<PAGE>
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Equity Portfolio
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PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited)
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ISSUER SHARES VALUE
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COMMON STOCKS -- 85.2%
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COMMODITIES - 6.5%
EI Dupont De Nemours & Co. Inc. 50,000 $ 3,437,500
Lubrizol Corp............ 83,000 2,936,125
Praxair Inc.............. 195,000 4,875,000
Stone Container Corp..... 81,500 1,731,875
------------
12,980,500
------------
COMMERCIAL SERVICES -2.1%
Sysco Corp............... 140,000 4,130,000
------------
CONSUMER-DURABLES - 5.1%
Eastman Kodak Co......... 81,000 4,910,625
General Motors Corp...... 112,500 5,273,438
------------
10,184,063
------------
CONSUMER-NON DURABLES - 4.9%
PepsiCo Inc.............. 96,000 4,380,000
Philip Morris Comp Cos Inc. 50,000 3,718,750
RJR Nabisco Holdings Group 65,000 1,811,875
------------
9,910,625
------------
CONSUMER SERVICES -4.2%
Carnival Corp............ 116,000 2,711,500
Mirage Resorts Inc....... 45,200 1,384,250
McDonald's Corp.......... 112,000 4,382,000
------------
8,477,750
------------
ELECTRONICS/TECHNICAL SERVICES - 11.5%
Cisco Systems, Inc....... 80,000 4,045,000
Computer Associates Intl. Inc. 41,700 2,825,175
DSC Communications....... 56,000 2,604,000
First Financial Mgmt. Corp. 34,500 2,949,750
General Motors Corp. Class "E" 125,000 5,437,500
Loral Corp............... 46,500 2,406,375
Silicon Graphics Inc.*... 70,000 2,791,250
------------
23,059,050
------------
ENERGY/MINERALS -12.6%
Amoco Corp............... 97,500 6,495,937
Exxon Corp............... 94,000 6,638,750
Kerr-McGee Corp.......... 100,000 5,362,500
Royal Dutch Petroleum Co.
ADRs................... 55,900 6,812,813
------------
25,310,000
------------
FINANCE - 8.4%
American International
Group Inc.............. 35,000 3,990,000
BankAmerica Corp......... 60,000 3,157,500
Federal National Mortgage
Association............ 45,000 4,246,875
State Street Boston Corp. 78,000 2,876,250
Travelers Inc............ 60,000 2,625,000
------------
16,895,625
------------
HEALTH SERVICES/TECHNOLOGY - 5.9%
Community Health Systems. 44,500 1,507,437
Johnson & Johnson........ 63,000 4,260,375
Pfizer Inc............... 47,500 4,387,813
United Healthcare Corp... 8,800 364,100
Value Health Inc......... 44,000 1,419,000
------------
11,938,725
------------
INDUSTRIAL SERVICES - 4.4%
Fluor Corp. ............. 62,000 3,224,000
Schlumberger LTD......... 28,200 1,751,925
WMX Technologies Inc..... 140,000 3,972,500
------------
8,948,425
------------
PRODUCER MANUFACTURING - 8.4%
Danaher Corp............. 72,700 2,199,175
Deere & Co............... 20,000 1,712,500
Emerson Electric Co...... 47,000 3,360,500
General Electric Co...... 89,000 5,017,375
Xerox Corp............... 38,300 4,490,675
------------
16,780,225
------------
RETAIL TRADE - 4.0%
Limited Inc.............. 75,000 1,650,000
Nine West Group Inc...... 47,600 1,737,400
Toys "R" Us Inc. *....... 97,000 2,837,250
Wal-Mart Stores Inc...... 70,000 1,872,500
------------
8,097,150
------------
TRANSPORTATION - 2.1%
Norfolk Southern Co...... 62,000 $ 4,177,250
------------
UTILITIES - 5.1%
FPL Group Inc............ 75,000 2,896,875
GTE Corp................. 111,000 3,787,875
Pacificorp .............. 150,000 2,812,500
Texas Utilities.......... 23,000 790,625
------------
10,287,875
------------
TOTAL COMMON STOCK
(Identified Cost - $146,020,547) 171,177,263
------------
FOREIGN CLOSED END FUNDS - 2.2%
Emerging Germany Fund Inc. 30,800 223,300
Emerging Tiger Fund Inc.. 43,800 580,350
First Australia Fund Inc. 11,400 89,775
First Philippine Fund.... 15,700 262,973
France Growth Fund ...... 12,900 132,225
Global Privatization Fund 17,500 225,313
Growth Fund of Spain..... 25,000 250,000
India Fund............... 40,200 412,050
Malaysia Fund............ 26,500 513,438
Pakistan Investment Fund. 45,500 307,125
Thai Capital Fund........ 24,700 429,163
The New Germany Fund..... 38,100 461,963
The Thai Fund Inc........ 18,500 490,250
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TOTAL FOREIGN CLOSED END FUNDS
(Identified Cost - $5,102,554) 4,377,925
------------
PRINCIPAL
ISSUER AMOUNT VALUE
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SHORT-TERM OBLIGATIONS -- 10.0%
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Chase Manhattan Repurchase Agreement
6.125%, due 7/3/95, proceeds
at maturity $20,013,210 $20,003,000 $ 20,003,000
(secured by $20,219,534 ------------
U.S. Treasury Note 7.50%,
due 11/15/16)
TOTAL INVESTMENTS........ 97.4% 195,558,188
(Identified Cost $171,126,101)
OTHER ASSETS,
LESS LIABILITIES........ 2.6 5,305,795
------ ------------
NET ASSETS............... 100.0% $200,863,983
====== ============
*Non-income producing security.
See notes to financial statements
<PAGE>
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Equity Portfolio
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STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (unaudited)
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<TABLE>
<S> <C>
ASSETS:
Investments at value (Note 1A) (Identified Cost, 171,126,101)....................... $195,558,188
Cash................................................................................ 893
Receivable for investments sold..................................................... 7,942,450
Dividends and interest receivable................................................... 278,845
------------
Total assets.................................................................... 203,780,376
------------
LIABILITIES:
Payable for investments purchased................................................... 2,817,153
Payable to affiliates--Investment advisory fee (Note 2).............................. 81,928
Accrued expenses and other liabilities.............................................. 17,312
------------
Total liabilities............................................................... 2,916,393
------------
NET ASSETS ......................................................................... $200,863,983
============
REPRESENTED BY:
Paid-in capital for beneficial interests............................................ $200,863,983
============
</TABLE>
See notes to financial statements
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Equity Portfolio
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STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995 (unaudited)
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<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $33,189).................. $1,608,782
Interest............................................................... 728,685
----------
Total Income......................................................... $ 2,337,467
EXPENSES:
Investment advisory fees (Note 2)...................................... 477,074
Administrative fees (Note 3)........................................... 47,707
Expense fees (Note 6).................................................. 47,711
----------
Total expenses....................................................... 572,492
-----------
Net investment income................................................ 1,764,975
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions.................. 3,267,365
Unrealized appreciation (depreciation) of investments--
Beginning of period................................................. 5,474,813
End of period....................................................... 24,432,087
----------
Net change in unrealized appreciation (depreciation).................. 18,957,274
-----------
Net realized and unrealized gain (loss) on investments.............. 22,224,639
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $23,989,614
===========
</TABLE>
See notes to financial statements
<PAGE>
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Equity Portfolio
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STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
MAY 1, 1994
SIX MONTHS ENDED (COMMENCEMENT
JUNE 30, 1995 OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................. $ 1,764,975 $ 2,322,467
Net realized gain on investment transactions...................... 3,267,365 2,731,272
Net change in unrealized appreciation (depreciation) of investments 18,957,274 (844,015)
------------ ------------
Net increase in net assets resulting from operations.......... 23,989,614 4,209,724
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from contributions....................................... 6,752,473 199,044,676
Value of withdrawals.............................................. (16,563,588) (16,568,916)
------------ ------------
Net increase (decrease) in net assets from capital transactions (9,811,115) 182,475,760
------------ ------------
NET INCREASE IN NET ASSETS: ...................................... 14,178,499 186,685,484
NET ASSETS:
Beginning of period............................................... 186,685,484 --
------------ ------------
End of period..................................................... $200,863,983 $186,685,484
============ ============
</TABLE>
See notes to financial statements
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Equity Portfolio
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FINANCIAL HIGHLIGHTS
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<TABLE>
MAY 1, 1994
SIX MONTHS ENDED (COMMENCEMENT
JUNE 30, 1995 OF OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1994
--------------- ----------------
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C>
Net Assets, end of period (000 omitted)........................... $200,864 $186,685
Ratio of expenses to average net assets........................... 0.60%<F1> 0.60%<F1>
Ratio of net investment income to average net assets.............. 1.85%<F1> 1.81%<F1>
Portfolio turnover................................................ 4% 35%
<FN>
<F1> Annualized
</TABLE>
See notes to financial statements
<PAGE>
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Equity Portfolio
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NOTES TO FINANCIAL STATEMENTS (unaudited)
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(1) SIGNIFICANT ACCOUNTING POLICIES
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 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 listed on securities
exchanges or reported through the NASDAQ system are valued at last sale prices.
Unlisted securities or listed securities for which last sales prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in sixty days or less), are valued on the basis
of valuations furnished by pricing services which take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, and other market data,
without exclusive reliance on quoted prices or exchange or over-the-counter
prices, since such valuations are believed to reflect more accurately the fair
value of the securities. Short-term obligations, maturing in sixty days or less,
are valued at amortized cost, which approximates market value. Securities, if
any, for which there are no such valuations or quotations are valued at fair
value as determined in good faith by or under guidelines established by the
Trustees.
B. INCOME -- Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on long-term debt securities
when required for U.S. federal income tax purposes. Dividend income is recorded
on the ex-dividend date.
C. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. 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 agreement
investments. 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.
E. 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.
F. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis.
(2) INVESTMENT ADVISORY FEES
The investment advisory fee paid to Citibank, as compensation for overall
investment management services, amounted to $477,074 for the six months ended
June 30, 1995. The investment advisory fee is computed at the annual rate of
0.50% of the Portfolio's average daily net assets.
(3) ADMINISTRATIVE FEE
Under the terms of an Administrative Services Agreement, the administrative fee
paid to the Administrator, as compensation for overall administrative services
and general office facilities, is computed at an annual rate of 0.05% of the
Portfolio's average daily net assets. The administrative fee amounted to $47,707
for the six months ended June 30, 1995. Citibank acts as Sub-Administrator and
performs such duties and receives such compensation from SFG as from time to
time is agreed to by SFG and Citibank. 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 of the officers and a Trustee of the
Portfolio are officers or directors of the Administrator or its affiliates.
(4) PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $6,752,473 and $16,563,588,
respectively, for the six months ended June 30, 1995.
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investment
securities owned at June 30, 1995, as computed on a federal income tax basis,
are as follows:
Aggregate cost...................... $171,126,101
============
Gross unrealized appreciation....... $ 27,121,853
Gross unrealized depreciation....... (2,689,766)
------------
Net unrealized appreciation......... $ 24,432,087
=============
(6) EXPENSE FEE
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 ordinary
expenses of the Portfolio would, on an annual basis, exceed an agreed upon rate,
currently 0.60% of average daily net assets.
(7) LINE OF CREDIT
The Portfolio, along with the other Landmark Funds, entered into an ongoing
agreement with a bank which allows the 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, 1995,
the commitment fee allocated to the Portfolio was $762. Since the line of credit
was established, there have been no borrowings.
