALAYSIA - 2.7%
Leader Universal Holdings Ltd.
Electronics .................................... 116,667 374,652
United Engineering
Basic Industries ............................... 100,000 493,440
-------------
868,092
-------------
MEXICO - 0.9%
Group Financiero Banamex-Accival S.A
Banks & Finance ................................ 100,000 289,447
-------------
NETHERLANDS - 3.9%
Ahold NV
Food Retail-Merchandising ...................... 20,604 637,789
Elsevier NV
Media-Publishing ............................... 60,000 626,010
-------------
1,263,799
-------------
PHILIPPINES - 2.1%
JG Summit Holdings Inc.*
Diversified Financial Holding
Company ........................................ 1,800,000 663,933
-------------
SPAIN - 3.1%
Banco de Santander S.A
Banks & Finance ................................ 20,000 765,811
Telefonica de Espana
Telecommunications ............................. 20,000 236,278
-------------
1,002,089
-------------
SWEDEN - 4.5%
Astra AB
Health & Personal Care ......................... 33,000 841,764
Securitas AB*
Business Services .............................. 23,000 619,190
-------------
1,460,954
-------------
<PAGE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
PORTFOLIO OF INVESTMENTS December 31, 1994 continued
- - --------------------------------------------------------------------------------
Issuer/Industry Shares Value
- - --------------------------------------------------------------------------------
SWITZERLAND - 5.3 %
BBC Brown Boveri & CIE
Health & Personal Care ......................... 500 $ 430,646
Roche Holdings AG
Health & Personal Care ......................... 150 726,213
Societe Generale de Surveillance
Business Services .............................. 400 553,305
-------------
1,710,164
-------------
THAILAND - 1.8 %
Bangkok Bank Ltd
Banks & Finance ................................ 70,000 574,385
-------------
UNITED KINGDOM - 6.7 %
Medeva PLC
Health & Personal Care ......................... 201,526 517,398
Powerscreen International*
Diversified Consumer Products .................. 150,000 551,835
Issuer/Industry Shares Value
- - --------------------------------------------------------------------------------
Tompkins PLC
Diversified Consumer Products .................. 200,000 $ 695,080
Vodafone Group
Telecommunications ............................. 120,936 401,374
-------------
2,165,687
-------------
TOTAL COMMON STOCK
(Identified Cost, $28,451,789) ................. 30,579,911
-------------
- - --------------------------------------------------------------------------------
CORPORATE BONDS--3.9%
- - --------------------------------------------------------------------------------
Industrial Credit & Investment of
India, 2.50%, due 4/3/00 ...................... $750,000 560,625
Sampo Corporation, 2.625%,
due 11/23/01 .................................. 700,000 700,000
-------------
TOTAL CORPORATE BONDS ........................... 1,260,625
-------------
(Identified Cost, $1,460,000)
TOTAL INVESTMENTS
(Identified Cost, $29,911,789) ................. 99.0% 31,840,536
Other Assets, Less Liabilities .................. 1.0% 312,288
-------- -------------
NET ASSETS ...................................... 100.0% $ 32,152,824
======== =============
* Non-income producing security
See notes to financial statements
<PAGE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
- - --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $29,911,789) ..... $31,840,536
Foreign currency, at value (Cost, $173,457) ....................... 168,590
Cash .............................................................. 45,014
Receivable for investments sold ................................... 339,814
Dividends and interest receivable ................................. 41,147
-----------
Total assets .................................................. 32,435,101
-----------
LIABILITIES:
Payable for investments purchased ................................. 248,863
Payable to affiliates--Investment advisory fee (Note 2) ........... 27,845
Accrued expenses and other liabilities ............................ 5,569
-----------
Total liabilities ............................................. 282,277
-----------
NET ASSETS ........................................................ $32,152,824
===========
REPRESENTED BY:
Paid-in capital for beneficial interests .......................... $32,152,824
===========
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
International Equity Portfolio
__________________________________________________________________________________________________________________________________
STATEMENT OF OPERATIONS
For the Period May 1, 1994 (Commencement of Operations) to December 31, 1994
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $79,071) ............................... $ 360,575
Interest ............................................................................ 36,745
-----------
Total investment income ........................................................... $ 397,320
EXPENSES:
Investment advisory fees (Note 2) ................................................... 218,950
Administrative fees (Note 3) ........................................................ 10,948
Expense reimbursement fees (Note 6) ................................................. 36,921
-----------
Total expenses .................................................................... 266,819
-----------
Net investment income ............................................................. 130,501
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions ............................... (515,520)
Net realized loss on foreign exchange transactions .................................. (20,448)
-----------
Net realized loss ................................................................. (535,968)
-----------
Unrealized appreciation (depreciation) of investments--
Beginning of period .............................................................. --
End of period .................................................................... 1,928,747
Less unrealized appreciation acquired in connection with the
Landmark International Equity Fund contribution (Note 1) ......................... 3,199,032 (1,270,285)
-----------
Translation of other assets and liabilities denominated
in foreign currencies--net ....................................................... (7,108)
-----------
Net change in unrealized appreciation (depreciation) ............................. (1,277,393)
-----------
Net realized and unrealized loss on investments .................................. (1,813,361)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ $(1,682,860)
===========
</TABLE>
See notes to financial statements
<PAGE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 1, 1994
(Commencement
of Operations) to
December 31, 1994
-----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
Operations:
Net investment income........................................................... $ 130,501
Net realized loss on investments and foreign exchange transactions.............. (535,968)
Net change in unrealized depreciation of investments............................ (1,277,393)
------------
Net decrease in net assets resulting from operations........................... (1,682,860)
------------
CAPITAL TRANSACTIONS:
Proceeds from contributions .................................................... 40,565,403
Value of withdrawals ........................................................... (6,729,719)
------------
Net increase in net assets from capital transactions........................ 33,835,684
------------
NET INCREASE IN NET ASSETS:..................................................... 32,152,824
NET ASSETS:
Beginning of period............................................................. --
------------
End of period................................................................... $ 32,152,824
============
</TABLE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
May 1, 1994
(Commencement
of Operations) to
December 31, 1994
-----------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000 omitted) ...................... $32,153
Ratio of expenses to average net assets ...................... 1.22%*
Ratio of net investment income to average net assets ......... 0.60%*
Portfolio turnover ........................................... 25%
*Annualized
See notes to financial statements
<PAGE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
International Equity Portfolio (the "Portfolio"), a separate series of The
Premium Portfolios (the "Portfolio Trust"), is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company which was organized as a trust under the laws of the State of
New York. The Declaration of Trust permits the Trustees to issue beneficial
interests in the Portfolio. The Investment Adviser of the Portfolio is Citibank
N.A. ("Citibank"). Signature Financial Group (Grand Cayman), Ltd. ("SFG") acts
as the Fund's Administrator. On May 1, 1994 (commencement of operations) the
Landmark International Equity Fund transferred all of its investable assets
($32,298,219 including $3,199,032 unrealized appreciation) to the Portfolio in
exchange for an interest in the Portfolio.
The following significant accounting policies consistently followed by the
Portfolio are in conformity with generally accepted accounting principles and
are as follows:
A. INVESTMENT SECURITY VALUATIONS -- Equity securities in the portfolio are
valued at the last sale price on the exchange on which they are primarily
traded, or on the quoted bid price for securities in which there were no sales
during the day, or for unlisted securities not reported on the NASDAQ system.
Securities listed on a foreign exchange are valued at the last quoted sale price
available before the time when net assets are valued. Bonds and other fixed
income securities (other than short-term obligations maturing in sixty days or
less) in the portfolio are valued on the basis of valuations furnished by a
pricing service, the use of which has been approved by the Trustees. In making
such valuations, the pricing service utilizes both dealer-supplied valuations
and electronic data processing techniques which take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data, without exclusive reliance upon quoted prices or
exchanges or over-the-counter prices, since such valuations are believed to
reflect more accurately the fair value of such securities. Short-term
obligations maturing in sixty days or less, are valued at amortized cost, which
constitutes fair value as determined by the Trustees. Portfolio securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees. Trading in
securities on most foreign exchanges and over-the-counter markets is normally
completed before the close of the New York Stock Exchange and may also take
place on days which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time when the Portfolio's net
asset value is calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general supervision of
the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Fund 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 with the net realized and
unrealized gain or loss from investments.
C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Portfolio may enter into
forward foreign currency exchange contracts ("contracts") in connection with
planned purchases or sales of securities, to hedge the U.S. dollar value of
portfolio securities denominated in a particular currency. The Portfolio could
be exposed to risks if the counter-parties to the contracts are unable to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. Dollar. The forward foreign currency
exchange contracts are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement purposes
as unrealized gains or losses until the contract settlement date.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date,
except, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as the Portfolio is informed of the ex-dividend date.
Dividend income is recorded net of foreign taxes withheld where recovery of such
taxes is not assured. Interest income is accrued daily.
<PAGE>
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS continued
- - --------------------------------------------------------------------------------
E. U.S. FEDERAL INCOME TAXES -- The Portfolio's policy considered a partnership
under the U.S. Internal Revenue Code. Accordingly, no provision for federal
income taxes is necessary.
F. EXPENSES -- The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
(2) INVESTMENT ADVISORY FEES
The investment advisory fee paid to Citibank, as compensation for overall
investment management services, amounted to $218,950 for the period May 1, 1994
(commencement of operations) to December 31, 1994. The investment advisory fee
is computed at the annual rate of 1.00% of the Portfolio's average daily net
assets.
(3) ADMINISTRATIVE FEE
Under the terms of an Administrative Services Agreement, the administrative
services fees paid to the Administrator, as compensation for overall
administrative services including general office facilities, is computed at an
annual rate of 0.05% of the Portfolio's average daily net assets. The Portfolio
accrued fees aggregating $10,948 for these services for the Portfolio for the
period May 1, 1994 (commencement of operations) to December 31, 1994. The
Portfolio pays no compensation directly to any Trustee or any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Portfolio from the Administrator or its affiliates. Certain
officers and a Trustee of the Portfolio are officers and directors of the
Administrator or its affiliates.
(4) PURCHASES AND SALES OF INVESTMENTS
During the period May 1, 1994 (commencement of operations) to December 31, 1994,
purchases and sales of investment securities, other than short-term investments,
aggregated $9,659,287 and $8,308,335, respectively.
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/(depreciation) in value of the investment
securities owned at December 31, 1994, as computed on a federal income tax
basis, are as follows:
Aggregate cost ......................................... $ 29,911,789
============
Gross unrealized appreciation .......................... $ 3,875,068
Gross unrealized depreciation .......................... (1,946,321)
------------
Net unrealized appreciation ............................ $ 1,928,747
============
(6) EXPENSE REIMBURSEMENT FEE
SFG has entered into an expense reimbursement agreement with the Portfolio. SFG
has agreed to pay all of the ordinary operating expenses (excluding interest,
taxes, brokerage commissions, litigation costs or other extraordinary costs or
expenses) of the Portfolio, other than fees paid under the Advisory Agreement,
and Administrative Services Agreement. The Agreement shall terminate on April
30, 2004, unless sooner terminated by either party upon not less than 30 days
nor more than 60 days written notice to the other party.
The Portfolio Trust has agreed to pay SFG an expense reimbursement fee, in
addition to the administrative fees, accrued daily and paid monthly; provided,
however, that such fee shall not exceed the amount such that immediately after
any such payment the aggregate expenses of the Portfolio would on an annual
basis exceed an agreed upon rate, currently 1.20% of average daily net assets.
(7) FINANCIAL INSTRUMENTS
The Portfolio may trade financial instruments with off-balance sheet risk
in the normal course of its investing activities and to assist in managing
exposure to market risks such as interest rates and foreign currency exchange
rates. These financial instruments include forward foreign currency exchange
contracts.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when related and offsetting transactions are considered. No such instruments
were held at December 31, 1994.
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS continued
- - --------------------------------------------------------------------------------
(8) LINE OF CREDIT
As of May 1, 1994 the Portfolio, along with the other Landmark Funds,
entered into an agreement with a bank which allows the Landmark Funds
collectively to borrow up to $40 million for temporary or emergency purposes.
Interest on the borrowings, if any, is charged to the specific fund executing
the borrowing at the base rate of the bank. In addition, the $15 million
committed portion of the line of credit requires a quarterly payment of a
commitment fee based on the average daily unused portion of the line of credit.
For the period May 1, 1994 (commencement of operations) to December 31, 1994,
the commitment fee allocated to the Portfolio was $141. Since the line of credit
was established, there have been no borrowings.
- - --------------------------------------------------------------------------------
International Equity Portfolio
________________________________________________________________________________
INDEPENDENT AUDITORS' REPORT
- - --------------------------------------------------------------------------------
TO THE TRUSTEES AND THE INVESTORS OF THE PREMIUM PORTFOLIOS (THE TRUST), WITH
RESPECT TO ITS SERIES, INTERNATIONAL EQUITY PORTFOLIO:
We have audited the accompanying statement of assets and liabilities
including the portfolio of investments, of International Equity Portfolio (the
"Portfolio"), a series of The Premium Portfolios, as at December 31, 1994 and
the related statements of operations and of changes in net assets and the
financial highlights for the period May 1, 1994 (commencement of operations) to
December 31, 1994. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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, which included confirmation of investments owned at
December 31, 1994 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmation from brokers
were not received, provides a reasonable basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Portfolio as at December 31, 1994, the
results of its operations and the changes in its net assets and the financial
highlights for the period May 1, 1994 (commencement of operations) to December
31, 1994 in accordance with U.S. generally accepted accounting principles.
PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 3, 1995
