INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS June 30, 1999
(Unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK
AND PREFERRED RIGHTS--95.9%
AMERICAN DEPOSITORY RECEIPTS/
ADR's--1.6%
- --------------------------------------------------------------------------------
Magyar Olaj -Es Gazipari
Energy Sources 7,400 $ 177,600
Matav RT
Telecommunications 7,200 198,000
Telecom Argentina SA
Telecommunications 6,700 179,225
-----------
554,825
-----------
AUSTRALIA--1.3%
- --------------------------------------------------------------------------------
Australia & New Zealand Bank
Banking 6,895 50,634
Brambles Industrial Ltd.
Business Services 1,394 36,676
Colonial Ltd.
Banking 12,357 43,702
Fosters Brewing
Beverage & Tobacco 6,426 18,088
Lend Lease Corp.
Real Estate 5,201 71,317
News Corp.
Broadcasting 8,465 72,130
North Ltd.
Non-Ferrous Metals1 3,344 26,992
Publishing & Broadcasting Ltd.
Broadcasting 7,486 49,338
Telestra Corp.
Telecommunications 7,664 43,859
Woodside Petroleum Co. Ltd.
Energy Sources 7,316 49,475
-----------
462,211
-----------
FINLAND--2.2%
- --------------------------------------------------------------------------------
Nokia AB
Electrical & Electronics 6,232 546,062
Sonera Yhtyma
Telecommunications 9,365 204,663
-----------
750,725
-----------
FRANCE--12.0%
- --------------------------------------------------------------------------------
AXA-UAP
Insurance 4,496 548,285
Bouygues
Homebuilders 601 158,788
Bouygues-Preferred Rights
Homebuilders 601 1,599
Canal Plus
Broadcasting 637 178,675
Cap Gemini
Business & Public Services 2,500 392,754
Carrefour
Retailing 2,880 423,061
Cie de St. Gobain
Containers & Glass 834 132,828
Groupe Danone
Food & Household Products 752 193,800
France Telecom
Telephone Utilities 5,106 385,553
Lafarge
Building Materials 1,536 145,988
L'Oreal
Pharmaceuticals & Health 730 493,277
Pinault-Printemps
Retailing 1,523 261,245
Sanofi
Pharmaceuticals & Health 6,068 257,401
Vivendi
Business & Public Services 7,032 569,404
-----------
4,142,658
-----------
GERMANY--10.3%
- --------------------------------------------------------------------------------
Allianz AG
Insurance 1,647 456,711
Basf AG
Chemicals 2,872 126,862
Bayer AG
Chemicals 3,015 125,564
Deutsche Bank AG
Banking 177 10,793
Deutsche Telekom AG
Telephone Utilities 10,884 456,645
Man AG
Telecommunications 4,208 143,582
Mannesmann AG
Telecommunications 4,059 605,457
Metro AG
Retailing 2,590 160,728
Preussag AG
Multi-Industry 5,280 283,575
RWE AG
Electrical & Gas Utilities 5,579 258,167
SAP AG -Preferred Rights
Data Processing &
Reproduction 1,224 488,932
15
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(Continued) June 30, 1999
(Unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
Siemens AG
Electrical Equipment 3,214 $ 247,824
Veba AG
Electrical & Gas Utilities 3,768 221,402
-----------
3,586,242
-----------
HONG KONG--0.7%
- --------------------------------------------------------------------------------
CLP Holdings
Electrical & Gas Utilities 20,000 97,182
Hutchinson Whampoa
Multi-Industry 17,000 153,926
-----------
251,108
-----------
ITALY--2.6%
- --------------------------------------------------------------------------------
Assicurazioni Generali Spa
Insurance 12,376 428,662
Mediaset
Broadcasting 20,231 179,771
Tecnost Spa
Electronics 13,939 34,342
Telecom Italia Mobile Spa
Telecommunications 41,106 245,346
-----------
888,121
-----------
JAPAN--24.5%
- --------------------------------------------------------------------------------
Advantest
Electronics 1,000 109,945
Alps Electric Co.
Electronics 2,000 46,871
Asahi Breweries
Food & Household
Products 5,000 62,247
Bank of Tokyo Mitsubishi
Banking 49,000 697,917
Bridgestone Corp.
Industrial Components 9,000 272,299
Canon Inc.
Photography 9,000 258,907
Denso Corp.
Auto Parts 9,000 183,021
East Japan Railway
Railroads & Equipment 41 220,303
Ebara Corp.
Machinery &
Engineering 3,000 35,687
Fanuc
Electronics 3,000 161,197
Fujitsu Ltd.
Data Processing &
Reproduction 20,000 402,579
Hankyu Corp.
Railroads & Equipment 9,000 35,711
Hirose Electric
Electronics 1,000 103,827
Honda Motor Co. Ltd.
Automobiles 10,000 424,072
Hoya Corp.
Pharmaceuticals & Health 1,000 56,460
Ito Yokado Co.
Retailing 4,000 267,835
Japan Air Lines Co.
Air Travel 19,000 62,825
Jusco Co.
Retailing 3,000 54,559
Kao Corp.
Food & Household
Products 7,000 196,743
Kawasaki Heavy Industries
Machinery &
Engineering 15,000 40,671
Kinki Nippon Railway
Railroads & Equipment 17,000 83,616
Minebea Co.
Machinery & Engineering 4,000 44,639
Murata Manufacturing Co.
Electronics 3,000 197,404
NGK Insulators
Electrical & Electronics 4,000 41,795
Nankai Electrical Railway
Railroads & Equipment 6,000 27,825
Nippon Express Co.
Trucking & Freight 11,000 65,925
Nippon Telegraph &
Telephone Co.
Telephone Utilities 132 1,538,563
Odakyu Electrical Railway
Railroads & Equipment 8,000 26,784
Osaka Gas Co. Ltd.
Electrical & Gas Utilities 26,000 88,336
Rohm Co.
Electronics 1,000 156,650
Sankyo Co. Ltd.
Pharmaceuticals & Health 5,000 126,064
Secom Co.
Business Services 1,000 104,158
16
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(Continued) June 30, 1999
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
77th Bank
Banking 4,000 $ 35,050
SMC Corp.
Machinery & Engineering 1,000 112,011
Shizuoka Bank
Banking 8,000 79,755
Sony Corp.
Household Appliances 3,000 323,634
Sumitomo Chemical
Chemicals 17,000 77,995
Sumitomo Marine & Fire
Insurance 7,000 42,242
Taisho Pharmacy Co.
Pharmaceuticals & Health 4,000 132,264
Takeda Chemical Industry
Pharmaceuticals & Health 9,000 417,376
Tobu Railway Co.
Railroads & Equipment 9,000 25,519
Tokyo Electronic Power
Electric & Gas Utilities 14,000 295,693
Tokyo Electronics
Electronics 2,000 135,736
Tokyo Marine &
Fire Insurance
Insurance 16,000 173,927
Toyoda Automobile
Machinery & Engineering 3,000 50,963
Toyota Motor Corp.
Automobiles 9,000 284,947
Uni Charm Corp.
Food & Household
Products 1,000 43,399
Yamato Transportation
Trucking & Freight 4,000 69,769
-----------
8,495,715
-----------
NETHERLANDS--2.6%
- --------------------------------------------------------------------------------
Ahold NV
Retailing 5,989 206,204
ING Groep NV
Financial Services 3,812 206,304
Philips Electronics
Household Appliances 1,729 170,481
Unilever NV
Food & Household
Products 4,771 321,404
-----------
904,393
-----------
SINGAPORE--0.7%
- --------------------------------------------------------------------------------
Overseas Chinese Bank
Banking 10,000 83,431
Singapore Press Holding
Publishing 6,000 102,233
Singapore Telecomm
Telecommunications 27,000 46,322
-----------
231,986
-----------
SPAIN--3.3%
- --------------------------------------------------------------------------------
BCO Bilbao Vizcaya
Banking 17,863 257,981
BCO Central Hispano
Banking 45,314 471,791
Banco Popular
Banking 2,398 172,421
Grupo Dragados
Homebuilders 12,018 140,860
Tabacalera
Beverage & Tobacco 5,911 119,430
-----------
1,162,483
-----------
SWEDEN--3.7%
- --------------------------------------------------------------------------------
ABB
Business & Public Services 1,721 161,173
Ericsson LM--Class B
Electronics 24,887 798,882
Securitas
Business & Public Services 11,446 171,238
Svenska Cellulosa
Paper 5,797 150,234
-----------
1,281,527
-----------
SWITZERLAND--5.3%
- --------------------------------------------------------------------------------
Adecco
Business & Public Services 310 166,054
Novartis AG
Pharmaceuticals & Health 493 719,639
Roche Holdings AGM
Pharmaceuticals & Health 69 709,035
Zurich Versicherungs
Insurance 416 236,476
-----------
1,831,204
-----------
THAILAND--.0%
- --------------------------------------------------------------------------------
Bangkok Bank Public Co. Ltd.
Banking 600 1,310
-----------
17
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(Continued) June 30, 1999
UNITED KINGDOM--25.1%
- --------------------------------------------------------------------------------
Astrazeneca
Pharmaceuticals
& Health 10,011 387,080
Allied Irish Banks
Banking 11,341 150,161
Bass
Leisure & Tourism 7,942 115,171
British Airways
Air Travel 16,520 114,054
British American Tobacco
Beverage & Tobacco 14,598 137,715
British Aerospace Plc
Aerospace & Military
Technology 23,931 155,789
British Telecommunications Plc
Telephone Utilities 74,954 1,254,713
Cable & Wireless
Telecommunications 29,060 370,569
Carlton Communications
Leisure & Tourism 14,878 123,355
Diageo Plc
Beverage & Tobacco 23,821 250,256
GKN
Machinery & Engineering 11,209 191,347
General Electric Co. Plc
Electrical & Electronics 54,906 557,786
Glaxo Wellcome
Pharmaceuticals & Health 18,285 508,127
Granada Group Plc
Business & Public Services 7,654 141,759
Hanson
Construction Materials 17,323 155,641
Hong Kong & Shanghai
Bank Corp. Holdings
Banking 6,653 235,743
Imperial Chemical Industries
Chemicals 19,164 189,248
Lloyds TSB Group Plc
Banking 46,448 630,736
Misys
Business & Public Services 17,624 150,845
National Grid Co.
Electrical & Gas Utilities 26,335 183,477
Pearson
Broadcasting 7,316 148,646
Prudential Corp. Plc
Insurance 19,319 284,722
Reuters Group
Business & Public Services 15,963 209,974
Rio Tinto
Non-Ferrous Metals 7,414 124,226
Smiths Industries
Machinery & Engineering 8,739 115,984
SmithKline Beecham Plc
Pharmaceuticals & Health 44,914 584,065
TI Group
Multi-Industry 21,940 147,323
Unilever Plc
Food & Household
Products 29,622 262,874
Vodafone
Telephone Utilities 33,241 653,904
Williams
Electrical Equipment 26,830 177,198
-----------
8,712,488
-----------
TOTAL INVESTMENTS
(Identified Cost
$29,021,937) 95.9% 33,256,996
OTHER ASSETS
LESS LIABILITIES 4.1 1,418,451
----- -----------
NET ASSETS 100.0% $34,675,447
===== ===========
Note: The Portfolio has the following industries over 10%: Pharmaceuticals &
Health 12%; Telephone Utilities 12%.
See notes to financial Statements
18
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $29,021,937) $33,256,996
Foreign currency, at value (Cost, $1,499,294) 1,496,355
Receivable for investments sold 901,355
Dividends and interest receivable 60,253
- --------------------------------------------------------------------------------
Total assets 35,714,959
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,001,627
Payable to affiliates--Investment Advisory fees (Note 2) 28,443
Other liabilities 9,442
- --------------------------------------------------------------------------------
Total liabilities 1,039,512
- --------------------------------------------------------------------------------
NET ASSETS $34,675,447
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $34,675,447
================================================================================
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $53,499) $ 276,812
Interest 1,516
- --------------------------------------------------------------------------------
Total investment income $ 278,328
- --------------------------------------------------------------------------------
EXPENSES:
Investment Advisory fees (Note 2) 176,916
Administrative fees (Note 3) 8,847
- --------------------------------------------------------------------------------
Total expenses 185,763
Less aggregate amount waived by the Administrator (Note 3) (8,847)
- --------------------------------------------------------------------------------
Net expenses 176,916
- --------------------------------------------------------------------------------
Net investment income 101,412
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 988,132
Net realized loss on foreign currencies transactions (93,881)
- --------------------------------------------------------------------------------
Net realized gain 894,251
- --------------------------------------------------------------------------------
Unrealized depreciation of investments-- (70,841)
Translation of other assets and liabilities denominated
in foreign currencies--net (6,511)
- --------------------------------------------------------------------------------
Total unrealized depreciation of investments (77,352)
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 816,899
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $918,311
================================================================================
See notes to financial statements
19
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(Unaudited) 1998
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
Net investment income $ 101,412 $ 150,293
Net realized gain on investments
and foreign exchange transactions 894,251 1,481,410
Unrealized appreciation (depreciation)
of investments and foreign
exchange transactions (77,352) 3,855,741
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 918,311 5,487,444
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 2,214,511 9,800,225
Value of withdrawals (5,696,932) (11,818,432)
- --------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions (3,482,421) (2,018,207)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS: (2,564,110) 3,469,237
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 37,239,557 33,770,320
- --------------------------------------------------------------------------------
End of period $34,675,447 $37,239,557
================================================================================
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 1, 1994
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED DECEMBER 31, OF OPERATIONS) TO
JUNE 30, 1999 --------------------------------------------------- DECEMBER 31,
(Unaudited) 1998 1997 1996 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
end of period
(000's omitted) $34,675 $37,240 $33,770 $49,056 $40,114 $32,153
Ratio of expenses
to average
net assets 1.00%* 1.00% 1.00% 1.11% 1.20% 1.22%*
Ratio of net investment
income to
average net assets 0.57%* 0.42% 0.58% 0.65% 0.59% 0.60%*
Portfolio turnover 35% 118% 99% 109% 51% 25%
Note:If the Agents of the Portfolio had not voluntarily waived a portion of
their fees for the periods indicated, the ratios would have been as follows:
Expenses to
average net assets 1.05%* 1.05% 1.06% 1.13% N/A N/A
Net investment income
to average net assets 0.52%* 0.37% 0.52% 0.63% N/A N/A
===============================================================================================================
</TABLE>
*Annualized
See notes to financial statements
20
<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.
Citibank is a wholly- owned subsidiary of Citicorp, which in turn is a
wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as a result
of the merger of Citicorp and Travelers Group, Inc., which was completed on
October 8, 1998.
The preparation of financial statements in accordance with U.S. 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.
The following significant accounting policies consistently followed by the
Portfolio 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. 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 of fund
valuation, 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
21
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 or 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.
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 custodian 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 $176,916
for the six months ended June 30, 1999. The investment advisory fees are
computed at the annual rate of 1.00% of the Portfolio's average daily net
assets.
22
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $8,847, all of which was voluntarily waived for
the six months ended June 30, 1999. 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, 1999,
purchases and sales of investment securities, other than short-term investments,
aggregated $12,477,071 and $15,863,336, respectively.
5. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at June 30, 1999 as
computed on a federal income tax basis, are as follows:
Aggregate cost $30,521,231
================================================================================
Gross unrealized appreciation $ 5,220,896
Gross unrealized depreciation (988,776)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 4,232,120
================================================================================
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 less expenses waived by the Administrator would on an annual
basis exceed an agreed upon rate, which as of July 1, 1996 is 1.00% of average
daily net assets.
23
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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, 1999.
8. LINE OF CREDIT The Portfolio, along with the other Portfolios in the
CitiFunds Family, entered into an ongoing agreement with a bank which allows the
Funds collectively to borrow up to $75 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. 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, 1999,
the commitment fee allocated to the Portfolio was $46. Since the line of credit
was established, there have been no borrowings.
24
