GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1999
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.4 %
- --------------------------------------------------------------------------------
BASIC INDUSTRIES-- 5.7%
Dow Chemical Corp. 7,100 $ 931,431
Martin Marietta
Materials Inc. 35,460 2,191,871
Mead Corp. 35,600 1,488,525
-----------
4,611,827
-----------
- --------------------------------------------------------------------------------
CAPITAL GOODS -- 1.6%
- --------------------------------------------------------------------------------
Parker Hannifin Corp. 26,600 1,248,537
-----------
CONSUMER DURABLE -- 5.3%
- --------------------------------------------------------------------------------
Dana Corp. 42,100 1,983,963
Eastman Kodak Co. 3,015 224,994
Goodyear Tire & Rubber 20,100 1,149,469
Sunbeam Corp. 176,300 947,613
-----------
4,306,039
-----------
CONSUMER NON-DURABLE -- 1.9%
- --------------------------------------------------------------------------------
Philip Morris Companies Inc. 44,600 1,563,788
-----------
CONSUMER SERVICES -- 6.5%
- --------------------------------------------------------------------------------
McDonalds Corp. 44,700 1,894,163
New York Times Co. 49,500 1,707,750
Tribune Co. 4,900 408,844
Walt Disney Co. 41,450 1,316,037
-----------
5,326,794
-----------
ENERGY -- 13.0%
- --------------------------------------------------------------------------------
Amerada Hess Corp. 27,000 1,539,000
Burlington Resources Inc. 39,900 1,837,894
Exxon Corp. 29,500 2,450,343
Halliburton Co. 29,400 1,253,175
Mobil Corp. 26,200 2,744,450
Royal Dutch
Petroleum Corp. 14,100 827,494
-----------
10,652,356
-----------
FINANCE -- 22.6%
- --------------------------------------------------------------------------------
Allstate Corp. 19,900 723,862
Bank One Corp. 44,000 2,596,000
Bankamerica Corp. 22,300 1,605,600
Chase Manhattan
Bank Corp. 32,500 2,689,375
Everest Reinsurance
Holdings 48,000 1,455,000
Franklin Resource Inc. 19,600 784,000
J.P. Morgan & Co. Inc. 16,100 2,169,475
Lehman Brothers
Holdings Inc. 12,600 700,088
Mellon Bank Corp. 22,100 1,642,306
Morgan Stanley
Dean Witter & Co. 14,530 1,441,194
Safeco Corp. 28,200 1,120,950
Washington Mutual Inc. 36,300 1,492,838
-----------
18,420,688
-----------
HEALTHCARE SERVICES -- 6.2%
- --------------------------------------------------------------------------------
American Home
Products Corp. 33,100 2,019,100
Columbia
Healthcare Corp. 39,500 975,156
Oxford Health Plans* 104,400 2,081,475
-----------
5,075,731
-----------
INDUSTRIAL SERVICES -- 2.5%
- --------------------------------------------------------------------------------
Waste Management Inc. 36,000 2,034,000
-----------
REAL ESTATE -- 1.5%
- --------------------------------------------------------------------------------
Avalonbay
Communities Inc. 7,260 254,100
Camden Property Trust 9,260 250,020
Duke Realty
Investments Inc. 10,960 257,560
Healthcare Reit Inc. 10,450 245,575
Meditrust 19,630 244,148
-----------
1,251,403
-----------
RETAIL -- 2.0%
- --------------------------------------------------------------------------------
Tommy Hilfiger Corp.* 15,200 1,062,100
Toys "R" Us Inc.* 27,500 598,125
-----------
1,660,225
-----------
TECHNOLOGY -- 10.7%
- --------------------------------------------------------------------------------
Applied Materials Inc. 17,300 927,712
Hewlett Packard Co. 19,700 1,553,838
Honeywell Inc. 17,800 1,686,550
International Business
Machines 3,800 794,912
Raytheon Corp. 31,100 2,184,775
3Com Corp. 61,900 1,617,138
-----------
8,764,925
-----------
14
<PAGE>
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)April 30, 1998
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION -- 3.7%
- --------------------------------------------------------------------------------
Delta Airlines Inc. 8,400 $ 532,875
Union Pacific Corp. 35,000 2,100,000
United Airlines Corp. 4,800 387,600
-----------
3,020,475
-----------
UTILITIES -- 15.2%
- --------------------------------------------------------------------------------
American Electric
Power Inc. 18,400 762,450
American Telephone
& Telegraph Corp. 81,300 4,105,650
Bell Atlantic Corp. 25,800 1,486,725
Cinergy Corp. 28,400 846,675
Entergy Corp. 32,500 1,015,625
Public Service
Enterprise Group 39,900 1,596,000
SBC Communications Inc. 36,600 2,049,600
Texas Utilities Co. 14,400 572,400
-----------
12,435,125
-----------
TOTAL COMMON STOCKS
(Identified Cost
$73,002,822) 80,371,913
-----------
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS
AT AMORTIZED COST -- 2.3%
- --------------------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement 4.92%
due 5/03/99 proceeds at
maturity $1,830,000
(collateralized by
$1,845,000 Federal
National Mortgage
Association, 5.30%
due 1/12/01, valued
at $1,871,175) $ 1,830,000
-----------
TOTAL INVESTMENTS
(Identified Cost
$74,832,822) 100.7% 82,201,913
OTHER ASSETS,
LESS LIABILITIES (0.7) (537,461)
----- -----------
NET ASSETS 100.0% $81,664,452
----- -----------
* Non income producing securities
See notes to financial statements
15
<PAGE>
GROWTH & INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A)
(Identified Cost, 74,832,822) $82,201,913
Cash 324
Dividends and interest receivable 90,219
- --------------------------------------------------------------------------------
Total assets 82,292,456
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investment purchased 553,351
Payable to affiliate--Management fee (Note 2) 30,510
Accrued expenses and other liabilities 44,143
- --------------------------------------------------------------------------------
Total liabilities 628,004
- --------------------------------------------------------------------------------
NET ASSETS $81,664,452
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $81,664,452
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME:
Dividend income (net of foreign tax of $1,150) $ 709,300
Interest income 32,634
- --------------------------------------------------------------------------------
$ 741,934
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 268,817
Custody and fund accounting fees 45,897
Audit fees 12,115
Legal fees 7,258
Trustees fees 3,538
Other 313
- --------------------------------------------------------------------------------
Total expenses 337,938
Less aggregate amounts waived by the Manager (Note 2) (49,884)
- --------------------------------------------------------------------------------
Net expense 288,054
- --------------------------------------------------------------------------------
Net investment income 453,880
- --------------------------------------------------------------------------------
Net realized gain from investment transaction 1,661,708
Unrealized appreciation of investments 12,371,228
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 14,032,936
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,486,816
================================================================================
See notes to financial statements
16
<PAGE>
GROWTH & INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
SIX MONTHS MARCH 2, 1998
ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS) TO
(Unaudited) OCTOBER 31, 1998
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 453,880 $ 599,983
Net realized gain (loss) on
investment transactions 1,661,708 (4,352,369)
Unrealized appreciation (depreciation)
of investments 12,371,228 (5,002,138)
- --------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 14,486,816 (8,754,524)
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 22,926,455 89,328,025
Value of withdrawals (26,333,519) (9,988,801)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets from
capital transactions (3,407,064) 79,339,224
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 11,079,752 70,584,700
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 70,584,700 --
- --------------------------------------------------------------------------------
End of period $81,664,452 $70,584,700
================================================================================
GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
SIX MONTHS MARCH 2, 1998
ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS) TO
(Unaudited) OCTOBER 31, 1998
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $81,664 $70,585
Ratio of expenses to average net assets 0.75%* 0.75%*
Ratio of net investment income to
average net assets 1.18%* 1.27%*
Portfolio turnover 40% 59%
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 0.88%* 0.93%*
Net investment income to average net assets 1.05%* 1.09%*
================================================================================
* Annualized
See notes to financial statements
17
<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 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.
18
<PAGE>
GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) Continued)
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 certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank is a
wholly-owned subsidiary of Citicorp, which in turn, is a wholly-owned subsidiary
of Citigroup Inc. Citigroup Inc. was formed as a result of the merger of
Citicorp and Travelers Group, Inc. which was completed on October 8, 1998.
The management fees paid to Citibank, amounted to $268,817, of which $49,884
was voluntarily waived for the six months ended April 30, 1999. 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 $29,943,958 and $32,063,902,
respectively, for the six months ended April 30, 1999.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1999, as
computed on a federal income tax basis, are as follows:
Aggregate cost $74,832,822
================================================================================
Gross unrealized appreciation $10,206,949
Gross unrealized depreciation (2,837,858)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 7,369,091
================================================================================
19
<PAGE>
GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) Continued)
5. LINE OF CREDIT The Portfolio, along with various other Portfolios in the
CitiFunds family, entered into an ongoing agreement with a bank which allows the
Portfolios collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio 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,
1999, the commitment fee allocated to the Portfolio was $102. Since the line of
credit was established, there have been no borrowings.
20
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1999
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 85.5%
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 9.0%
- --------------------------------------------------------------------------------
Abacus Direct Corp.* 17,655 $ 1,306,470
Applied Power Inc. 28,500 899,531
Catalina Marketing Corp.* 30,390 2,596,446
Consolidated Graphics Inc.* 9,097 387,760
Ha Lo Industries Inc.* 72,143 847,680
ITT Services Inc.* 39,000 957,938
Lamar Advertising Co.* 36,435 1,225,127
Lernout & Hauspie
Speech Products* 16,825 658,278
Medquist Inc.* 11,920 408,260
Metzler Group Inc.* 51,800 1,443,925
Probusiness Services Inc.* 45,640 1,637,335
Profit Recovery Group
International Inc.* 27,051 987,361
-----------
13,356,361
-----------
COMMODITIES & PROCESSING -- 2.1%
- --------------------------------------------------------------------------------
OM GROUP INC 60,566 2,203,088
Synetic Inc.* 9,500 897,156
-----------
3,100,244
-----------
CONSUMER DURABLES -- 1.3%
- --------------------------------------------------------------------------------
Ethan Allen Interiors Inc. 14,300 724,831
Tower Automotive Inc.* 50,165 1,153,795
-----------
1,878,626
-----------
CONSUMER NON-DURABLES -- 2.3%
- --------------------------------------------------------------------------------
Beringer Wine Estate
Holdings* 34,270 1,349,381
General Nutrition Co.* 80,400 1,331,625
Horizon Organic
Holding Corp.* 45,830 773,381
-----------
3,454,387
-----------
CONSUMER SERVICES -- 6.4%
- --------------------------------------------------------------------------------
Heftel Broadcasting Corp.* 43,235 2,350,903
Houghton Mifflin Co. 16,400 731,850
Metro Networks Inc.* 32,250 1,710,855
Premier Parks Inc.* 55,656 1,923,610
SFX Entertainment Inc.* 40,415 2,495,626
Wiley John & Son 8,895 359,692
-----------
9,572,536
-----------
ELECTRONICS/TECHNICAL SERVICES -- 23.4%
- --------------------------------------------------------------------------------
Alliant Techsystems Inc.* 9,500 777,813
C Cube
Microsystems Inc.* 55,495 1,255,574
CMG Information
Services Inc.* 10,725 2,730,183
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
Critical Path Inc.* 4,766 $ 474,217
Dallas Semiconducter
Corp. 17,400 739,500
Earthlink Network Inc.* 5,600 386,050
Electronics For
Imaging Inc.* 42,880 2,028,760
Exodus
Communications Inc.* 18,000 1,622,250
ICG
Communications Inc.* 65,804 1,451,801
Infoseek Corp.* 8,400 428,925
Launch Media Inc.* 580 14,645
Legato Systems Inc.* 34,995 1,415,110
Level One
Communications Inc.* 53,915 2,769,883
Macromedia Inc.* 29,685 1,230,072
Mercury Interactive
Corp.* 49,560 1,396,973
Mettler Toledo
International Inc.* 31,600 825,550
Microchip Technology Inc.* 18,185 636,475
Miningco Com Inc.* 997 65,304
Network Appliance Inc.* 40,950 2,060,297
Network Solutions Inc.* 4,200 326,550
Novellus Systems Inc.* 28,595 1,351,114
PMC Sierra Inc.* 6,800 651,950
Powerwave
Technologies Inc.* 14,300 434,362
Rational Software Corp.* 34,175 1,012,434
Safeguard Scientifics Inc.* 22,600 1,830,600
Sapient Corp.* 7,890 495,097
Sipex Corp.* 53,555 749,770
Smart Modular
Technologies Inc.* 59,395 794,408
Tekelec Inc.* 88,075 795,427
Transaction System
Architects Inc.* 18,900 613,069
USinternetworkong Inc.* 902 46,115
Verticalnet Inc.* 690 78,315
Whittman Hart Inc.* 89,150 2,518,487
Wind Systems Inc.* 46,056 690,840
----------
34,697,920
----------
ENERGY MINERALS -- 1.2%
- --------------------------------------------------------------------------------
Petroleum Geological
Services * 105,535 1,767,711
----------
- --------------------------------------------------------------------------------
FINANCE -- 11.6%
- --------------------------------------------------------------------------------
Centura Banks Inc. 25,310 1,507,527
Checkfree
Holdings Corp.* 32,800 1,574,400
Chittenden Corp. 46,000 1,322,500
Cullen Frost Bankers Inc. 41,730 2,250,812
E Trade Group Inc.* 27,200 3,141,600
14
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) April 30, 1999
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
FINANCE (CONT'D)
- --------------------------------------------------------------------------------
Enhance Financial
Services Group Inc. 37,740 $ 780,746
Executive Risk Inc. 14,095 1,011,316
Peoples Heritage
Financial Group 112,295 2,175,716
SEI Investments Co. 6,600 627,000
Telebanc Financial Corp.* 10,174 1,054,281
U.S. Trust Corp. 18,910 1,727,901
- --------------------------------------------------------------------------------
17,173,799
-----------
HEALTH SERVICES/TECHNOLOGY -- 9.6%
- --------------------------------------------------------------------------------
Andrx Corp.* 20,600 1,622,250
Apria Healthcare
Group Inc.* 39,200 612,500
Barr Laboratories Inc.* 41,760 1,255,410
Bisys Group Inc.* 20,320 1,031,240
Coflexip 17,800 795,393
Coulter
Pharmaceutical Inc.* 17,600 354,200
Covance Inc.* 25,600 561,600
Gentex Corp.* 22,600 679,413
Gilead Sciences Inc.* 15,700 723,181
Hanger Orthopedic
Group* 46,200 675,675
Medimmune Inc.* 13,710 755,764
PSS World Medical Inc.* 32,150 313,463
Roberts Pharmaceutical
Corp.* 93,600 1,591,200
Ventana Medical
Systems Inc.* 64,000 1,560,000
Visx Inc.* 7,500 965,625
Xomed Surgical
Products Inc.* 16,500 686,813
-----------
14,183,727
-----------
INDUSTRIAL SERVICES -- 1.1%
- --------------------------------------------------------------------------------
Service Experts Inc.* 28,840 466,847
Waste Connections Inc.* 42,955 1,132,938
-----------
1,599,785
-----------
MULTI-INDUSTRY -- 2.8%
- --------------------------------------------------------------------------------
Covad Communications
Group Inc.* 15,075 1,447,200
Pinnicle Holdings Inc.* 97,410 1,996,905
R & B Falcon Corp.* 74,200 756,157
-----------
4,200,262
-----------
PRODUCER MANUFACTURING -- 1.0%
- --------------------------------------------------------------------------------
Aptargroup Inc. 50,695 1,419,460
Marimba Inc.* 631 12,620
-----------
1,432,080
-----------
RAW MATERIALS -- 0.7%
- --------------------------------------------------------------------------------
Carlisle Co. 21,500 $ 1,053,500
-----------
RETAIL -- 5.2%
- --------------------------------------------------------------------------------
Boyds Collection * 35,400 619,500
Linens N Things Inc.* 33,310 1,523,933
Men's Wearhouse Inc.* 26,151 715,884
O'Reilly Automotive Inc.* 21,400 979,050
Tiffany & Co. 11,615 975,660
Wholesale Foods
Market Inc.* 43,685 1,703,715
Wilmar Industries Inc.* 71,275 864,209
Zale Corp.* 9,800 370,563
-----------
7,752,514
-----------
TRANSPORTATION -- 3.9%
- --------------------------------------------------------------------------------
CH Robinson
Worldwide 35,800 1,071,763
CNF Transportation Inc. 25,300 1,105,294
Eagle U.S.A
Airfreight Inc.* 45,775 1,670,788
Hub Group Inc.* 37,640 856,310
Skywest Inc. 40,958 1,064,908
-----------
5,769,063
-----------
UTILITIES -- 3.9%
- --------------------------------------------------------------------------------
American Tower Corp.* 55,915 1,184,699
National Inc.* 26,840 2,046,550
RSL Communications* 36,600 1,198,650
Western Wireless Corp.* 34,850 1,431,028
-----------
5,860,927
-----------
TOTAL COMMON STOCKS
(Identified Cost $114,236,630) 126,853,192
-----------
SHORT-TERM OBLIGATIONS
AT AMORTIZED COST-- 0.3%
- --------------------------------------------------------------------------------
Student Loan Marketing
Discount Note
4.80% due 5/03/99 485,870
-----------
TOTAL INVESTMENTS
(Identified Cost
$114,722,500) 85.8% 127,339,062
OTHER ASSETS,
LESS LIABILITIES 14.2% 21,024,912
----- ------------
NET ASSETS 100.0% $148,363,974
===== ============
*Non income producing securities
See notes to financial statements
15
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $114,722,500) $127,339,062
Cash 736
Receivable for securities sold 25,003,762
- --------------------------------------------------------------------------------
Total assets 152,343,560
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 3,742,381
Payable to affiliates-- Management fees (Note 2) 96,058
- --------------------------------------------------------------------------------
Accrued expenses and other liabilities 141,147
- --------------------------------------------------------------------------------
Total liabilities 3,979,586
- --------------------------------------------------------------------------------
Net Assets $148,363,974
================================================================================
Represented by:
Paid-in capital for beneficial interests $148,363,974
================================================================================
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME:
Dividend income $170,922
Interest income 84,860
- --------------------------------------------------------------------------------
$ 255,782
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 689,437
Custody and fund accounting fees 73,520
Audit fees 14,163
Legal fees 5,556
Shareholder reports 5,000
Trustees fees 3,270
Other 2,942
- --------------------------------------------------------------------------------
Total expenses 793,888
- --------------------------------------------------------------------------------
Net investment loss (538,106)
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions 9,425,980
Unrealized appreciation of investments 6,780,033
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain On Investments 16,206,013
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $15,667,907
================================================================================
See notes to financial statements
16
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31,
(Unaudited) 1998
=====================================================================================
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss $ (538,106) $ (1,122,896)
Net realized gain (loss) on investment transactions 9,425,980 (9,691,394)
Unrealized appreciation (depreciation) of investments 6,780,033 (27,795,086)
- ------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 15,667,907 (38,609,376)
- -------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions (Note 1) 10,146,221 260,666,527
Value of withdrawals (72,121,397) (76,983,925)
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital transactions (61,975,176) 183,682,602
- -------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS: (46,307,269) 145,073,226
- -------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 194,671,243 49,598,017
- -------------------------------------------------------------------------------------
End of period $148,363,974 $194,671,243
=====================================================================================
</TABLE>
SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS JUNE 21, 1995
ENDED ENDED (COMMENCEMENT
APRIL 30, YEAR ENDED OCTOBER 31, YEAR ENDED OF OPERATIONS)
1999 OCTOBER 31, 1997 DECEMBER 31, TO DECEMBER 31,
(Unaudited) 1998 (Note 1F) 1996 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net Assets, end of period
(000's omitted) $ 148,364 $194,671 $ 49,598 $ 47,142 $ 4,989
Ratio of expenses to average
net assets 0.86%* 0.88% 0.85%* 0.61% 0.00%*
Ratio of net investment income
(loss) to average net assets (0.58)%* (0.50)% (0.37)%* 0.15% 1.22%*
Portfolio turnover 63% 51% 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 0.86% *0.88% 1.04%* 1.17% 2.50%*
Net investment loss to average
net assets (0.58)%* (0.50)% (0.56)%* (0.41)% (1.28)%*
=============================================================================================================
</TABLE>
* Annualized
See notes to financial statements
17
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Small Cap Growth 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
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 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 total investable assets, and contributions are
included in the "Proceeds from contributions" on the Statement of Changes in Net
Assets.
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.
18
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 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 certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank is a
wholly-owned subsidiary of Citicorp, which in turn, is a wholly-owned subsidiary
of Citigroup Inc. Citigroup Inc. was formed as a result of the merger of
Citicorp and Travelers Group, Inc. which was completed on October 8, 1998.
The management fees paid to Citibank, amounted to $689,437 for the six months
ended April 30, 1999. 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 $112,095,186 and $189,159,751,
respectively, for the six months ended April 30, 1999.
19
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1999, as
computed on a federal income tax basis, are as follows:
AGGREGATE COST $114,722,500
================================================================================
Gross unrealized appreciation $ 21,955,556
Gross unrealized depreciation (9,338,994)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 12,616,562
================================================================================
5. LINE OF CREDIT The Portfolio, along with various other Portfolios in the
CitiFunds family, entered into an ongoing agreement with a bank which allows the
Portfolio collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio 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,
1999, the commitment fee allocated to the Portfolio was $212. Since the line of
credit was established, there have been no borrowings.
20
<PAGE>
LARGE CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1999
(Unaudited)
ISSUER SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS -- 97.4%
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES -- 5.6%
- --------------------------------------------------------------------------------
Cintas Corp. 155,500 $ 10,690,625
Ecolab Inc. 208,500 8,743,969
Interpublic Group
Companies Inc. 171,300 13,286,454
Omnicom Group 127,200 9,222,000
------------
41,943,048
------------
CONSUMER NON-DURABLES -- 5.1%
- --------------------------------------------------------------------------------
Clorox Co. 97,100 11,202,913
Procter & Gamble Co. 289,180 27,128,699
------------
38,331,612
------------
CONSUMER SERVICES -- 4.3%
- --------------------------------------------------------------------------------
Clear Channel
Communications* 169,700 11,794,150
MCI Worldcom Inc.* 253,000 20,793,438
------------
32,587,588
------------
FINANCE -- 9.9%
- --------------------------------------------------------------------------------
American International
Group 141,750 16,646,765
Bank of New York 195,100 7,804,000
Charles Schwab Corp. 82,000 8,999,500
Federal Home Loan
Mortgage Corp. 278,000 17,444,500
Firstar 277,800 8,351,363
Zions Bancorp 234,400 15,631,550
------------
74,877,678
------------
HEALTHCARE -- 16.4%
- --------------------------------------------------------------------------------
American Home
Products Corp. 185,000 11,285,000
Cardinal Health Inc. 180,200 10,778,213
Guidant Corp. 174,000 9,341,625
Johnson & Johnson 183,700 17,910,750
Lilly (Eli) & Co. 216,600 15,947,175
Merck & Co. 165,800 11,647,450
Pfizer Inc. 228,200 26,257,263
Schering Plough Corp. 425,200 20,542,475
------------
123,709,951
------------
PRODUCER MANUFACTURING -- 8.9%
- --------------------------------------------------------------------------------
Danaher Corp. 155,500 10,331,031
General Electric Co. 465,900 49,152,450
Tyco International Ltd. 94,000 7,637,500
------------
67,120,981
------------
RETAIL -- 13.8%
- --------------------------------------------------------------------------------
Bed Bath & Beyond Inc.* 460,100 $ 16,419,819
Costco Companies Inc.* 106,300 8,603,655
Gap Inc. 111,000 7,388,438
Home Depot 286,000 17,142,125
Kohls Corp.* 105,000 6,975,938
Staples Inc.* 273,550 8,206,500
Wal Mart Stores Inc. 678,200 31,197,200
Walgreen Co. 295,200 7,933,500
------------
103,867,175
------------
SEMICONDUCTOR TECHNOLOGY -- 4.5%
- --------------------------------------------------------------------------------
Altera Corp.* 96,000 6,936,000
Intel Corp. 364,600 22,308,963
Xilinx Inc.* 93,000 4,243,125
------------
33,488,088
------------
TECHNOLOGY -- 21.8%
- --------------------------------------------------------------------------------
Cisco Systems Inc.* 273,400 31,184,687
EMC Corp.* 108,800 11,852,400
International Business
Machines 122,600 25,646,388
Jabil Circuit Inc.* 124,327 5,788,976
Lucent Technology Inc. 363,600 21,861,450
Microsoft Corp.* 751,600 61,114,475
Sun Microsystems Inc.* 122,000 7,297,125
------------
164,745,501
------------
TECHNOLOGY SERVICES -- 6.5%
- --------------------------------------------------------------------------------
Automatic Data
Processing Inc. 347,500 15,463,750
Ceridian Corp.* 402,600 14,745,225
Solectron Corp.* 124,600 6,043,100
SunGard Data Systems* 405,300 12,944,268
------------
49,196,343
------------
TRANSPORTATION -- 0.6%
- --------------------------------------------------------------------------------
Southwest Airlines Co. 144,915 4,718,795
------------
TOTAL COMMON STOCKS
(Identified Cost
$564,310,015) 734,586,760
------------
14
<PAGE>
LARGE CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
(Unaudited) April 30, 1999
ISSUER VALUE
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS
AT AMORTIZED COST-- 2.7%
- --------------------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement
4.92% due 5/3/99 proceeds
maturity $20,748,503
(collateralized by $20,910,000
Federal Home Loan Mortgage
5.56% due 8/24/00, valued at
21,159,101) $ 20,740,000
------------
TOTAL INVESTMENTS
(Identified Cost
$585,050,015) 100.1% 755,326,760
OTHER ASSETS,
LESS LIABILITIES (0.1) (716,164)
----- ------------
NET ASSETS 100.0% $754,610,596
===== ============
* Non income producing
See notes to financial statements
15
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $585,050,015) $755,326,760
Cash 761
Dividends and interest receivable 157,125
- --------------------------------------------------------------------------------
Total assets 755,484,646
- --------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliates-Management fees (Note 2) 389,228
Accrued expenses and other liabilities 484,822
- --------------------------------------------------------------------------------
Total liabilities 874,050
- --------------------------------------------------------------------------------
NET ASSETS $754,610,596
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $754,610,596
- --------------------------------------------------------------------------------
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $2,051,434
Interest income 525,265
- --------------------------------------------------------------------------------
Total investment income $ 2,576,699
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 2,155,201
Custody and fund accounting fees 234,737
Legal fees 31,556
Audit fees 14,163
Trustees fees 6,964
Other 27,860
- --------------------------------------------------------------------------------
Total expenses 2,470,481
- --------------------------------------------------------------------------------
Net investment income 106,218
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions 52,493,096
Unrealized appreciation of investments 52,465,828
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 104,958,924
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $105,065,142
- --------------------------------------------------------------------------------
See notes to financial statements
16
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 1999 OCTOBER 31,
(Unaudited) 1998
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 106,218 $ 1,225,038
Net realized gain on investment transactions 52,493,096 61,181,518
Unrealized appreciation of investments 52,465,828 55,065,852
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 105,065,142 117,472,408
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions (Note 1) 213,680,255 369,790,712
Value of withdrawals (175,039,268) (201,271,389)
- --------------------------------------------------------------------------------
Net increase in net assets
from capital transactions 38,640,987 168,519,323
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 143,706,129 285,991,731
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 610,904,467 324,912,736
- --------------------------------------------------------------------------------
End of period $754,610,596 $610,904,467
- --------------------------------------------------------------------------------
LARGE CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS MAY 1, 1994
ENDED YEAR ENDED YEAR ENDED (COMMENCEMENT
APRIL 30, ENDED OCTOBER 31, DECEMBER 31, OF OPERATIONS)
1999 OCTOBER 31, 1997 ---------------- TO DECEMBER 31,
(Unaudited) 1998 (Note 1F) 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period
(000's omitted) $754,611 $610,904 $324,913 $288,562 $246,158 $186,685
Ratio of expenses to
average net assets 0.69%* 0.71% 0.60%* 0.60% 0.60% 0.60%*
Ratio of net investment income
to average net assets 0.03%* 0.23%* 0.62%* 1.10% 1.73% 1.81%*
Portfolio turnover 32% 53% 103% 90% 67% 35%
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
See notes to financial statements
17
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Large Cap Growth Portfolio (the "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 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 total investable assets and contributions are
included in the year ended October 31, 1998 "Proceeds from contributions" on the
Statement of Changes in Net Assets.
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.
18
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank is a
wholly-owned subsidiary of Citicorp, which in turn is a wholly-owned subsidiary
of Citigroup Inc. Citigroup Inc. was formed as a result of the merger of
Citicorp and Travelers Group, Inc., which was completed on October 8, 1998.
The management fees paid to Citibank amounted to $2,155,201 for the six
months ended April 30, 1999. 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, 1999.
19
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1999, as
computed on a federal income tax basis, are as follows:
AGGREGATE COST $585,050,015
- --------------------------------------------------------------------------------
Gross unrealized appreciation $173,979,879
Gross unrealized depreciation (3,703,134)
- --------------------------------------------------------------------------------
Net unrealized appreciation $170,276,745
- --------------------------------------------------------------------------------
5. LINE OF CREDIT The Portfolio, along with various other Portfolios in the
CitiFunds Family, entered into an ongoing agreement with a bank which allows the
Portfolios collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio 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,
1999, the commitment fee allocated to the Portfolio was $981. Since the line of
credit was established, there have been no borrowings.
20
<PAGE>
U.S. FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------
FIXED INCOME -- 118.3%
- ------------------------------------------------------
ASSET BACKED SECURITIES -- 4.3%
- ------------------------------------------------------
Aames Mortgage Trust
6.59% due 6/15/24 $ 375 $ 379,324
Contimortgage Home
Equity Loan
6.13% due 3/15/13 500 499,685
Green Tree Financial Corp.
6.71% due 8/15/29 550 539,863
8.05% due 10/15/27 1,500 1,555,305
IMC Home Equity Loan
6.16% due 5/20/14 1,000 1,003,110
----------
3,977,287
----------
DOMESTIC CORPORATIONS -- 31.5%
- ------------------------------------------------------
Aircraft Financial Trust
8.00% due 5/15/24 1,300 1,281,719
Allstate Corp.
6.75% due 5/15/18 1,030 1,022,017
American Financial
Group Inc.
7.125% due 4/15/09 910 882,554
Associates Corp. of N. A
6.95% due 11/01/18 1,000 1,004,460
BB&T Corp.
6.375% due 6/30/05 1,330 1,328,311
Bank One Corp.
5.625% due 2/17/04 1,000 979,530
Century Enterprises Inc.
6.30% due 1/15/08 750 741,900
Conoco Inc.
5.90% due 4/15/04 910 902,147
Conseco Inc.
6.40% due 6/15/01 350 345,992
Dayton Hudson Corp.
6.65% due 8/01/28 1,105 1,065,485
Equitable Life Assurance
6.95% due 12/01/05 1,000 1,024,230
Ford Motor Co.
6.625% due 10/01/28 1,165 1,118,295
General Motors
Acceptance Corp.
6.15% due 4/05/07 940 931,756
Household Financial Corp.
6.50% due 11/15/08 $ 1,130 $ 1,124,113
Knight Ridder Inc.
6.875% due 3/15/29 700 684,358
Lehman Brothers
Holdings, Inc.
6.375% due 3/15/01 775 778,340
6.40% due 8/30/00 930 935,943
MCI Communications Corp.
6.50% due 4/15/10 1,395 1,403,230
Mattel Inc.
6.00% due 7/15/03 700 695,456
May Department
Stores Co.
5.95% due 11/01/08 650 637,377
Merita Bank PLC
6.50% due 4/01/09 935 921,966
Morgan Stanley
Dean Witter & Co.
5.625% due 1/20/04 1,000 985,300
National Rural Utilities
6.20% due 2/01/08 1,235 1,236,136
Nordstrom Inc.
5.625% due 1/15/09 765 722,933
Norfolk Southern Corp.
7.35% due 5/15/07 705 750,754
Peco Energy
6.05% due 3/01/09 1,000 991,250
Petroleum Geological
Services
6.625% due 3/30/08 565 553,175
Popular, Inc.
6.20% due 4/30/01 650 648,330
Raytheon Co.
6.30% due 3/15/05 910 918,081
Sears Credit Account
Master Trust
5.25% due 10/16/08 820 797,188
TPSA Financial
7.75% due 12/10/08 765 778,289
Union Carbide Corp.
6.70% due 4/01/09 930 922,743
----------
29,113,358
----------
14
<PAGE>
U.S. FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------
MORTGAGE OBLIGATIONS -- 47.1%
- ------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 12.6%
- ------------------------------------------------------
Asset Securitization Corp.
Series 95
7.10% due 8/13/29 $ 255 $ 265,701
7.384% due 8/13/29 1,000 1,054,540
Asset Securitization Corp.
Series 97
6.85% due 2/14/41 225 230,796
Commercial Mortgage Corp.
5.80% due 3/15/06 265 259,968
Commercial Mortgage
Passthrough 1999
7.239% due 10/15/08 1,300 1,274,806
CRIMI Mae Commercial
Mortgage Trust
7.00% due 11/02/11 500 393,594
GE Capital Mortgage
Services, Inc.
5.905% due 10/25/13 2,000 1,994,860
GMAC Commercial
Mortgage Inc.
6.42% due 8/15/08 550 549,389
6.83% due 12/15/03 457 463,693
J.P. Morgan Commercial
Mortgage Financial Corp.
6.373% due 1/15/30 234 235,406
Merrill Lynch Mortgage Co.
6.95% due 6/18/29 459 469,626
Morgan Stanley Capital
Investment Inc.
6.44% due 11/15/02 475 479,451
Nomura Asset
Securitization Corp.
8.15% due 3/04/20 1,000 1,078,990
Norwest Asset
Securitization Corp.
6.75% due 11/25/27 2,000 2,006,960
Residential Asset
Securitization Trust
7.00% due 2/25/08 180 181,309
Structured Asset
Securities Corp.
6.79% due 6/12/04 695 713,408
----------
11,652,497
----------
MORTGAGE BACKED SECURITIES/
PASSTHROUGHS -- 20.2%
- -------------------------------------------------------
Federal Home Loan
Mortgage Corp.
6.25% due 6/15/24 $ 535 $ 531,680
6.75% due 8/15/04 1,500 1,512,648
8.50% due 4/01/01 10 9,933
----------
2,054,261
Federal National
Mortgage Association
5.49% due 8/18/00 5,000 5,014,850
6.50% due 12/01/29 TBA* 6,635 6,628,133
6.50% due 8/25/22 1,500 1,478,512
7.412% due 8/17/21 2,341 2,453,722
7.50% due 10/01/25 750 771,110
7.50% due 5/01/26 169 173,806
7.50% due 6/01/26 31 31,952
8.00% due 6/01/02 8 8,085
----------
16,560,170
----------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION -- 14.3%
- ------------------------------------------------------
6.50%
due 12/15/29 TBA* 500 495,545
6.50%
due 12/31/29 TBA* 2,000 1,981,875
7.00%
due 12/31/29 TBA* 6,600 6,676,296
7.00% due 2/15/24 1,033 1,049,625
7.25% due 10/16/22 869 873,623
7.50%
due 12/31/29 TBA* 2,000 2,056,260
8.00% due 12/15/07 42 43,715
----------
13,176,939
TOTAL MORTGAGE OBLIGATIONS 43,443,867
----------
YANKEE BONDS -- 2.1%
- ------------------------------------------------------
Corporacion Andina
De Fomento
7.75% due 3/01/04 1,000 1,000,624
Korea Development Bank
7.125% due 4/22/04 910 897,505
----------
1,898,129
----------
15
<PAGE>
U.S. FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) April 30, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------
UNITED STATES GOVERNMENT
AND OTHER GOVERNMENT
OBLIGATIONS -- 33.3%
- ------------------------------------------------------
UNITED STATES TREASURY BONDS -- 7.2%
6.625% due 2/15/27 $1,150 $ 1,264,816
6.125% due 11/15/27 2,650 2,743,174
3.625% due 4/15/28 610 584,851
5.25% due 11/15/28 2,200 2,035,682
----------
6,628,523
----------
UNITED STATES TREASURY NOTES -- 23.9%
- ------------------------------------------------------
6.00% due 6/30/99 50 50,117
5.625% due 4/30/00 215 216,378
5.50% due 12/31/00 1,650 1,660,824
6.625% due 6/30/01 2,665 2,745,776
6.50% due 5/31/02 1,000 1,036,250
5.75% due 11/30/02 5,005 5,091,036
4.25% due 11/15/03 2,000 1,920,940
7.875% due 11/15/04 460 515,485
6.50% due 5/15/05 580 614,075
6.875% due 5/15/06 2,735 2,970,456
6.625% due 5/15/07 3,720 4,008,300
3.875% due 1/15/09 1,275 1,273,406
----------
22,103,043
----------
UNITED STATES AGENCY OBLIGATIONS -- 0.8%
- ------------------------------------------------------
Tennessee Valley Authority
5.88% due 4/01/36 750 761,062
----------
OTHER GOVERNMENT OBLIGATIONS -- 1.4%
- ------------------------------------------------------
Manitoba Province
5.50% due 10/01/08 1,300 1,253,772
----------
TOTAL UNITED STATES
GOVERNMENT & OTHER
GOVERNMENT OBLIGATIONS 30,746,400
----------
TOTAL FIXED INCOME
(Identified Cost
$110,173,821) 109,179,041
-----------
PREFERRED STOCK -- 0.6%
- ------------------------------------------------------
Comed Financing I
(Identified Cost
$590,291) 23 592,097
-----------
SHORT-TERM OBLIGATIONS
AT AMORTIZED COST -- 0.3%
- ------------------------------------------------------
United States Treasury Bills
4.19% due 6/24/99 $ 60 $ 59,623
4.23% due 6/24/99 30 29,809
4.38% due 6/24/99 12 11,921
4.495% due 6/24/99 170 168,854
--------
TOTAL SHORT-TERM
OBLIGATIONS 270,207
--------
TOTAL INVESTMENTS
(Identified Cost
$111,034,319) 119.2% 110,041,345
----- -----------
OTHER ASSETS,
LESS LIABILITIES (19.2) (17,723,292)
----- -----------
NET ASSETS 100.0% $92,318,053
===== ===========
FUTURES CONTRACTS
- ----------------------------------------------------
Futures contracts which were open at April 30,
1999 are as follows :
AGGREGATE
FACE
NUMBER VALUE UNREALIZED
DESCRIPTION/ OF OF EXPIRATION GAIN/
POSITION CONTRACTS CONTRACTS DATE (LOSS)
- --------------------------------------------------------------------------------
U.S. Treasury
30 Year June,
Bond (sell) (75) ($7,500,000) 1999 $32,250
U.S. Treasury
Two Year June,
Note (buy) 40 4,500,000 1999 (7,025)
U.S. Treasury
Ten Year June,
Note (sell) (20) (2,000,000) 1999 19,850
-------
$45,075
-------
* TBA's are mortgage-backed securities traded under delayed delivery
commitments; settling after April 30, 1999. Although the unit price for the
trade has been established, the principal value has not been finalized. However,
the amount of the commitment will not fluctuate more than 2% from the principal
amount. Income on TBA's is not earned until the settlement date.
See notes to financial statements
16
<PAGE>
U.S. FIXED INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIl 30, 1999 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $111,034,319) $110,041,345
Cash 62,026
Interest receivable 1,299,191
Receivable for daily variation on futures contracts 175,319
- --------------------------------------------------------------------------------
Total assets 111,577,881
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments repurchased 19,215,027
Payable to affiliates--Management Fee (Note 2) 6,870
Accrued expenses and other liabilities 37,931
- --------------------------------------------------------------------------------
Total liabilities 19,259,828
- --------------------------------------------------------------------------------
NET ASSETS $92,318,053
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $92,318,053
================================================================================
See notes to financial statements
17
<PAGE>
U.S. FIXED INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 1, 1998 (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (Unaudited)
================================================================================
Investment Income (Note 1B):
Interest Income $2,614,844
Dividend Income 24,433
- --------------------------------------------------------------------------------
$2,639,277
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 161,358
Custody and fund accounting fees 39,045
Audit fees 21,235
Legal fees 13,000
Trustees fees 2,931
Other 2,137
- --------------------------------------------------------------------------------
Total expenses 239,706
Less aggregate amounts waived by the Manager (Note 2) (55,282)
- --------------------------------------------------------------------------------
Net expenses 184,424
- --------------------------------------------------------------------------------
Net investment income 2,454,853
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Unrealized depreciation of investments (947,905)
Less unrealized appreciation from contributed
assets (Note 1) 1,683,386
- --------------------------------------------------------------------------------
Unrealized depreciation of investments (2,631,291)
- --------------------------------------------------------------------------------
Net realized gain from futures transactions 49,413
Net realized loss from investment transactions (156,037)
- --------------------------------------------------------------------------------
Net realized loss from investment and futures transactions (106,624)
- --------------------------------------------------------------------------------
Net realized and unrealized loss on investments (2,737,915)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (283,062)
================================================================================
See notes to financial statements
18
<PAGE>
U.S. FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
NOVEMBER 1, 1998
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 1999
(Unaudited)
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,454,853
Net realized loss from investment transactions (106,624)
Unrealized depreciation of investments (2,631,291)
- --------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (283,062)
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions (Note 1) 110,812,931
Value of withdrawals (18,211,816)
- --------------------------------------------------------------------------------
Net increase in net assets from capital transactions 92,601,115
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 92,318,053
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- --------------------------------------------------------------------------------
End of period $92,318,053
================================================================================
See notes to financial statements
19
<PAGE>
U.S. FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
NOVEMBER 1, 1998
(COMMENCEMENT
OF OPERATIONS) TO
APRIL 30, 1999
(Unaudited)
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 92,318
Ratio of expenses to average net assets 0.40%*
Ratio of net investment income to average net assets 5.28%*
Portfolio turnover 80%
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 0.52%*
Net investment income to average net assets 5.16%*
================================================================================
*Annualized
See notes to financial statements
20
<PAGE>
U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES U.S. Fixed 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 November 1, 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 Administrator.
On November 1, 1998, CitiFunds Intermediate Income Portfolio transferred all
of its investable assets in the amount of $76,788,364 including $1,683,386 of
unrealized appreciation to the Portfolio in exchange for an interest in the
Portfolio. The total investable assets along with current period contributions
are included in the "Proceeds from Contributions" on the Statement of Changes in
Net Assets.
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 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 upon 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 (maturity 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. Gain and loss from principal
paydowns are recorded as ordinary income.
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.
21
<PAGE>
U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
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. TBA Purchase Commitments The Portfolio enters into "TBA" (to be amounted)
purchase commitments to purchase securities for a fixed unit price at a future
date beyond customary settlement time. Although the unit price has been
established, the principal value has not been finalized. However, the amount of
the commitment will not fluctuate more than 2.0% from the principal amount. The
Portfolio holds, and maintains until the settlement date, cash or higher-grade
debt obligations in an amount sufficient to meet the purchase price. TBA
purchase commitments may be considered securities in themselves, and involve a
risk of loss if the value of the security to be purchased declines prior to the
settlement date, which risk is addition to the risk of decline in the value of
the Portfolio's other assets. Unsettled TBApurchase commitments are valued at
the current market value of the underlying securities, generally according to
the procedures described under Note 1A.
Although the Portfolio will generally enter into TBApurchase commitments with
the intention of acquiring securities for its portfolio, the Portfolio may
dispose of a commitment prior to settlement if the Portfolio's Adviser deems it
appropriate to do so.
G. Futures Contracts The Portfolio may engage in futures transactions. The
Portfolio may use futures contracts in order to protect the Portfolio from
fluctuations in interest rates without actually buying or selling debt
securities, or to manage the effective maturity or duration of fixed income
securities in the Portfolio's portfolio in an effort to reduce potential losses
or enhance potential gains. Buying futures contracts tends to increase the
Portfolio's exposure to the underlying instrument. Selling futures contracts
tends to either decrease the Portfolio's exposure to the underlying instrument,
or to hedge other fund investments.
22
<PAGE>
U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
Upon entering into a futures contract, the Portfolio is required to deposit
with the broker an amount of cash or cash equivalents equal to a certain
percentage of the contract amount. This is known as the "initial margin".
Subsequent payments ("variation margin") are made or received by the Portfolio
each day, depending on the daily fluctuation of the value of the contract. The
daily changes in contract value are recorded as unrealized gains or losses and
the Portfolio recognizes a realized gain or loss when the contract is closed.
Futures contracts are valued at the settlement price established by the board of
trade or exchange on which they are traded.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in the value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in the value of the hedged instruments. In addition,
there is the risk the Fund may not be able to enter into a closing transaction
because of an illiquid secondary market. Futures contracts involve, to varying
degrees, risk of loss in excess of the futures variation margin reflected in the
Statement of Assets and Liabilities.
H. 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 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. CFBDS acts as
Sub-Administrator and performs such duties and receives such compensation from
Citibank as from time to time is agreed to by Citibank and CFBDS. Citibank is a
wholly-owned subsidiary of Citicorp, which in turn, is a wholly-owned subsidiary
of Citigroup Inc. Citigroup Inc. was formed as a result of the merger of
Citicorp and Travelers Group, Inc. which was completed on October 8, 1998.
The management fees paid to Citibank amounted to $161,358, of which $55,282
was voluntarily waived for the period November 1, 1998 (commencement of
operations) to April 30, 1999. The management fees are computed at the annual
rate of 0.35% 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 $138,338,843 and $91,518,321,
respectively, for the period November 1, 1998 (Commencement of Operations) to
April 30, 1999.
23
<PAGE>
U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1999, as
computed on a federal income tax basis, are as follows:
Aggregate cost $111,034,319
================================================================================
Gross unrealized appreciation $ 376,448
Gross unrealized depreciation (1,369,422)
- --------------------------------------------------------------------------------
Net unrealized depreciation $ (992,974)
================================================================================
5. LINE OF CREDIT The Portfolio, along with various 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 period November 1, 1998
(Commencement of Operations) to April 30, 1999, the commitment fee allocated to
the Portfolio was $120. Since the line of credit was established, there have
been no borrowings.
24
