INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS December 31, 1999
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 96.7%
- --------------------------------------------------------------------------------
AUSTRALIA --- 0.0%
- --------------------------------------------------------------------------------
Australia & New Zealand Bank
Banks 184 $ 1,368
-----------
BELGIUM -- 0.6%
- --------------------------------------------------------------------------------
Fortis
Diversified Financials 7,008 252,871
- --------------------------------------------------------------------------------
FINLAND -- 5.7%
- --------------------------------------------------------------------------------
Nokia AB
Communications
Equipment 9,341 1,693,738
Sonera Yhtyma
Diversified
Telecommunication
Services 7,900 541,546
-----------
2,235,284
-----------
FRANCE -- 12.4%
- --------------------------------------------------------------------------------
AXA-UAP
Insurance 3,809 531,040
Bouygues
Construction &
Engineering 529 336,252
Canal Plus
Media 2,328 338,868
Cap Gemini
IT Consulting & Services 1,665 422,664
Carrefour Supermarche
Food & Drug Retailing 1,343 247,711
Castorama Dubois
Specialty Retail 618 188,008
Cie de St. Gobain
Building Products 869 163,435
France Telecom
Diversified
Telecommunication
Services 4,221 558,291
L'Oreal
Personal Products 517 414,817
Pinault-Printemps
Multiline Retail 1,454 383,748
Sanofi
Pharmaceuticals 7,373 307,040
Total Fina
Oil & Gas 4,308 575,005
Vivendi
Mutli-Utilities 4,540 410,002
-----------
4,876,881
-----------
GERMANY -- 8.3%
- --------------------------------------------------------------------------------
Allianz AG
Insurance 1,435 482,090
Bayer AG
Chemicals 3,015 142,746
Deutsche Telekom AG
Diversified
Telecommunication
Services 12,610 898,079
Mannesmann AG
Wireless
Telecommunication
Services 3,319 800,743
Muenchener
Ruckversicherungs AG
Insurance 1,876 475,849
Preussag AG
Industrial Conglomerates 2,937 163,610
Siemens AG
Industrial Conglomerates 1,048 133,335
Veba AG
Mutli-Utilities 3,719 180,760
-----------
3,277,212
-----------
HONG KONG -- 1.7%
- --------------------------------------------------------------------------------
Cable & Wireless
Diversified
Telecommunication
Services 67,893 196,076
Hang Seng Bank
Banks 4,500 51,376
Hutchinson Whampoa
Diversified Financials 27,000 392,487
Johnson Electric Holdings
Electrical Equipment 2,000 12,839
-----------
652,778
-----------
ITALY -- 2.5%
- --------------------------------------------------------------------------------
Assicurazioni Generali Spa
Insurance 5,148 170,095
Mediaset Spa
Media 18,530 288,206
Telecom Italia Mobile Spa
Wireless
Telecommunication
Services 48,336 539,986
-----------
998,287
-----------
16
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS December 31, 1999
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
JAPAN -- 28.9%
- --------------------------------------------------------------------------------
Acom Co.
Diversified Financials 1,000 $ 97,974
Advantest
Semiconductor
Equipment & Products 800 211,412
Asahi Breweries
Beverages 4,000 43,770
Bank of Tokyo Mitsubishi
Banks 42,000 585,377
Bridgestone Corp.
Auto Components 8,000 176,177
Canon Inc.
Office Electronics 7,000 278,164
East Japan Railway
Road & Rail 37 199,540
Fanuc
Machinery 1,500 191,005
Fujitsu Ltd.
Computers & Peripherals 16,000 729,764
Hirose Electric
Electronic Equipment
& Instruments 600 134,540
Honda Motor Co. Ltd.
Automobiles 8,000 297,543
Hoya Corp.
Health Care Equipment
& Supplies 1,000 78,790
Ito Yokado Co.
Multiline Retail 3,000 325,927
Japan Air Lines Co.
Aerospace & Defense 19,000 56,347
Kao Corp.
Household Products 6,000 171,185
Kinki Nippon Railway
Road & Rail 14,000 56,181
Minebea Co.
Machinery 3,000 51,473
Mitsubishi Estate
Real Estate 10,000 97,582
Murata Manufacturing Co.
Semiconductor Equipment
& Products 2,000 469,805
Nec Corp.
Computers & Peripherals 13,000 309,827
Nikon Corp.
Semiconductor Equipment
& Products 3,000 88,088
Nintendo Co.
Leisure Equipment &
Products 1,000 166,194
Nippon Express Co.
Road & Rail 10,000 55,300
Nippon Telegraph &
Telephone Co.
Diversified
Telecommunication
Services 107 1,832,730
Nitto Denko Corp.
Electronic Equipment
& Instruments 1,000 50,015
Osaka Gas Co. Ltd.
Gas Utilities 23,000 55,378
Promise Co.
Diversified Financials 1,000 50,896
Rohm Co. Ltd.
Electronic Equipment
& Instruments 1,000 411,080
Secom Co. Ltd.
Commercial Services
& Supplies 2,000 220,221
77th Bank
Banks 4,000 41,930
SMC Corp.
Machinery 700 154,909
Shinetsu Chemical Co.
Chemicals 3,000 129,196
Softbank Corp.
Internet Software &
Services 900 861,505
Sony Corp.
Household Durables 3,400 1,008,320
Sumitomo Bank
Banks 22,000 301,243
Sumitomo Chemical
Chemicals 15,000 70,471
Sumitomo Marine & Fire
Insurance 6,000 36,997
Taisho Pharmacy Co.
Pharmaceuticals 3,000 88,089
Takeda Chemical Industry
Pharmaceuticals 7,000 345,992
Takefuji Corp.
Diversified Financials 1,000 125,184
Terumo Corp.
Health Care Equipment
& Supplies 1,000 26,720
17
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1999
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
Tokyo Electronics
Semiconductor
Equipment & Products 2,000 $ 274,053
Tokyo Marine & Fire Insurance
Insurance 13,000 152,051
Uni Charm Corp.
Household Products 1,000 57,649
Yamanouchi Pharmaceutical
Pharmaceuticals 2,000 69,884
Yamato Transportation
Air Freight & Couriers 3,000 116,277
-----------
11,352,755
-----------
NETHERLANDS -- 1.7%
- --------------------------------------------------------------------------------
Akzo Nobel NV
Chemicals 3,686 184,912
Unilever NV
Food Products 5,366 296,434
Wolters Kluwer
Media 5,400 182,774
-----------
664,120
-----------
SINGAPORE -- 1.6%
- --------------------------------------------------------------------------------
Overseas Chinese Bank
Banks 24,500 225,068
Singapore Press Holding
Media 12,000 260,102
Singapore Telecomm
Diversified
Telecommunication
Services 65,000 134,254
-----------
619,424
-----------
SPAIN -- 3.9%
- --------------------------------------------------------------------------------
BCO Central Hispano
Banks 28,280 320,203
Banco Popular
Banks 2,133 139,127
Bankinter SA
Banks 4,221 213,239
Sogecable SA *
Media 6,340 404,910
Telefonica Publica *
Media 9,115 443,031
-----------
1,520,510
-----------
SWEDEN -- 3.9%
- --------------------------------------------------------------------------------
ABB
Electrical Equipment 1,426 173,788
L.M. Ericsson Telefon (Series B)
Communications
Equipment 14,959 961,637
Securitas
Commercial Services &
Supplies 10,453 189,184
Svenska Cellulosa
Paper & Forest Products 6,938 205,474
-----------
1,530,083
-----------
SWITZERLAND -- 5.9%
- --------------------------------------------------------------------------------
Adecco
Commercial Services
& Supplies 267 207,926
Nestle
Food Products 324 593,549
Novartis AG
Pharmaceuticals 442 648,996
Roche Holdings AGM
Pharmaceuticals 73 866,482
-----------
2,316,953
-----------
UNITED KINGDOM -- 19.6%
- --------------------------------------------------------------------------------
AstraZeneca
Pharmaceuticals 13,778 572,414
British Sky Broadcast
Media 18,800 303,676
British Telecommunications Plc.
Diversified
Telecommunication
Services 63,503 1,538,646
CRH
Construction Materials 7,415 160,221
Cable & Wireless
Diversified
Telecommunication
Services 18,863 318,710
Diageo Plc.
Beverages 34,655 276,533
Glaxo Wellcome
Pharmaceuticals 26,693 756,276
Granada Group Plc.
Hotels Restaurants &
Leisure 15,308 154,544
Great Universal Stores
Internet & Catalog Retail 15,660 91,064
Imperial Chemical Industries
Chemicals 16,509 174,402
18
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS December 31, 1999
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
Lloyds TSB Group Plc.
Banks 39,601 $ 491,910
Marconi
Communications
Equipment 28,348 500,033
Misys
Software 17,624 273,578
National Grid Co.
Electric Utilities 20,649 157,099
Pearson
Media 6,130 199,521
Prudential Corp. Plc.
Insurance 16,714 326,137
Reuters Group
Media 14,018 194,732
SmithKline Beecham Plc.
Pharmaceuticals 41,451 525,603
Tesco
Food & Drug Retailing 31,573 95,880
Unilever Plc.
Food Products 16,258 119,490
Vodafone
Wireless
Telecommunication
Services 95,542 476,244
-----------
7,706,713
-----------
TOTAL COMMON STOCKS
(Identified Cost $26,399,024) 38,005,239
-----------
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 1.4%
- --------------------------------------------------------------------------------
GERMANY -- 1.4%
SAP AG
Software
(Identified Cost $378,615) 931 560,830
-----------
TOTAL INVESTMENTS
(Identified Cost
$26,777,639) 98.1% 38,566,069
OTHER ASSETS
LESS LIABILITIES 1.9 739,128
----- -----------
NET ASSETS 100.0% $39,305,197
===== ===========
Note: The Portfolio has the following industries over 10%: Diversified
Telecommunication Services 15%; Pharmaceuticals 11%.
*Non-income producing
See notes to financial statements
19
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $26,777,639) $38,566,069
Foreign currency, at value (Cost, $25,333) 24,174
Cash 728,362
Dividends and interest receivable 20,981
- --------------------------------------------------------------------------------
Total assets 39,339,586
- --------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliates--Investment Advisory fees (Note 2) 30,635
Other liabilities 3,754
- --------------------------------------------------------------------------------
Total liabilities 34,389
- --------------------------------------------------------------------------------
NET ASSETS $39,305,197
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $39,305,197
================================================================================
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $74,490) $ 415,878
Interest 3,319
- --------------------------------------------------------------------------------
Total investment income $ 419,197
EXPENSES:
Investment Advisory fees (Note 2) 348,915
Administrative fees (Note 3) 17,449
- --------------------------------------------------------------------------------
Total expenses 366,364
Less aggregate amount waived by the Administrator (Note 3) (17,449)
- --------------------------------------------------------------------------------
Net expenses 348,915
- --------------------------------------------------------------------------------
Net investment income 70,282
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 3,269,324
Net realized loss on foreign currencies transactions (76,036)
- --------------------------------------------------------------------------------
Net realized gain 3,193,288
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments 7,484,308
Translation of other assets and liabilities denominated
in foreign currencies--net (218)
- --------------------------------------------------------------------------------
Total unrealized appreciation (depreciation) of investments 7,484,090
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 10,677,378
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,747,660
================================================================================
See notes to financial statements
20
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
Net investment income $ 70,282 $ 150,293
Net realized gain on investments
and foreign exchange transactions 3,193,288 1,481,410
Unrealized appreciation
of investments and foreign
exchange transactions 7,484,090 3,855,741
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 10,747,660 5,487,444
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 6,143,220 9,800,225
Value of withdrawals (14,825,240) (11,818,432)
- --------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions (8,682,020) (2,018,207)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 2,065,640 3,469,237
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 37,239,557 33,770,320
- --------------------------------------------------------------------------------
End of period $39,305,197 $37,239,557
================================================================================
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
end of period
(000's omitted) $39,305 $37,240 $33,770 $49,056 $40,114
Ratio of expenses
to average
net assets 1.00% 1.00% 1.00% 1.11% 1.20%
Ratio of net investment
income to
average net assets 0.20% 0.42% 0.58% 0.65% 0.59%
Portfolio turnover 68% 118% 99% 109% 51%
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
Net investment income
to average net assets 0.15% 0.37% 0.52% 0.63% N/A
================================================================================
See notes to financial statements
21
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES International Equity Portfolio (the
"Port-folio"), 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 Citigroup Inc.
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 on 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
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.
22
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 $348,915
for the year ended December 31, 1999. 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
23
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $17,449, all of which was voluntarily waived for
the year ended December 31, 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 year ended December 31, 1999,
purchases and sales of investment securities, other than short-term investments,
aggregated $23,574,085 and $32,465,038, respectively.
5. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at December 31, 1999
as computed on a federal income tax basis, are as follows:
Aggregate cost $26,744,967
================================================================================
Gross unrealized appreciation $12,523,967
Gross unrealized depreciation (702,865)
- --------------------------------------------------------------------------------
Net unrealized appreciation $11,821,102
================================================================================
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.
24
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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, 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 year ended December 31, 1999, the
commitment fee allocated to the Portfolio was $91. Since the line of credit was
established, there have been no borrowings.
25
<PAGE>
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, 1999, and
the related statements of operations and of changes in net assets and the
financial highlights for the periods indicated. 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 audits.
We conducted our audits 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 audits, which included confirmation of investments owned as
at December 31, 1999 by correspondence with the custodian, provide 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, 1999, the
results of its operations and the changes in its net assets, and the financial
highlights for the periods indicated in accordance with U.S. generally accepted
accounting principles.
PricewaterhouseCoopers LLP
Chartered Accountants
Toronto, Ontario
February 23, 2000
26
