<PAGE>
Emerging Asian Markets Equity Portfolio
PORTFOLIO OF INVESTMENTS June 30, 1998
(Unaudited)
ISSUER/INDUSTRY SHARES VALUE
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COMMON STOCK AND WARRANTS--87.7%
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INDONESIA-7.4%
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Pt Bimanatra Citra
Multi-Industry 262,000 $ 4,918
Pt Daya Guna Samudera
Consumer 66,000 40,546
Pt Gudang Garam
Consumer 40,000 23,754
Pt Indosat
Telecommunications 24,000 28,177
Pt Tambang Timah
Building Materials 49,000 22,160
Pt Telecomunikasion
Telecommunications 29,000 8,264
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127,819
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MALAYSIA-46.7%
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Berjaya Group Berhad
Multi-Industry 20,000 2,458
Berjaya Sports
Leisure & Tourism 17,000 25,191
Commerce Asset
Holdings Berhad
Banking 78,000 29,131
Genting Berhad
Leisure & Tourism 19,000 34,335
Hume Industries Berhad
Building Materials 13,000 9,773
IOI Corp.
Plantations 42,000 20,948
KFC Holdings Berhad
Consumer 21,000 11,132
Kuala Lumpur Kepong Berhad
Plantations 37,000 59,731
Magnum Corp. Berhad
Leisure & Tourism 50,000 18,553
Malayan Banking Berhad
Banking 37,000 37,265
Malayan Resource Corp.
Multi-Industry 74,000 18,722
Malaysia Mining Corp.
Construction/Engineering 59,000 18,765
Malayan Bank
Banking 14,000 14,100
Malaysian International Shipping
Transport 35,000 51,021
Petronas Gas Berhad
Utilities 13,000 24,119
Public Bank Berhad
Banking 29,000 8,735
RHB Capital Berhad
Banking 41,000 16,696
Rashid Hussein Berhad
Banking 25,000 12,288
Resorts World Berhad
Leisure & Tourism 40,000 43,949
Rothmans Pall Mall
Consumer 6,300 43,642
Selangor Properties
Properties 9,000 3,686
Sime Darby Berhad
Multi-Industry 14,000 9,648
Star Publications Malaysia
Media 22,000 18,447
Technology Resources
Industries Berhad
Telecommunications 14,000 9,614
Telekom Malaysia
Utilities 93,000 156,858
Tenaga Nasional Berhad
Utilities 85,000 102,403
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801,210
----------
PHILIPPINES-15.2%
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Ayala Land Inc.
Property 196,070 56,423
DMCI Holdings Inc.
Construction 5,000 158
Filinvest Land
Property 36,000 1,519
Ionics Circuit Inc.
Manufacturing 45,700 14,521
Manila Electric
Utilities 21,590 56,952
Metro Bank & Trust Co.
Banking 1,500 8,813
Philippine Long Distance
Telephone
Telecommunications 3,370 76,775
SM Prime Holdings
Property 179,000 28,331
San Miguel Corp.
Consumer 13,600 17,938
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261,430
----------
THAILAND-18.4%
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Advanced Information Services
Telecommunications 800 3,185
Advanced Information Services*
Telecommunications 8,200 34,976
Bangkok Bank Co. Ltd.
Banking 24,100 29,697
Bangkok Expressway
Construction 1,000 385
Bec World
Construction 7,000 26,706
Co-Generation Public Co.
Utilities 14,900 6,002
Co-Generation Public Co.*
Utilities 98,600 39,720
Electricity General
Utilities 6,600 10,244
Grammy Entertainment
Media 9,000 20,900
Industrial Financing Corp.
of Thailand
Banking 13,100 2,701
National Petrochemical
Petrochemicals 1,500 418
Ptt Exploration & Products
Energy 9,000 68,246
Phatra Thanakit Co.
Finance 37,500 3,377
Siam Makro
Consumer 28,500 39,171
Siam Cement Co.
Building Materials 1,600 7,735
Thai Airways International
Transportation 7,200 5,972
Thai Farmers Bank
Banking 17,400 15,359
Thai Farmers
Bank-Warrants* 2,837 168
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314,962
----------
TOTAL COMMON STOCK
(Identified Cost $2,602,810) $1,505,421
----------
TOTAL INVESTMENTS 87.7% 1,505,421
OTHER ASSETS
LESS LIABILITIES 12.3 211,097
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NET ASSETS 100.0% $1,716,518
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* Non income producing securities
See notes to financial statements
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
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ASSETS:
Investments at value (Note 1A) (Identified Cost, $2,602,810) $1,505,421
Receivable for investments sold 15,976
Cash 174,593
Receivable for foreign currency sold 11,589
Foreign currency, at value (Cost, $19,913) 20,010
Dividends receivable 2,693
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Total assets 1,730,282
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LIABILITIES:
Payable to affiliates--Investment advisory fees (Note 2) 1,511
Payable for currency purchased 11,616
Accrued expenses and other liabilities 637
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Total liabilities 13,764
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NET ASSETS $1,716,518
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REPRESENTED BY:
Paid-in capital for beneficial interests $1,716,518
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<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
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INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $2,552) $ 64
Interest 2,637
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Total investment income $ 2,701
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EXPENSES:
Investment advisory fees (Note 2) 12,366
Administrative fees (Note 3) 618
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Total expenses 12,984
Less aggregate amount waived by the Administrator
(Note 3) (618)
Net expenses 12,366
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Net investment loss (9,665)
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (2,242,108)
Net realized loss on foreign currency exchange
transactions (72,346)
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Net realized loss (2,314,454)
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Unrealized appreciation (depreciation) of investments--
Beginning of period (2,398,027)
End of period (1,097,292) 1,300,735
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Translation of other assets and liabilities denominated
in foreign currencies--net 544
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Net change in unrealized appreciation (depreciation) 1,301,279
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Net realized and unrealized loss on investments (1,013,175)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,022,840)
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See notes to financial statements
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(Unaudited) 1997
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INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss) $ (9,665) $ 33,784
Net realized loss on investments and foreign
exchange transactions (2,314,454) (3,015,565)
Net change in unrealized appreciation (depreciation)
of investments and foreign currency exchange 1,301,279 (3,247,601)
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Net decrease in net assets resulting from operations (1,022,840) (6,229,382)
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CAPITAL TRANSACTIONS:
Proceeds from contributions 280,099 2,061,677
Value of withdrawals (212,925) (4,552,871)
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Net increase (decrease) in net assets from
capital transactions 67,174 (2,491,194)
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NET DECREASE IN NET ASSETS: (955,666) (8,720,576)
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NET ASSETS:
Beginning of period 2,672,184 11,392,760
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End of period $1,716,518 $2,672,184
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EMERGING ASIAN MARKETS EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AUGUST 23, 1995
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ----------------------- DECEMBER 31,
(Unaudited) 1997 1996 1995
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<S> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $ 1,717 $ 2,672 $ 11,393 $5,963
Ratio of expenses to average net assets 1.00%* 1.12%+ 0.56% 0%
Ratio of net investment income (loss)
to average net assets (0.78)%* 0.40% 0.60% 1.53%*
Portfolio turnover 83% 72% 73% 0%
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees for the
periods indicated, the ratios would have been as follows:
Ratios:
Expenses to average net assets 1.05%* 1.20% 1.06% 1.05%*
Net investment income (loss)
to average net assets (0.83)%* 0.32% 0.10% 0.48%*
- ------------------------------------------------------------------------------------------------
* Annualized.
+ Ratio of expenses to average net assets excluding interest expense would be 1.00%.
</TABLE>
See notes to financial statements
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Emerging Asian Markets Equity Portfolio (the
"Portfolio"), a separate series of The Premium Portfolios (the "Portfolio
Trust"), is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company which was organized as a
trust under the laws of the State of New York. The Declaration of Trust permits
the Trustees to issue beneficial interests in the Portfolio. The Investment
Adviser of the Portfolio is Citibank N.A. ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Fund's Administrator. 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 preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The following significant accounting policies consistently followed by the
Portfolio are as follows:
A. Investment Security Valuations Equity securities in the portfolio are
valued at the last sale price on the exchange on which they are primarily
traded, or at the quoted bid price for securities in which there were no sales
during the day, or for unlisted securities not reported on the NASDAQ system.
Securities listed on a foreign exchange are valued at the last quoted sale price
available. Bonds and other fixed income securities (other than short-term
obligations maturing in sixty days or less) in the portfolio are valued on the
basis of valuations furnished by a pricing service, the use of which has been
approved by the Trustees. In making such valuations, the pricing service
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices or exchanges or
over-the-counter prices, since such valuations and techniques are believed to
reflect more accurately the fair value of such securities. Short-term
obligations maturing in sixty days or less are valued at amortized cost, which
constitutes fair value as determined by the Trustees. Portfolio securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Trustees. Trading in
securities on most foreign exchanges and over-the-counter markets is normally
completed before the close of the New York Stock Exchange and may also take
place on days which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time of fund valuation, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.
B. Foreign Currency Translation The accounting records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Translation of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income and foreign taxes withholding
recorded and the actual amount received or paid.
C. Forward Foreign Currency Exchange Contracts The Portfolio may enter into
forward foreign currency exchange contracts ("contracts") in connection with
planned purchases or sales of securities or to hedge the U.S. dollar value of
portfolio securities denominated in a particular currency. The Portfolio could
be exposed to risks if the counter-parties to the contracts are unable to meet
the terms of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. Forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying currency and
any gains or losses are recorded for financial statement purposes as unrealized
gains or losses until the contract settlement date.
D. Accounting For Investments Securities transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date.
Dividend income is recorded net of foreign taxes withheld where recovery of such
taxes is not assured. Reclaim of recoverable foreign taxes are the
responsibility of the qualified investors. Interest income is accrued daily.
Interest expense is related to expenses incurred on cash overdrafts.
E. U.S. Federal Income and Other Taxes The Portfolio is considered a
partnership under the U.S. Internal Revenue Code. Accordingly, no provision for
federal income taxes is necessary. The Portfolio may be subject to taxes imposed
by countries in which it invests. Such taxes are generally based on income
and/or capital gains earned or repatriated. Taxes are accrued and applied to net
investment income and net realized gains as such income and/or gains are earned.
F. Expenses The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
G. Repurchase Agreements It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
2. INVESTMENT ADVISORY FEES The investment advisory fees paid to Citibank, as
compensation for overall investment management services, amounted to $12,366 for
the six months ended June 30, 1998. The investment advisory fees are computed at
the annual rate of 1.00% of the Portfolio's average daily net assets.
3. ADMINISTRATIVE FEES Under the terms of an Administrative Services Agreement,
the administrative services fees paid to the Administrator, as compensation for
overall administrative services including general office facilities, is computed
at an annual rate of 0.05% of the Portfolio's average daily net assets. The
administrative fees amounted to $618, all of which was voluntarily waived, for
the six months ended June 30, 1998. The Portfolio pays no compensation directly
to any Trustee or any officer who is affiliated with the Administrator, all of
whom receive remuneration for their services to the Portfolio from the
Administrator or its affiliates. Certain officers and a Trustee of the Portfolio
are officers and directors of the Administrator or its affiliates.
4. PURCHASES AND SALES OF INVESTMENTS For the six months ended June 30, 1998,
purchases and sales of investment securities, other than short-term investments,
aggregated $2,033,079 and $1,920,094, respectively.
5. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized
appreciation/(depreciation) in value of the investment securities owned at June
30, 1998, as computed on a federal income tax basis, are as follows:
- -------------------------------------------------------------------------------
Aggregate cost $ 2,602,810
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 14,910
Gross unrealized depreciation (1,112,299)
- -------------------------------------------------------------------------------
Net unrealized depreciation $(1,097,389)
- -------------------------------------------------------------------------------
6. EXPENSE FEES SFG has entered into an expense agreement with the Portfolio.
SFG has agreed to pay all of the ordinary operating expenses (excluding
interest, taxes, brokerage commissions, litigation costs or other extraordinary
costs or expenses) of the Portfolio, other than fees paid under the Advisory
Agreement and Administrative Services Agreement. The Agreement may be terminated
by either party upon not less than 30 days nor more than 60 days written notice.
The Portfolio has agreed to pay SFG an expense fee, on an annual basis,
accrued daily and paid monthly; provided, however, that such fee shall not
exceed the amount such that immediately after any such payment the aggregate
expenses of the Portfolio less expenses waived by the Administrator would, on an
annual basis, exceed an agreed upon rate, currently 1.00% of average daily net
assets.
7. FINANCIAL INSTRUMENTS The Portfolio may trade financial instruments with
off-balance sheet risk in the normal course of its investing activities and to
assist in managing exposure to market risks such as interest rates and foreign
currency exchange rates. These financial instruments include forward foreign
currency exchange contracts.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when related and offsetting transactions are considered. No such instruments
were held on June 30, 1998.
8. 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 June 30, 1998. The commitment fee allocated to the Portfolio was
$7. Since the line of credit was established, there have been no borrowings.
9. SUBSEQUENT EVENT On August 7, 1998 the Board of Trustees of the Portfolio,
approved the liquidation of the Portfolio.
