N-CSRS 1 c31418_n-csrs.htm 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
S
FORM N-CSR


CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-10407


INSTITUTIONAL PORTFOLIO -
PRIME CASH RESERVES PORTFOLIO (formerly Institutional Reserves Portfolio)
INSTITUTIONAL ENHANCED PORTFOLIO
(Exact name of registrant as specified in charter)

125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
300 First Stamford Place
Stamford, CT 06902
 (Name and address of agent for service)

Registrant's telephone number, including area code: (800) 451-2010

Date of fiscal year end:  AUGUST 31
Date of reporting period: FEBRUARY 29, 2004

ITEM 1.  REPORT TO STOCKHOLDERS.

         The SEMI-ANNUAL Report to Stockholders is filed herewith.
Prime Cash Reserves Portfolio  
S C H E D U L E   O F   I N V E S T M E N T S
February 29, 2004
(Unaudited)  
  Principal      
  Amount           
Issuer
 (000’s omitted)     Value
         
Certificates of Deposit (Yankee) — 7.3%
Bank America  
     
   1.10% due 3/15/04 $ 75,000   $
75,000,000
Toronto-Dominion        
   1.09% due 3/05/04   35,000    
35,000,096
Wells Fargo Bank        
   1.05% due 3/01/04   75,000    
75,000,000
WestDeutsche        
   Landesbank        
   1.11% due 3/02/04   75,000    
75,000,000
       
         
260,000,096
       
         
Commercial Paper — 76.1%    
Amstel Funding Corp.        
   1.11% due 3/01/04   60,000    
60,000,000
   1.10% due 8/11/04   25,000    
24,875,486
Aquinas Funding        
   1.11% due 6/03/04   49,700    
49,555,953
Atlantis One        
   Funding Corp.        
   1.09% due 7/20/04   25,000    
24,893,271
Atomium Funding Corp.        
   1.06% due 4/14/04   37,414    
37,365,528
   1.07% due 5/06/04   50,000    
49,901,917
   1.10% due 8/23/04   25,145    
25,010,544
Blue Heron Funding V Ltd.*      
   1.12% due 2/23/05   75,000    
75,000,000
Brahms Funding Corp        
   1.08% due 3/19/04   60,000    
59,967,600
Bryant Park Funding LLC        
   1.05% due 3/30/04   57,202    
57,153,616
CIT Group Inc.*        
   1.25% due 12/04/04   50,000    
50,000,000
Credit Lyonnais        
   1.08% due 6/30/04   30,000    
29,891,100
Crown Point Capital Co.        
   1.09% due 7/12/04   34,187    
34,049,331
Depfa Bank Europe        
   1.09% due 8/23/04   50,000    
49,735,069
Edison Asset Security        
   1.10% due 3/01/04   60,000    
60,000,000
Eiffel Funding        
   1.06% due 5/28/04   25,000    
24,935,222
Fenway Funding LLC        
   1.09% due 3/12/04   41,351    
41,337,228
Galaxy Funding Inc.        
   1.13% due 5/05/04   50,000    
49,897,986
Goldman Sachs Group*        
   1.21% due 9/20/04   75,000    
75,000,000
Grampian Funding Ltd.        
   1.11% due 6/08/04   50,000    
49,847,375
Grampian Funding LLC        
   1.10% due 8/03/04   50,000    
49,763,194
HBOS Treasury                 
   Services PLC        
   1.11% due 4/14/04   54,000  
53,926,740
Hanover Funding Co.      
   1.05% due 4/22/04   50,000  
49,924,167
Harwood Street      
   Funding LLC      
   1.08% due 3/18/04   39,125  
39,105,046
   1.11% due 3/18/04   37,559  
37,539,313
Jupiter Sect      
   1.05% due 6/30/04   29,000  
28,897,654
KFW International      
   Financing Inc.      
   1.01% due 4/30/04   50,000  
49,915,833
K2 USA LLC*      
   1.06% due 2/28/05   75,000  
74,992,561
Macquarie Bank Ltd.      
   1.09% due 5/28/04   23,750  
23,687,010
   1.10% due 6/17/04   12,117  
12,077,196
   1.10% due 7/07/04   24,000  
23,906,560
Main Street      
   Warehouse LLC      
   1.10% due 3/05/04   60,000  
59,992,667
   1.09% due 3/30/04   60,000  
59,947,316
Mica Funding LLC      
   1.07% due 5/24/04   50,000  
49,875,167
Moat Funding LLC      
   1.09% due 7/14/04   50,000  
49,795,625
Mortgage Interest      
   Network      
   1.10% due 3/26/04   70,000  
69,946,528
Nieuw Amsterdam      
   Receivables      
   1.10% due 7/01/04   60,000  
59,776,333
Nyala Funding LLC      
   1.15% due 4/15/04   50,000  
49,928,125
Nyala Funding LLC,      
   1.08% due 4/15/04   60,000  
59,755,200
Park Granada LLC      
   1.12% due 3/15/04   35,000  
34,984,756
Perry Global Funding      
   1.12% due 3/04/04   61,177  
61,171,290
   1.07% due 6/01/04   41,830  
41,715,618
Premier Asset*      
   1.05% due 12/15/04   45,000  
44,989,200
   1.07% due 2/15/05   50,000  
49,995,154
Regency Markets LLC      
   1.05% due 5/20/04   50,000  
49,883,333
Republic of Italy      
   1.09% due 7/27/04   8,800  
8,760,566
Scaldis Cap Ltd.      
   1.13% due 6/21/04   27,293  
27,197,050
   1.13% due 6/23/04   34,333  
34,210,145
   1.12% due 8/10/04   30,162  
30,009,984

14

Prime Cash Reserves Portfolio    
S C H E D U L E   O F   I N V E S T M E N T S   (Continued)
February 29, 2004
(Unaudited)        
  Principal          
  Amount      
Issuer (000’s omitted)   Value
         
Commercial Paper — (cont’d)      
Sharp Electronics          
   1.03% due 3/30/04 $ 20,000   $ 19,983,406
ST Germain Holdings          
   1.07% due 3/23/04   60,000     59,960,767
Sigma Finance Inc.          
   1.07% due 5/06/04   50,000     49,998,648
Stanfield Victoria          
   Finance Ltd.          
   1.09% due 3/10/04*   40,000     40,000,000
   1.09% due 7/29/04   21,600     21,501,900
Tango Finance Corp.          
   1.09% due 7/27/04   18,300     18,217,996
Tango Finance Corp Ltd.        
   1.12% due 8/06/04   20,000     19,901,689
Victory Receivables          
   Corp.          
   1.06% due 3/24/04   48,461     48,428,181
Westpac Capital Corp.          
   1.12% due 5/27/04   60,000     59,838,325
   1.12% due 6/01/04   25,000     24,928,444
Whistlejacket Capital Ltd.        
   1.20% due 4/15/04   54,450     54,368,325
   1.06% due 5/20/04*   25,000     24,998,352
White Pine          
   Finance LLC*          
   1.07% due 6/07/04   50,158     50,011,901
       
          2,706,224,491
       
           
Master Notes — 3.2%        
Merrill Lynch & Co. Inc.*        
   1.21% due 3/01/04   65,000     65,000,000
Morgan Stanley Dean          
   Witter & Co.*          
   1.26% due 3/01/04   50,000     50,000,000
       
          115,000,000
       
           
Time Deposits — 9.3%        
Danske Corp          
   1.05% due 3/31/04   60,000     59,947,500
National City Bank          
   1.03% due 3/01/04 130,000     130,000,000
US Bank CIN          
   Grand Cayman          
   1.03% due 3/01/04 139,263     139,263,000
       
          329,210,500
         
US Gov’t Agency Discount Notes — 4.1%
Federal Home Loan Banks        
   1.16% due 6/04/04
43,000
42,871,776
   1.01% due 6/08/04
52,000
51,855,570
Federal National
   Mortgage Association
   1.10% due 3/22/04
50,000
49,968,063
 
144,695,409
         
Total Investments, at          
   Amortized Cost   100.0 %   3,555,130,496
Other Assets,          
   Less Liabilities   0.0     558,956
   
   
Net Assets   100.0 %
$
 3,555,689,452
   
 
           
See notes to financial statements      
           
* Variable interest rate—subject to periodic change.

15

Prime Cash Reserves Portfolio
 
S T A T E M E NT   O F   A S S E T S   A N D   L I A B I L I T I E S
 
February 29, 2004 (Unaudited)
 
 
 
Assets:
 
Investments, at amortized cost (Note 1A)
$
 3,555,130,496
Cash
311
Interest receivable
1,081,920
   Total assets
3,556,212,727
Liabilities:
 
Management fees payable (Note 2)
209,643
Accrued expenses and other liabilities
313,632
   Total liabilities
523,275
Net Assets
$
 3,555,689,452
 
 
Represented by:
 
Paid-in capital for beneficial interests
$
 3,555,689,452
 
 
 
 
See Notes to financial statements
 

16

Prime Cash Reserves Portfolio               
S T A T E M E N T   O F   O P E R A T I O N S        
         
For the Six Months Ended February 29, 2004  (Unaudited)            
             
Investment Income (Note 1B)        
$
 18,433,426
             
Expenses:            
Management fees (Note 2)
$
 1,655,834        
Custody and fund accounting fees   320,689        
Trustees’ fees   47,875        
Legal fees   27,205        
Audit fees   10,667        
Miscellaneous   3,515        
   Total expenses   2,065,785        
Less: aggregate amounts waived by the Manager (Note 2)   (410,699 )      
Less: fees paid indirectly (note 1F)   (195 )      
   Net expenses           1,654,891
Net investment income        
$
 16,778,535
             
See notes to financial statements            

17

Prime Cash Reserves Portfolio     
S T A T E M E N T   O F   C H A N G E   I N    N E T   A S S E T S  
               
  Six Months Ended          
  February 29, 2004     Year Ended  
 
(Unaudited)
     August 31, 2003  
 
               
Increase in Net Assets From Operations:              
Net investment income $ 16,778,535    
$
 23,827,187  
 
Capital Transactions:              
Proceeds from contributions (Note 1)   7,696,332,942       10,135,347,564  
Value of withdrawals (6,843,481,659 )     (8,699,330,681 )
 
Net increase in net assets from capital transactions   852,851,283       1,436,016,883  
 
Net Increase in Net Assets   869,629,818       1,459,844,070  
 
Net Assets:              
Beginning of period   2,686,059,634       1,226,215,564  
 
End of period $ 3,555,689,452    
$
 2,686,059,634  
 
               
               
See notes to financial statements              

18

Prime Cash Reserves Portfolio
N OT E S   TO   F I N A N C I A L   S T A T E M E N T S  (Unaudited)

1. Significant Accounting Policies Institutional Reserves Portfolio, which changed its name to Prime Cash Reserves Portfolio (the “Portfolio”) on February 27, 2004, is a separate series of Institutional Portfolio (the “Trust”). The Trust is registered under the U.S. Investment Company Act of 1940, as amended (the “1940 Act”) as a no-load, 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. Citi Fund Management Inc. (the “Manager”) acts as the Investment Manager. On June 3, 2002 (commencement of operations) Citi Institutional Cash Reserves transferred all of its investable assets ($1,383,780,908) to the Portfolio in exchange for an interest in the Portfolio.

     The preparation of financial statements in accordance with United States of America 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. Valuation of Investments Money market instruments are valued at amortized cost, in accordance with the 1940 Act. This method involves valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. The Portfolio’s use of amortized cost is subject to its compliance with certain conditions as specified under the 1940 Act.

     B. Interest Income and Expenses Interest income consists of interest accrued and discount earned (including both original issue and market discount) on the investments of the Portfolio, accrued ratably to the date of maturity, plus or minus net realized gain or loss, if any, on investments. Expenses of the Portfolio are accrued daily. The Portfolio bears all costs of its operations other than expenses specifically assumed by the Manager.

     C. U.S. Federal Income Taxes The Portfolio is considered a partnership under the U.S. Internal Revenue Code. Accordingly, no provision for federal income taxes is necessary.

     D. Repurchase Agreements It is the policy of the Portfolio to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian bank’s vault, all securities held as collateral in support of repurchase agreement investments. Additionally, procedures have been established by the Portfolio to monitor, on a daily basis, the market value of the repurchase agreements’ underlying investments to ensure the existence of a proper level of collateral.

     E. Other Purchases, maturities and sales of money market instruments are accounted for on the date of the transaction.

     F. Fees Paid Indirectly The Portfolio’s custodian calculates its fees based on the Portfolio’s average daily net assets. The fee is reduced according to a fee arrange-

19

Prime Cash Reserves Portfolio
N O T E S  TO  F I N A N C I A L  S T A T E M E N T S  (Unaudited)  (Continued)

ment, which provides for custody fees to be reduced based on a formula developed to measure the value of cash deposited with the custodian by the Portfolio. This amount is shown as a reduction of expenses on the Statement of Operations.

2. Management Fees The Manager is responsible for overall management of the Portfolio’s, business affairs, and has a Management Agreement with the Portfolio. The Manager or an affiliate also provides certain administrative services to the Portfolio. These administrative services include providing general office facilities and supervising the overall administration of the Portfolio.

     The management fees paid to the Manager are accrued daily and payable monthly. The management fees are computed at an annual rate of 0.10% of the Portfolio’s average daily net assets. The management fees amounted to $1,655,834 of which $410,699 was voluntarily waived for the six months ended February 29, 2004. The Portfolio pays no compensation directly to any Trustee or any officer who is affiliated with the Manager, all of whom receive remuneration for their services to the Fund from the Manager or its affiliates. Certain of the officers and a Trustee of the Portfolio are officers and a director of the Manager or its affiliates.

3. Investment Transactions Purchases and maturities and sales of money market instruments aggregated $67,661,078,765 and $66,803,964,220, respectively, for the six months ended February 29, 2004.

4. Trustee Retirement Plan The Trustees of the Fund have adopted a Retirement Plan for all Trustees who are not “interested persons” of the Fund, within the meaning of the 1940 Act. Under the Plan, all Trustees are required to retire from the Board as of the last day of the calendar year in which the applicable Trustee attains age 75 (certain Trustees who had already attained age 75 when the Plan was adopted were required to retire effective December 31, 2003). Trustees may retire under the Plan before attaining the mandatory retirement age. Trustees who have served as Trustee of the Trust or any of the investment companies associated with Citigroup for at least ten years when they retire are eligible to receive the maximum retirement benefit under the Plan. The maximum retirement benefit is an amount equal to five times the amount of retainer and regular meeting fees payable to a Trustee during the calendar year ending on or immediately prior to the applicable Trustee’s retirement. Amounts under the Plan may be paid in installments or in a lump sum (discounted to present value). The Portfolio’s allocable share of the expenses of the Plan for the six months ended February 29, 2004 and the related liability at ended February 29, 2004 was not material.

5. Additional Information The Portfolio has received the following information from Citigroup Asset Management (“CAM”), the Citigroup business unit which includes the Portfolio’s Investment Manager and other investment advisory companies, all of which are indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an affiliate, into the transfer agent business in the

20

Prime Cash Reserves Portfolio
N OT E S  TO  F I N A N C I A L  S T A T E M E N T S  (Unaudited)  (Continued)

period 1997-1999. As CAM currently understands the facts, at the time CAM decided to enter the transfer agent business, CAM sub-contracted for a period of five years certain of the transfer agency services to a third party and also concluded a revenue guarantee agreement with this sub-contractor providing that the sub-contractor would guarantee certain benefits to CAM or its affiliates (the “Revenue Guarantee Agreement”). In connection with the subsequent purchase of the subcontractor’s business by an affiliate of the current sub-transfer agent (PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee Agreement was amended eliminating those benefits in exchange for arrangements that included a one-time payment from the sub-contractor.

The boards of CAM-managed funds (the “Boards”) were not informed of the Revenue Guarantee Agreement with the subcontractor at the time the Boards considered and approved the transfer agent agreements. Nor were the Boards informed of the subsequent amendment to the Revenue Guarantee Agreement when that occurred.

CAM has begun to take corrective actions. CAM will pay to the applicable funds approximately $17 million (plus interest) that CAM and its affiliates received from the Revenue Guarantee Agreement and its amendment. CAM also plans an independent review to verify that the transfer agency fees charged by CAM were fairly priced as compared to competitive alternatives. CAM is instituting new procedures and making changes designed to ensure no similar arrangements are entered into the future.

CAM has briefed the SEC, the New York State Attorney General and other regulators with respect to this matter, as well as the U.S. Attorney who is investigating the matter. CAM is cooperating with governmental authorities on this matter, the ultimate outcome of which is not yet determinable.

21

Prime Cash Reserves Portfolio                      
F I N A N C I A L  H I G H L I G H T S
                     
 
                 
For the Period
  
                 
June 3, 2002*
  
  Six Months Ended            
(Commencement of
  
  February 29, 2004     Year Ended    
Operations) to
  
  (Unaudited)     August 31, 2003    
August 31, 2002
  
                       
Ratios/Supplemental Data:                    
Net Assets, end of period                    
   (000’s omitted) $ 3,555,689     $ 2,686,060     $ 1,226,216  
Ratio of expenses to average                    
   net assets   0.10 %*     0.11 %     0.15 %*
Ratio of net investment            
    income to average net assets 1.01 %*     1.27 %     1.77 %*
                       
Note: If agents of the Portfolio had not voluntarily waived a portion of their fees for the periods indi-  
cated, the ratios would have been as follows:                    
                       
Ratios:                      
Expenses to average net assets 0.12 %*     0.19 %     0.20 %*
Net investment income to                    
   average net assets 0.99 %*     1.19 %     1.72 %*
* Annualized                      
                       
See notes to financial statements                    

22

Institutional Enhanced Portfolio  
S C H E D U L E    O F    I N V E S T M E N T S
February 29, 2004
  
(Unaudited)        
         
         
  Principal        
  Amount        
Issuer (000’s omitted)     Value  
 
           
Asset Backed — 21.5%          
 
Restructured Asset            
   Securitization*            
   0.95% due 4/15/04
500
    
$
 499,863  
Structured Product
         
   Asset Return*
         
   1.60% due 7/15/04
500
       500,699  
 
   
 
 
      1,000,562  
 
   
 
 
         
Corporate Notes — 13.7%          
 
Foxboro Funding Ltd.
         
   1.11% due 3/19/04
250
       249,861  
Nationwide Anglia
         
   Building Society
         
   1.08% due 8/31/04
150
       149,177  
Park Granada LLC
         
   1.06% due 3/02/04
200
       199,994  
State Street
         
   Cayman Islands
         
   1.04% due 3/01/04
41
       41,000  
       
 
          640,032  
       
 
             
Floating Rate Notes — 57.6%          
 
Ameriquest Mortgage            
   Securitization Inc.            
   1.18% due 7/25/33
352
       351,918  
Centex Home Equity
         
   Loan Trust
         
   1.53% due 12/25/32
177
       177,586  
CIT Equipment Coll
         
   1.28% due 10/20/09
269
       268,967  
EQCC Home Equity
         
   Loan Trust
         
   1.32% due 11/15/28
263
       263,429  
Household Home Equity
         
   Loan Trust
         
   1.38% due 5/20/31
233
       232,968  
Monumental Global            
   Funding            
   1.37% due 2/15/05
400
       400,932  
Option One Mortgage
         
   Loan Trust
         
   1.35% due 7/25/32
133
       132,594  
Residential Asset
         
   Mortgage Products
         
   1.47% due 1/25/33
242
       242,218  
Saxon Asset
         
   Securitization Trust
         
   1.34% due 3/25/32
214
       214,456  
Wells Fargo Bank
         
   1.20% due 9/29/05
400
           400,000      
       
 
          2,685,068  
       
 
               
US Gov’t Agency Discount Notes — 7.5%  
 
Federal Home Loan Bank          
4.88% due 5/14/04 50    
$
 50,375  
Federal Home Loan            
Mortgage            
1.15% due 9/09/05 100       100,051  
Federal National Mortgage          
Association            
1.06% due 7/20/04 200       199,963  
       
 
          350,389  
       
 
Total Investments,            
at Value            
(Identified Cost            
      $4,674,906) 100.3 %     4,676,051  
Other Assets            
Less Liabilities (0.3 )     (12,680 )
 
 
 
Net Assets 100.0 %  
$
 4,663,371  
 
 
 
             
* Variable interest rate—subject to periodic change  
See notes to financial statements          

1

Institutional Enhanced Portfolio        
S T A T E M E N T    O F    A SS E T S    A N D    L I A B I L I T I E S
   
February 29, 2004 (Unaudited)    
     
Assets:    
Investments at value (Identified Cost, $4,674,906)
$
 4,676,051
Cash
7
Interest receivable
3,374
Receivable from Manager
40,145
   Total assets
4,719,577
Liabilities:
 
Accrued expenses and other liabilities
56,206
   Total liabilities
56,206
Net Assets
$
 4,663,371
 
 
Represented by:
 
Paid-in capital for beneficial interest
$
 4,663,371
     
     
See notes to financial statements    

2

Institutional Enhanced Portfolio             
S T A T E M E N T    O F    O P E R A T I O N S          
           
For the Six Months Ended February 29, 2004 (Unaudited)          
Interest Income (Note 1B):      
$
 53,295
Expenses:          
Custody and fund accounting fees $ 25,956      
Management fees   6,414      
Audit fees   4,000      
Legal fees   3,110      
Trustees’ fees   925      
Miscellaneous   10,401      
Total expenses   50,806      
Less: expenses assumed by the Manager (Note 5)   (40,145 )    
Less: aggregate amounts waived by the Manager (Note 2)   (6,414 )    
Less: fees paid indirectly (Note 1E)   (2 )    
Net expenses         4,245
Net investment income         49,050
Net realized and unrealized gain on investments:          
Net realized gain on investments         4,481
Net unrealized appreciation on investments         7
Net Realized and Unrealized Gain(Loss) on Investment         4,488
Net Increase in Net Assets Resulting from Operations      
$
 53,538
See notes to financial statements          

3

Institutional Enhanced Portfolio                
S T A T E M E N T    O F    C H A N G E S    I N    N E T    A S S E T S
  
   
March 11, 2003
  
Six Months Ended  
(Commencement
  
February 29, 2004  
of Operations)
  
(Unaudited)  
to August 31, 2003
  
 
Increase in Net Assets from Operations:            
Net investment income
$
 49,050  
$
 84,303  
Net realized gain on investments   4,481     6,801  
Increase in unrealized appreciation on investments   7     1,138  
 
Net increase in net assets resulting from operations   53,538     92,242  
 
Capital Transactions:            
Proceeds from contributions (Note )   3,902,810     25,286,110  
Value of withdrawals   (12,220,812 )   (12,450,517 )
 
Net increase (decrease) in net assets            
    from capital transactions   (8,318,002 )   12,835,593  
 
Net increase (decrease) in net assets resulting from            
    transactions in shares of beneficial interest   (8,318,002 )   12,835,593  
 
Net Increase (decrease) in Net Assets   (8,264,464 )   12,927,835  
 
Net Assets:            
Beginning of year   12,927,835     —  
 
End of year $ 4,663,371  
$
 12,927,835  
 
See notes to financial statements            

4

Institutional Enhanced Portfolio
N OT E S   TO   F I N A N C I A L   S T A T E M E N T S   (Unaudited)

1. Significant Accounting Policies Institutional Enhanced Portfolio (the “Portfolio”) is a separate series of Institutional Portfolio (the “Trust”). The Trust is registered under the U.S. Investment Company Act of 1940, as amended (the “1940 Act”) as a no load, diversified, open-end management company which was organized as a trust under the law of the State of New York. The Declaration of Trust permits the Trustees to issue beneficial interests in the Portfolio. Citi Fund Management Inc. (the “Manager”) acts as the Investment Manager. The Portfolio commenced operations on March 11, 2003.

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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.Valuation of Investments Short-term obligation instruments with less than 60 days remaining to maturity when acquired by the Portfolio are valued at amortized cost, which the Trustees have determined in good faith constitutes fair value. Debt securities are valued on the basis of valuations furnished by a pricing service which utilizes both dealer-supplied valuations and electronic data processing techniques.

     B. Investment Income and Expenses Investment income consists of interest accrued and discount earned (including both original issue and market discount), adjusted for accretion of discount and amortization of premium, on the investments of the Portfolio, accrued ratably to the date of maturity, plus or minus net realized gain or loss, if any, on investments. Expenses of the Portfolio are accrued daily.

     C. Federal Income Taxes The Portfolio’s policy is to comply with the applicable provisions of the Internal Revenue Code. Accordingly, no provision for federal income taxes is necessary.

     D. Fees Paid Indirectly The Portfolio’s custodian calculates its fees based on the Portfolio’s average daily net assets. The fee is reduced according to a fee arrangement, which provides for custody fees to be reduced based on a formula developed to measure the value of cash deposited with the custodian by the Portfolio. This amount is shown as a reduction of expenses on the Statement of Operations.

2. Management Fees The Manager is responsible for overall management of the Portfolio’s business affairs, and has a Management Agreement with the Portfolio. The Manager or an affiliate also provides certain administrative services to the Portfolio. These administrative services include providing general office facilities and supervising the overall administration of the Portfolio.

5

Institutional Enhanced Portfolio
N OT E S  TO  F I N A N C I A L  S T A T E M E N T S  (Unaudited)  (Continued)

     The management fees paid to the Manager are accrued daily and payable monthly. The management fee is computed at the annual rate of 0.15% of the Fund’s average daily net assets. The management fee amounted to $6,414 of which all was voluntarily waived for the six months ended February 29, 2004. The Portfolio pays no compensation directly to any Trustee or any officer who is affiliated with the Manager, all of whom receive remuneration for their services to the Fund from the Manager or its affiliates. Certain of the officers and a Trustee of the Portfolio are officers and a director of the Manager or its affiliates.

3. Investment Transactions Purchases and sales of investments other than short-term obligations aggregated $1,304,934 and $3,168,230 respectively, for the six months ended February 29, 2004.

At February 29, 2004 the aggregate gross unrealized appreciation (depreciation) for Federal income tax purposes was:

Gross unrealized appreciation
$
 1,145
Gross unrealized depreciation
0
Net unrealized appreciation
$
 1,145

4. Trustee Retirement Plan The Trustees of the Portfolio have adopted a Retirement Plan for all Trustees who are not “interested persons” of the Portfolio, within the meaning of the 1940 Act. Under the Plan, all Trustees are required to retire from the Board as of the last day of the calendar year in which the applicable Trustee attains age 75 (certain Trustees who had already attained age 75 when the Plan was adopted are required to retire effective December 31, 2003). Trustees may retire under the Plan before attaining the mandatory retirement age. Trustees who have served as Trustee of the Trust or any of the investment companies associated with Citigroup for at least ten years when they retire are eligible to receive the maximum retirement benefit under the Plan. The maximum retirement benefit is an amount equal to five times the amount of retainer and regular meeting fees payable to a Trustee during the calendar year ending on or immediately prior to the applicable Trustee’s retirement. Amounts under the Plan may be paid in installments or in a lump sum (discounted to present value). The Portfolio’s allocable share of the expenses of the Plan for the six months ended February 29, 2004 and the related liability at February 29, 2004 was not material.

5. Assumption of Expenses The Manager has voluntarily agreed to pay a portion of the unwaived expenses of the Portfolio for the six months ended February 29, 2004 which amounted to $40,145 to maintain a voluntary expense limitation of average daily net assets of 0.10%. This voluntary expense limitation may be discontinued at any time.

6

Institutional Enhanced Portfolio
N OT E S  TO   F I N A N C I A L   S T A T E M E N T S  (Unaudited)  (Continued)

6. Additional Information The Fund has received the following information from Citigroup Asset Management (“CAM”), the Citigroup business unit which includes the Fund’s Investment Manager and other investment advisory companies, all of which are indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an affiliate, into the transfer agent business in the period 1997-1999. As CAM currently understands the facts, at the time CAM decided to enter the transfer agent business, CAM sub-contracted for a period of five years certain of the transfer agency services to a third party and also concluded a revenue guarantee agreement with this sub-contractor providing that the sub-contractor would guarantee certain benefits to CAM or its affiliates (the “Revenue Guarantee Agreement”). In connection with the subsequent purchase of the sub-contractor’s business by an affiliate of the current sub-transfer agent (PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee Agreement was amended eliminating those benefits in exchange for arrangements that included a one-time payment from the sub-contractor.

The Boards of CAM-managed funds (the “Boards”) were not informed of the Revenue Guarantee Agreement with the sub-contractor at the time the Boards considered and approved the transfer agent agreements. Nor were the Boards informed of the subsequent amendment to the Revenue Guarantee Agreement when that occurred.

CAM has begun to take corrective actions. CAM will pay to the applicable funds approximately $17 million (plus interest) that CAM and its affiliates received from the Revenue Guarantee Agreement and its amendment. CAM also plans an independent review to verify that the transfer agency fees charged by CAM were fairly priced as compared to competitive alternatives. CAM is instituting new procedures and making changes designed to ensure no similar arrangements are entered into in the future.

CAM has briefed the SEC, the New York State Attorney General and other regulators with respect to this matter, as well as the U.S. Attorney who is investigating the matter. CAM is cooperating with governmental authorities on this matter, the ultimate outcome of which is not yet determinable.

7

Institutional Enhanced Portfolio          
F I N A N C I A L    H I G H L I G H T S          
       
March 11, 2003
  Six Months Ended  
(Commencement
  February 29, 2004  
of Operations)
  (Unaudited)  
to August 31, 2003
           
Ratios/Supplemental Data:          
Net assets, end of period (000’s omitted) $4,663     $12,928  
Ratio of expenses to average net assets 0.10 %*   0.10 %*
Ratio of net investment income to average net assets 1.15 %*   1.28 %*
Total return 1.29 %**   0.69 %**
Portfolio turnover 28 %   228 %
           
Note: If agents of the Portfolio had not voluntarily agreed to waive all or a portion of their fees for the  
period indicated and the expenses were not reduced for fees paid indirectly, the net investment income  
per share and ratios would have been as follows:  
           
Ratios:          
Expenses to average net assets 1.19 %*   1.03 %*
Net investment income to average net assets 0.06 %*   0.35 %*
   * Annualized.          
** Not Annualized.          
           

See notes to financial statements

8 



ITEM 2.  CODE OF ETHICS.

         Not applicable.

ITEM 3.  AUDIT COMMITTEE FINANCIAL EXPERT.

         Not applicable.

Item 4.  Principal Accountant Fees and Services

         Not applicable

ITEM 5.  AUDIT COMMITTEE OF LISTED REGISTRANTS.

         Not applicable.

ITEM 6.  [RESERVED]

ITEM 7.  DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
         MANAGEMENT INVESTMENT COMPANIES.

         Not applicable.

ITEM 8.  PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
         INVESTMENT COMPANIES.

         Not applicable.

ITEM 9.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No changes.

ITEM 10. CONTROLS AND PROCEDURES.

         (a)   The registrant's principal executive officer and principal
               financial officer have concluded that the registrant's disclosure
               controls and procedures (as defined in Rule 30a-3(c) under the
               Investment Company Act of 1940, as amended (the "1940 Act")) are
               effective as of a date within 90 days of the filing date of this
               report that includes the disclosure required by this paragraph,
               based on their evaluation of the disclosure controls and
               procedures required by Rule 30a-3(b) under the 1940 Act and
               15d-15(b) under the Securities Exchange Act of 1934

         (b)   There were no changes in the registrant's internal control over
               financial reporting (as defined in Rule 30a-3(d) under the 1940
               Act) that occurred during the registrant's last fiscal half-year
               (the registrant's second fiscal half-year in the case of an
               annual report) that have materially affected, or are likely to
               materially affect the registrant's internal control over
               financial reporting.

ITEM 11. EXHIBITS.


               (a)(2) Attached hereto.

               Exhibit 99.CERT            Certifications pursuant to section
                                          302 of the Sarbanes-Oxley Act of
                                          2002


               (b) Furnished.

               Exhibit 99.906CERT         Certifications pursuant to Section
                                          906 of the Sarbanes-Oxley Act of
                                          2002







SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.

INSTITUTIONAL PORTFOLIO -
INSTITUTIONAL ENHANCED PORTFOLIO



By:      /s/ R. Jay Gerken
     --------------------------
     R. Jay Gerken
     Chief Executive Officer of
INSTITUTIONAL PORTFOLIO -
INSTITUTIONAL ENHANCED PORTFOLIO

Date: May 5, 2004

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


By:      /s/ R. Jay Gerken
     --------------------------
     (R. Jay Gerken)
     Chief Executive Officer of
INSTITUTIONAL PORTFOLIO -
INSTITUTIONAL ENHANCED PORTFOLIO


Date: May 5, 2004

By:      /s/ Andrew B. Shoup
     --------------------------
         Chief Administrative Officer of
INSTITUTIONAL PORTFOLIO -
INSTITUTIONAL ENHANCED PORTFOLIO

Date: May 5, 2004





SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.


INSTITUTIONAL PORTFOLIO -
PRIME CASH RESERVES PORTFOLIO
(FORMERLY INSTITUTIONAL RESERVES PORTFOLIO)


By:   /s/ R. Jay Gerken
      --------------------------
      R. Jay Gerken
      Chief Executive Officer of
INSTITUTIONAL PORTFOLIO -
PRIME CASH RESERVES PORTFOLIO
(FORMERLY INSTITUTIONAL RESERVES PORTFOLIO)


Date: May 5, 2004


     Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


By:      /s/ R. Jay Gerken
         --------------------------
         (R. Jay Gerken)
         Chief Executive Officer of
INSTITUTIONAL PORTFOLIO -
PRIME CASH RESERVES PORTFOLIO
(FORMERLY INSTITUTIONAL RESERVES PORTFOLIO)


Date: May 5, 2004


By:      /s/ ANDREW B. SHOUP
         --------------------------
         Chief Administrative Officer of
INSTITUTIONAL PORTFOLIO -
PRIME CASH RESERVES PORTFOLIO
(FORMERLY INSTITUTIONAL RESERVES PORTFOLIO)


Date: May 5, 2004