<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------
COMMON STOCKS -- 96.4%
AMERICAN DEPOSITARY RECEIPTS (ADR) - 2.4%
Royal Dutch Petroleum Co.
Energy Sources............................ 1,850 $ 285,934
Turkiye Garanti Bankasi
Banking................................... 139,050 834,300
-----------
1,120,234
-----------
GLOBAL DEPOSITARY RECEIPTS (GDR) - 0.8%
Samsung Electronics Co. Ltd.
Electrical Electronics 144A............... 11,979 287,496
Samsung Electronics Co. Ltd. Wts.
Electronic Electronics 144A............... 47 2,374
Samsung Electronics Co. Ltd.
(Preferred Shares)
Electronics 144A.......................... 512 25,893
Samsung Electronics Co. Ltd. Rts.
Electronics 144A.......................... 3,610 86,640
-----------
402,403
-----------
AUSTRALIA - 2.5%
Amcor Limited
Miscellaneous Materials................... 71,250 484,329
News Corp.
Business & Public......................... 100,703 570,580
News Corp (Preferred Shares)
Business & Public......................... 20,455 99,662
-----------
1,154,571
-----------
CANADA - 2.1%
Alcan Aluminum Ltd.
Non-Ferrous Metals........................ 2,250 68,476
Avenor Inc. Co.
Forest Products & Paper................... 4,400 71,225
Barrick Gold Corp.
Gold Mines................................ 4,500 122,120
Canadian Natural Resources Ltd.
Forest Products & Paper................... 6,200 115,576
Cominco Ltd.
Non-Ferrous & Metals...................... 4,900 106,064
Franco-Nevada Mining Ltd.
Miscellaneous Materials................... 1,500 95,037
Inco Ltd.
Steel..................................... 3,400 109,449
Placer Dome Group Inc. Com.
Multi-Industry............................ 2,700 64,571
Renaissance Energy Ltd.
Forest Products & Paper................... 2,700 71,196
Talisman Energy Inc.
Forest Products & Paper................... 5,000 116,279
Westin Resources
Miscellaneous Materials................... 12,000 65,482
-----------
1,005,475
-----------
FRANCE - 7.0%
AGF (Assurances Generales
de France)
Insurance................................. 6,600 178,873
Air Liquide French
Chemicals................................. 850 150,217
AXA Company
Insurance................................. 3,200 175,194
Axime (Ex Segin)
Financial Services........................ 1,500 209,972
Bouygues
Building & Construction................... 1,500 167,394
Canal Plus
Business & Public Service................. 850 208,057
Carrefour Supermarche
Retailing................................. 495 277,548
CIE Generale Des Eaux
Electrical & Gas Utilities................ 1,500 167,686
Credit Commercial de France
Banking................................... 3,300 153,081
Credit Local de France
Financial Services........................ 1,800 146,630
Legris Industries
Building & Construction................... 3,800 174,354
Louis Vitton-Moet Hennesy
Beverages & Tobacco....................... 700 166,169
Michelin "B" Shares
Industrial Components..................... 3,700 180,988
Primagaz
Energy Sources............................ 1,150 127,665
Printemps
Retailing................................. 600 210,088
Salomon S.A.
Household Appliances...................... 63 57,627
Sodexho
Multi-Industry............................ 500 222,026
Total CIE Francaise Petrole
Energy Services........................... 2,400 178,149
Unibail
Real Estate............................... 1,500 149,897
-----------
3,301,615
-----------
GERMANY - 7.7%
Allianz AG Holdings
Insurance................................. 205 355,168
Bayer AG
Chemicals................................. 5,800 204,977
Daimler-Benz AG
Automobiles............................... 575 307,934
Daimler-Benz Aus (Warrants)
Automobiles............................... 575 79
Deutche Bank AG
Banking .................................. 12,390 586,547
Gehe AG
Pharmaceuticals & Health.................. 275 184,792
Mannesmann AG
Machinery & Engineering................... 765 264,574
Puma AG
Leisure & Tourism......................... 917 32,950
Rhoen-Klinikum
Pharmaceuticals & Health.................. 2,860 376,093
SAP AG VORZUG (Preferred Shares)
Data Processing & Reproduction............ 1,400 207,759
SGL Carbon AG
Non-Ferrous Metals........................ 1,514 177,192
Tarkett International
Food & Household Products................. 8,321 175,622
Veba AG
Electrical & Gas Utilities................ 11,980 632,220
Volkswagenwerk AG
Automobiles............................... 310 115,265
-----------
3,621,172
-----------
HONG KONG - 1.1%
Swire Pacific Ltd. "A"
Multi-Industry............................ 60,000 513,516
-----------
INDONESIA - 3.6%
PT Hanjaya Mandala Sampoerna
Beverages & Tobacco....................... 150,000 1,707,841
-----------
ITALY - 3.7%
Assicurazioni Generali
Insurance................................. 5,564 128,995
Credito Italiano
Banking .................................. 149,733 176,024
Eni Spa
Energy Sources............................ 55,320 276,248
Fiat Spa
Automobiles............................... 60,680 204,810
Instituto Banc San Paolo Torina
Banking................................... 34,530 222,405
Instituto Mobiliare Italiano
Banking................................... 23,921 201,160
Italgas
Electrical & Gas Utilities................ 23,810 89,322
Stet D Risp Non Cvt.
Telephone Utilities....................... 33,903 89,233
Telecom Italia Mobile
Telephone Utilities....................... 148,894 333,933
-----------
1,722,130
-----------
JAPAN - 44.7%
Amway Japan Ltd.
Household Appliances ..................... 10,000 502,903
Asahi Bank Ltd.
Banking .................................. 55,000 638,687
Autobacs Seven
Automobiles............................... 6,000 581,539
Canon Inc.
Electrical & Electronics.................. 24,000 500,343
Dai-Ichi Kangyo Bank
Banking .................................. 42,000 783,432
DDI Corporation
Telephone Utilities....................... 35 305,948
Ebara Corporation
Machinery & Engineering................... 40,000 640,059
Fanuc Company
Machinery & Engineering................... 2,800 111,626
Fuji Bank
Banking .................................. 35,000 755,269
Industrial Bank of Japan
Banking .................................. 17,000 422,804
Ito Yokado Corp.
Retailing................................. 15,000 906,597
Kawasaki Steel
Steel..................................... 136,000 491,199
Kyocera Corp.
Multi-Industry............................ 6,000 425,182
Matsushita Electric Industries
Electrical & Electronics.................. 26,000 484,983
Mitsubishi Estate Co. Ltd.
Real Estate............................... 40,000 552,279
Mitsubishi Heavy
Machinery................................. 70,000 609,976
Mitsubishi Trust
Financial Services........................ 26,000 439,812
Nippon Sheet Glass
Miscellaneous Materials................... 50,000 245,508
Nippon Denso
Automobiles............................... 30,000 652,860
NKK Corporation
Steel..................................... 163,000 494,820
Nomura Securities Co. Ltd.
Financial Services........................ 26,000 508,755
Ohbayashi-Gumi Corp.
Building & Construction................... 70,000 634,298
Osaka Gas Co. Ltd.
Electrical & Gas Utilities................ 115,000 421,661
Sankyo Co. Ltd.
Pharmaceutical & Health................... 22,000 571,298
Sanyo Electric Co. Ltd.
Instruments & Components.................. 75,000 458,787
Secom Co. Ltd.
Business & Public Services................ 10,000 662,003
Seven Eleven Japan Ltd.
Retailing................................. 8,000 511,315
Shin-Etsu Chemical Co.
Chemicals................................. 16,800 322,589
Shohkoh Fund
Financial Services........................ 2,200 462,671
Sumitomo Bank
Banking .................................. 40,000 775,385
Sumitomo Electric Industries
Industrial Components..................... 34,000 488,090
TDK Corp.
Instruments & Components.................. 10,000 597,998
Teijin Limited
Textiles.................................. 55,000 299,227
The Bank of Tokyo Mitsubishi
Banking .................................. 33,050 767,586
Tobu Railroad Co. Ltd.
Road & Rail Transport..................... 77,000 506,222
Tohoku Electric Power
Electrical & Gas Utilities................ 18,000 403,239
Tokio Marine & Fire
Insurance................................. 45,000 600,741
Tokyu Corp.
Real Estate .............................. 50,000 381,749
Toyota Motor Co.
Automobiles............................... 30,000 751,614
Yamato Transport Co. Ltd.
Road & Rail Transport..................... 28,000 330,270
-----------
21,001,324
-----------
MALAYSIA - 2.2%
Leader Universal Holdings Ltd.
Industrial Components .................... 116,000 327,841
United Engineers
Machinery & Engineering................... 100,000 693,526
-----------
1,021,367
-----------
NETHERLANDS - 4.2%
Be Semiconductor Industries
Instrument & Components................... 7,100 106,989
Elsevier
Business & Public Services................ 19,000 288,537
Heineken NV
Beverges & Tobacco........................ 1,000 223,629
IHC Caland NV
Building & Construction................... 2,500 123,131
International Nederlanden Group
Insurance................................. 10,250 305,907
KLM Royal Dutch Airlines
Airlines.................................. 4,700 150,466
Oce-Van Der Grinten
Machinery & Engineering................... 2,322 246,155
Security Capital U.S. Realty
Real Estate............................... 9,900 112,860
Unilever NV
Food & Household Products................. 900 130,343
Vendex International NV
Retailing................................. 5,400 188,391
Verenigde Nederlandse
Business & Public......................... 6,500 100,998
-----------
1,977,406
-----------
SPAIN - 2.9%
Acerinox SA
Multi-Industry............................ 511 53,453
Alba Corp. Finance
Machinery & Engineering................... 691 57,545
Aumar
Building & Construction................... 2,821 36,473
Banco Bilbao Vizcaya
Banking .................................. 6,941 281,423
Banco Popular Espanola
Banking .................................. 807 143,993
Corporation Mapfre
Insurance................................. 1,912 97,687
Gas Natural SDG S.A.
Electrical & Gas Utilities................ 543 114,110
Iberdrola S.A.
Electrical & Gas Utilities................ 12,032 123,605
Repsol S.A.
Energy Sources............................ 3,472 120,837
Sol Melia S.A.
Leisure & Tourism......................... 217,000 42,544
Telefonica de Espana
Telephone Utilities....................... 13,175 242,905
Union Electrica Fenosa S.A.
Electrical & Gas Utilities................ 9,587 61,714
-----------
1,376,289
-----------
SWEDEN - 1.9%
Astra AB
Pharmaceuticals & Health.................. 2,700 117,961
Ericcson AB
Electrical & Electronics.................. 4,000 86,471
Esselte B
Business & Public Services................ 2,780 56,946
Hennes & Mauritz
Retailing................................. 1,120 104,129
Kinnevik AB
Machinery & Engineering................... 2,840 86,296
Sparbanken Sverige AB
Banking .................................. 9,640 125,329
Stora Kopparberges
Forest Products........................... 9,200 121,695
Svedala Industri AB
Machinery & Engineering................... 1,796 34,074
Swedish Match AB
Miscellaneous Materials................... 6,370 19,837
Tornet Fastighets AB
Real Estate............................... 1,000 8,163
Volvo Aktiebolag
Automobiles............................... 5,370 122,582
-----------
883,483
-----------
SWITZERLAND - 0.1%
Roche Holding AG-Genusschein
Pharmaceutical & Health .................. 5 38,175
-----------
THAILAND - 1.6%
Bangkok Bank Public Co. Ltd.
Banking .................................. 7,000 661,808
Bangkok Bank Co. Ltd
Banking .................................. 6,000 81,308
-----------
743,116
-----------
UNITED KINGDOM - 7.9%
BAT Industries
Multi-Industry............................ 14,875 115,735
British Aerospace PLC
Aeorspace & Defense....................... 9,774 148,223
British Petroleum Co. PLC
Energy Sources............................ 17,082 149,753
British Telecommunications PLC
Telephone Utilities....................... 35,687 191,206
Cable & Wireless
Telephone Utilities....................... 14,515 95,917
Cadbury Schwepps PLC
Food & Household Products................. 15,843 125,235
Dixons Group PLC
Retailing................................. 16,089 131,677
Glaxo Wellcome PLC
Pharmaceuticals & Health.................. 11,680 157,175
Glynwed International PLC
Machinery & Engineering................... 24,314 119,320
Hanson Trust PLC
Multi-Industry............................ 40,193 112,668
Inchape PLC
Business & Public Services................ 26,135 118,922
Kingfisher PLC
Retailing................................. 12,744 127,952
Lloyds TSB Group PLC
Banking................................... 23,775 116,306
Logica PLC
Business & Public Services................ 11,007 110,255
London International Group
Pharmaceuticals & Health.................. 48,331 113,901
MFI Furniture Group PLC
Retailing................................. 83,641 225,367
Pilkington Brothers
Building Materials........................ 34,410 96,724
Royal Bank of Scotland Group PLC
Banking................................... 15,135 115,878
RTZ Corp.
Non Ferrous Metals........................ 9,590 141,933
Securicor Group PLC "A"
Multi-Industry............................ 18,285 74,257
Smiths Industries PLC
Machinery & Engineering................... 10,514 114,953
Standard Chartered PLC
Banking................................... 13,880 138,172
Sun Alliance Group
Insurance................................. 18,834 108,807
Thorn EMI PLC
Leisure & Tourism......................... 5,695 158,667
Whitbread & Co. Class "A"
Beverages & Tobacco....................... 20,978 230,984
WPP Group
Business & Public Services................ 35,958 121,178
Wolseley PLC
Building Materials........................ 16,382 115,630
Zeneca Group PLC
Pharmaceuticals & Health.................. 6,155 136,065
-----------
3,712,860
-----------
TOTAL COMMON STOCKS
(Identified Cost $40,961,454)............. 45,302,977
-----------
CORPORATE BONDS -- 3.0%
Principal
Amount
----------
Industrial Credit & Investment
of India 2.50% due 4/03/00................ $ 750,000 615,000
Sampo Corporation
2.625% due 11/23/01....................... 700,000 798,000
-----------
TOTAL CORPORATE BONDS
(Identified Cost $1,460,000).............. 1,413,000
-----------
TOTAL INVESTMENTS
(Identified Cost $42,421,454)............. 99.4% 46,715,977
OTHER ASSETS,
LESS LIABILITIES.......................... 0.6% 298,408
----- -----------
NET ASSETS.................................. 100.0% $47,014,385
===== ===========
See notes to financial statements.
<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1996 (unaudited)
ASSETS:
Investments at value (Note 1A) (Identified Cost, $42,421,454) $46,715,977
Foreign currency, at value (Cost, $78,726)................... 62,950
Cash......................................................... 16,495
Receivable for investments sold ............................. 596,544
Dividends and interest receivable............................ 113,010
-----------
Total assets............................................... 47,504,976
-----------
LIABILITIES:
Payable for securities purchased............................. 442,915
Payable to affiliates--Investment advisory fees (Note 2)..... 39,715
Accrued expenses and other liabilities....................... 7,961
-----------
Total liabilities.......................................... 490,591
-----------
NET ASSETS .................................................. $47,014,385
-----------
REPRESENTED BY:
Paid-in capital for beneficial interests..................... $47,014,385
===========
See notes to financial statements
International Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996 (unaudited)
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $87,297) $ 408,581
Interest............................................. 95,765
----------
Total investment income............................ $ 504,346
EXPENSES:
Investment advisory fees (Note 2).................... 225,743
Administrative fees (Note 3)......................... 11,287
Expense fees (Note 6)................................ 33,889
----------
Total expenses..................................... 270,919
----------
Net investment income.............................. 233,427
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions 2,133,485
Net realized loss on foreign exchange transactions... (130,687)
----------
Net realized gain (loss)........................... 2,002,798
----------
Unrealized appreciation (depreciation) of investments--
Beginning of period................................ 3,807,712
End of period...................................... 4,294,523 486,811
----------
Translation of other assets and liabilities
denominated in foreign currencies--net............. (6,043)
----------
Net change in unrealized appreciation (depreciation) 480,768
----------
Net realized and unrealized gain on investments.... 2,483,566
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,716,993
==========
See notes to financial statements
<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
JUNE 30, 1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
----------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income.................................................... $ 233,427 $ 202,735
Net realized gain (loss) on investments and foreign exchange transactions 2,002,798 3,779,752
Net change in unrealized appreciation (depreciation) of investments...... 480,768 1,878,598
----------- -----------
Net increase (decrease) in net assets resulting from operations...... 2,716,993 5,861,085
----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from contributions.............................................. 15,977,118 14,645,582
Value of withdrawals..................................................... (11,793,289) (12,545,928)
----------- -----------
Net increase in net assets from capital transactions................. 4,183,829 2,099,654
----------- -----------
NET INCREASE IN NET ASSETS: ............................................. 6,900,822 7,960,739
NET ASSETS:
Beginning of period...................................................... 40,113,563 32,152,824
----------- -----------
End of period............................................................ $47,014,385 $40,113,563
=========== ===========
</TABLE>
See notes to financial statements
International Equity Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 1, 1994
SIX MONTHS YEAR (COMMENCEMENT
JUNE 30, 1996 ENDED OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1995 DECEMBER 31, 1994
--------------- ----------------- -----------------
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C> <C>
Net Assets, end of period (000's omitted)........... $47,014 $40,114 $32,153
Ratio of expenses to average net assets............. 1.20%* 1.20% 1.22%*
Ratio of net investment income to average net assets 1.03% 0.59%* 0.60%*
Portfolio turnover.................................. 51% 51% 25%
Average commission rate per share (A)............... $0.036 N/A N/A
<FN>
* Annualized
(A) The average commission rate paid is applicable for Funds that invest greater than 10% of average net assets in
equity transactions on which commissions are charged. This disclosure is required for fiscal periods beginning
on or after September 1, 1995.
</TABLE>
See notes to financial statements
<PAGE>
International Equity Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
(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 Portfolio's Administrator.
The preparation of financial statements in accordance with generally accepted
accounting principles require management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
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 at 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. 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 approved by the Board of
Trustees, 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. 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, 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. Translation of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income, expenses and foreign taxes
withheld recorded and the actual amount received or paid.
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. 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 soon 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.
E. U.S. FEDERAL INCOME AND OTHER TAXES -- The Portfolio is considered a
partnership under the U.S. Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary. The Portfolio may be subject to taxes
imposed by countries in which it invests. Such taxes are generally based on
income and/or capital gains earned or repatriated.Taxes are accrued and
applied to net investment income and net realized gains as such income and/or
gains are earned.
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.
G. REPURCHASE AGREEMENTS -- It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custidian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
(2) INVESTMENT ADVISORY FEES
The investment advisory fees paid to Citibank, as compensation for overall
investment management services, amounted to $225,743 for the six months ended
June 30, 1996. The investment advisory fees are computed at the annual rate of
1.00% of the Portfolio's average daily net assets.
(3) ADMINISTRATIVE FEES
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
administrative fees amounted to $11,287 for the six months ended June 30, 1996.
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
For the six months ended June 30, 1996, purchases and sales of investment
securities, other than short-term investments, aggre-gated $35,317,526 and
$20,959,814, respectively.
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/(depreciation) in value of the
investment securities owned at June 30, 1996 as computed on a federal income
tax basis, are as follows:
Aggregate cost................... $42,421,454
===========
Gross unrealized appreciation.... $ 5,193,483
Gross unrealized depreciation.... (898,960)
-----------
Net unrealized appreciation...... $ 4,294,523
===========
(6) EXPENSE FEES
SFG has entered into an expense 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 may be terminated by either party upon not
less than 30 days nor more than 60 days written notice.
The Portfolio has agreed to pay SFG an expense fee, on an annual basis, 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 and expenses waived by the Administrator 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 June 30, 1996.
(8) LINE OF CREDIT
The Portfolio, along with the other Landmark Funds, entered into an ongoing
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 six months ended June 30,
1996, the commitment fee allocated to the Portfolio was $120. Since the line of
credit was established, there have been no borrowings.
