<PAGE>
Growth & Income Portfolio
PORTFOLIO OF INVESTMENTS April 30, 1998
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 95.3%
- --------------------------------------------------------------------------------
BASIC INDUSTRIES -- 10.2%
- --------------------------------------------------------------------------------
Barrick Gold Corp. 47,400 $ 1,063,537
Crown Cork & Seal Inc. 15,500 806,969
EI du Pont de Nemours & Co. 47,400 1,951,375
Martin Marietta Materials Inc. 31,600 1,483,225
Mead Corp. 33,600 1,163,400
Weyerhauser Co. 21,100 1,215,888
-----------
7,684,394
-----------
CAPITAL GOODS -- 4.0%
- --------------------------------------------------------------------------------
Deere & Co. 28,400 1,659,625
Parker Hannifin Corp. 29,600 1,320,900
-----------
2,980,525
-----------
CONSUMER DURABLE -- 5.1%
- --------------------------------------------------------------------------------
Goodyear Tire & Rubber 26,800 1,876,000
Lucasvarity PLC 24,425 1,099,125
Meritor Automotive Inc. 33,300 859,556
-----------
3,834,681
-----------
CONSUMER SERVICES -- 4.6%
- --------------------------------------------------------------------------------
McDonalds Corp. 43,800 2,710,125
Tricon Global
Restaurants Inc.* 24,700 784,225
-----------
3,494,350
-----------
ENERGY -- 17.1%
- --------------------------------------------------------------------------------
Amerada Hess Corp. 18,800 1,081,000
Burlington Resources Inc. 37,300 1,753,100
Diamond Offshore Drilling Inc. 14,500 734,063
Exxon Corp. 27,600 2,013,075
Halliburton Co. 30,200 1,661,000
Mobil Corp. 24,700 1,951,300
Royal Dutch Petroleum Corp. 35,400 2,002,312
Santa Fe International Corp. 43,700 1,712,494
-----------
12,908,344
-----------
FINANCE -- 24.4%
- --------------------------------------------------------------------------------
Bankers Trust Corp. 10,100 1,304,162
Chase Manhattan Bank Corp. 18,600 2,577,263
Everest Reinsurance Holdings 47,800 1,971,750
Franklin Resources Inc. 18,300 979,050
J.P. Morgan & Co. Inc. 15,000 1,968,750
Lehman Brothers Holdings Inc. 30,500 2,167,406
Nationsbank Corp. 28,600 2,166,450
Safeco Corp. 32,100 1,602,994
Travelers Group Inc. 21,000 1,284,938
Washington Mutual Inc. 14,600 1,022,912
Wells Fargo 3,700 1,363,450
-----------
18,409,125
-----------
HEALTHCARE SERVICES -- 4.5%
- --------------------------------------------------------------------------------
American Home Products Corp. 15,500 1,443,438
Oxford Health Plans* 48,300 827,137
Wellpoint Health Networks Inc.* 15,500 1,117,938
-----------
3,388,513
-----------
INDUSTRIAL SERVICES -- 1.1%
- --------------------------------------------------------------------------------
U.S.A. Waste Services Inc. 17,300 848,781
-----------
RETAIL -- 3.7%
- --------------------------------------------------------------------------------
Federated Department Stores Inc.* 13,800 678,787
Premark International Inc. 14,600 487,275
Sears Roebuck & Co. 15,700 931,206
Toys "R" Us Inc.* 25,900 713,869
-----------
2,811,137
-----------
TECHNOLOGY -- 7.6%
- --------------------------------------------------------------------------------
Compaq Computer Corp. 25,900 726,819
Hewlett Packard Co. 10,000 753,125
International Business Machines 3,100 359,212
Intel Corp. 9,900 800,044
Raytheon Corp. 29,500 1,672,281
Sun Microsystems Inc. 34,200 1,408,613
-----------
5,720,094
-----------
TRANSPORTATION -- 1.2%
- --------------------------------------------------------------------------------
Union Pacific Corp. 16,500 903,375
-----------
UTILITIES -- 11.8%
- --------------------------------------------------------------------------------
American Electric Power Inc. 17,300 826,075
American Telephone & Telegraph Corp. 38,900 2,336,431
Bell Atlantic Corp. 18,700 1,749,619
Bellsouth Corp. 21,000 1,347,937
Cinergy Corp. 26,600 927,675
Entergy Corp. 30,300 753,713
Houston Industries Inc. 32,200 935,812
-----------
8,877,262
-----------
TOTAL COMMON STOCKS 71,860,581
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS -- 4.6%
- --------------------------------------------------------------------------------
Sanwa Repurchase Agreement 5.43% due 5/01/98
proceeds at maturity $3,461,522
(collateralized by $3,409,000 U.S. Treasury
Note, 6.50% due 8/01/01, valued
at $3,533,086) 3,461,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Identified Cost $73,399,869) 99.9% 75,321,581
OTHER ASSETS,
LESS LIABILITIES 0.1 26,233
----- -----------
NET ASSETS 100.0% $75,347,814
===== ===========
* Non income producing securities
See notes to financial statements
<PAGE>
GROWTH & INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $73,399,869) $75,321,581
Cash 920
Dividends and interest receivable 87,879
- --------------------------------------------------------------------------------
Total assets 75,410,380
- --------------------------------------------------------------------------------
LIABILITIES:
Accrued expenses and other liabilities 62,566
- --------------------------------------------------------------------------------
NET ASSETS $75,347,814
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $75,347,814
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $119,866
Interest income 67,988
- --------------------------------------------------------------------------------
Total investment income $ 187,854
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 58,492
Custody and Fund Accounting fees 41,178
Audit fees 13,750
Legal fees 5,000
Trustees fees 1,333
Miscellaneous 1,305
- --------------------------------------------------------------------------------
Total expenses 121,058
Less aggregate amounts waived by Investment Adviser (58,492)
- --------------------------------------------------------------------------------
Net expense 62,566
- --------------------------------------------------------------------------------
Net investment income 125,288
- --------------------------------------------------------------------------------
Net realized gain from investment transaction 253,020
Net change in unrealized appreciation of investment 1,921,712
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investment 2,174,732
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,300,020
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
GROWTH & INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 125,288
Net realized gain on investment transactions 253,020
Net change in unrealized appreciation of investments 1,921,712
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,300,020
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 73,466,468
Value of withdrawals (418,674)
- --------------------------------------------------------------------------------
Net increase in net assets from capital transactions 73,047,794
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 75,347,814
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- --------------------------------------------------------------------------------
End of period $75,347,814
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $75,348
Ratio of expenses to average net assets 0.75%*
Ratio of net investment income to average net assets 1.50%*
Portfolio turnover 8%
Note: If Agents of the Portfolio had not voluntarily waived a portion of their
fees during the periods indicated, the ratios would have been as follows:
RATIOS:
Expenses to average net assets 1.45%*
Net investment income to average net assets 0.80%*
- --------------------------------------------------------------------------------
* Annualized
See notes to financial statements
<PAGE>
GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Growth & Income 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 Portfolio commenced
operations on March 2, 1998. The Declaration of Trust permits the Trustees to
issue beneficial interests in the Portfolio. The Investment Manager of the
Portfolio is Citibank, N.A. ("Citibank"). Signature Financial Group (Grand
Cayman), Ltd. ("SFG") acts as the Portfolio's Sub-Administrator.
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 significant accounting policies consistently followed by the Portfolio
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 approved by Board of Trustees 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. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. 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 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.
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. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs such duties and receives such compensation
from Citibank as from time to time are agreed to by Citibank and SFG. Citibank
is a wholly-owned subsidiary of Citicorp. Citicorp recently announced its
intention to merge with The Travelers Group. Completion of the merger is subject
to the satisfaction of certain conditions.
The management fees paid to Citibank, amounted to $58,492, all of which was
voluntarily waived for the period March 2, 1998 (Commencement of Operations) to
April 30, 1998. The management fees are computed at the annual rate of 0.70% of
the Portfolio's average daily net assets. The Trust pays no compensation
directly to any Trustee or any other officer who is affiliated with the
Sub-Administrator, all of whom receive remuneration for their services to the
Trust from the Sub-Administrator or its affiliates.
3. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $74,350,203 and $4,664,354,
respectively, for the period March 2, 1998 (Commencement of Operations) to April
30, 1998.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1998, as
computed on a federal income tax basis, are as follows:
Aggregate cost $73,399,869
- --------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,812,280
Gross unrealized depreciation (890,568)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 1,921,712
- --------------------------------------------------------------------------------
5. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
ongoing agreement with a bank which allows the Funds collectively to borrow up
to $60 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 period
March 2, 1998 (Commencement of Operations) to April 30, 1998, no commitment fee
was allocated to the Portfolio. Since the line of credit was established, there
have been no borrowings.
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1998
(Unaudited)
ISSUER SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS -- 97.0%
- -------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 23.6%
- -------------------------------------------------------------------------------
Abacus Direct Corp.* 119,100 $ 6,773,813
AHL Services Inc.* 114,980 3,923,693
Cultural Access Worldwide * 132,800 1,875,800
Lamar Advertising Co.* 208,320 7,187,040
Metro Networks Inc.* 75,910 3,017,423
Metzler Group Inc.* 74,100 2,565,712
NFO Worldwide Inc.* 176,100 3,687,094
Probusiness Services Inc.* 121,575 3,373,706
Profit Recovery Group International Inc.* 182,500 4,745,000
Rental Service Corp.* 172,770 5,021,128
Romac International Inc.* 117,480 3,113,220
Snyder Communications Inc.* 123,580 5,252,150
Suiza Foods Corp.* 88,180 5,224,665
Wilmar Industries Co.* 149,110 3,560,001
-----------
59,320,445
-----------
COMMODITIES & PROCESSING -- 4.4%
- -------------------------------------------------------------------------------
ITEQ Inc.* 314,370 4,008,218
OM Group Inc. 105,710 4,684,274
Synthetic Industries Inc.* 103,420 2,365,732
-----------
11,058,224
-----------
CONSUMER DURABLE -- 1.8%
- -------------------------------------------------------------------------------
Tower Automotive Inc.* 85,180 4,541,159
-----------
CONSUMER NON-DURABLES -- 1.3%
- -------------------------------------------------------------------------------
Beringer Wine Estate Holdings * 71,140 3,308,010
-----------
CONSUMER SERVICES -- 9.2%
- -------------------------------------------------------------------------------
American Italian Pasta Co.* 58,470 1,812,570
Central Packing Corp. 122,415 5,738,203
Gray Communications Systems Inc.* 106,030 3,154,393
Heftel Broadcasting Corp.* 98,368 4,315,896
Premier Parks Inc.* 94,280 5,244,325
Suburban Lodges America Inc.* 157,050 2,905,425
-----------
23,170,812
-----------
ELECTRONICS/TECHNICAL SERVICES -- 19.6%
- -------------------------------------------------------------------------------
CDW Computer Centers Inc.* 86,030 4,172,455
Etec Systems Inc.* 77,350 4,389,613
Harbinger Corp.* 92,830 3,376,691
Inacom Corp.* 114,510 4,100,889
Lernout & Hauspie Speech Products* 109,960 7,009,950
N2K Inc.* 24,620 618,577
PC Connection Inc.* 46,935 1,017,903
QAD Inc.* 220,600 3,060,825
Renaissance Worldwide Inc.* 198,780 3,565,616
Sapient Corp.* 66,560 3,286,400
Sipex Corp.* 126,280 2,509,815
Speedfam International Inc.* 122,850 3,562,650
Tier Technologies Inc.* 78,920 1,588,265
Whittman Hart Inc.* 156,780 6,878,722
-----------
49,138,371
-----------
ENERGY MINERALS -- 4.3%
- -------------------------------------------------------------------------------
Forcenergy Inc.* 143,620 3,312,236
Key Energy Group Inc.* 156,400 2,922,725
Lomak Petroleum Inc. 239,230 3,304,365
Superior Energy Services Inc.* 98,840 1,099,595
-----------
10,638,921
-----------
FINANCE -- 11.0%
- -------------------------------------------------------------------------------
Allied Group Inc. 91,575 2,735,803
Executive Risk Inc. 76,980 5,133,604
First Republic Bank of San Francisco* 66,450 2,284,219
Litchfield Financial Corp. 48,100 1,106,300
Medallion Financial Corp. 127,800 3,818,025
Metris Companies Inc.* 106,800 6,054,225
Sirrom Capital Corp. 213,780 6,386,678
-----------
27,518,854
-----------
HEALTH SERVICES/TECHNOLOGY -- 11.0%
- -------------------------------------------------------------------------------
Concentra Managed Care Inc.* 131,570 4,095,116
Henry Schein Inc.* 93,830 3,659,370
Human Genome Sciences Inc.* 108,310 3,939,776
Parexel International Corp.* 137,310 4,599,886
Renal Treatment Centers Inc.* 186,058 6,163,171
Somas Medical Technologies* 126,110 1,513,320
Viropharma Inc.* 169,700 3,690,975
-----------
27,661,614
-----------
INDUSTRIAL SERVICES -- 2.3%
- -------------------------------------------------------------------------------
American Disposal Services Inc.* 77,550 3,109,270
Service Experts Inc.* 79,340 2,638,055
-----------
5,747,325
-----------
PRODUCER MANUFACTURER -- 0.8%
- -------------------------------------------------------------------------------
Simpson Manufacturing Inc.* 49,400 2,056,275
-----------
RETAIL -- 4.8%
- -------------------------------------------------------------------------------
CD Now Inc.* 91,720 2,935,040
Men's Wearhouse Inc.* 83,090 3,500,166
Whole Foods Market Inc.* 90,350 5,590,406
-----------
12,025,612
-----------
TRANSPORTATION -- 2.9%
- --------------------------------------------------------------------------------
Eagle U.S.A. Airfreight Inc.* 146,330 4,810,599
Hub Group Inc.* 92,550 2,441,006
-----------
7,251,605
TOTAL COMMON STOCKS 243,437,227
-----------
ISSUER VALUE
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS -- 3.4%
- -------------------------------------------------------------------------------
Sanwa Repurchase Agreement
5.42% due 5/01/98 proceeds
at maturity $ 8,616,033
(collateralized by $10,037,000
U.S. Treasury Strip zero coupon
due 2/15/00) $ 8,612,000
- -------------------------------------------------------------------------------
Total Investments
(Identified Cost
$200,229,565) 100.4% 252,049,227
Other Assets, Less Liabilities (0.4) (1,058,464)
----- ------------
Net Assets 100.0% $250,990,763
===== ============
* Non income producing securities
See notes to financial statements
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $200,229,565) $252,049,227
Cash 80
Interest receivable 1,296
- -------------------------------------------------------------------------------
Total assets 252,050,603
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 810,000
Payable to affiliates-- Management fees (Note 2) 153,818
Accrued expenses and other liabilities 96,022
- -------------------------------------------------------------------------------
Total liabilities 1,059,840
- -------------------------------------------------------------------------------
NET ASSETS $250,990,763
- -------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $250,990,763
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $213,597
Interest income 225,187
- -------------------------------------------------------------------------------
$ 438,784
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 848,002
Custody and Fund Accounting fees 116,471
Auditing fees 11,850
Legal fees 11,692
Trustees fees 2,593
Miscellaneous 4,381
- -------------------------------------------------------------------------------
Total expenses 994,989
- -------------------------------------------------------------------------------
Net investment loss (556,205)
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net change in unrealized appreciation of
investments 43,376,257
Less unrealized appreciation from contributed
assets (Note 1) 25,188,211
- -------------------------------------------------------------------------------
Unrealized appreciation of investments 18,188,046
Net realized gain from investment transactions 6,779,213
- -------------------------------------------------------------------------------
Net realized and unrealized gain on investments 24,967,259
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $24,411,054
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997 DECEMBER 31,
(Unaudited) (Note 1F) 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss) $ (556,205) $ (139,259) $ 28,536
Net realized gain on investment transactions 6,779,213 785,204 1,063,995
Unrealized appreciation of investments 18,188,046 6,200,702 1,516,882
- ------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 24,411,054 6,846,647 2,609,413
- ------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 221,191,652 18,404,723 45,631,942
Value of withdrawals (44,209,960) (22,795,675) (6,088,455)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital transactions 176,981,692 (4,390,952) 39,543,487
- ------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 201,392,746 2,455,695 42,152,900
NET ASSETS:
Beginning of period 49,598,017 47,142,322 4,989,422
- ------------------------------------------------------------------------------------------------
End of period $250,990,763 $49,598,017 $47,142,322
- ------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS JUNE 21, 1995
ENDED ENDED (COMMENCEMENT
APRIL 30, OCTOBER 31, YEAR ENDED OF OPERATIONS)
1998 1997 DECEMBER 31, TO DECEMBER 31,
(Unaudited) (Note 1F) 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $250,991 $49,598 $47,142 $4,989
Ratio of expenses to average
net assets 0.88%* 0.85%* 0.61% 0%
Ratio of net investment income
(loss) to average net assets (0.49)%* (0.37)%* 0.15% 1.22%*
Portfolio turnover 12% 108% 89% 41%
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees and assumed
Portfolio expenses for the periods indicated and had expenses been limited to that required by
certain state securities law for the period ended December 31, 1995, the ratios would have been as
follows:
RATIOS:
Expenses to average net assets 0.88%* 1.04%* 1.17% 2.50%*
Net investment loss to average
net assets (0.49)%* (0.56)%* (0.41)% (1.28)%*
- ----------------------------------------------------------------------------------------------------
* Annualized
</TABLE>
See notes to financial statements
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Small Cap Growth Portfolio (the "Portfolio"),
(formerly Small Cap Equity 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 Manager of the Portfolio is Citibank N.A.,
("Citibank"). Signature Financial Group (Grand Cayman), Ltd. ("SFG") acts as the
Portfolio's Sub-Administrator. On November 1, 1997 the CitiSelect Folio 200,
CitiSelect Folio 300, CitiSelect Folio 400 and CitiSelect Folio 500 each
transferred a portion of their investable assets in the amount of $15,439,632,
$38,272,468, $75,166,816 and $37,432,299 including $2,166,532, $5,841,516,
$11,815,501 and $5,364,662, respectively of unrealized appreciation to the
Portfolio in exchange for an interest in the Portfolio.
The preparation of financial statements in accordance with U.S. 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 significant accounting policies consistently followed by the Portfolio
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 approved by the Board of Trustees
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. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. 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. 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.
E. 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.
F. Change in Fiscal Year End During the fiscal year 1997, the Portfolio
changed its fiscal year end from December 31 to October 31.
G. 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. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolios' business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs such duties and receives such compensation
from Citibank as from time to time are agreed to by Citibank and SFG. Citibank
is a wholly-owned subsidiary of Citicorp. Citicorp recently announced its
intention to merge with The Travelers Group. Completion of the merger is subject
to the satisfaction of certain conditions. The management fees paid to Citibank,
amounted to $848,002 for the six months ended April 30, 1998. The management
fees are computed at the annual rate of 0.75% of the Portfolio's average daily
net assets.
3. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $27,493,879 and $51,945,025,
respectively, for the six months ended April 30, 1998.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1998, as
computed on a federal income tax basis, are as follows:
Aggregate cost $200,229,565
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 59,805,259
Gross unrealized depreciation (7,985,597)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 51,819,662
- -------------------------------------------------------------------------------
5. LINE OF CREDIT The Portfolio, along with the other CitiFunds entered into an
ongoing agreement with a bank which allows the Funds collectively to borrow up
to $60 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 April 30, 1998, the commitment fee allocated to the Portfolio was
$217. Since the line of credit was established, there have been no borrowings.
<PAGE>
LARGE CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1998
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 97.0%
- --------------------------------------------------------------------------------
CAPITAL GOODS -- 8.1%
- --------------------------------------------------------------------------------
General Electric Co. 384,000 $32,688,000
Illinois Tool Works 155,000 10,927,500
-----------
43,615,500
-----------
COMMERCIAL SERVICES -- 2.5%
- --------------------------------------------------------------------------------
Interpublic Group Companies Inc. 95,000 6,068,125
Paychex Inc. 137,000 7,440,813
-----------
13,508,938
-----------
CONSUMER DURABLES -- 1.3%
- --------------------------------------------------------------------------------
Leggett & Platt Inc. 139,000 7,219,312
-----------
CONSUMER NON-DURABLES -- 8.9%
- --------------------------------------------------------------------------------
Clorox Co. 100,275 8,410,566
Coca Cola Co. 294,000 22,307,250
Gillette Co. 65,000 7,503,437
Procter & Gamble Co. 123,000 10,109,062
-----------
48,330,315
-----------
CONSUMER SERVICES -- 7.8%
- --------------------------------------------------------------------------------
Carnival Corp. 121,000 8,417,063
Clear Channel Communications* 92,000 8,671,000
Cracker Barrel Old Country Store 251,000 9,224,250
Gannett Inc. 144,630 9,825,801
Walt Disney Co. 48,700 6,054,019
-----------
42,192,133
-----------
ENERGY -- 1.0%
- --------------------------------------------------------------------------------
Schlumberger Ltd. 67,200 5,533,206
-----------
FINANCE -- 11.1%
- --------------------------------------------------------------------------------
American International Group Inc. 46,000 6,051,875
Federal Home Loan Mortgage Corp. 106,000 4,909,125
Federal National Mortgage Association 194,430 11,641,496
MBNA Corp. 152,000 5,149,000
MGIC Investment Corp. 102,200 6,438,600
Norwest Corp. 176,100 6,988,969
State Street Corp. 79,000 5,648,500
US Bancorp 45,930 5,833,110
Zions Bancorp 148,000 7,566,500
-----------
60,227,175
-----------
HEALTHCARE -- 22.2%
- --------------------------------------------------------------------------------
Abbott Labs 89,000 6,508,125
Cardinal Health Inc. 119,000 11,453,750
Eli Lilly & Co. 121,000 8,417,062
HBO & Co. 149,000 8,912,063
Johnson & Johnson 115,000 8,208,125
Lincare Holdings Inc.* 120,700 9,791,787
Medtronic Inc. 184,000 9,683,000
Merck & Co. 142,000 17,111,000
Pfizer Inc. 173,000 19,689,562
Schering Plough Corp. 99,000 7,932,375
Warner Lambert Co. 64,000 12,108,000
-----------
119,814,849
-----------
RETAIL -- 11.4%
- --------------------------------------------------------------------------------
Bed Bath & Beyond Inc.* 127,489 6,278,833
Consolidated Stores* 174,100 6,964,000
Gap Inc. 121,000 6,223,938
Home Depot 154,000 10,722,250
Kohls Corp.* 208,070 8,595,892
Wal Mart Stores Inc. 282,000 14,258,625
Walgreen Co. 247,000 8,521,500
-----------
61,565,038
-----------
TECHNOLOGY -- 20.2%
- --------------------------------------------------------------------------------
Automatic Data Processing Inc. 162,400 10,870,650
BMC Software Inc.* 64,000 5,988,000
Cisco Systems Inc.* 148,767 10,897,183
Compuware Corp.* 108,000 5,278,500
EMC Corp.* 203,000 9,363,375
Hewlett Packard Co. 103,800 7,817,438
Intel Corp. 78,000 6,303,375
Linear Technology Corp. 69,000 5,554,500
Microsoft Corp.* 272,000 24,514,000
Parametic Technology Corp.* 268,000 8,567,625
Solectron Corp.* 116,900 5,180,130
SunGard Data Systems* 246,100 8,767,313
-----------
109,102,089
-----------
TRANSPORTATION -- 1.5%
- --------------------------------------------------------------------------------
Southwest Airlines Co. 290,000 7,956,875
-----------
UTILITIES -- 1.0%
- --------------------------------------------------------------------------------
Ameritech Corp. 128,000 5,448,000
-----------
TOTAL COMMON STOCKS 524,513,430
-----------
<PAGE>
ISSUER VALUE
- --------------------------------------------------------------------------------
SHORT-TERM
OBLIGATIONS -- 3.2%
- --------------------------------------------------------------------------------
Sanwa Repurchase Agreement
5.42% due 5/01/98
proceeds at maturity
$17,476,000 (Collateralized
by $11,000,000 U.S.
Treasury Strip, zero coupon
due 2/15/00 and
$7,691,000
U.S. Treasury Note,
5.50% due 11/15/98) $ 17,476,000
------------
TOTAL INVESTMENTS
(Identified Cost $416,940,098) 100.2% 541,989,430
OTHER ASSETS, LESS LIABILITIES (0.2) (1,106,337)
----- ------------
NET ASSETS 100.0% $540,883,093
===== ============
* Non income producing securities
See notes to financial statements
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $416,940,098) $541,989,430
Cash 60
Receivable for investments sold 5,450,130
Dividends and interest receivable 262,599
- --------------------------------------------------------------------------------
Total assets 547,702,219
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 6,375,206
Payable to affiliates--Management fees (Note 2) 266,013
Accrued expenses and other liabilities 177,907
- --------------------------------------------------------------------------------
Total liabilities 6,819,126
- --------------------------------------------------------------------------------
NET ASSETS $540,883,093
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $540,883,093
- --------------------------------------------------------------------------------
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $ 1,934,321
Interest income 362,537
- --------------------------------------------------------------------------------
Total investment income $ 2,296,858
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 1,438,479
Custody and Fund Accounting fees 229,472
Audit fees 13,750
Legal fees 9,184
Trustees fees 2,810
Miscellaneous 8,308
- --------------------------------------------------------------------------------
Total expenses 1,702,003
- --------------------------------------------------------------------------------
Net investment income 594,855
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net change in unrealized appreciation
of investments 72,553,099
Less unrealized appreciation from
contributed assets 10,248,832
- --------------------------------------------------------------------------------
Unrealized appreciation of investment 62,304,267
Net realized gain from investment transactions 39,166,058
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 101,470,325
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $102,065,180
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, 1997 DECEMBER 31,
(Unaudited) (Note 1F) 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 594,855 $ 1,639,995 $ 3,049,790
Net realized gain on
investment transactions 39,166,058 60,297,277 28,518,761
Unrealized appreciation of
investments 62,304,267 1,141,934 4,832,223
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 102,065,180 63,079,206 36,400,774
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 215,193,953 38,002,991 61,756,061
Value of withdrawals (101,288,776) (64,731,733) (55,752,909)
- --------------------------------------------------------------------------------
Net increase (decrease) in
net assets from capital
transactions 113,905,177 (26,728,742) 6,003,152
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 215,970,357 36,350,464 42,403,926
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 324,912,736 288,562,272 246,158,346
- --------------------------------------------------------------------------------
End of period $540,883,093 $324,912,736 $288,562,272
- --------------------------------------------------------------------------------
LARGE CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS MAY 1, 1994
ENDED ENDED YEAR ENDED (COMMENCEMENT
APRIL 30, OCTOBER 31, DECEMBER 31, OF OPERATIONS) TO
1998 1997 ----------------- DECEMBER 31,
(Unaudited) (Note 1F) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $540,883 $324,913 $288,562 $246,158 $186,685
Ratio of expenses to
average net assets 0.71%* 0.60%* 0.60% 0.60% 0.60%*
Ratio of net investment income
to average net assets 0.25%* 0.62%* 1.10% 1.73% 1.81%*
Portfolio turnover 46% 103% 90% 67% 35%
- ------------------------------------------------------------------------------------------------------
* Annualized
</TABLE>
See notes to financial statements
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Large Cap Growth Portfolio (the "Portfolio"),
(formerly Equity Portfolio), a separate series of The Premium Portfolios (the
"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
Manager of the Portfolio is Citibank, N.A. ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's Sub-Administrator. On
November 1, 1997 the CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect
Folio 400 and CitiSelect Folio 500 each transferred a portion of their
investable assets in the amount of $12,183,616, $34,554,616, $38,508,816 and
$16,346,503 including $1,107,028, $3,598,984, $4,092,260 and $1,450,560,
respectively of unrealized appreciation to the Portfolio in exchange for an
interest in the Portfolio.
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 significant accounting policies consistently followed by the Portfolio
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 approved by the Board of Trustees
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. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. 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 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.
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. Change in Fiscal Year End During the fiscal year 1997, the Portfolio
changed its fiscal year end from December 31 to October 31.
G. 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. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs such duties and receives such compensation
from Citibank as from time to time are agreed to by Citibank and SFG. Citibank
is a wholly-owned subsidiary of Citicorp. Citicorp recently announced its
intention to merge with The Travelers Group. Completion of the merger is subject
to the satisfaction of certain conditions.
The management fees paid to Citibank, amounted to $1,438,479 for the six
months ended April 30, 1998. Management fees are computed at the annual rate of
0.60% of the Portfolio's average daily net assets.
The Trust pays no compensation directly to any Trustee or any other officer
who is affiliated with the Sub-Administrator, all of whom receive remuneration
for their services to the Trust from the Sub-Administrator or its affiliates.
3. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $234,318,706 and $223,882,192,
respectively, for the six months ended April 30, 1998.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1998, as
computed on a federal income tax basis, are as follows:
Aggregate cost $416,940,098
- --------------------------------------------------------------------------------
Gross unrealized appreciation $126,120,465
Gross unrealized depreciation (1,071,133)
- --------------------------------------------------------------------------------
Net unrealized appreciation $125,049,332
- --------------------------------------------------------------------------------
5. LINE OF CREDIT The Portfolio, along with the other CitiFunds, entered into an
ongoing agreement with a bank which allows the Funds collectively to borrow up
to $60 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 April 30, 1998, the commitment fee allocated to the Portfolio was
$443. Since the line of credit was established, there have been no borrowings.
