Annual Report o August 31, 1999
CitiFunds(sm)
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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 6
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Statement of Changes in Net Assets 7
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Financial Highlights 8
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Notes to Financial Statements 9
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Independent Auditors' Report 11
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TAX FREE RESERVES PORTFOLIO
Portfolio of Investments 12
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Statement of Assets and Liabilities 20
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Statement of Operations 20
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Statement of Changes in Net Assets 21
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Financial Highlights 21
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Notes to Financial Statements 22
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Independent Auditors' Report 24
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
Despite the volatility of the financial markets over the past twelve months,
money market securities once again provided competitive returns for shareholders
seeking income with capital preservation. Economic conditions during the
reporting period were generally characterized by strong growth coupled with low
inflation. However, many forward-looking investors were alternately concerned
over the past year that the economy might either be deteriorating or growing too
quickly. Those who sought the safety of money market funds were largely
unaffected by the volatility of the stock and bond markets caused by changing
market conditions and shifting investor views.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFundsSM Tax Free Reserves with the goal of achieving its
investment objectives: providing high levels of current income exempt from
federal income taxes, preservation of capital and liquidity.
This annual report reviews the Fund's investment activities and performance
during the twelve months ended August 31, 1999, and provides a summary of
Citibank's perspective on and outlook for the tax-exempt money market securities
marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
September 15, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST YEAR HAS BEEN AN EVENTFUL ONE FOR THE U.S. ECONOMY AND FINANCIAL
MARKETS. Between September 1, 1998 and August 31, 1999, the period that
coincides with CitiFundsSM Tax Free Reserves' fiscal year, the U.S. economy
underwent a full interest-rate cycle. When the reporting period began, interest
rates were declining sharply in response to the currency and credit crisis that
began in Asia, spread to Russia and threatened Latin America. Many U.S.
investors were concerned that economic weakness abroad might derail the domestic
economy. In response, the Federal Reserve Board (the "Fed") and other central
banks throughout the world reduced short-term interest rates in an attempt to
stimulate global economic growth. As a result, interest rates and yields of most
money market instruments declined over the last four months of 1998.
However, the first eight months of 1999 reflected dramatically different
economic conditions. When it became apparent early in the year that the worst of
the global financial crisis was over, many investors' concerns about an economic
slowdown eased. In fact, the U.S. economy was actually stronger than most
investment professionals expected, and evidence quickly emerged that it might be
growing at unsustainable rates. This unexpectedly robust growth triggered fears
among fixed-income investors that inflation might accelerate beyond its
prevailing low levels. Tight labor markets and rising commodities prices lent
credence to this view. In response, the Fed raised short-term interest rates
twice during the summer of 1999, effectively offsetting most of the rate cuts it
had implemented last fall.
IN THIS ENVIRONMENT, TAX-EXEMPT MONEY MARKET YIELDS GENERALLY ROSE ALONG WITH
INTEREST RATES. However, tax-exempt money market yields tended to rise less than
yields of taxable money market instruments, primarily because of different
supply-and-demand influences in the two markets. While issuance from
corporations in the taxable market remained robust, there was a relative
shortage of tax-exempt instruments. The strong economy had enabled many states
and municipalities to improve their fiscal operations, reducing their need to
borrow in order to cover short-term deficits. Yet, demand for tax-exempt money
market instruments remained high from individuals and institutions seeking to
minimize their tax liabilities. The combination of low supply and strong demand
helped constrain the rise of tax-exempt yields relative to taxable yields.
The relative shortage of municipal notes made it more difficult for the
Fund's managers to find high-yielding opportunities in high quality, highly
liquid instruments. The Fund's management team found such opportunities
primarily in Variable Rate Demand Notes (VRDNs), which are short-term
instruments that are securitized and issued by investment banks. During the
first seven months of 1999, VRDNs comprised roughly 70% of total portfolio
assets. However, toward the end of the reporting period, even VRDNs were in
relatively short supply because of decreased issuance. In fact, despite higher
interest rates, the yields of VRDNs with daily or weekly maturities were
modestly lower at the end of the reporting period than they were at the
beginning.
2
<PAGE>
By focusing primarily on VRDNs, the Fund's managers were able to gradually
reduce its weighted average maturity to as low as 35 days. In a rising interest
rate environment, this maturity stance enabled the investment team to have funds
available for higher yielding instruments as they became available. The managers
also strategically managed the portfolio's average duration in response to
short-term technical influences, such as temporary changes in supply and demand.
Looking forward, the investment team believes that the Fed's shift to higher
interest rates should help ease investors' concerns regarding the possibility of
an overheated economy and rising inflation. Accordingly, the Fund's managers are
monitoring market conditions carefully to identify opportunities to take
advantage of interest-rate changes.
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.
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
August 31, 1984 Distributed annually, if any
NET ASSETS AS OF 8/31/99 BENCHMARKS**
$489.9 million o Lipper Tax Exempt Money Market
Funds Average
o IBC Financial Data General Tax Free
Money Market Funds Average
*A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
**The Lipper Funds Average and IBC Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
CITIFUNDS TAX FREE RESERVES
FUND PERFORMANCE
TOTAL RETURNS
ONE FIVE TEN
ALL PERIODS ENDED AUGUST 31, 1999 YEAR YEARS* YEARS*
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CitiFunds Tax Free Reserves 2.66% 3.01% 3.26%
Lipper Tax Exempt Money Market Funds Average 2.63% 3.01% 2.91%
* Average Annual Total Return
7-DAY YIELDS
Annualized Current 2.65%
Effective 2.69%
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.
IMPORTANT TAX INFORMATION--For the fiscal year ended August 31, 1999, the Fund
paid $0.02626 per share to shareholders from net investment income. For such
period, the Fund designated all dividends paid as exempt-interest dividends.
Thus, 100% of these distributions were exempt from Federal income tax. In
addition, 12.9% of the dividends were derived from income earned from certain
government obligations which may be subject to the Federal Alternative Minimum
Tax (AMT).
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS TAX FREE RESERVES VS.
IBC FINANCIAL DATA GENERAL TAX FREE MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds Tax Free Reserves generally provided a similar
annualized seven-day yield to that of a comparable IBC Financial Data Money
Market Funds Average, as published in IBC Money Fund ReportTM, for the one-year
period.
[The figures below represent the chart omitted from printed piece]
8/25/98 2.85 2.82
2.83 2.84
2.57 2.66
2.76 2.79
3.09 3.06
3.22 3.21
3.05 3
10/13/98 2.83 2.79
2.81 2.78
2.73 2.69
2.69 2.69
2.62 2.59
2.69 2.68
2.8 2.75
2.72 2.69
12/8/98 2.47 2.41
2.62 2.59
2.8 2.76
2.99 2.95
3.15 3.15
2.62 2.55
2.5 2.48
1/26/99 2.47 2.42
2.4 2.35
2.08 1.98
2.06 2.01
2.3 2.35
2.44 2.42
2.32 2.29
2.46 2.44
3/23/99 2.51 2.47
2.49 2.45
2.43 2.43
2.32 2.25
2.51 2.51
2.71 2.74
2.91 2.99
2.86 2.89
5/18/99 2.77 2.81
2.67 2.7
2.63 2.66
2.49 2.48
2.56 2.55
2.67 2.67
2.82 2.91
7/6/99 2.76 2.76
2.39 2.34
2.44 2.44
2.56 2.55
2.55 2.56
2.47 2.47
2.56 2.59
2.61 2.6
8/31/99 2.65 2.65
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. 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.
4
<PAGE>
CITIFUNDS TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
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ASSETS:
Investment in Tax Free Reserves Portfolio, at value (Note 1) $491,039,098
Receivable for shares of beneficial interest sold 15,000
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Total assets 491,054,098
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LIABILITIES:
Dividends payable 891,562
Payable to affiliate-Shareholder servicing agents' fees (Note 3B) 105,934
Payable for shares of beneficial interest repurchased 36,551
Accrued expenses and other liabilities 139,585
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Total liabilities 1,173,632
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NET ASSETS for 489,882,856 shares of beneficial interest
outstanding $489,880,466
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NET ASSETS CONSIST OF:
Paid-in capital $489,882,856
Accumulated net realized loss on investments (2,390)
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Total $489,880,466
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NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
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See notes to financial statements
5
<PAGE>
CITIFUNDS TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
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INTEREST INCOME (Note 1A):
Income from Tax Free Reserves Portfolio $16,901,587
Allocated expenses from Tax Free Reserves Portfolio (776,185)
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$16,125,402
EXPENSES
Shareholder Servicing Agents' fees (Note 3B) 1,291,979
Administrative fees (Note 3A) 1,291,979
Distribution fees (Note 4) 516,792
Shareholder reports 27,847
Legal fees 20,058
Custody and fund accounting fees 17,698
Audit fees 13,663
Trustees' fees 13,106
Transfer agent fees 10,000
Miscellaneous 5,885
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Total expenses 3,209,007
Less aggregate amounts waived by Administrator and
Distributor (Notes 3A and 4) (626,731)
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Net expenses 2,582,276
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Net investment income 13,543,126
NET REALIZED GAIN ON INVESTMENTS FROM TAX FREE RESERVES PORTFOLIO 11,496
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $13,554,622
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See notes to financial statements
6
<PAGE>
CITIFUNDS TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------
1999 1998
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INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income $ 13,543,126 $ 14,532,483
Net realized gain on investments 11,496 13,752
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Net increase in net assets from operations 13,554,622 14,546,235
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DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (13,543,126) (14,532,483)
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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 771,192,000 950,656,793
Net asset value of shares issued to shareholders from
reinvestment of dividends 2,080,452 2,647,143
Cost of shares repurchased (798,174,036) (861,030,403)
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Net increase (decrease) in net assets from transactions in
shares of beneficial interest (24,901,584) 92,273,533
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NET INCREASE (DECREASE) IN NET ASSETS (24,890,088) 92,287,285
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NET ASSETS:
Beginning of period 514,770,554 422,483,269
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End of period $489,880,466 $514,770,554
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</TABLE>
See notes to financial statements
7
<PAGE>
CITIFUNDS TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $1.00000 $1.0000 $1.0000 $1.0000 $1.00000
Net investment income 0.02626 0.0304 0.0300 0.0297 0.03197
Less dividends from net
investment income (0.02626) (0.03042) (0.03004) (0.02973) (0.03197)
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Net Asset Value, end of period $1.00000 $1.0000 $1.0000 $1.0000 $1.00000
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $489,880 $514,771 $422,483 $371,349 $392,172
Ratio of expenses to
average net assets+ 0.65% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income
to average net assets+ 2.62% 3.04% 3.01% 2.97% 3.22%
Total return 2.66% 3.08% 3.05% 3.01% 3.24%
Note: If agents of the Fund and agents of Tax Free Reserves Portfolio had not waived all or 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 $0.02365 $0.02782 $0.02715 $0.02693 $0.02929
RATIOS:
Expenses to average net assets+ 0.91% 0.92% 0.94% 0.93% 0.92%
Net investment income to
average net assets+ 2.36% 2.77% 2.72% 2.69% 2.95%
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+ Includes the Fund's share of Tax Free Reserves Portfolio's allocated expenses.
</TABLE>
See notes to financial statements
8
<PAGE>
CITIFUNDS TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS
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. 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. The value of
such investment reflects the Fund's proportionate interest (approximately 74.7%
at August 31, 1999) in the net assets of the Portfolio. CFBDS, Inc. ("CFBDS")
acts as the Fund's Administrator and Distributor. Citibank also serves as
Sub-Administrator and makes Fund shares available to customers as Shareholder
Servicing Agent. Citibank is a wholly-owned subsidiary of Citicorp, which in
turn is a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as
a result of the merger of Citicorp and Travelers Group, Inc. which was completed
on October 8, 1998.
The 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, 1999, the
Fund, for federal income tax purposes, had a capital loss carryover of $2,390,
all of which will expire on August 31, 2005. Such capital loss carryover 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 includeable 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.
9
<PAGE>
CITIFUNDS TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
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. For the year ended August 31, 1999, management agreed
to voluntarily limit Fund expenses to 0.65%.
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 $1,291,979, of which $418,030 was voluntarily
waived for the year ended August 31, 1999. 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
$1,291,979 for the year ended August 31, 1999.
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 $516,792, of which $208,701 was voluntarily waived
for the year ended August 31, 1999.
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 $1,914,764,464 and $1,955,995,509 respectively, for the
year ended August 31, 1999.
10
<PAGE>
CITIFUNDS TAX FREE RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF
CITIFUNDS TAX FREE RESERVES:
We have audited the accompanying statement of assets and liabilities of
CitiFunds Tax Free Reserves (a Massachusetts business trust) as of August 31,
1999, the related statement of operations for the year then ended, the statement
of changes in net assets for the years ended August 31, 1999 and 1998, and the
financial highlights for each of the years in the five-year period ended August
31, 1999. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of CitiFunds Tax Free
Reserves at August 31, 1999, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 4, 1999
11
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
TAX-EXEMPT COMMERCIAL PAPER--7.5%
- -------------------------------------------------------------------------------
Dallas Texas, Water & Sewer System Revenue, 3.35%
due 10/07/99 $9,813 $ 9,813,000
Houston, Texas,
3.30% due 9/07/99 5,000 5,000,000
Intermountain Power Agency Revenue,
3.35% due 10/13/99 5,000 5,000,000
Massachusetts Health & Education, Harvard,
3.25% due 9/14/99 10,000 10,000,000
Phenix City, Alabama, Environmental Revenue,
AMT 3.30% due 10/13/99 2,000 2,000,000
Phenix City, Alabama, Environmental Revenue,
AMT 3.55% due 2/09/00 7,000 7,000,000
Sullivan Pollution Control Revenue, Indiana, 3.20%
due 9/08/99 5,000 5,000,000
Sunshine State, Florida,
3.40% due 2/11/00 4,000 4,000,000
Venango, Pennsylvania, Industrial Development
Authority Revenue, AMT
3.30% due 10/19/99 1,300 1,300,000
----------
49,113,000
----------
GENERAL OBLIGATION BONDS
AND NOTES--2.8%
- -------------------------------------------------------------------------------
Connecticut State,
3.09% due 8/01/12 1,800 1,800,000
Connecticut State,
3.05% due 5/15/14 5,500 5,500,000
Delaware State,
6.13% due 4/01/00 1,465 1,490,535
Hilton Head,
3.60% due 2/17/00 6,000 6,008,043
Minnesota State,
5.60% due 10/01/99 1,260 1,262,218
Ohio State,
4.50% due 5/15/00 1,000 1,008,894
Pennsylvania State,
6.875% due 11/01/99 490 500,336
Wisconsin State,
5.00% due 5/01/00 250 252,668
Wisconsin State,
5.75% due 5/01/00 600 609,417
----------
18,432,111
----------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS)--19.4%
- -------------------------------------------------------------------------------
Abilene Texas,
6.40% due 2/15/00 $ 300 $ 304,093
Aiken County, South Carolina, School District,
5.00% due 4/01/00 1,900 1,919,387
Anderson County, South Carolina, School District,
6.00% due 5/01/00 355 361,206
Arizona Educational Loan Marketing, 6.90%
due 3/01/00 500 508,270
Austin Texas,
7.00% due 9/01/99 1,880 1,880,000
Austin Texas, Utility System Revenue, 10.75%
due 5/15/00 2,250 2,366,380
Boston Massachusetts,
5.25% due 10/01/99 2,000 2,002,796
Boston Massachusetts, Water & Sewer Revenue,
4.50% due 11/01/99 2,840 2,846,959
Camden County, Georgia, School District, 4.75%
due 4/01/00 1,000 1,008,624
Charlotte, North Carolina,
4.90% due 6/01/00 975 986,741
Chicago, Illinois,
3.05% due 10/31/99 4,000 4,000,000
Chicago, Illinois, Metropolitan Water
Reclamation District,
4.70% due 12/01/99 3,000 3,012,042
Claremont County, Ohio, Hospital
Facilities Revenue,
4.70% due 9/01/99 1,200 1,200,000
Clark County, California,
School District, 4.25%
due 9/01/99 750 750,000
Clark County, Kentucky, Pollution Control
Revenue, 3.10%
due 10/15/99 2,200 2,200,000
Clark County, Nevada,
5.80% due 10/01/99 1,000 1,002,045
Clark County, Nevada, ARPT Revenue, 3.40%
due 7/01/28 1,445 1,445,000
Clark County, Nevada, School District, 5.50%
due 6/15/00 2,000 2,035,320
12
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
Collin County, Texas, 4.15%
due 3/01/00 $2,725 $2,737,538
Harris County, Texas, Flood Control
District, 7.125%
due 10/01/99 1,190 1,193,943
Hockley County, Texas Industrial
Development Corp., 3.15%
due 11/01/99 9,000 9,000,000
Honolulu, Hawaii, City & County, 4.60%
due 10/01/99 2,200 2,202,112
Illinois State, Sales Tax Revenue, 5.75%
due 6/15/00 125 127,196
Iowa State, School Cash Anticipation Program,
3.50% due 1/28/00 3,000 3,004,203
Irving, Texas,
5.00% due 9/15/99 1,100 1,100,824
Jacksonville, Florida, Electrical Authority
Revenue, 4.40%
due 10/01/99 1,200 1,201,184
Jefferson County, Kentucky, Capital
Projections, 5.40%
due 4/01/00 670 677,973
Jefferson Parish, Louisiana,
Home Mortgage
Authority Revenue,
3.65% due 6/01/00 2,000 2,000,000
Kentucky State Turnpike Authority
Economical Development, 7.25%
due 5/15/00 145 150,994
King County, Water, 5.00%
due 12/01/99 850 853,511
Knoxville Tennesee, 5.00%
due 5/01/00 1,000 1,011,331
Lancaster Pennsylvania, School District, 4.00%
due 5/15/00 1,300 1,305,949
Louisiana State,Offshore, 3.25%
due 9/01/08 2,100 2,100,000
Madison Wisconsin, 4.00%
due 5/01/00 2,050 2,059,930
McHenry County, Illinois, Public
Common Revenue, 4.00%
due 12/01/99 1,450 1,451,193
Mercer County, North Dakota,
Solid Waste Disposal Authority, AMT,
3.25% due 12/01/99 $3,500 $3,500,000
Metro Washington D.C., Authority Revenue,
5.80% due 10/01/99 2,000 2,004,190
Michigan State, Building Authority Revenue,
4.00% due 10/01/99 1,240 1,240,645
Michigan State, Building Authority Revenue,
4.25% due 10/15/99 1,265 1,266,551
Monroe Wisconsin School District, 3.55%
due 12/10/99 2,500 2,501,213
Montgomery County,
Pennsylvania, 6.80%
due 11/01/99 1,660 1,703,071
Montgomery County, Pennsylvania,
Education & Health, 7.50%
due 11/01/99 3,465 3,490,373
Murray County, Utah, Hospital Revenue,
4.50% due 5/15/00 500 503,936
New Orleans, Louisiana, Single Family
Mortgage, AMT, 3.15%
due 12/01/99 3,500 3,500,000
North Carolina State,
4.50% due 4/01/00 3,000 3,024,905
Northumberland County, Pennsylvania, 6.30%
due 10/15/99 500 501,657
Ohio State Building Authority, 5.00%
due 10/01/99 2,520 2,523,330
Oklahoma State Water Resource Board
State Loan Revenue, 2.95%
due 9/01/99 3,630 3,630,000
Oklahoma State Water Resource Board
State Loan Revenue, 3.60%
due 3/01/00 1,360 1,360,000
Oregon State, Housing & Community
Services Development, AMT
3.20% due 4/13/00 2,810 2,810,000
Pennsylvania State, Turnpike Revenue, 7.50%
due 12/01/99 1,700 1,752,603
Portland Maine,
3.40% due 9/01/99 1,515 1,515,000
13
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
Port Houston, Texas,
5.375% due 10/01/99 $ 680 $ 681,241
Rhode Island State, Health and Educational
Revenue, 8.38% due
4/01/00 1,000 1,048,948
Rhode Island State, Health and Educational
Revenue, 3.00%
due 12/01/29 1,000 1,000,000
Richmond County, Georgia, Board of Education,
4.00% due 9/01/99 1,750 1,750,000
San Antonio, Texas, Water Revenue, 5.90%
due 5/15/00 1,300 1,323,143
Spokane, Washington, 3.50%
due 1/31/00 2,000 2,004,059
Stevens Point, Wisconsin,
3.50% due 5/01/00 300 300,387
Tennesee State, School Board Authority, 5.00%
due 5/01/00 1,000 1,011,658
Texas State, 5.125%
due 10/01/99 100 100,158
Texas State, 7.75%
due 10/01/99 500 501,700
Texas State, 9.00%
due 10/01/99 500 502,179
Tulsa County, Oklahoma, Criminal Justice,
4.50% due 9/01/99 2,900 2,900,000
Tulsa County, Oklahoma, Public School District,
4.50% due 2/01/00 1,375 1,382,247
Utah Water Finance Agency Revenue, 4.40%
due 10/01/99 1,000 1,000,718
Vermont Housing Finance Agency, AMT 3.15%
due 4/28/00 4,255 4,255,000
Virginia State, Housing Development Authority,
6.00% due 7/01/00 3,000 3,054,553
Washington State, 6.10%
due 6/01/00 750 765,561
Wyoming Student Loan Corp. Revenue, 6.25%
due 12/01/99 5,000 5,036,476
-----------
127,452,246
-----------
REVENUE, TAX, BOND AND TAX REVENUE
ANTICIPATION NOTES--4.2%
- -------------------------------------------------------------------------------
Anchorage, Alaska, TAN's,
3.75% due 1/04/00 $ 5,000 $ 5,013,290
Canton, Massachusetts, BAN's, 3.90%
due 9/17/99 4,925 4,926,083
Texas State, TRAN's, 4.50%
due 8/31/00 10,500 10,580,955
West Jordan, Utah State, TRAN's, 4.00%
due 6/30/00 7,350 7,385,267
-----------
27,905,595
-----------
VARIABLE RATE DEMAND NOTES*--67.2%
- -------------------------------------------------------------------------------
ABN-Amro Munitops Certificates Trust,
due 4/05/06 5,000 5,000,000
ABN-Amro Munitops Certificates Trust, AMT,
due 7/05/06 2,000 2,000,000
Adams County, Colorado,
Industrial Development Revenue,
due 12/01/15 2,000 2,000,000
Alaska State, Housing Finance Corp.,
due 6/01/26 3,000 3,000,000
Alexandria, Virginia,
Industrial Development Authority,
due 7/01/26 1,300 1,300,000
Allegheny County, Pennsylvania,
Industrial Development Authority Revenue,
due 7/01/27 1,100 1,100,000
Arapahoe County, Colorado, Revenue Authority,
due 7/01/07 1,775 1,775,000
Ascension, Louisiana, Revenue, AMT
due 12/01/27 2,000 2,000,000
Ashe County, North Carolina,
Industrial Facilities and Pollution,
due 7/01/10 2,100 2,100,000
Beloit, Kansas, Industrial
Development Authority,
AMT, due 12/01/16 3,100 3,100,000
14
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
Beaver County, Pennsylvania,
Pollution Control
Revenue,
due 12/01/20 $1,500 $ 1,500,000
Bexar County, Texas,
Housing Finance Authority,
due 9/15/26 1,900 1,900,000
Brooks County, Georgia,
Development Authority Revenue,
due 3/01/18 2,000 2,000,000
Burke County, Georgia,
Development Authority Pollution Control,
due 7/01/24 1,200 1,200,000
Carrollton, Georgia, Payroll
Development Authority,
due 3/01/15 1,650 1,650,000
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
Chester County, Pennsylvania,
Health & Educational Facilities,
due 5/15/22 415 415,000
Chesterfield County, Virginia,
Industrial Development,
due 2/01/03 1,400 1,400,000
Chicago, Illinois, O'Hare International
Airport Revenue,
due 7/01/10 500 500,000
Clark County, Nevada, Industrial
Development Revenue, AMT
due 10/01/30 2,700 2,700,000
Clarksville, Arizona,
Industrial Development Revenue, AMT
due 8/01/13 2,025 2,025,000
Clarksville, Tennessee,
Public Building Authority,
due 10/01/25 765 765,000
Clipper Tax Exempt
Trust, AMT,
due 3/01/15 $1,255 $ 1,255,000
Clipper Tax Exempt
Trust, AMT,
due 3/01/16 7,320 7,320,000
Colorado Health Facilities Authority Revenue,
due 6/01/21 5,000 5,000,000
Columbus, Georgia, Housing Authority Revenue,
due 11/01/17 850 850,000
Connecticut State, Health &
Educational Facilities,
due 7/01/27 1,500 1,500,000
Davidson County, North Carolina, Industrial
Facilities, due 7/01/20 2,140 2,140,000
De Kalb County, Georgia, Industrial Development
Revenue, due 8/01/01 1,500 1,500,000
De Kalb County, Georgia, Industrial Development
Revenue, due 2/01/18 1,100 1,100,000
De Kalb County, Georgia, Multi-family Housing
Revenue, due 6/15/25 2,700 2,700,000
Director of State of Nevada,
Department of Business, AMT,
due 8/01/20 865 865,000
District of Columbia,
Revenue, due 10/01/15 500 500,000
East Baton Rouge,
Louisiana, Pollution Control Revenue,
due 6/01/11 1,400 1,400,000
Eloy, Arizona, Industrial Development
Authority Revenue, AMT,
due 8/01/20 1,000 1,000,000
Emmaus, Pennsylvania, General Authority
Revenue, due 3/01/24 18,300 18,300,000
Facilities Municipal Trust,
due 12/15/14 1,000 1,000,000
Farmington, New Mexico, Pollution Control
Revenue, due 12/01/16 6,200 6,200,000
Farmington, New Mexico, Pollution Control
Revenue, due 5/01/24 900 900,000
Fayetteville, Arkansas, Industrial Development,
AMT, due 12/01/04 1,100 1,100,000
15
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
Floyd County, Georgia, Development Authority,
due 3/01/24 $2,000 $ 2,000,000
Floyd County, Georgia, Development Authority,
due 9/01/26 1,080 1,080,000
Forsyth County, Georgia, Industrial Development
Revenue, due 1/01/07 2,000 2,000,000
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 3,900 3,900,000
Georgia Local Government Trust
Certificates Partner-
ships, due 6/01/28 3,000 3,000,000
Gila County, Arizona, Industrial
Development Authority,
due 11/01/25 1,725 1,725,000
Glasgow, Kentucky, Industrial
Building Revenue, AMT,
due 5/01/14 3,345 3,345,000
Gordon County, Georgia, Industrial
Development Authority Revenue,
due 8/01/17 1,000 1,000,000
Grapevine, Texas, Industrial
Development Authority Revenue,
due 12/01/24 1,100 1,100,000
Greenville, Wisconsin Industrial
Development Revenue, AMT,
due 9/01/13 1,640 1,640,000
Gulf Breeze, Florida, Revenue,
due 3/31/21 1,485 1,485,000
Gwinett County, Georgia,
Industrial Development
Revenue, due 6/01/05 1,500 1,500,000
Gwinett County, Georgia,
Industrial Development
Revenue, due 3/01/17 465 465,000
Harris County, Texas,
due 8/01/15 7,800 7,800,000
Harris County, Texas,
Health Facilities
Development,
due 2/15/27 900 900,000
Hawkins County, Tennessee,
Industrial Development
Board, due 10/01/27 $1,450 $ 1,450,000
Hays, Texas, Mental Health
Development Facilities,
due 11/15/14 2,000 2,000,000
Heard County, Georgia, Pollution Development
Revenue, due 9/01/26 1,800 1,800,000
Heber City, Utah, Industrial
Development Revenue,
AMT, due 7/01/33 3,650 3,650,000
Henderson, Nevada, Health Care
Facilities Revenue,
due 7/01/20 700 700,000
Henrico County, Virginia,
Industrial Development
Authority, due 8/01/23 180 180,000
Illinois Educational Facilities
Authority Revenue,
due 12/01/25 700 700,000
Illinois Educational Facilities
Authority Revenue,
due 1/01/04 7,000 7,000,000
Illinois Health Facilities Authority Revenue,
due 11/01/15 1,800 1,800,000
Illinois Health Facilities Authority Revenue,
due 12/01/15 3,875 3,875,000
Illinois Health Facilities Authority Revenue,
due 1/01/28 1,800 1,800,000
Jackson County, Mississippi, Pollution Control
Revenue, due 12/01/16 2,800 2,800,000
Jackson County, Mississippi, Pollution Control
Revenue, due 6/01/23 1,200 1,200,000
Jackson County, Mississippi,
Industrial Development
Revenue, due 12/01/15 2,650 2,650,000
Jacksonville, Florida, Health
Facilities Revenue,
due 12/01/23 1,500 1,500,000
Jefferson County, Alabama, Sewer Revenue,
due 2/01/33 5,000 5,000,000
Jefferson Parish, Louisiana,
Hospital District 2,
due 12/01/15 2,700 2,700,000
Jefferson Parish, Louisiana, Home Mortgage,
due 12/01/26 1,690 1,690,000
16
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
Kenton County, Kentucky, Board Revenue, AMT
due 3/01/15 $ 1,800 $ 1,800,000
Knox County, Tennessee, Health
Educational Hospital Facilities,
due 12/01/27 8,000 8,000,000
Knox County, Tennessee, Industrial
Development Board Revenue, AMT,
due 10/01/00 1,000 1,000,000
Lone Star Texas Authority,
due 12/01/14 400 400,000
Louisa County, Virginia,
Industrial Development
Authority, due 1/01/20 720 720,000
Louisiana Housing Finance Agency
Mortgage Revenue, AMT,
due 6/01/27 2,970 2,970,000
Macon Trust Pooled
Receipts, due 3/03/07 26,240 26,240,000
Macon Trust Pooled
Receipts, AMT
due 12/05/30 2,315 2,315,000
Madison, Wisconsin, Community
Development Authority,
due 6/01/22 1,085 1,085,000
Maricopa County, Arizona, Pollution Control,
due 5/01/29 600 600,000
Marshfield, Wisconsin, Industrial Development
Revenue, due 12/01/14 2,500 2,500,000
Maryland State,
due 8/01/12 2,115 2,115,000
Maryland State, Community Development,
due 4/01/25 1,930 1,930,000
Mason County, Kentucky, Pollution Control,
due 10/15/14 2,900 2,900,000
Massachusetts State Health and
Educational Facilities,
due 7/01/05 1,600 1,600,000
Massachusetts State Housing Finance
Authority, due 7/01/19 8,500 8,500,000
Massachusetts State Water Resource Authority,
due 11/01/26 8,000 8,000,000
Mecklenburg County, North Carolina, Industrial
Facilities, due 9/01/14 $2,000 $ 2,000,000
Metropolitan Government, Nashville Tennessee,
Industrial, due 12/01/18 1,000 1,000,000
Metropolitan Pier & Expo,
Illinois, due 6/15/21 570 570,000
Michigan State Hospital Finance Authority
Revenue, due 8/15/15 3,000 3,000,000
Minneapolis/St. Paul, Minnesota,
due 8/15/25 1,000 1,000,000
Mississippi Home Corp., Single Family, AMT,
due 6/01/28 3,465 3,465,000
Missouri State, Health and Educational Facilities
Revenue, due 7/01/18 3,700 3,700,000
Missouri State, Housing & Development Common
Mortgage, due 3/01/30 4,000 4,000,000
Moorhead, Minnesota, Solid Waste Disposal, AMT,
due 4/01/12 3,000 3,000,000
Morgan County, Utah, Solid
Waste, due 8/01/31 500 500,000
Multi-State Municipal Securities Trust
Certificates, due 3/01/01 9,140 9,140,000
Multi-State Municipal Securities Trust
Certificates,
due 12/01/03 8,380 8,380,000
Nash County, North
Carolina, due 12/01/14 1,000 1,000,000
New Hampshire High Educational & Health,
due 6/01/23 1,300 1,300,000
New Hanover County, North Carolina,
due 3/01/14 2,250 2,250,000
New Hanover County, North Carolina,
due 3/01/15 2,250 2,250,000
New Hanover County, North Carolina,
due 3/01/16 2,250 2,250,000
New Jersey State,
due 2/15/11 3,800 3,800,000
New York City Municipal Water Finance,
due 6/15/31 6,225 6,225,000
17
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
New York City Municipal Water Finance Authority,
due 6/15/24 $ 1,700 $ 1,700,000
New York Pooled Puttable
Trust, due 10/01/30 595 595,000
New York Pooled Puttable
Trust, AMT
due 12/05/30 30 30,000
New York State,
due 8/01/16 2,700 2,700,000
New York State, Energy Development,
due 12/01/25 2,400 2,400,000
New York State Thruway Authority Revenue,
due 1/01/27 10,705 10,705,000
North Carolina Educational
Facilities, due 9/01/26 200 200,000
North Carolina Medical Care Commonwealth,
due 11/15/28 6,000 6,000,000
North Central, Texas, Health
Facilities Development,
due 12/01/15 1,500 1,500,000
North Little Rock, Arkansas,
Health Facilities,
due 12/01/21 1,700 1,700,000
Oakland California, Economic Development
Revenue, due 8/01/27 280 280,000
Ohio State, Air Quality Development Authority,
due 5/01/26 1,755 1,755,000
Orange County, Florida, Industrial Development
Authority, due 1/01/11 400 400,000
Peoria, Illinois, Health Care Facilities Revenue,
due 5/01/17 1,255 1,255,000
Person County, North Carolina,
Pollution Control Authority,
due 11/01/19 3,000 3,000,000
Piedmont, South Carolina, Municipal Power Agency,
due 1/01/22 1,000 1,000,000
Pinal County, Arizona, Pollution Control
Revenue, due 12/01/11 2,500 2,500,000
Pitney Bowes Credit Corp.
Leasetops, due 11/13/02 1,620 1,620,465
Port Arthur, Texas, Navigation District,
due 10/01/24 300 300,000
Puerto Rico Public Finance
Corp., due 6/01/12 $ 300 $ 300,000
Puerto Rico Commonwealth,
due 7/01/20 1,200 1,200,000
Red Bay, Alabama, Industrial Development Board
Revenue, due 11/01/10 3,400 3,400,000
Rhode Island State Industrial
Facilities Corp.,
due 5/01/05 1,500 1,500,000
Rhode Island State Industrial
Facilities Corp., AMT,
due 6/01/05 3,300 3,300,000
Rhode Island State Industrial
Facilities Corp.,
due 11/01/05 3,710 3,710,000
Richmond Virginia, Development & Housing
Authority, due 11/01/29 4,900 4,900,000
Roswell, Georgia, Multi-family
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
Saint Charles, Parish, Louisiana,
Pollution Control Revenue,
due 3/01/24 5,200 5,200,000
San Antonio, Texas, Electrical Gas Revenue,
due 2/01/19 12,000 12,000,000
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
Southeastern Oklahoma Industrial Development
Authority, due 6/01/16 3,400 3,400,000
Sumner County, Tennessee, Health Educational
Revenue, due 6/01/29 10,000 10,000,000
Syracuse Industrial Economic Development
Revenue, due 12/01/05 680 680,000
Tarrant County, Texas, Health
Facilities Development,
due 11/15/26 960 960,000
18
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
Texas State,
due 10/01/08 $4,950 $ 4,950,000
Texas State, Department of
Housing and Community,
due 3/01/17 1,995 1,995,000
Tipton, Indiana, Economic
Development Revenue,
due 7/01/22 1,025 1,025,000
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
Traill County, North Dakota,
Solid Waste, due 3/01/18 5,750 5,750,000
Uinta County, Wyoming, Pollution Control
Revenue, due 12/01/22 1,500 1,500,000
Uinta County, Wyoming, Pollution Control
Revenue, due 8/15/20 1,400 1,400,000
Utah State Board of
Regents, due 11/01/25 900 900,000
Valdez, Arkansas, Marine
Term Revenue,
due 8/01/25 4,000 4,000,000
Valley, California, Health &
Hospital System Revenue,
due 5/15/25 3,300 3,300,000
Vermont Industrial Development Authority
Revenue, AMT,
due 12/01/11 800 800,000
Volisia County, Florida,
Health Facilities Authority,
due 11/01/15 1,000 1,000,000
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
Walton County, Georgia, Industrial Building
Authority, due 10/01/17 700 700,000
Washington State Multi-family Mortgage
Revenue, due 7/01/25 1,425 1,425,000
Washington State Health Care Facilities Revenue,
due 1/01/23 200 200,000
Washington State Public
Power Supply,
due 7/01/17 $1,000 $ 1,000,000
Winchester, Kentucky, Industrial Building, AMT,
due 10/01/18 2,400 2,400,000
Wisconsin State Health & Educational Facility,
due 8/15/17 2,100 2,100,000
------------
441,465,465
------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 101.1% 664,368,417
OTHER ASSETS,
LESS LIABILITIES (1.1) (7,248,098)
------ ------------
NET ASSETS 100.0% $657,120,319
------ ------------
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 days notice.
See notes to financial statements
19
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost and value (Note 1A) $664,368,417
Cash 53,884
Interest receivable 4,779,961
- --------------------------------------------------------------------------------
Total assets 669,202,262
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 11,940,955
Payable to affiliate - Investment advisory fees (Note 2A) 72,123
Accrued expenses and other liabilities 68,865
- --------------------------------------------------------------------------------
Total liabilities 12,081,943
- --------------------------------------------------------------------------------
NET ASSETS $657,120,319
- --------------------------------------------------------------------------------
REPRESENTED BY:
Capital paid-in for beneficial interests $657,120,319
- --------------------------------------------------------------------------------
TAX FREE RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
- --------------------------------------------------------------------------------
INTEREST INCOME (NOTE 1B): $23,864,214
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory fees (Note 2A) $1,461,892
Administrative fees (Note 2B) 365,473
Custody and fund accounting fees 206,804
Legal fees 30,556
Audit fees 20,500
Trustees' fees 13,991
Miscellaneous 11,664
- --------------------------------------------------------------------------------
Total expenses 2,110,880
Less aggregate amounts waived by Investment Adviser and
Administrator (Notes 2A and 2B) (1,002,903)
Less fees paid indirectly (Note 1D) (12,038)
- --------------------------------------------------------------------------------
Net expenses 1,095,939
- --------------------------------------------------------------------------------
Net investment income 22,768,275
NET REALIZED GAIN ON INVESTMENTS 16,677
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $22,784,952
- --------------------------------------------------------------------------------
See notes to financial statements
20
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-----------------------------
1999 1998
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 22,768,275 $ 20,567,400
Net realized gain on investments 16,677 17,001
- --------------------------------------------------------------------------------
Increase in net assets from operations 22,784,952 20,584,401
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 3,367,197,193 1,069,295,431
Value of withdrawals (3,456,720,231) (849,651,201)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital transactions (89,523,038) 219,644,230
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (66,738,086) 240,228,631
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 723,858,405 483,629,774
- --------------------------------------------------------------------------------
End of period $657,120,319 $723,858,405
- --------------------------------------------------------------------------------
TAX FREE RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C> <C> <C> <C>
Net Assets, end of period
(000's omitted) $657,120 $723,858 $483,630 $372,171 $394,222
Ratio of expenses to
average net assets 0.15% 0.15% 0.19% 0.30% 0.32%
Ratio of net investment income
to average net assets 3.11% 3.53% 3.46% 3.31% 3.55%
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 0.29% 0.29% 0.31% 0.32% 0.32%
Net investment income to average
net assets 2.98% 3.39% 3.35% 3.29% 3.55%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
21
<PAGE>
TAX FREE RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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, nondiversified, 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"), acts as the Portfolio's Administrator. Citibank, N.A.
("Citibank") acts as the Investment Adviser. Citibank is a wholly-owned
subsidiary of Citicorp, which in turn, is a wholly-owned subsidiary of Citigroup
Inc. Citigroup Inc. was formed as a result of the merger of Citicorp and
Travelers Group, Inc., which was completed on October 8, 1998.
The 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 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.
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 $1,461,892,
of which $637,430 was voluntarily waived for the year ended August 31, 1999. The
investment advisory fee is computed at the annual rate of 0.20% of the
Portfolio's average daily net assets.
22
<PAGE>
TAX FREE RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 $365,473, all of which was voluntarily waived for the year ended
August 31, 1999. 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 $2,623,416,618 and $2,678,252,942, respectively, for the year ended
August 31, 1999.
4. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at August 31, 1999, for federal income tax purposes, amounted
to $664,368,417.
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 $75
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 year ended
August 31, 1999, the commitment fee allocated to the Portfolio was $1,942. Since
the line of credit was established, there have been no borrowings.
23
<PAGE>
TAX FREE RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS OF
TAX FREE RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Tax Free Reserves Portfolio (a New
York Trust) as of August 31, 1999, the related statement of operations for the
year then ended, the statement of changes in net assets for the years ended
August 31, 1999 and 1998, and the financial highlights for each of the years in
the five-year period ended August 31, 1999. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1999, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Tax Free Reserves
Portfolio at August 31, 1999, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 4, 1999
24
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Walter E. Robb, III
E. Kirby Warren
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
INVESTMENT ADVISER
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
200 Berkeley Street, Boston, MA 02116
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 Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds Tax
Free Reserves. It is authorized for distribution to prospective investors only
when preceded or accompanied by an effective prospectus of CitiFunds Tax Free
Reserves.
Ask for a prospectus (except for CitiFunds Tax Free Reserves, which preceded or
accompanies this report) containing more complete information, including all
sales charges (if any), fees and expenses. Please read the prospectus carefully
before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554
(C)1999 Citicorp [logo] Printed on recycled paper CFA/RTF/899
