<PAGE>
Semi-Annual Report o February 28, 1998
[LOGO]
Tax Free Reserves
[Graphic Omitted]
MONEY MARKETS
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INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
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<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
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Portfolio Environment and Outlook 2
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Fund Facts 3
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Fund Performance 4
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CITIFUNDS TAX FREE RESERVES
Statement of Assets and Liabilities 5
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Statement of Operations 5
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Statement of Changes in Net Assets 6
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Financial Highlights 6
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Notes to Financial Statements 7
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TAX FREE RESERVES PORTFOLIO
Portfolio of nvestments 10
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Statement of Assets and Liabilities 17
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Statement of Operations 17
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Statement of Changes in Net Assets 18
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Financial Highlights 18
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Notes to Financial Statements 19
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The six-month period ended February 28, 1998 was a good one for most financial
assets, especially U.S. stocks and bonds. A remarkably resilient economy, low
rates of inflation and lower interest rates were primarily responsible for the
above-average returns provided by longer-term investments. However, shorter-term
assets did not share the benefits these positive economic influences provided.
As interest rates declined during the period, so did yields on most money market
securities.
Nonetheless, we are pleased with the performance of CitiFundsSM Tax Free
Reserves. Despite the difficult market environment for short-term tax-exempt
securities, the portfolio continued to provide shareholders with a competitive
level of income that is largely free from federal income taxes.
Among other highlights of the reporting period, your portfolio has changed
its name to CitiFunds Tax Free Reserves. The fund's investment objective and
management approach remain the same.
Finally, we would like to thank you for your continued confidence and
participation.
Sincerely,
/S/ Philip W. Coolidge
Philip W. Coolidge
President
March 20, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
SHORT-TERM INTEREST RATES GENERALLY DECLINED OVER THE PAST SIX MONTHS. At the
same time, the U.S. economy continued to grow in the late stages of one of the
longest expansions since World War II. Unlike previous economic cycles, however,
this one has been particularly notable for its persistently low inflation rate.
Inflation has remained benign despite strong economic growth and low
unemployment. As a result, fixed-income investors have grown increasingly
confident that inflation will not erode the future value of their principal and
income. They bid up the prices of bonds accordingly, and yields on money market
securities generally fell.
The tax-exempt bond market also responded during the six-month period to its
own unique influences. While changes in the yields of short-term tax-exempt
securities generally tracked those of comparable taxable securities,
supply-and-demand factors helped keep tax-exempt yields high relative to U.S.
Treasury bills and notes. First, demand for short-term investments was
relatively constrained because the stellar returns provided by stocks and
longer-term bonds provided little incentive for investors to seek the safety of
money market funds. In addition, the possibility of changes in the rules
governing corporate holdings of municipal bonds reduced business demand for
tax-exempt securities. Yet, the available supply of short-term tax-exempt
securities rose as municipalities came to the market to take advantage of low
interest rates, putting upward pressure on rates.
WE FOUND ATTRACTIVE INVESTMENT OPPORTUNITIES IN VARIABLE-RATE SECURITIES,
which were available with yields up to one percentage point higher than
comparable fixed-rate notes. Consequently, variable-rate notes comprised between
60% and 75% of the portfolio's assets on average during the six-month period.
Many municipalities used variable-rate securities to refinance their longer-term
debt, potentially enabling them to reduce their borrowing costs further if
interest rates continue to decline.
The portfolio's increased exposure to variable-rate securities caused its
average maturity to decline from about 50 days at the start of the six-month
period to as low as 35 days. Later in the period, we took advantage of technical
factors to purchase longer-dated tax-exempt notes at favorable rates of
interest, and the portfolio's average maturity rose to as much as 60 days. In
our view, our current "barbell" portfolio structure -- short-term variable-rate
securities on one end, longer-term fixed-rate notes on the other -- positions
the portfolio well for the future. If short-term tax-exempt yields fall further,
the longer-dated, fixed-rate holdings should help us maintain relatively high
yields. If interest rates rise, the portfolio's shorter-term, variable-rate
securities should help us participate in higher yields as they become available.
WE BELIEVE THAT MODESTLY LOWER SHORT-TERM INTEREST RATES ARE LIKELY.
Ultimately, however, we believe that the direction of tax-exempt money market
yields depends upon the U.S. economy and the nation's stock market. If the
economy slows, yields of short-term tax-exempt and taxable securities will
generally move lower. If slower economic growth causes a stock market
correction, investors may shift their assets to the short-term tax-exempt market
in order to avoid potential losses. In this case, higher demand for tax-exempt
securities may cause yields to decline further.
Whatever the next six months hold, we will continue to manage the portfolio
according to the approach we have followed for years. We intend to adjust the
average maturity in anticipation of changes in interest rates and shift assets
among the most attractive sectors of the tax-exempt marketplace. We fully expect
this strategy to provide competitive levels of federally tax-exempt income
commensurate with a stable principal value.
<PAGE>
FUND FACTS
FUND OBJECTIVE
Provide high levels of current income which is exempt from Federal income
taxes,* preservation of capital and liquidity.
INVESTMENT ADVISER, DIVIDENDS
TAX FREE RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
CAPITAL GAINS
COMMENCEMENT OF OPERATIONS Distributed annually, if any
August 31, 1984
BENCHMARKS
NET ASSETS AS OF 2/28/98 o Lipper Tax Exempt Money Market
$482.1 million Funds Average
o IBC General Tax Free
Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SIX ONE FIVE TEN
ALL PERIODS ENDED FEBRUARY 28, 1998 (Unaudited) MONTHS** YEAR YEARS* YEARS*
- --------------------------------------------------------------------------------
CitiFunds Tax Free Reserves 1.53% 3.12% 2.76% 3.63%
Lipper Tax Exempt Money Market Funds Average 1.52% 3.09% 2.76% 3.64%
*Average Annual Total Return
**Not Annualized
7-Day Yields
Annualized Current 2.89%
Effective 2.93%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized, the
income earned by the investment during that seven day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS TAX FREE RESERVES
VS. IBC GENERAL TAX FREE FUNDS AVERAGE
As illustrated, CitiFunds Tax Free Reserves generally provided a similar
annualized seven-day yield to that of a comparable IBC Money Fund Average, as
published in IBC Money Fund ReportTM, for the one-year period.
CitiFunds IBC General
Tax Free Tax Free Funds
Reserves Average
--------- --------------
3/4/97 2.83% 2.82%
3/11/97 2.70% 2.61%
3/18/97 2.69% 2.56%
3/25/97 2.82% 2.75%
4/1/97 2.92% 2.89%
4/8/97 2.87% 2.80%
4/15/97 2.96% 2.90%
4/22/97 3.18% 3.14%
4/29/97 3.52% 3.51%
5/6/97 3.54% 3.43%
5/13/97 3.39% 3.33%
5/20/97 3.35% 3.30%
5/27/97 3.29% 3.25%
6/3/97 3.24% 3.20%
6/10/97 3.01% 3.00%
6/17/97 3.21% 3.19%
6/24/97 3.35% 3.29%
7/1/97 3.45% 3.43%
7/8/97 3.13% 3.04%
7/15/97 2.93% 2.92%
7/22/97 3.06% 3.04%
7/29/97 3.09% 3.06%
8/5/97 3.05% 3.04%
8/12/97 2.91% 2.91%
8/19/97 2.90% 2.92%
8/26/97 2.85% 2.86%
9/2/97 2.84% 2.90%
9/9/97 2.91% 2.95%
9/16/97 3.03% 3.06%
9/23/97 3.19% 3.17%
9/30/97 3.34% 3.29%
10/7/97 3.18% 3.11%
10/14/97 3.08% 3.05%
10/21/97 3.07% 3.05%
10/28/97 3.09% 3.09%
11/4/97 3.09% 3.09%
11/11/97 3.11% 3.12%
11/18/97 3.24% 3.21%
11/25/97 3.31% 3.24%
12/2/97 3.29% 3.23%
12/9/97 3.10% 3.01%
12/16/97 3.13% 3.10%
12/23/97 3.26% 3.22%
12/30/97 3.37% 3.34%
1/6/98 3.24% 3.26%
1/13/98 2.93% 2.88%
1/20/98 2.89% 2.87%
1/27/98 2.90% 2.92%
2/3/98 2.98% 3.00%
2/10/98 2.81% 2.70%
2/17/98 2.66% 2.61%
2/24/98 2.77% 2.78%
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.
<PAGE>
CITIFUNDS TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (Unaudited)
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ASSETS:
Investment in Tax Free Reserves Portfolio, at value (Note 1) $483,340,034
Receivable for shares of beneficial interest sold 125
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Total assets 483,340,159
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LIABILITIES:
Payable for shares of beneficial interest repurchased 146,616
Dividends payable 862,039
Payable to affiliate--Shareholder Servicing Agents' fees (Note 3B) 91,952
Accrued expenses and other liabilities 155,647
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Total liabilities 1,256,254
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NET ASSETS for 482,101,235 shares of beneficial
interest outstanding $482,083,905
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NET ASSETS CONSIST OF:
Paid-in capital $482,101,235
Accumulated net realized loss on investments (17,330)
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Total $482,083,905
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NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
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CITIFUNDS TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (Unaudited)
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INVESTMENT INCOME (Note 1A):
Income from Tax Free Reserves Portfolio $8,431,275
Allocated expenses from Tax Free Reserves Portfolio (340,622)
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$8,090,653
EXPENSES:
Shareholder Servicing Agents' fees (Note 3B) 562,991
Administrative fees (Note 3A) 562,991
Distribution fees (Note 4) 225,197
Shareholder reports 13,395
Custodian fees 11,035
Registration fees 8,894
Transfer agent fees 7,873
Auditing fees 7,550
Trustee fees 6,476
Legal fees 5,350
Miscellaneous 14,361
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Total expenses 1,426,113
Less aggregate amounts waived by Administrator
and Distributor (Notes 3A and 4) (294,439)
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Net expenses 1,131,674
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Net investment income 6,958,979
NET REALIZED GAIN ON INVESTMENTS FROM TAX FREE RESERVES
PORTFOLIO 9,348
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,968,327
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See notes to financial statements
<PAGE>
CITIFUNDS TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 28, 1998 YEAR ENDED
(Unaudited) AUGUST 31, 1997
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INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 6,958,979 $ 12,138,295
Net realized gain on investments 9,348 4,286
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Net increase in net assets from operations 6,968,327 12,142,581
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DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (6,958,019) (12,138,295)
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TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
AT NET ASSET VALUE OF $1.00 PER
Share (Note 5):
Proceeds from sale of shares 477,995,176 785,995,599
Net asset value of shares issued to
shareholders from reinvestment of
dividends 1,318,643 2,758,764
Cost of shares repurchased (419,723,491) (737,624,515)
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Net increase in net assets from transactions
in shares of beneficial interest 59,590,328 51,129,848
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NET INCREASE IN NET ASSETS 59,600,636 51,134,134
NET ASSETS:
Beginning of period 422,483,269 371,349,135
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End of period $482,083,905 $422,483,269
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<PAGE>
<TABLE>
<CAPTION>
CITIFUNDS TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1998 --------------------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.01523 0.03004 0.02973 0.03197 0.02002 0.02014
Less dividends from net
investment income (0.01523) (0.03004) (0.02973) (0.03197) (0.02002) (0.02014)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $482,084 $422,483 $371,349 $392,172 $232,333 $227,296
Ratio of expenses to
average net assets* 0.65%+ 0.65% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income
to average net assets* 3.09%+ 3.01% 2.97% 3.22% 1.99% 2.01%
Total return 1.53%** 3.05% 3.01% 3.24% 2.02% 2.03%
Note: If agents of the Fund and agents of Tax Free Reserves Portfolio had not waived a portion of their fees during the periods
indicated, the net investment income per share and the ratios would have been as follows:
Net investment income per share $0.01385 $0.02715 $0.02693 $0.02929 $0.01730 $0.01723
RATIOS:
Expenses to average net assets* 0.93%+ 0.94% 0.93% 0.92% 0.92% 0.94%
Net investment income to
average net assets* 2.81%+ 2.72% 2.69% 2.95% 1.72% 1.72%
- ---------------------------------------------------------------------------------------------------------------------------------
* Includes the Fund's share of Tax Free Reserve Portfolio's allocated expenses
+ Annualized
** Not Annualized.
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Tax Free Reserves (the "Fund") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end,
management investment company. Effective January 2, 1998 Landmark Tax Free
Reserves changed its name to CitiFunds Tax Free Reserves. The Fund invests all
of its investable assets in Tax Free Reserves Portfolio (the "Portfolio"), a
management investment company for which Citibank, N.A. ("Citibank") serves as
investment adviser. CFBDS, Inc. ("CFBDS"), (formerly Landmark Funds
Broker-Dealer Services, Inc.) acts as the Fund's Administrator and Disributor.
Citibank also serves as Sub-Administrator and makes Fund shares available to
customers as Shareholder Servicing Agent.
The Fund seeks to achieve its investment objective of a high level of current
income which is exempt from federal income taxes, consistent with preservation
of capital and liquidity, by investing all of its investable assets in the
Portfolio, an open-end, non-diversified management investment company having the
same investment objective as the Fund. The value of such investment reflects the
Fund's proportionate interest (approximately 87.8% at February 28, 1998) in the
net assets of the Portfolio.
The preparation of financial statements in accordance with 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 financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The significant accounting policies consistently followed by the Fund are as
follows:
A. Investment Income The Fund earns income, net of Portfolio expenses, daily
on its investment in the Portfolio.
B. Federal Taxes The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its net investment income. Accordingly, no
provision for federal income or excise tax is necessary. At August 31, 1997, the
Fund, for federal income tax purposes, had a capital loss carryover of $27,638,
of which $4,677 will expire on August 31, 1999, $1,494 will expire on August 31,
2002 and $21,467 will expire on August 31, 2005. Such capital loss carryovers
will reduce the Fund's taxable income arising from future net realized gain on
investment transactions, if any, to the extent permitted by the Internal Revenue
Code, and thus will reduce the amount of distributions to shareholders which
would otherwise be necessary to relieve the Fund of any liability for federal
income tax. Dividends paid by the Fund from net interest received on tax-exempt
money market instruments are not includable by shareholders as gross income for
federal income tax purposes because the Fund intends to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued after
August 7, 1986, may be considered a tax preference item to shareholders.
C. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 12:00
noon, Eastern standard time, and all of the net income of the Fund so determined
is declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
3. ADMINISTRATIVE SERVICES PLAN The Fund has adopted an Administrative Services
Plan which provides that the Fund may obtain the services of an Administrator,
one or more Shareholder Servicing Agents, and other Servicing Agents, and may
enter into agreements providing for the payment of fees for such services. Under
the Fund's Administrative Services Plan, the aggregate of the fee paid to the
Administrator from the Fund, the fees paid to the Shareholder Servicing Agents
from the Fund under such plan and the Basic Distribution Fee paid from the Fund
to the Distributor under the Distribution Plan may not exceed 0.60% of the
Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee, as compensation for
overall administrative services and general office facilities, which is computed
at the annual rate of 0.25% of the Fund's average daily net assets.
Administrative fees amounted to $562,991, of which $196,395 was voluntarily
waived for the six months ended February 28, 1998. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
CFBDS as from time to time is agreed to by CFBDS and Citibank. The Fund 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 Fund
from the Administrator or its affiliates. Certain of the officers and a Trustee
of the Fund are officers and a director of the Administrator or its affiliates.
B. Shareholder Servicing Agent Fees The Fund has entered into shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which
that Shareholder Servicing Agent acts as an agent for its customers and provides
other related services. For their services, each Shareholder Servicing Agent
receives a fee from the Fund, which may be paid periodically, but may not
exceed, on an annualized basis, an amount equal to 0.25% of the average daily
net assets of the Fund represented by shares owned during the period for which
payment is being made by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. Shareholder Servicing Agent fees amounted to
$562,991 for the six months ended February 28, 1998.
4. DISTRIBUTION FEE The Fund has adopted a Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, in which the Fund
compensates the Distributor at an annual rate not to exceed 0.10% of the Fund's
average daily net assets. The Distributor may also receive an additional fee
from the Fund at an annual rate not to exceed 0.10% of the Fund's average daily
net assets in anticipation of, or as reimbursement for, advertising expenses
incurred by the Distributor in connection with the sale of shares of the Fund.
No payments of such additional fees have been made during the period.
Distribution fees amounted to $225,197, of which $98,044 was voluntarily waived
for the six months ended February 28, 1998.
5. SHARE OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional Shares of Beneficial Interest
(without par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $286,924,493 and $235,193,672, respectively, for the
six months ended February 28, 1998.
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
TAX-EXEMPT COMMERCIAL PAPER -- 1.8%
- --------------------------------------------------------------------------------
Dallas, Texas,
3.50% due 4/07/98 $ 3,806 $ 3,806,000
Houston, Texas,
Airport System Revenue,
AMT, 3.60% due 6/08/98 3,000 3,000,000
Venango, Pennsylvania,
3.65% due 4/06/98 1,300 1,300,000
Venango, Pennsylvania,
Industrial Development
Revenue,
3.65% due 4/06/98 2,000 2,000,000
------------
10,106,000
------------
GENERAL OBLIGATION BONDS
AND NOTES -- 6.0%
- --------------------------------------------------------------------------------
California School Cash
Reserve Notes,
4.75% due 7/02/98 4,000 4,011,578
Chicago, Illinois,
3.55% due 10/29/98 3,900 3,900,000
Chicago, Illinois,
3.55% due 2/04/99 3,000 3,000,000
Joshua, Texas Independent
School District,
6.125% due 2/15/99 4,710 4,822,329
State of Utah General
Obligations,
3.10% due 3/10/98 2,000 2,000,000
State of Utah General
Obligations,
3.30% due 3/11/98 2,750 2,750,000
State of Utah General
Obligations, AMT,
3.61% due 7/01/22 3,330 3,330,000
Texas State,
3.50% due 4/01/20 9,440 9,440,100
------------
33,254,007
------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS) -- 18.7%
- --------------------------------------------------------------------------------
Alabama State,
5.70% due 3/01/98 1,000 1,000,000
Anchorage, Alaska,
6.80% due 7/01/98 1,000 1,009,773
Chicago, Illinois, Metropolitan
Water Reclamation District,
7.25% due 1/01/99 1,200 1,234,314
Clackmas County, Oregon,
Hospital Facilities Authority,
3.75 % due 4/01/98 3,200 3,199,967
Clark County, Kentucky,
Pollution Control Revenue,
3.70% due 4/15/98 2,400 2,400,000
Fort Smith, Arizona,
Sales and Use Tax,
4.00% due 12/01/98 480 480,000
Hawaii State Department
of Budget and Finance
Revenue,
3.75% due 3/01/98 4,100 4,100,000
Kentucky Assets and Liabilities,
3.55% due 6/04/98 3,000 3,000,000
Lower Colorado River
Authority,
3.45% due 5/21/98 3,300 3,300,000
Maryland State Department
of Transportation
Construction,
6.375% due 11/01/98 2,000 2,036,910
Michigan State, Michigan,
4.50% due 9/30/98 2,500 2,511,260
Michigan State,
Housing Development
Authority, AMT,
3.625% due 3/09/98 4,000 4,000,000
Milwaukee, Wisconsin, Metro
Sewer District,
6.50% due 10/01/98 1,000 1,016,422
Minnesota Water Pollution
Control Revenue,
5.00% due 3/01/99 2,170 2,199,584
Nashville, Tennessee, Health
and Educational Facilities,
3.75% due 1/15/99 4,000 4,000,000
New Berlin, Wisconsin,
4.50% due 12/01/98 1,105 1,111,019
Nevada State,
9.70% due 5/01/98 2,800 2,827,208
Newport News, Virginia,
6.875 % due 12/01/98 1,700 1,778,744
Oklahoma State Water
Resource Board State
Loan Revenue,
3.75% due 3/02/98 12,700 12,700,000
Ohio State Public Facilities
Authority,
4.50% due 11/01/98 5,000 5,029,188
Ohio State Public Facilities
Authority,
5.00% due 11/01/98 1,000 1,008,438
Port Seattle, Washington,
4.60% due 4/01/98 1,000 1,000,669
Reno, Nevada,
Hospital Revenue,
7.10% due 7/01/98 500 505,479
Rhode Island State
Resource Recovery,
4.25% due 7/31/98 1,000 1,001,195
San Antonio, Texas
6.20% due 2/01/99 2,000 2,046,896
San Antonio, Texas
7.00% due 2/01/99 2,000 2,060,905
Scottsdale, Arizona,
Water and Sewer Revenue,
7.25% due 7/01/98 425 429,463
Sikeston, Missouri,
Electric Revenue Authority,
3.60% due 6/17/98 10,098 10,098,000
South Dakota Education
Loans Inc., AMT,
3.70% due 5/06/98 5,000 5,000,000
Texas State,
8.10% due 6/01/98 1,000 1,010,471
Texas State,
3.60 % due 6/17/98 4,950 4,950,000
Utah State Building
Ownership Authority,
7.50% due 8/15/98 1,000 1,017,108
Virginia State,
5.80% due 5/15/98 1,165 1,169,874
Virginia State,
6.60% due 6/01/98 1,800 1,848,030
Washington State,
Housing Finance
Community, AMT,
3.90% due 12/15/98 1,000 1,000,000
Wichita, Kansas,
4.25% due 8/27/98 4,000 4,011,580
York County, South Carolina,
Pollution Control,
3.70% due 3/15/98 5,900 5,899,982
------------
102,992,479
------------
REVENUE, TAX, BOND AND TAX
REVENUE ANTICIPATION NOTES--17.7%
- --------------------------------------------------------------------------------
Butts County, Georgia,
School District,
3.85% due 9/01/98 1,390 1,390,000
Charlotte, North Carolina,
5.50% due 5/01/98 1,000 1,002,903
Charlotte, North Carolina,
Certificates of Participation,
4.00% due 9/01/98 1,000 1,002,201
Chicago, Illinois, Public Building
Commercial Revenue,
7.75% due 1/01/99 1,530 1,608,341
Colorado Springs, Colorado,
Utilities Revenue,
5.40% due 11/15/98 1,315 1,330,817
East Stroudsburg, Pennsylvania,
4.50% due 11/15/98 1,000 1,005,950
Fairfax County, Virginia,
5.375% due 4/01/98 3,750 3,755,493
Fairfax County, Virginia,
5.90% due 4/01/98 830 831,465
Fairfax County, Virginia,
5.00% due 6/01/98 2,000 2,006,131
Georgia State,
5.80% due 3/01/98 1,980 1,980,000
Hamilton, Ohio,
Electric System Revenue,
8.00% due 10/15/98 400 418,497
Harris County, Texas,
7.50% due 3/01/98 1,000 1,000,000
Honolulu, Hawaii,
6.00% due 4/01/98 1,000 1,001,771
Houston, Texas,
6.50% due 2/01/99 1,000 1,026,163
Idaho State, Tax Anticipation Notes,
4.625% due 6/30/98 1,500 1,503,536
Inland, Florida,
Protection Financing Corp.,
3.55% due 6/12/98 4,320 4,320,000
Inland, Florida,
Protn. Financing Corp.,
4.00% due 7/01/98 4,000 4,006,396
Iowa State School Cash
Anticipation Program,
4.50% due 6/26/98 3,000 3,006,426
Iowa State School Cash
Anticipation Program,
4.25% due 1/28/99 5,970 6,005,688
Jonesboro, Arkansas,
Sale and Use Tax,
3.80% due 5/15/98 4,000 4,000,000
Jonesboro, Arkansas, Sale
and Use Tax,
3.90% due 11/15/98 1,000 1,000,000
Lafayette, Louisiana,
Public Import Sales Tax,
8.00% due 3/01/98 2,000 2,040,000
Louisiana Public Facilities
Authority,
4.40% due 12/10/98 4,000 4,017,011
Maine State,
4.00% due 6/29/98 3,000 3,004,888
Maine State,
4.50% due 7/01/98 2,000 2,004,893
Massachusetts State Health
and Educational Facilities,
7.75% due 6/01/98 725 746,199
Mecklenburg County,
North Carolina,
6.20% due 1/01/99 1,000 1,021,128
Minnesota State,
6.80% due 8/01/98 2,000 2,027,581
Montana State,
Tax and Revenue
Anticipation Notes,
4.25% due 6/30/98 1,000 1,002,436
Montana State, Tax and
Revenue Anticipation
Notes, 4.50% due 6/30/98 3,000 3,006,529
New Mexico State,
4.50% due 6/30/98 1,750 1,755,220
New Mexico State Severance
Tax, 5.375% due 7/01/98 4,800 4,829,517
Rio Grande City, Texas,
Construction Industrial
Development,
4.50% due 8/15/98 435 435,974
Salem, Ohio, City School
District, Bond Anticipation
Notes, 4.00% due 3/05/98 1,350 1,350,010
St. Joseph County, Indiana,
Hospital Revenue,
4.25% due 8/15/98 1,565 1,569,563
Texas State,
7.20% due 8/01/98 1,000 1,014,843
Texas State, Tax and Revenue
Anticipation Notes,
4.75% due 8/31/98 5,300 5,328,651
University of Missouri,
4.25% due 6/30/98 7,000 7,014,946
Virginia State Transportation
Board Revenue,
7.80% due 3/01/98 1,315 1,341,300
Virginia State Transportation
Board Revenue,
6.00% due 5/15/98 2,370 2,427,441
Wake County, North Carolina,
4.40% due 3/01/98 150 150,000
Washington State,
4.20% due 8/01/98 3,000 3,005,420
Washington Suburban
Sanitation District,
7.00% due 12/01/98 2,500 2,582,942
Western Minnesota
Municipal Power Agency
Supply, 10.25% due 1/01/99 600 631,684
Wisconsin State,
6.20% due 5/01/98 1,000 1,003,904
Wisconsin State,
7.10% due 5/01/98 590 598,922
------------
97,112,780
------------
VARIABLE RATE DEMAND NOTES* -- 55.0%
- --------------------------------------------------------------------------------
Alexandria, Virginia, Industrial
Development Authority,
due 7/01/26 1,400 1,400,000
Arapahoe County, Colorado,
Revenue Authority,
due 7/01/07 2,125 2,125,000
Beloit, Kansas, Industrial
Development Authority,
due 12/01/16 4,000 4,000,000
Bexar County, Texas, Health
Facilities Development,
due 7/11/11 960 960,000
Bexar County, Texas, Housing
Finance Authority,
due 9/15/26 1,900 1,900,000
Capital Projects Financial
Authority Revenue,
due 8/01/17 1,700 1,700,000
Capital Projects Financial
Authority Revenue,
due 7/01/27 3,300 3,300,000
Carrollton, Georgia, Payroll
Development Authority,
due 3/01/15 1,750 1,750,000
Carthage, Missouri, Industrial
Development Authority
Revenue, due 4/01/07 2,000 2,000,000
Carthage, Missouri, Industrial
Development Authority
Revenue, AMT,
due 9/01/30 2,000 2,000,000
Cherokee County, South
Carolina, Industrial Revenue,
AMT, due 8/01/19 200 200,000
Chicago, Illinois, Industrial
Development Revenue,
due 8/01/09 2,500 2,500,000
Clarksville, Tennessee,
Public Building Authority,
due 10/01/25 1,000 1,000,000
Clayton County, Georgia,
Housing Authority,
due 1/01/21 865 865,000
Clipper Tax Exempt Trust,
AMT, due 3/01/15 3,400 3,400,000
Clipper Tax Exempt Trust,
AMT, due 3/01/16 3,500 3,500,000
Colorado Housing Finance
Authority, due 2/15/28 2,000 2,000,000
Columbus, Georgia,
Housing Authority Revenue,
due 11/01/17 850 850,000
Columbus, Indiana,
Economic Development
Revenue, AMT,
due 1/01/00 1,040 1,040,000
Connecticut State, Housing
Finance Authority,
due 5/15/18 500 500,000
Crossett, Arizona,
Pollution Control Revenue,
due10/01/98 3,500 3,500,000
Dauphin County, Pennsylvania,
General Authority Revenue,
due 10/01/27 5,000 5,000,000
De Kalb County, Georgia,
Multifamily Housing Revenue,
due 6/01/25 4,300 4,300,000
Director State, Nevada,
Department Of Business,
AMT, due 8/01/20 955 955,000
District of Columbia, Revenue,
due 10/01/15 500 500,000
East Baton Rouge, Louisiana,
Pollution Control Revenue,
due 10/01/99 2,200 2,200,000
Effingham County, Georgia,
Development Authority,
due 4/01/37 400 400,000
Eloy, Arizona, Industrial
Development Authority
Revenue, AMT,
due 8/01/20 1,000 1,000,000
Farmington, New Mexico,
Pollution Control Revenue,
due 6/01/23 10,995 10,995,000
Fayetteville, Arkansas,
Industrial Development,
AMT, due 12/01/04 1,100 1,100,000
Forsyth County, Georgia,
Industrial Development
Revenue, due 1/01/07 2,000 2,000,000
Fort Wayne, Indiana,
Economic Development
Revenue, due 12/01/03 1,000 1,000,000
Fort Wayne, Indiana,
Hospital Authority Revenue,
due 1/01/16 1,000 1,000,000
Fox Lake, Wisconsin,
Redevelopment Authority
Revenue, AMT,
due 6/01/09 1,760 1,760,000
Fulton County, Georgia,
Development Authority,
due 12/01/12 5,000 5,000,000
Fulton County, Georgia,
Development Authority
Revenue, due 2/01/18 2,000 2,000,000
Fulton County, Georgia,
Industrial Development
Authority, AMT,
due 6/01/27 500 500,000
Gage County, Nevada,
Industrial Development
Revenue, AMT,
due 10/10/17 1,000 1,000,000
Georgia State Hospital
Finance Authority Revenue,
due 3/01/01 2,748 2,748,000
Germantown, Wisconsin,
Industrial Development
Authority, due 8/01/11 955 955,000
Gila County, Arizona, Industrial
Development Authority,
due 11/01/25 1,800 1,800,000
Gordon County, Georgia,
Industrial Development
Authority Revenue,
due 8/01/17 1,000 1,000,000
Grant Parish, Louisiana,
Industrial Development
Revenue, AMT,
due 10/01/21 1,000 1,000,000
Green River, Wyoming,
Pollution Control Revenue,
AMT, due 10/01/18 400 400,000
Gulf Coast, Texas, Industrial
Development Authority,
AMT, due 5/01/24 300 300,000
Gwinett County, Georgia,
Industrial Development
Revenue, due 6/01/05 1,500 1,500,000
Gwinett County, Georgia,
Industrial Development
Revenue, due 3/01/17 1,000 1,000,000
Harris County, Texas, Health
Facilities Development,
due 2/15/27 2,200 2,200,000
Houston, Texas, Water and
Sewer Revenue,
due 12/01/25 3,535 3,535,000
Illinois Health Facilities
Authority Revenue,
due 5/01/11 2,700 2,700,000
Illinois Development,
due 11/01/17 2,725 2,725,000
Jackson, Mississippi, Industrial
Development Revenue,
due 12/01/15 2,650 2,650,000
Jackson County, Mississippi,
Pollution Control Revenue,
due 6/01/23 1,200 1,200,000
Jefferson Parish, Louisiana,
Hospital District 2,
due 12/01/15 2,700 2,700,000
Kentucky State Turnpike
Authority Resource
Recovery, due 7/01/98 6,000 6,000,000
Kohler, Wisconsin, Industrial
Sewer Facilities, AMT,
due 9/01/17 4,000 4,000,000
Louisa County, Virginia,
Industrial Development
Authority, due 1/01/20 900 900,000
Macon, Trust Receipts Pooled
Certificates, due 10/01/32 5,000 5,000,000
Macon, Trust Receipts Pooled
Variable Rate, AMT,
due 2/05/30 2,695 2,695,000
Macon, Trust Receipts Pooled
Variable Rate, AMT,
due 12/15/30 700 700,000
Madison, Wisconsin,
Community Development
Authority, due 6/01/22 1,125 1,125,000
Mason County, Kentucky,
Pollution Control,
due 10/15/14 2,950 2,950,000
Massachusetts State Turnpike
Authority, due 1/01/17 10,800 10,800,000
Mississippi Home Corporation,
Single Family, due 11/01/29 3,305 3,305,000
Mississippi Home Corporation,
Single Family, AMT,
due 6/01/28 3,500 3,500,000
Moorhead, Minnesota, Solid
Waste Disposal, AMT,
due 4/01/12 3,000 3,000,000
Morgan Keegan Municipal
Productions, AMT
due 12/03/98 3,000 3,000,000
Morgan Keegan Municipal
Trust Receipts, AMT
due 5/01/29 2,900 2,900,000
Morgan Keegan Municipal
Trust Receipts, AMT
due 5/01/30 800 800,000
Morton, Illinois, Industrial
Development, AMT,
due 4/01/16 970 970,000
Murray County, Georgia,
Development Revenue,
AMT, due 9/01/17 1,000 1,000,000
Nash County, North Carolina,
due 12/01/14 1,000 1,000,000
Nashville, Tennessee,
due 5/15/25 6,450 6,450,000
New Hampshire State
Industrial Development
Authority, AMT,
due 1/01/18 1,325 1,325,000
New Hampshire Highway,
Educational and Health
Facilities, due 6/01/23 5,945 5,945,000
New Hanover County, North
Carolina, due 3/01/14 2,250 2,250,000
New Jersey Economic
Development Authority,
AMT, due 12/15/98 6,000 6,000,000
New York State Medical Care
Facilities Finance Authority,
due 8/15/22 4,400 4,400,000
New York State Thruway
Authority, General Revenue,
due 1/01/27 700 700,000
North Carolina Medical Care
Hospital Authority,
due 10/01/13 200 200,000
North Little Rock, Arkansas,
Health Facilities,
due 12/01/21 8,400 8,400,000
Oak Creek, Wisconsin,
Industrial Development
Authority, due 12/01/07 1,700 1,700,000
Ohio Housing Finance Agency
Revenue, AMT,
due 3/01/99 6,000 6,000,000
Orange County, Florida,
Industrial Development
Authority, due 1/01/11 450 450,000
Ossian, Indiana, Economic
Development Revenue,
AMT, due 12/01/23 200 200,000
Peoria, Illinois, Health Care
Facilities Revenue,
due 5/01/17 1,440 1,440,000
Person County, North
Carolina, Pollution Control
Authority, due 11/01/19 3,000 3,000,000
Philadelphia, Pennsylvania,
Airport Revenue,
due 6/15/10 3,915 3,915,000
Port Arthur, Texas, Navigation
District, due 10/01/24 300 300,000
Puttable Floating Option Tax
Exempt, due 10/01/32 17,185 17,185,000
Regional Transportation
District of Co.,
due 12/01/17 5,000 5,000,000
Rhode Island State Industrial
Facilities Corp.,
due 11/01/05 4,240 4,240,000
Rhode Island State Industrial
Facilities Corp., AMT,
due 6/01/05 4,400 4,400,000
Roswell, Georgia, Multifamily
Housing Authority,
due 8/01/27 2,500 2,500,000
Rutherford County, Tennessee,
Industrial Development,
AMT, due 12/01/03 1,500 1,500,000
Saline County, Nebraska,
Industrial Development
Revenue, AMT,
due 10/01/11 1,000 1,000,000
Savannah, Illinois, Industrial
Development Revenue,
due 6/01/04 600 600,000
Seattle, Washington, Municipal
Lighting and Power Revenue,
due 11/01/18 900 900,000
Sevier County, Tennessee, Public
Building Authority,
due 6/01/17 1,500 1,500,000
Sevier County, Tennessee,
Public Building Authority,
due 6/01/21 4,000 4,000,000
Shelby County, Tennessee,
due 12/01/10 11,725 11,725,000
South Carolina Jobs
Economic Development,
due 4/01/17 700 700,000
Southeastern Oklahoma
Industrial Development
Authority, due 6/01/16 3,400 3,400,000
St. Charles County, Missouri,
Industrial Development
Authority, due 12/01/07 1,000 1,000,000
St. Charles Parish, Louisiana,
Pollution Revenue,
due 3/01/24 2,400 2,400,000
Tarrant County,Texas, Health
Facilities Development,
due 2/15/17 6,300 6,300,000
Tarrant County,Texas, Health
Facilities Development,
due 11/15/26 980 980,000
Texas State, Department of
Housing and Community,
due 3/01/17 1,995 1,995,000
Texas State, Turnpike Authority,
due 1/01/23 3,000 3,000,000
Thornton, Colorado, Industrial
Development Revenue,
due 12/15/99 1,000 1,000,000
Tipton, Indiana, Economic
Development Revenue,
due 7/01/22 1,065 1,065,000
Traill County, North Dakota,
Industrial Development,
AMT, due 12/01/11 1,000 1,000,000
Traill County, North Dakota,
Industrial Development,
AMT, due 12/11/11 1,000 1,000,000
Uinta County, Wyoming,
Pollution Control Revenue,
due 12/01/22 700 700,000
Utah State Board of Regents,
due 11/01/25 900 900,000
Utah State Board of Regents,
AMT, due 11/01/31 500 500,000
Vermont Industrial
Development Authority,
AMT, due 12/01/11 800 800,000
Walton County, Georgia,
Industrial Building Authority,
due 10/01/00 1,050 1,050,000
Walton County, Georgia,
Industrial Building Authority,
due 10/01/02 1,080 1,080,000
Washington State Health Care
Facilities Revenue,
due 10/01/05 500 500,000
Washington State Health Care
Facilities Revenue,
due 1/01/23 200 200,000
Whitfield County, Georgia,
Development Authority
Revenue, AMT,
due 11/01/17 1,000 1,000,000
Winchester, Kentucky, Industrial
Building, due 10/01/18 1,700 1,700,000
------------
302,753,000
------------
TOTAL INVESTMENTS AT
AMORTIZED COST 99.2% 546,218,266
OTHER ASSETS, LESS
LIABILITIES 0.8 4,134,878
----- ------------
NET ASSETS 100.0% $550,353,144
----- ------------
AMT-Subject to Alternative Minimum Tax
* Variable rate demand notes have a demand feature under which the fund could
tender them back to the issuer on no more than 7 day's notice.
See notes to financial statements
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost and value (Note 1A) $546,218,266
Cash 101,330
Interest receivable 5,146,006
- --------------------------------------------------------------------------------
Total assets 551,465,602
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 1,007,075
Payable to affiliate--Investment Advisory fees (Note 2A) 42,307
Accrued expenses and other liabilities 63,076
- --------------------------------------------------------------------------------
Total liabilities 1,112,458
- --------------------------------------------------------------------------------
Net Assets 550,353,144
- --------------------------------------------------------------------------------
REPRESENTED BY:
Capital paid-in for beneficial interests $550,353,144
- --------------------------------------------------------------------------------
TAX FREE RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $9,402,995
- --------------------------------------------------------------------------------
EXPENSES:
Investment Advisory fees (Note 2A) $ 503,609
Administrative fees (Note 2B) 125,902
Custodian fees 94,671
Auditing fees 10,200
Trustee fees 6,631
Legal fees 5,480
Miscellaneous 8,787
- --------------------------------------------------------------------------------
Total expenses 755,280
Less aggregate amounts waived by Investment
Advisor and Administrator (Notes 2A and 2B) (373,406)
Less fees paid indirectly (Note 1D) (1,850)
- --------------------------------------------------------------------------------
NET EXPENSES 380,024
- --------------------------------------------------------------------------------
Net investment income $9,022,971
NET REALIZED GAIN ON INVESTMENTS 10,547
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $9,033,518
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED
FEBRUARY 28, 1998 YEAR ENDED
(Unaudited) AUGUST 31, 1997
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $9,022,971 $14,529,341
Net realized gain on investments 10,547 4,286
- --------------------------------------------------------------------------------
Increase in net assets from operations 9,033,518 14,533,627
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 362,470,690 574,845,460
Value of withdrawals (304,780,838) (477,920,393)
- --------------------------------------------------------------------------------
Net increase in net assets from capital
transactions 57,689,852 96,925,067
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 66,723,370 111,458,694
NET ASSETS:
Beginning of period 483,629,774 372,171,080
- --------------------------------------------------------------------------------
End of period $550,353,144 $483,629,774
- --------------------------------------------------------------------------------
TAX FREE RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1998 ------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $550,353 $483,630 $372,171 $394,222 $233,108 $277,593
Ratio of expenses to
average net assets 0.15%+ 0.19% 0.30% 0.32% 0.31% 0.31%
Ratio of net investment income to
average net assets 3.57%+ 3.46% 3.31% 3.55% 2.33% 2.35%
- -----------------------------------------------------------------------------------------------------------
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees during the periods indicated and the
expenses were not reduced for fees paid indirectly for the years after August 31, 1995, the ratios would have been as
follows:
RATIOS:
Expenses to average net assets 0.30%+ 0.31% 0.32% 0.32% 0.32% 0.33%
Net investment income
to average net assets 3.42%+ 3.35% 3.29% 3.55% 2.32% 2.32%
- -----------------------------------------------------------------------------------------------------------
+ Annualized
</TABLE>
See notes to financial statements
<PAGE>
TAX FREE RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Tax Free Reserves Portfolio (the "Portfolio")
is registered under the Investment Company Act of 1940, as amended, as a
no-load, non-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.
CFBDS, Inc. ("CFBDS"), (formerly Landmark Funds Broker-Dealer Services, Inc.)
acts as the Portfolio's Administrator. Citibank, N.A. ("Citibank") acts as the
Investment Adviser.
The preparation of financial statements in accordance with 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, which the Trustees have determined in good faith constitutes fair value.
The Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.
B. Investment Income and Expenses Investment income consists of interest
accrued and discount earned (including both original issue and market discount),
adjusted for amortization of premium, on the investments of the Portfolio.
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 Fund's custodian bank calculates its fees based
on the Fund'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 Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
E. Other Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
2. INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE
A. Investment Advisory Fee The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $503,609,
of which $247,504 was voluntarily waived for the six months ended February 28,
1998. The investment advisory fee is computed at the annual rate of 0.20% of the
Portfolio's average daily net assets.
B. Administrative Fee Under the terms of an Administrative Services
Agreement, the administrative fee payable to the Administrator, as compensation
for overall administrative services and general office facilities, is computed
at the annual rate of 0.05% of the Portfolio's average daily net assets and
amounted to $125,902, all of which was voluntarily waived for the six months
ended February 28, 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 of the officers and a Trustee of the Portfolio are
officers and a director of the Administrator or its affiliates.
3. INVESTMENT TRANSACTIONS Purchases, and maturities and sales of money market
instruments, exclusive of securities purchased subject to repurchase agreements,
aggregated $859,113,045 and $815,200,804, respectively, for the six months ended
February 28, 1998.
4. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1998, for federal income tax purposes, amounted
to $546,218,266.
5. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on 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 February 28, 1998, the commitment fee allocated to the Portfolio was $899.
Since the line of credit was established, there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John. R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
(OF TAX FREE RESERVES PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
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