Annual Report o October 31, 1998
CITISELECT(R) PORTFOLIOS
CitiSelect(R) Folio 200
CitiSelect(R) Folio 300
CitiSelect(R) Folio 400
CitiSelect(R) Folio 500
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INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
TABLE OF CONTENTS
Letter to Our Shareholders 1
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Portfolio Environment and Outlook 2
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Risk Reward Trade-Off 3
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Fund Facts 4
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Portfolio Highlights 5
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Fund Performance 6
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Statements of Assets and Liabilities 10
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Statements of Operations 11
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Statements of Changes in Net Assets 12
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Financial Highlights 14
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Notes to Financial Statements 16
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Independent Auditors' Report 22
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LETTER TO OUR SHAREHOLDERS
Dear CitiSelect Portfolios Shareholder:
We are pleased to present this annual report for the CitiSelect(R)
Portfolios. The report covers the year ended October 31, 1998. Inside, the
CitiSelect portfolios' investment manager, Citibank, N.A., discusses the market
conditions it faced, the strategies it employed and its outlook for the future.
Much of the 12-month period ended October 31, 1998 saw a continuation of
generally positive economic conditions in the United States. Overseas, however,
the financial crisis that began last year in Southeast Asia has spread to other
emerging markets in Eastern Europe and South America. This economic weakness
negatively affected the earnings of U.S. companies doing business overseas, and
contributed to record levels of volatility in the U.S. stock market.
We believe that recent market volatility once again confirms the benefits
of diversification. By allocating your investment assets among a number of
different markets and asset classes, you may be able to reduce the effects of
heightened volatility on your overall portfolio. In our view, the CitiSelect
portfolios can play a particularly valuable role in your diversification
strategy because they invest in a wide variety of asset classes, geographic
regions and investment styles.
We are pleased to announce the appointment of Richard Goldman as senior
portfolio manager of the CitiSelect portfolios effective as of January 4, 1999.
Mr. Goldman has been a member of the management team since the portfolios'
inception. He replaces Larry Keblusek, who will continue to serve as U.S. Chief
Investment Officer of Citibank Global Asset Management. Mr. Goldman will
continue to participate in the management of the large-cap equity sector of the
Portfolios. Thank you for your continued confidence and participation.
Sincerely,
/s/PHILIP W. COOLIDGE
Philip W. Coolidge
President
November 20, 1998
1
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PORTFOLIO ENVIRONMENT AND OUTLOOK
THE THIRD QUARTER OF 1998 WAS AN EXTRAORDINARILY DIFFICULT TIME FOR THE
GLOBAL FINANCIAL MARKETS in which the CitiSelect portfolios invest. In large
part, this very broad-based weakness is a result of the currency and banking
crisis that began last year in Southeast Asia and has since spread to other
emerging markets. When it became apparent this past summer that these financial
problems would affect developed economies in the U.S. and Europe, investors
reacted by selling investments that they perceived as risky. Even triple-A-rated
investments such as high-quality corporate bonds were punished in this "flight
to quality" during the third quarter of 1998. More recently, in October, we
began to see signs of a return to stability in the global equity markets, and
many of the markets in which we invest have rebounded from their lows.
WE ARE CLEARLY DISAPPOINTED THAT THE CITISELECT PORTFOLIOS PROVIDED RESULTS
BELOW OUR LONG-TERM EXPECTATIONS. We attribute a sizeable portion of the
portfolios' lackluster performance to the extreme volatility in the world's
markets. CitiSelect Folios 400 and 500, the more aggressive of the CitiSelect
portfolios, were hurt by their larger weightings in small-capitalization stocks.
We are pleased that the more conservative portfolios -- CitiSelect Folios 200
and 300 -- have protected their shareholders from the brunt of the most recent
financial markets' declines.
WHILE VOLATILE MARKETS TEND TO RISE AND FALL IN TANDEM, THE DEPTH OF THE
SIMULTANEOUS DECLINE OF LARGE-CAP U.S. STOCKS, SMALL-CAP U.S. STOCKS AND
INTERNATIONAL STOCKS -- AS IN THE THIRD QUARTER OF 1998 -- IS HIGHLY UNUSUAL.
Historically, however, stocks have rebounded sharply in the quarter following
such simultaneous declines, and investors who stayed the course have benefitted.
We've already begun to see signs of such a recovery. Of course, there is no
guarantee that these rebounds will be sustained throughout the fourth quarter of
1998.
The CitiSelect portfolios' returns were also affected by the relative
performance of some of the financial market's sub-sectors. The value style of
investing in both domestic and international stocks was particularly
unrewarding. The value style, which seeks to identify stocks selling at prices
below their true worth, has been out of favor in 1998, and investment managers
who remained true to that style were among the hardest hit. We believe that this
investment style's poor performance is a reflection of investors' widespread
preference for high-quality growth companies.
Despite its recent underperformance, we are confident that the value style
of investing continues to make sound investment sense, and that our individual
value-oriented portfolio managers have adhered to the disciplines that led to
their past success. FURTHERMORE, WE BELIEVE THAT THESE VALUE-ORIENTED HOLDINGS
MAY REPRESENT PARTICULARLY ATTRACTIVE LONG-TERM OPPORTUNITIES AT CURRENT PRICES.
Equally important, the value strategy complements the growth-oriented portions
of the portfolios, which performed relatively well during the reporting period.
Looking ahead, we believe that the diversification strategy underlying the
CitiSelect portfolios is more important than ever. History has repeatedly shown
us that last year's top performers are not necessarily tomorrow's winners. We
regard
2
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this period of instability as an instance in which market sectors that had
gotten ahead of themselves may return to more reasonable levels, and
underperforming assets may position themselves for better returns in the months
and years ahead. In fact, we believe that an attractive level of imbedded value
currently exists in our U.S. small-cap stock and international stock holdings,
creating attractive opportunities for investors with appropriate risk tolerances
and long-term perspectives. As these market sectors return to more normal
historical relationships, investors in the CitiSelect portfolios should be well
positioned to benefit from their gains.
RISK REWARD TRADE-OFF
CitiSelect portfolios use a proprietary asset allocation which seeks an optimal
mix of stocks, bonds and cash to help maximize potential return for any given
level of risk. CitiSelect Folio 200 has the lowest risk level -- and the lowest
return. CitiSelect 300 scores slightly higher on both counts, followed by
CitiSelect Folio 400, then CitiSelect Folio 500.
This graph shows how the performance of each CitiSelect portfolio compares to
the other CitiSelect portfolios over the same period.
CitiSelect CitiSelect CitiSelect CitiSelect
Folio 200 Folio 300 Folio 400 Folio 500
Jun-96 10000 10000 10000
Jul-96 9900 9810 9700
Aug-96 10125 10110 10110 10000
Sep-96 10321 10355 10400 10230
Oct-96 10407 10436 10440 10220
Nov-96 10684 10807 10890 10690
Dec-96 10638 10761 10884 10720
Jan-97 10693 10842 10984 10851
Feb-97 10648 10781 10914 10801
Mar-97 10455 10549 10652 10560
Apr-97 10485 10590 10612 10510
May-97 10922 11145 11336 11322
Jun-97 11156 11463 11749 11773
Jul-97 11359 11756 12041 12114
Aug-97 11298 11635 11900 11964
Sep-97 11643 12080 12505 12606
Oct-97 11511 11847 12112 12114
Nov-97 11491 11837 12051 12074
Dec-97 11492 11822 11999 12006
Jan-98 11513 11833 11968 11965
Feb-98 11869 12335 12673 12804
Mar-98 12048 12596 13046 13275
Apr-98 12121 12670 13140 13357
May-98 11974 12450 12787 12937
Jun-98 12048 12534 12839 12988
Jul-98 11827 12199 12341 12384
Aug-98 11187 11236 10889 10522
Sep-98 11534 11592 11200 10706
Oct-98 11838 12011 11781 11371
CitiSelect CitiSelect CitiSelect CitiSelect
Folio 200 Folio 300 Folio 400 Folio 500
3
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FUND FACTS
MANAGER
Citibank N.A. -- Large Cap Growth Portfolio
-- Small Cap Growth Portfolio
-- Intermediate Income Portfolio
-- Short-Term Portfolio
SUBADVISERS
Franklin Advisory Services, Inc. -- Small Cap Value Portfolio
Hotchkis and Wiley -- International Portfolio
Miller Anderson & Sherrerd LLP -- Large Cap Value Portfolio
Pacific Investment Management Company -- Foreign Bond Portfolio
CITISELECT FOLIO 200
FUND OBJECTIVE
As high a total return over time as is consistent with a primary emphasis on a
combination of fixed income and money market securities, and a secondary
emphasis on equity securities.
COMMENCEMENT OF OPERATIONS DIVIDENDS
June 17, 1996 Paid quarterly, if any
NET ASSETS AS OF 10/31/98 CAPITAL GAINS
$206.3 million Paid annually, if any
CITISELECT FOLIO 300
FUND OBJECTIVE
As high a total return over time as is consistent with a balanced emphasis on
equity and fixed income securities.
COMMENCEMENT OF OPERATIONS DIVIDENDS
June 17, 1996 Paid quarterly, if any
NET ASSETS AS OF 10/31/98 CAPITAL GAINS
$340.5 million Paid annually, if any
CITISELECT FOLIO 400
FUND OBJECTIVE
As high a total return over time as is consistent with a primary emphasis on
equity securities and a secondary emphasis on fixed income securities.
COMMENCEMENT OF OPERATIONS DIVIDENDS
June 17, 1996 Paid annually, if any
NET ASSETS AS OF 10/31/98 CAPITAL GAINS
$410.3 million Paid annually, if any
CITISELECT FOLIO 500
FUND OBJECTIVE
As high a total return over time as is consistent with a dominant emphasis on
equity securities and a small allocation to fixed income securities.
COMMENCEMENT OF OPERATIONS DIVIDENDS
September 3, 1996 Paid annually, if any
NET ASSETS AS OF 10/31/98 CAPITAL GAINS
$163.5 million Paid annually, if any
4
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PORTFOLIO HIGHLIGHTS
TOP FIVE SECURITIES (STOCKS)
LARGE CAP GROWTH PORTFOLIO
COMPANY INDUSTRY % NET ASSETS
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Microsoft Corp. Technology 6.58%
General Electric Co. Capital Goods 6.45%
Wal Mart Stores Inc. Retail 3.68%
Eli Lilly & Co. Healthcare 3.51%
Pfizer Inc. Pharmaceutical 3.51%
LARGE CAP VALUE PORTFOLIO
COMPANY INDUSTRY % NET ASSETS
General Motors Corp. Consumer Durable Goods 3.31%
Philip Morris Companies Inc. Consumer Basics 2.94%
First Union Corp. Finance 2.80%
International Business Machines Technology 2.76%
Chase Manhattan Corp. Finance 2.68%
SMALL CAP GROWTH PORTFOLIO
COMPANY INDUSTRY % NET ASSETS
Abacus Direct Corp. Commercial Services 3.25%
Profit Recovery Group
International Inc. Commercial Services 3.15%
Probusiness Services Inc. Commercial Services 2.75%
Lamar Advertising Co. Commercial Services 2.69%
Total Renal Care Holdings Inc. Health Service/Technology 2.56%
SMALL CAP VALUE PORTFOLIO
COMPANY INDUSTRY % NET ASSETS
JLG Industries, Inc. Producer Manufacturing 3.91%
Dimon Inc. Consumer Non-Durables 2.92%
Fritz Companies Inc. Transportation 2.44%
Standard Commercial Corp. Consumer Non-Durables 2.25%
Cliffs Drilling Co. Industrial Services 1.97%
DOMESTIC FIXED INCOME
INTERMEDIATE INCOME PORTFOLIO
INSTRUMENTS % NET ASSETS
Mortgage and Asset Backed Securities 49.00%
U.S. Treasury Issues 31.00%
Corporate Bonds 18.30%
Short-Term Obligations 4.30%
Preferred Stocks 1.40%
TOP 5 COUNTRIES (INTERNATIONAL ASSET CLASSES)
FOREIGN BOND PORTFOLIO
COUNTRY % NET ASSETS
Italy 15.80%
Australia 13.30%
United States (excludes short-term) 13.00%
Spain 11.00%
Great Britain 9.80%
INTERNATIONAL PORTFOLIO
COUNTRY % NET ASSETS
Great Britain 24.70%
Switzerland 10.30%
Netherlands 8.00%
Germany 7.80%
France 7.80%
5
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FUND PERFORMANCE CITISELECT FOLIO 200
TOTAL RETURNS
SINCE
ONE 6/17/96
ALL PERIODS ENDED OCTOBER 31, 1998 YEAR
INCEPTION*
CitiSelect(R)Folio 200 2.84% 7.37%
Composite Benchmark+ 8.15% 9.90%
*Average Annual Total Return
IMPORTANT TAX INFORMATION
The Fund designates for income tax purposes $293,370 of its capital gains
distribution as short-term capital gains.
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$11,838 (as of 10/31/98). The graph shows how the Fund compares to its
benchmarks over the same period June 17, 1996 to October 31, 1998.
LEHMAN BROS
INTERMEDIATE
COMPOSITE GOVT/CORP CITISELECT
DATE BENCHMARK S&P 500 BOND INDEX FOLIO 200
Jun-96 10,000.00 10,000.00 10,000.00 10,000.00
Jul-96 9,879.72 9,640.20 10,115.26 9,900.04
Aug-96 10,021.99 9,843.61 10,123.35 10,125.29
Sep-96 10,217.42 10,396.82 10,264.06 10,321.17
Oct-96 10,318.57 10,683.77 10,445.74 10,406.66
Nov-96 10,585.82 11,490.39 10,583.62 10,684.08
Dec-96 10,565.71 11,262.88 10,515.88 10,637.76
Jan-97 10,612.20 11,965.69 10,556.90 10,693.44
Feb-97 10,585.67 12,060.22 10,576.95 10,647.65
Mar-97 10,424.76 11,565.75 10,503.97 10,454.61
Apr-97 10,521.71 12,255.07 10,626.87 10,485.09
May-97 10,936.27 13,000.18 10,715.07 10,921.97
Jun-97 11,171.40 13,582.58 10,812.58 11,155.65
Jul-97 11,400.41 14,662.40 11,032.08 11,358.85
Aug-97 11,306.93 13,841.30 10,976.91 11,297.89
Sep-97 11,652.92 14,598.42 11,104.25 11,643.33
Oct-97 11,567.86 14,110.84 11,227.50 11,511.25
Nov-97 11,587.52 14,764.17 11,252.20 11,490.93
Dec-97 11,664.00 15,018.11 11,342.22 11,491.58
Jan-98 11,746.81 15,183.31 11,490.81 11,512.56
Feb-98 12,081.60 16,278.03 11,481.61 11,869.38
Mar-98 12,248.32 17,111.46 11,518.35 12,047.79
Apr-98 12,361.01 17,286.00 11,575.95 12,121.25
May-98 12,254.70 16,988.68 11,660.45 11,974.33
Jun-98 12,358.87 17,678.42 11,735.08 12,047.79
Jul-98 12,219.21 17,491.03 11,776.15 11,827.40
Aug-98 11,647.35 14,962.18 11,961.04 11,187.23
Sep-98 12,112.08 15,920.71 12,261.26 11,533.55
Oct-98 12,510.57 17,215.70 12,249.00 11,837.90
Notes: We believe that the performance comparison to the composite benchmark, on
which the Fund's asset allocation model is based, is a more appropriate
comparison than a comparison to any single broad-based securities market index,
such as the S&P 500 Index or the Lehman Brothers Intermediate Gov't/Corp Bond
Index, which securities regulations require us to include. All Fund performance
numbers represent past performance, and are no guarantee of future results. The
Fund's share price and investment return will fluctuate, so that the value of an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns include change in share price and reinvestment of dividends
and distributions, if any. Returns reflect certain voluntary fee waivers. If the
waivers were not in place, the Fund's return would have been lower.
+ The returns are based on the composite performance of unmanaged indices and
assume reinvestment of dividends and interest payments. Indices and
percentages used: S&P 500 Index -- Large Cap Stocks (15%); Russell 2000 Index
-- Small Cap Stocks (15%); Morgan Stanley EAFE Index -- International Stocks
(5%); Lehman Bros. Intermediate Gov't/Corp Bonds -- Domestic Bonds (25%);
Salomon Bros. Non-$ World Gov't -- Foreign Gov't Bonds (20%); Federal Reserve
91-day Treasury Bill -- Cash (20%). Unlike the fund's total return the
composite benchmark total return does not reflect any fees or expenses.
6
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FUND PERFORMANCE CITISELECT FOLIO 300
TOTAL RETURNS
SINCE
ONE 6/17/96
ALL PERIODS ENDED OCTOBER 31, 1998 YEAR INCEPTION*
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CitiSelect(R)Folio 300 1.38% 8.03%
Composite Benchmark+ 8.40% 10.97%
*Average Annual Total Return
IMPORTANT TAX INFORMATION
The Fund designates for income tax purposes $2,190,541 of its capital gains
distribution as short-term capital gain.
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$12,011(as of 10/31/98). The graph shows how the Fund compares to its benchmarks
over the same period June 17, 1996 to October 31, 1998.
LEHMAN BROS
INTERMEDIATE
COMPOSITE GOVT/CORP CITISELECT
DATE BENCHMARK S&P 500 BOND INDEX FOLIO 300
Jun-96 10,000.00 10,000.00 10,000.00 10,000.00
Jul-96 9,786.68 9,640.20 10,115.26 9,810.00
Aug-96 9,959.91 9,843.61 10,123.35 10,110.00
Sep-96 10,208.90 10,396.82 10,264.06 10,355.31
Oct-96 10,304.87 10,683.77 10,445.74 10,435.58
Nov-96 10,645.96 11,490.39 10,583.62 10,806.85
Dec-96 10,615.09 11,262.88 10,515.88 10,761.11
Jan-97 10,679.84 11,965.69 10,556.90 10,841.87
Feb-97 10,646.73 12,060.22 10,576.95 10,781.30
Mar-97 10,433.80 11,565.75 10,503.97 10,549.12
Apr-97 10,560.04 12,255.07 10,626.87 10,589.50
May-97 11,094.38 13,000.18 10,715.07 11,144.72
Jun-97 11,406.13 13,582.58 10,812.58 11,462.68
Jul-97 11,712.96 14,662.40 11,032.08 11,756.08
Aug-97 11,545.46 13,841.30 10,976.91 11,634.68
Sep-97 11,996.89 14,598.42 11,104.25 12,079.83
Oct-97 11,808.54 14,110.84 11,227.50 11,847.13
Nov-97 11,840.42 14,764.17 11,252.20 11,837.02
Dec-97 11,935.15 15,018.11 11,342.22 11,822.28
Jan-98 12,036.60 15,183.31 11,490.81 11,832.74
Feb-98 12,498.80 16,278.03 11,481.61 12,334.93
Mar-98 12,738.78 17,111.46 11,518.35 12,596.48
Apr-98 12,863.62 17,286.00 11,575.95 12,669.72
May-98 12,696.39 16,988.68 11,660.45 12,450.01
Jun-98 12,828.43 17,678.42 11,735.08 12,533.71
Jul-98 12,623.18 17,491.03 11,776.15 12,198.92
Aug-98 11,733.24 14,962.18 11,961.04 11,236.40
Sep-98 12,262.41 15,920.71 12,261.26 11,592.11
Oct-98 12,800.73 17,215.70 12,249.00 12,010.60
Notes: We believe that the performance comparison to the composite benchmark, on
which the Fund's asset allocation model is based, is a more appropriate
comparison than a comparison to any single broad-based securities market index,
such as the S&P 500 Index or the Lehman Brothers Intermediate Gov't/Corp Bond
Index, which securities regulations require us to include. All Fund performance
numbers represent past performance, and are no guarantee of future results. The
Fund's share price and investment return will fluctuate, so that the value of an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns include change in share price and reinvestment of dividends
and distributions, if any. Returns reflect certain voluntary fee waivers. If the
waivers were not in place, the Fund's return would have been lower.
+ The returns are based on the composite performance of unmanaged indices and
assume reinvestment of dividends and interest payments. Indices and
percentages used: S&P 500 Index -- Large Cap Stocks (20%); Russell 2000 Index
-- Small Cap Stocks (20%); Morgan Stanley EAFE Index -- International Stocks
(10%); Lehman Bros. Intermediate Gov't/Corp Bonds -- Domestic Bonds (25%);
Salomon Bros. Non-$ World Gov't -- Foreign Gov't Bonds (20%); Federal Reserve
91-day Treasury Bill -- Cash (5%). Unlike the fund's total return the
composite benchmark total return does not reflect any fees or expenses.
7
<PAGE>
FUND PERFORMANCE CITISELECT FOLIO 400
TOTAL RETURNS
SINCE
ONE 6/17/96
ALL PERIODS ENDED OCTOBER 31, 1998 YEAR INCEPTION*
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CitiSelect(R)Folio 400 (2.73)% 7.15%
Composite Benchmark+ 6.22% 10.23%
*Average Annual Total Return
IMPORTANT TAX INFORMATION
The Fund designates for income tax purposes $194,688 of its capital gains
distribution as short-term capital gain.
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$11,781 (as of 10/31/98). The graph shows how the Fund compares to its
benchmarks over the same period June 17, 1996 to October 31, 1998.
LEHMAN BROS
INTERMEDIATE
COMPOSITE GOVT/CORP CITISELECT
DATE BENCHMARK S&P 500 BOND INDEX FOLIO 400
Jun-96 10,000.00 10,000.00 10,000.00 10,000.00
Jul-96 9,632.66 9,640.20 10,115.26 9,700.00
Aug-96 9,859.99 9,843.61 10,123.35 10,110.00
Sep-96 10,143.96 10,396.82 10,264.06 10,400.00
Oct-96 10,178.45 10,683.77 10,445.74 10,440.00
Nov-96 10,572.36 11,490.39 10,583.62 10,890.00
Dec-96 10,571.30 11,262.88 10,515.88 10,883.71
Jan-97 10,611.47 11,965.69 10,556.90 10,984.30
Feb-97 10,564.78 12,060.22 10,576.95 10,913.88
Mar-97 10,321.79 11,565.75 10,503.97 10,652.35
Apr-97 10,430.17 12,255.07 10,626.87 10,612.12
May-97 11,125.86 13,000.18 10,715.07 11,336.36
Jun-97 11,528.62 13,582.58 10,812.58 11,748.82
Jul-97 11,865.25 14,662.40 11,032.08 12,041.28
Aug-97 11,646.93 13,841.30 10,976.91 11,900.09
Sep-97 12,226.95 14,598.42 11,104.25 12,505.18
Oct-97 11,861.36 14,110.84 11,227.50 12,111.88
Nov-97 11,867.29 14,764.17 11,252.20 12,051.37
Dec-97 11,975.29 15,018.11 11,342.22 11,998.74
Jan-98 12,083.06 15,183.31 11,490.81 11,967.63
Feb-98 12,717.43 16,278.03 11,481.61 12,672.83
Mar-98 13,046.81 17,111.46 11,518.35 13,046.17
Apr-98 13,179.88 17,286.00 11,575.95 13,139.50
May-98 12,913.65 16,988.68 11,660.45 12,786.90
Jun-98 13,044.08 17,678.42 11,735.08 12,838.76
Jul-98 12,734.93 17,491.03 11,776.15 12,340.97
Aug-98 11,392.67 14,962.18 11,961.04 10,889.09
Sep-98 11,903.06 15,920.71 12,261.26 11,200.21
Oct-98 12,599.39 17,215.70 12,249.00 11,780.96
Notes: We believe that the performance comparison to the composite benchmark, on
which the Fund's asset allocation model is based, is a more appropriate
comparison than a comparison to any single broad-based securities market index,
such as the S&P 500 Index or the Lehman Brothers Intermediate Gov't/Corp Bond
Index, which securities regulations require us to include. All Fund performance
numbers represent past performance, and are no guarantee of future results. The
Fund's share price and investment return will fluctuate, so that the value of an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns include change in share price and reinvestment of dividends
and distributions, if any. Returns reflect certain voluntary fee waivers. If the
waivers were not in place, the Fund's return would have been lower.
+ The returns are based on the composite performance of unmanaged indices and
assume reinvestment of dividends and interest payments. Indices and
percentages used: S&P 500 Index -- Large Cap Stocks (20%); Russell 2000 Index
-- Small Cap Stocks (30%); Morgan Stanley EAFE Index -- International Stocks
(20%); Lehman Bros. Intermediate Gov't/Corp Bonds -- Domestic Bonds (5%);
Salomon Bros. Non-$ World Gov't -- Foreign Gov't Bonds (20%); Federal Reserve
91-day Treasury Bill -- Cash (5%). Unlike the fund's total return the
composite benchmark total return does not reflect any fees or expenses.
8
<PAGE>
FUND PERFORMANCE CITISELECT FOLIO 500
TOTAL RETURNS
SINCE
ONE 6/17/96
ALL PERIODS ENDED OCTOBER 31, 1998 YEAR INCEPTION*
- ---------------------------------------------------------------------
CitiSelect(R)Folio 500 (6.14)% 6.13%
Composite Benchmark+ 4.59% 12.07%
*Average Annual Total Return
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$11,371 (as of 10/31/98). The graph shows how the Fund compares to its
benchmarks over the same period September 3, 1996 to October 31, 1998.
SALOOMON
NON-$WORLD
COMPOSITE GOV'T BOND CITISELECT
DATE BENCHMARK S&P 500 (unmanaged) FOLIO 500
9/3/96 10,000.00 10,000.00 10,000.00 10,000.00
Sep-96 10,362.00 10,315.40 10,029.40 10,230.00
Oct-96 10,351.64 10,212.25 10,198.90 10,220.00
Nov-96 10,795.72 10,620.74 10,316.18 10,690.00
Dec-96 10,805.44 10,486.91 10,241.91 10,720.46
Jan-97 10,861.63 10,121.97 9,826.09 10,850.83
Feb-97 10,830.13 10,289.99 9,712.10 10,800.68
Mar-97 10,571.29 10,329.82 9,649.95 10,560.00
Apr-97 10,706.60 10,386.63 9,454.05 10,509.86
May-97 11,505.31 11,064.88 9,801.96 11,322.17
Jun-97 11,988.54 11,677.87 9,922.53 11,773.45
Jul-97 12,404.54 11,869.39 9,663.55 12,114.42
Aug-97 12,095.67 10,985.12 9,707.03 11,963.99
Sep-97 12,773.02 11,602.48 9,942.91 12,605.81
Oct-97 12,227.62 10,713.73 10,165.64 12,114.42
Nov-97 12,247.18 10,606.60 9,905.40 12,074.30
Dec-97 12,386.80 10,702.06 9,805.35 12,005.64
Jan-98 12,528.01 11,194.35 9,872.03 11,964.70
Feb-98 13,294.72 11,915.27 10,011.22 12,803.97
Mar-98 13,725.47 12,284.64 9,846.04 13,274.77
Apr-98 13,844.88 12,384.14 10,062.65 13,356.65
May-98 13,516.76 12,327.18 10,046.55 12,937.02
Jun-98 13,664.09 12,423.33 10,010.38 12,988.20
Jul-98 13,293.79 12,552.53 10,022.40 12,384.33
Aug-98 11,550.98 10,999.78 10,297.01 10,521.56
Sep-98 11,988.76 10,665.39 10,972.49 10,705.79
Oct-98 12,788.41 11,779.92 11,467.35 11,371.07
Notes: We believe that the performance comparison to the composite benchmark, on
which the Fund's asset allocation model is based, is a more appropriate
comparison than a comparison to any single broad-based securities market index,
such as the Morgan Stanley EAFE Index or the Salomon Bros. Non-$ World Gov't
Index, which securities regulations require us to include. All Fund performance
numbers represent past performance, and are no guarantee of future results. The
Fund's share price and investment return will fluctuate, so that the value of an
investor's shares, when redeemed, may be worth more or less than their original
cost. Total returns include change in share price and reinvestment of dividends
and distributions, if any. Returns reflect certain voluntary fee waivers. If the
waivers were not in place, the Fund's return would have been lower.
+ The returns are based on the composite performance of unmanaged indices and
assume reinvestment of dividends and interest payments. Indices and
percentages used: S&P 500 Index -- Large Cap Stocks (20%); Russell 2000 Index
-- Small Cap Stocks (35%); Morgan Stanley EAFE Index -- International Stocks
(30%); Salomon Bros. Non-$ World Gov't -- Foreign Gov't Bonds (10%); Federal
Reserve 91-day Treasury Bill -- Cash (5%). Unlike the fund's total return the
composite benchmark total return does not reflect any fees or expenses.
9
<PAGE>
CITISELECT PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
CITISELECT CITISELECT CITISELECT CITISELECT
OCTOBER 31, 1998 FOLIO 200 FOLIO 300 FOLIO 400 FOLIO 500
============================================================================================================
<S> <C> <C> <C> <C>
ASSETS:
Investment in, at value:
Large Cap Growth Portfolio $17,153,351 $36,847,074 $45,651,918 $17,747,772
Large Cap Value Portfolio 15,603,292 33,489,707 42,656,008 17,444,906
Small Cap Growth Portfolio 13,735,918 31,003,776 58,297,559 28,469,021
Small Cap Value Portfolio 12,002,843 27,491,599 52,611,052 26,095,833
International Portfolio 10,968,761 35,569,332 88,173,415 53,197,540
Intermediate Income Portfolio 52,478,771 88,899,376 23,005,886 --
Foreign Bond Portfolio 46,542,500 79,332,859 90,552,419 16,442,607
Short-Term Portfolio 38,284,187 8,883,544 10,514,114 4,104,389
- -----------------------------------------------------------------------------------------------------------
Total Investments (Note 1A) 206,769,623 341,517,267 411,462,371 163,502,068
Receivable for shares of
beneficial interest sold 1,002,209 334,642 281,358 528,502
Other assets 50,063 181,912 460,958 279,525
- -----------------------------------------------------------------------------------------------------------
Total Assets 207,821,895 342,033,821 412,204,687 164,310,095
- -----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of
beneficial interest repurchased 1,316,045 1,207,684 1,326,679 584,139
Payable to affiliates--
Management fees (Note 2) 41,338 47,391 33,677 13,195
Accrued expenses 151,070 323,693 494,704 172,393
- -----------------------------------------------------------------------------------------------------------
Total Liabilities 1,508,453 1,578,768 1,855,060 769,727
- -----------------------------------------------------------------------------------------------------------
NET ASSETS for 18,287,699,
29,654,732, 36,119,310 and
14,716,110 shares, respectively,
of beneficial interest
outstanding $206,313,442 $340,455,053 $410,349,627 $163,540,368
===========================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $194,050,933 $313,566,220 $384,737,414 $160,113,430
Undistributed net investment
income 3,932,440 4,752,923 2,111,319 193,366
Accumulated net realized gain
on investments 4,891,636 10,808,289 13,450,386 5,612,865
Unrealized appreciation (depreciation)
of investments and foreign currency
transactions 3,438,433 11,327,621 10,050,508 (2,379,293)
- -----------------------------------------------------------------------------------------------------------
Net Assets $206,313,442 $340,455,053 $410,349,627 $163,540,368
===========================================================================================================
NET ASSET VALUE PER SHARE
OF BENEFICIAL INTEREST $11.28 $11.48 $11.36 $11.11
===========================================================================================================
</TABLE>
See notes to financial statements
10
<PAGE>
CITISELECT PORTFOLIOS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED CITISELECT CITISELECT CITISELECT CITISELECT
OCTOBER 31, 1998 FOLIO 200 FOLIO 300 FOLIO 400 FOLIO 500
=============================================================================================================
<S> <C> <C> <C> <C>
INVESTMENT INCOME (Note 6):
Interest $ 7,719,629 $10,468,320 $ 8,004,574 $ 1,747,415
Dividends* 878,722 2,355,847 4,466,373 2,526,168
Allocated net expenses (1,413,666) (2,685,924) (3,783,062) (1,716,677)
Foreign tax reclaims 23,067 88,234 222,981 145,031
- -------------------------------------------------------------------------------------------------------------
7,207,752 10,226,477 8,910,866 2,701,937
- -------------------------------------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 3) 1,026,202 1,796,242 2,318,563 1,003,503
Management fees (Note 2) 479,555 579,750 439,941 140,476
Shareholder reports 42,010 108,214 97,289 2,795
Transfer agent fees 36,716 56,001 45,185 13,931
Legal services 39,610 43,224 36,751 31,138
Audit fees 21,204 24,642 18,450 21,030
Registration fees 14,471 8,956 -- --
Custody and fund accounting fees 17,305 17,601 23,232 15,187
Trustees fees 8,625 12,905 13,771 12,932
Other 18,442 55,075 52,742 17,109
- -------------------------------------------------------------------------------------------------------------
Total expenses 1,704,140 2,702,610 3,045,924 1,258,101
Less aggregate amounts waived by
the Manager (Note 2) (39,520) -- -- --
- -------------------------------------------------------------------------------------------------------------
Net expenses 1,664,620 2,702,610 3,045,924 1,258,101
- -------------------------------------------------------------------------------------------------------------
Net investment income 5,543,132 7,523,867 5,864,942 1,443,836
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) (Note 6):
Net realized gain 3,990,987 9,220,072 11,257,648 5,206,249
Net change in unrealized
depreciation (4,954,426) (12,789,550) (30,768,997) (19,385,626)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss (963,439) (3,569,478) (19,511,349) (14,179,377)
- -------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 4,579,693 $ 3,954,389 $(13,646,407) $(12,735,541)
=============================================================================================================
*Net of foreign taxes withheld $ 54,659 $ 182,116 $ 458,331 $ 296,652
</TABLE>
See notes to financial statements
11
<PAGE>
CITISELECT PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CITISELECT FOLIO 200 CITISELECT FOLIO 300
- ------------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS JUNE 17, 1996+ TEN MONTHS JUNE 17, 1996+
YEAR ENDED TO YEAR ENDED TO
ENDED OCTOBER 31, 1997 DECEMBER ENDED OCTOBER 31, 1997 DECEMBER
OCTOBER 31, 1998 (Note 1F) 1996 OCTOBER 31, 1998 (Note 1F) 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $ 5,543,132 $ 3,158,996 $ 899,000 $ 7,523,867 $ 5,081,355 $ 1,462,651
Net realized gain (loss) 3,990,987 1,586,569 328,852 9,220,072 4,036,929 756,606
Unrealized appreciation
(depreciation) of
investments (4,954,426) 5,482,209 2,910,650 (12,789,550) 16,483,809 7,633,362
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 4,579,693 10,227,774 4,138,502 3,954,389 25,602,093 9,852,619
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS FROM:
Net income (2,765,372) (71,535) (687,964) (4,055,263) (48,172) (1,078,616)
Net realized gain on
investments (2,990,460) (247,643) (206,058) (7,140,789) (553,981) (417,933)
In excess of net income -- -- -- -- -- --
In excess of realized gains
on investments -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total from distributions (5,755,832) (319,178) (894,022) (11,196,052) (602,153) (1,496,549)
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES
OF BENEFICIAL INTEREST
(Note 5):
Net proceeds from sale
of shares 156,198,374 97,483,483 107,356,153 155,429,504 161,589,276 195,928,712
Net asset value of shares
issued to shareholders
from reinvestment
of distributions 5,752,937 318,936 890,601 11,196,052 602,153 1,496,549
Cost of shares
repurchased (120,664,972) (44,283,179) (8,715,828) (144,121,491) (57,427,040) (10,353,009)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in shares
of beneficial interest 41,286,339 53,519,240 99,530,926 22,504,065 104,764,389 187,072,252
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS 40,110,200 63,427,836 102,775,406 15,262,402 129,764,329 195,428,322
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 166,203,242 102,775,406 -- 325,192,651 195,428,322 --
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $206,313,442 $166,203,242 $102,775,406 $340,455,053 $325,192,651 $195,428,322
====================================================================================================================================
*Including undistributed
and overdistributed net
investment income $ 3,932,440 $ 2,159,917 $ 155,387 $ 4,752,923 $ 3,095,564 $ 231,965
====================================================================================================================================
+Commencement of Operations
See notes to financial statements
</TABLE>
12
<PAGE>
CITISELECT PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CITISELECT FOLIO 400 CITISELECT FOLIO 500
- ------------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS JUNE 17, 1996+ TEN MONTHS JUNE 17, 1996+
YEAR ENDED TO YEAR ENDED TO
ENDED OCTOBER 31, 1997 DECEMBER ENDED OCTOBER 31, 1997 DECEMBER
OCTOBER 31, 1998 (Note 1F) 1996 OCTOBER 31, 1998 (Note 1F) 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM:
OPERATIONS:
Net investment income $ 5,864,942 $ 4,176,962 $ 1,097,081 $ 1,443,836 $ 1,062,640 $ 184,438
Net realized gain (loss) 11,257,648 6,053,161 1,371,474 5,206,249 2,209,014 (188,916)
Unrealized appreciation
(depreciation) of
investments (30,768,997) 27,920,674 12,898,831 (19,385,626) 13,574,647 3,431,686
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (13,646,407) 38,150,797 15,367,386 (12,735,541) 16,846,301 3,427,208
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS FROM:
Net income (3,075,835) (96,602) (629,492) (1,425,110) -- (144,954)
Net realized gain on
investments (9,500,048) (869,414) (738,025) (2,644,180) -- --
In excess of net income -- -- -- -- -- (1,053)
In excess of realized gains
on investments -- -- -- -- -- (73,003)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from distributions (12,575,883) (966,016) (1,367,517) (4,069,290) -- (219,010)
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES
OF BENEFICIAL INTEREST
(Note 5):
Net proceeds from sale
of shares 156,349,445 237,424,101 252,564,522 69,424,820 129,199,716 84,679,052
Net asset value of shares
issued to shareholders
from reinvestment
of distributions 12,574,806 966,016 1,367,517 4,068,438 -- 218,935
Cost of shares
repurchased (188,099,086) (73,383,909) (14,376,145) (95,971,232) (28,295,151) (3,033,878)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in shares
of beneficial interest (19,174,835) 165,006,208 239,555,894 (22,477,974) 100,904,565 81,864,109
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS (45,397,125) 202,190,989 253,555,763 (39,282,805) 117,750,866 85,072,307
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 455,746,752 253,555,763 -- 202,823,173 85,072,307 --
- ------------------------------------------------------------------------------------------------------------------------------------
End of period* $410,349,627 $455,746,752 $253,555,763 $163,540,368 $202,823,173 $85,072,307
====================================================================================================================================
*Including undistributed
and overdistributed net
investment income $ 2,111,319 $ 1,804,435 $ 308,689 $ 193,366 $ 720,000 $ (5,765)
====================================================================================================================================
+Commencement of Operations
See notes to financial statements
13
</TABLE>
<PAGE>
CITISELECT PORTFOLIOS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CITISELECT FOLIO 200 CITISELECT FOLIO 300
- ------------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS JUNE 17, 1996+ TEN MONTHS JUNE 17, 1996+
YEAR ENDED TO YEAR ENDED TO
ENDED OCTOBER 31, 1997 DECEMBER ENDED OCTOBER 31, 1997 DECEMBER
OCTOBER 31, 1998 (Note 1F) 1996 OCTOBER 31, 1998 (Note 1F) 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $11.33 $10.50 $10.00 $11.71 $10.66 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income From
Operations:
Net investment income 0.240 0.138 0.128 0.187 0.101 0.088
Net realized and unrealized
gain (loss) on investments 0.068++ 0.722 0.506 (0.036) 0.974 0.671
- ------------------------------------------------------------------------------------------------------------------------------------
Total from operations 0.308 0.860 0.634 0.151 1.075 0.759
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.172) (0.007) (0.112) (0.138) (0.002) (0.075)
Net realized gain
on investments (0.186) (0.023) (0.022) (0.243) (0.023) (0.024)
In excess of net income -- -- -- -- -- --
In excess of realized gains
on investments -- -- -- -- -- --
====================================================================================================================================
Total from distributions (0.358) (0.030) (0.134) (0.381) (0.025) (0.099)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
end of period $11.28 $11.33 $10.50 $11.48 $11.71 $10.66
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $206,313 $166,203 $102,775 $340,455 $325,193 $195,428
Ratio of expenses to
average net assets (A) 1.50% 1.50%* 1.50%* 1.50% 1.50%* 1.50%*
Ratio of net investment
income to average
net assets 2.70% 2.88%* 2.84%* 2.09% 2.30%* 2.38%*
Total return 2.84% 8.21%** 6.38%** 1.38% 10.09%** 7.61%**
Note: If Agents of the Funds and the Agents of respective Portfolios had not
voluntarily agreed to waive a portion of their fees, and the Sub-administrator
not assumed expenses for the periods indicated, the net investment income per
share and the ratios would have been as follows:
Net investment income
per share $0.238 $0.126 $0.076 $0.187 $0.100 $0.060
RATIOS:
Expenses to average
net assets (A) 1.52% 1.75%* 2.66%* 1.50% 1.52%* 2.26%*
Net investment income to
average net assets 2.68% 2.63%* 1.68%* 2.09% 2.28%* 1.62%*
====================================================================================================================================
(A) Includes allocated expenses for the periods indicated from the respective portfolios.
* Annualized
** Not Annualized
+ Commencement of Operations
++ The amount shown for a share outstanding does not correspond with the aggregate net realized
and unrealized gain (loss) on investments for the period ended due to the timing of sales
of Fund shares in relation to fluctuating market value of the investments.
</TABLE>
See notes to financial statements
14
<PAGE>
CITISELECT PORTFOLIOS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CITISELECT FOLIO 400 CITISELECT FOLIO 500
- ------------------------------------------------------------------------------------------------------------------------------------
TEN MONTHS JUNE 17, 1996+ TEN MONTHS JUNE 17, 1996+
YEAR ENDED TO YEAR ENDED TO
ENDED OCTOBER 31, 1997 DECEMBER ENDED OCTOBER 31, 1997 DECEMBER
OCTOBER 31, 1998 (Note 1F) 1996 OCTOBER 31, 1998 (Note 1F) 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $12.01 $10.82 $10.00 $12.08 $10.69 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income From
Operations:
Net investment income 0.090 0.037 0.042 0.053 0.044 0.019
Net realized and unrealized
gain (loss) on investments (0.417) 1.183 0.841 (0.786) 1.346 0.701
- ------------------------------------------------------------------------------------------------------------------------------------
Total from operations (0.327) 1.220 0.883 (0.733) 1.390 0.720
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.079) (0.003) (0.029) (0.083) -- (0.019)
Net realized gain
on investments (0.244) (0.027) (0.034) (0.154) -- --
In excess of net income -- -- -- -- -- (0.001)
In excess of realized gains
on investments -- -- -- -- -- (0.010)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from distributions (0.323) (0.030) (0.063) (0.237) -- (0.030)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
end of period $11.36 $12.01 $10.82 $11.11 $12.08 $10.69
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $410,350 $455,747 $253,556 $163,540 $202,823 $85,072
Ratio of expenses to
average net assets (A) 1.47% 1.65%* 1.75%* 1.48% 1.72%* 1.75%*
Ratio of net investment
income to average
net assets 1.26% 1.39%* 1.39%* 0.72% 0.88%* 1.09%*
Total return (2.73)% 11.28%** 8.84%** (6.14)% 13.00%** 7.20%**
Note: If Agents of the Funds and the Agents of respective Portfolios had not
voluntarily agreed to waive a portion of their fees, and the Sub-administrator
not assumed expenses for the periods indicated, the net investment income per
share and the ratios would have been as follows:
Net investment income
per share $0.090 $0.037 $0.028 $0.053 $0.040 $0.001
RATIOS:
Expenses to average
net assets (A) 1.47% 1.65%* 2.20%* 1.48% 1.80%* 2.80%*
Net investment income to
average net assets 1.26% 1.39%* 0.93%* 0.72% 0.80%* 0.04%*
====================================================================================================================================
(A) Includes allocated expenses for the periods indicated from the respective portfolios.
* Annualized
** Not Annualized
+ Commencement of Operations
++ The amount shown for a share outstanding does not correspond with the aggregate net realized
and unrealized gain (loss) on investments for the period ended due to the timing of sales
of Fund shares in relation to fluctuating market value of the investments.
See notes to financial statements
15
</TABLE>
<PAGE>
CITISELECT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiSelect Folio 200, CitiSelect Folio 300,
CitiSelect Folio 400 and CitiSelect Folio 500 (individually, the "Fund", or
collectively, the "Funds") are each a separate series of CitiFunds Trust I (the
"Trust"), a Massachusetts business trust. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect Folio
400 and CitiSelect Folio 500 each invest all of their investable assets in Large
Cap Growth Portfolio, Large Cap Value Portfolio, Small Cap Growth Portfolio,
Small Cap Value Portfolio, International Portfolio, Intermediate Income
Portfolio, Foreign Bond Portfolio, and Short-Term Portfolio, respectively, (the
"Portfolios"). All portfolios are registered under the Investment Company Act of
1940, as amended, are open-end, diversified management investment companies and
have multiple investors. These respective portfolios are organized as trusts
under the laws of the state of New York and are treated as partnerships for U.S.
tax purposes. The Declaration of Trusts permit the Trustees to issue beneficial
interests in the respective Portfolios. The Investment Adviser of the respective
Portfolios is Citibank N.A. ("Citibank"). The financial statements of the
Portfolios, including the portfolio of investments (which are not part of the
Funds financial statements), may be obtained without charge, and further
inquiries about the Portfolios may be made, by calling 1-800-625-4554.
Citibank, N.A. ("Citibank") is the Investment Manager of each of the
Portfolios and has hired Subadvisers for certain Portfolios. CFBDS, Inc.
("CFBDS", formerly Landmark Funds Broker-Dealer Services, Inc.) acts as each
Fund's Sub-Administrator and Distributor.
CitiSelect Folio 200 seeks to achieve its investment objective of as high a
total return over time as is consistent with a primary emphasis on a combination
of fixed income and money market securities, and a secondary emphasis on equity
securities by investing all of its investable assets in the Portfolios.
CitiSelect Folio 300 seeks to achieve its investment objective of as high a
total return over time as is consistent with a balanced emphasis on equity and
fixed income securities by investing all of its investable assets in the
Portfolios.
CitiSelect Folio 400 seeks to achieve its investment objective of as high a
total return over time as is consistent with a primary emphasis on equity
securities, and a secondary emphasis on fixed income securities by investing all
of its investable assets in the Portfolios.
CitiSelect Folio 500 seeks to achieve its investment objective of as high a
total return over time as is consistent with a dominant emphasis on equity
securities and a small allocation to fixed income securities by investing all of
its investable assets in the Portfolios.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
16
<PAGE>
CITISELECT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The significant accounting policies consistently followed by the Funds are as
follows:
A. INVESTMENT VALUATION Each Fund's net asset value will fluctuate based on
changes in the values of the underlying portfolios securities. The values of
each Fund's beneficial interest in its Portfolios are determined by multiplying
the net asset value of a Portfolio by a Fund's percentage of the aggregate
beneficial interest in that Portfolio for that day. This proportionate
percentage of interest in a Portfolio, including the effects of the prior day's
contributions and withdrawals, is then applied to determine the value of each
Fund's interest in a Portfolio as of the close of regular trading on the New
York Stock Exchange on each business day.
Each Fund's investments and other assets, including the Fund's interest in
various Portfolios and investments, securities and other assets held by the
respective Portfolios, are valued primarily on the basis of market quotations,
or if market quotations are not available, by a method believed to accurately
reflect fair value. An equity security that is primarily traded on a U.S. or
foreign exchange (including securities traded through the NASDAQ national market
system) is valued at the last sale price on that exchange or, if there were no
sales during the day (or for unlisted securities not reported on the NASDAQ
system), at the quoted bid price. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Bonds, foreign bonds
and other fixed income securities (other than short term securities maturing in
sixty days or less) are valued on the basis of valuations furnished by pricing
services authorized by the Board of Trustees, which utilize market quotations
and transactions, quotations from dealers and various relationships among
securities in determining value. Short-term obligations (maturing in 60 days or
less) are valued at amortized cost. Other assets and securities for which no
quotations are readily available are valued at fair value as determined in good
faith by or under guidelines established by the Trustees.
B. INVESTMENT INCOME Each Fund earns income, net of Portfolio expenses,
daily based on its investment in each Portfolio. Additionally, each Fund
reclaims its pro rata portion of recoverable foreign taxes.
C. FEDERAL TAXES The Funds' policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders all of its taxable income, including any net realized
gain on investment transactions. Accordingly, no provision for federal income or
excise tax is necessary.
D. EXPENSES Each Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more funds or series are allocated in proportion to the
average net assets of each fund, except when allocations of direct expenses to
each fund can otherwise be made fairly. Expenses directly attributable to a fund
are charged to that fund. A fund's share of the Portfolio's expenses are charged
against and reduce the amount of the Fund's investment in that Portfolio.
E. DISTRIBUTIONS Distributions to shareholders are recorded on the
ex-dividend date. The amount and character of income and net realized gains to
be distributed are determined in accordance with income tax rules and
regulations, which may differ from generally accepted accounting principles.
These differences are
17
<PAGE>
CITISELECT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
attributable to permanent book and tax accounting differences. Reclassifications
are made to each Fund's capital accounts to reflect income and net realized
gains available for distribution (or available capital loss carryovers) under
income tax rules and regulations. For the year ended October 31, 1998 CitiSelect
Folio 200, CitiSelect Folio 300, CitiSelect Folio 400 and CitiSelect Folio 500
reclassified $1,005,237, $1,811,245, $2,482,223 and $545,360, respectively from
undistributed net investment income to accumulated net realized gain.
F. CHANGE IN FISCAL YEAR END During the fiscal year 1997, the Funds changed
their fiscal year ends from December 31 to October 31.
G. OTHER All the realized and unrealized gain and loss of the Portfolios
are allocated pro rata, based on respective ownership interests, among the Funds
and the other investors in each Portfolio at the time of such determination.
2. MANAGEMENT FEES Citibank is responsible for overall management of each Fund's
business affairs, and has a separate Management Agreement with each of the
Funds. Citibank also provides certain administrative services to the Funds.
These administrative services include providing general office facilities and
supervising the overall administration of the Funds. CFBDS acts as
Sub-Administrator and performs certain duties and receives compensation from
Citibank from time to time as agreed to by Citibank and CFBDS. Citibank 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.
For the services of Citibank under the Management Agreements which covers
the Funds and respective Portfolios and the services of the Subadvisers, the
Funds and respective Portfolios pay an aggregate fee, which is accrued daily and
paid monthly, of 0.75% of the average daily net assets on an annualized basis
for the current fiscal year. This fee is higher than the management fee paid by
most mutual funds. Citibank may voluntarily agree to waive a portion of its
management fee from any Fund.
The management fee paid to Citibank for CitiSelect Folio 200, CitiSelect
Folio 300, CitiSelect Folio 400 and CitiSelect Folio 500 amounted to $479,555,
$579,750, $439,941 and $140,476 of which $39,520 for CitiSelect Folio 200, was
voluntarily waived by the manager for the year ended October 31, 1998.
The Trust pays no compensation directly to any Trustee or any other officer
who is affiliated with the Sub-Administrator, all of whom receive remuneration
for their services to the Trust from the Sub-Administrator or its affiliates.
3. DISTRIBUTION FEES Each of the Funds has adopted a Service Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, under which the
Fund pays fees for distribution, sales and marketing and shareholder services at
an annual rate not to exceed 0.50% of each Fund's average daily net assets which
amounted to $1,026,202, $1,796,242, $2,318,563 and $1,003,503 for CitiSelect
Folio 200, CitiSelect Folio 300, CitiSelect Folio 400 and CitiSelect Folio 500,
respectively, for the year ended October 31, 1998.
4. INVESTMENT TRANSACTIONS Contributions and withdrawals in the Funds'
investment in the Portfolios for the year ended October 31, 1998, were as
follows:
18
<PAGE>
CITISELECT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CONTRIBUTIONS WITHDRAWALS
================================================================================
CitiSelect Folio 200 $280,256,069 $245,197,866
CitiSelect Folio 300 $483,239,161 $471,149,001
CitiSelect Folio 400 $285,012,253 $315,640,214
CitiSelect Folio 500 $341,399,470 $366,187,370
5. SHARES 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). Transactions in shares of beneficial interest were
as follows:
CITISELECT FOLIO 200
- --------------------------------------------------------------------------------
YEAR TEN MONTHS JUNE 17, 1996+
ENDED ENDED TO
OCTOBER 31, OCTOBER 31, 1997 DECEMBER 31,
1998 (Note 1F) 1996
================================================================================
Shares sold 13,850,585 8,941,698 10,551,539
Shares reinvested 529,249 30,174 86,538
Shares repurchased (10,763,390) (4,084,861) (853,833)
- --------------------------------------------------------------------------------
Net increase 3,616,444 4,887,011 9,784,244
================================================================================
CITISELECT FOLIO 300
- --------------------------------------------------------------------------------
YEAR TEN MONTHS JUNE 17, 1996+
ENDED ENDED TO
OCTOBER 31, OCTOBER 31, 1997 DECEMBER 31,
1998 (Note 1F) 1996
================================================================================
Shares sold 13,293,751 14,513,003 19,201,036
Shares reinvested 1,002,332 53,100 142,587
Shares repurchased (12,417,139) (5,130,252) (1,003,686)
- --------------------------------------------------------------------------------
Net increase 1,878,944 9,435,851 18,339,937
================================================================================
CITISELECT FOLIO 400
- --------------------------------------------------------------------------------
YEAR TEN MONTHS JUNE 17, 1996+
ENDED ENDED TO
OCTOBER 31, OCTOBER 31, 1997 DECEMBER 31,
1998 (Note 1F) 1996
================================================================================
Shares sold 13,008,116 20,837,873 24,716,079
Shares reinvested 1,103,053 83,062 127,805
Shares repurchased (15,946,902) (6,391,184) (1,418,592)
- --------------------------------------------------------------------------------
Net increase (decrease) (1,835,733) 14,529,751 23,425,292
================================================================================
CITISELECT FOLIO 500
YEAR TEN MONTHS JUNE 17, 1996+
ENDED ENDED TO
OCTOBER 31, OCTOBER 31, 1997 DECEMBER 31,
1998 (Note 1F) 1996
================================================================================
Shares sold 5,673,025 11,266,707 8,228,228
Shares reinvested 353,470 -- 20,792
Shares repurchased (8,094,784) (2,440,204) (291,124)
- --------------------------------------------------------------------------------
Net increase (decrease) (2,068,289) 8,826,50 7,957,896
================================================================================
+ Commencement of Operations
19
<PAGE>
CITISELECT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Pertinent details as to various amounts allocated from each Portfolio to
CitiSelect Folio 200 for the year ended October 31, 1998 are noted below. With
respect to the Portfolios, investment transactions are accounted for on the
trade date basis and realized gains and losses are determined on the identified
cost basis.
PORTFOLIO
INTEREST DIVIDENDS EXPENSES
================================================================================
Large Cap Growth Portfolio $ 35,332 $111,428 $ (110,813)
Large Cap Value Portfolio 16,545 274,796 (114,849)
Small Cap Growth Portfolio 29,824 26,317 (132,015)
Small Cap Value Portfolio 23,576 137,362 (129,454)
International Portfolio 14,595 294,905 (112,501)
Intermediate Income Portfolio 3,212,468 33,914 (316,390)
Foreign Bond Portfolio 2,208,760 -- (309,603)
Short-Term Portfolio 2,178,529 -- (188,041)
- --------------------------------------------------------------------------------
Total $7,719,629 $878,722 $(1,413,666)
================================================================================
CHANGE IN PERCENTAGE
REALIZED UNREALIZED OF OWNERSHIP
GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO
================================================================================
Large Cap Growth Portfolio $1,807,896 $ 1,573,096 2.8%
Large Cap Value Portfolio 978,006 (1,717,168) 12.1%
Small Cap Growth Portfolio (725,989) (1,951,643) 7.0%
Small Cap Value Portfolio 889,382 (5,563,342) 7.3%
International Portfolio 184,828 (964,441) 4.7%
Intermediate Income Portfolio 637,260 763,984 24.9%
Foreign Bond Portfolio 202,222 2,864,283 16.5%
Short-Term Portfolio 17,384 38,587 46.5%
Foreign Tax Reclaim (2) 2,218 --
- --------------------------------------------------------------------------------
Total $3,990,987 $(4,954,426)
================================================================================
Pertinent details as to various amounts allocated from each Portfolio to
CitiSelect Folio 300 for the year ended October 31, 1998 are included below.
With respect to the Portfolios, investment transactions are accounted for on the
trade date basis and realized gains and losses are determined on the identified
cost basis.
PORTFOLIO
INTEREST DIVIDENDS EXPENSES
================================================================================
Large Cap Growth Portfolio $ 81,395 $ 266,979 $ (262,547)
Large Cap Value Portfolio 38,769 653,051 (272,782)
Small Cap Growth Portfolio 70,961 63,143 (313,445)
Small Cap Value Portfolio 56,373 325,788 (308,545)
International Portfolio 48,863 990,829 (377,788)
Intermediate Income Portfolio 5,601,573 56,057 (551,008)
Foreign Bond Portfolio 3,830,283 -- (536,007)
Short-Term Portfolio 740,103 -- (63,802)
- --------------------------------------------------------------------------------
Total $10,468,320 $2,355,847 $(2,685,924)
================================================================================
CHANGE IN PERCENTAGE
REALIZED UNREALIZED OF OWNERSHIP
GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO
================================================================================
Large Cap Growth Portfolio $4,413,545 $ 4,144,705 6.0%
Large Cap Value Portfolio 2,323,516 (4,464,528) 25.9%
Small Cap Growth Portfolio (1,515,226) (4,261,380) 15.9%
Small Cap Value Portfolio 2,242,873 (11,433,990) 16.1%
International Portfolio 589,406 (2,604,101) 15.4%
Intermediate Income Portfolio 1,074,120 1,208,609 42.1%
Foreign Bond Portfolio 86,797 4,604,154 28.1%
Short-Term Portfolio 5,048 9,852 10.8%
Foreign Tax Reclaim (7) 7,129 --
- --------------------------------------------------------------------------------
Total $9,220,072 $(12,789,550)
================================================================================
20
<PAGE>
Pertinent details as to various amounts allocated from each Portfolio to
CitiSelect Folio 400 for the year ended October 31, 1998 are noted below. With
respect to the Portfolios, investment transactions are accounted for on the
trade date basis and realized gains and losses are determined on the identified
cost basis.
PORTFOLIO
INTEREST DIVIDENDS EXPENSES
================================================================================
Large Cap Growth Portfolio $ 102,806 $ 333,466 $ (329,368)
Large Cap Value Portfolio 48,831 822,821 (344,130)
Small Cap Growth Portfolio 138,081 122,875 (607,076)
Small Cap Value Portfolio 110,309 633,909 (600,822)
International Portfolio 127,291 2,538,305 (971,320)
Intermediate Income Portfolio 1,489,361 14,997 (146,431)
Foreign Bond Portfolio 5,009,409 -- (699,572)
Short-Term Portfolio 978,486 -- (84,343)
- --------------------------------------------------------------------------------
Total $8,004,574 $4,466,373 $(3,783,062)
================================================================================
CHANGE IN PERCENTAGE
REALIZED UNREALIZED OF OWNERSHIP
GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO
================================================================================
Large Cap Growth Portfolio $ 5,464,321 $ 5,097,803 7.5%
Large Cap Value Portfolio 2,950,077 (5,805,509) 33.0%
Small Cap Growth Portfolio (2,829,560 (8,043,853) 29.9%
Small Cap Value Portfolio 4,392,922 (22,094,114) 30.8%
International Portfolio 1,366,459 (6,143,980) 38.2%
Intermediate Income Portfolio 284,975 339,839 10.9%
Foreign Bond Portfolio (378,445 )5,845,978 32.1%
Short-Term Portfolio 6,924 16,904 12.8%
Foreign Tax Reclaim (25) 17,935 --
================================================================================
Total $11,257,648 $(30,768,997)
================================================================================
Pertinent details as to various amounts allocated from each Portfolio to
CitiSelect Folio 500 for the year ended October 31, 1998 are noted below. With
respect to the Portfolios, investment transactions are accounted for on the
trade date basis and realized gains and losses are determined on the identified
cost basis.
PORTFOLIO
INTEREST DIVIDENDS EXPENSES
================================================================================
Large Cap Growth Portfolio $ 44,379 $ 145,034 $ (143,192)
Large Cap Value Portfolio 21,253 359,006 (150,216)
Small Cap Growth Portfolio 70,180 63,117 (309,735)
Small Cap Value Portfolio 56,554 323,656 (306,603)
International Portfolio 81,271 1,635,355 (622,904)
Intermediate Income Portfolio -- -- --
Foreign Bond Portfolio 1,071,969 -- (149,414)
Short-Term Portfolio 401,809 -- (34,613)
- --------------------------------------------------------------------------------
Total $1,747,415 $2,526,168 $(1,716,677)
================================================================================
CHANGE IN PERCENTAGE
REALIZED UNREALIZED OF OWNERSHIP
GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO
================================================================================
Large Cap Growth Portfolio $2,413,120 $ 2,040,381 2.9%
Large Cap Value Portfolio 1,295,925 (3,115,406) 13.5%
Small Cap Growth Portfolio (1,433,322) (4,330,622) 14.6%
Small Cap Value Portfolio 2,268,586 (11,072,187) 15.3%
International Portfolio 838,857 (4,162,920) 23.0%
Intermediate Income Portfolio -- -- 0.0%
Foreign Bond Portfolio (179,508) 1,239,010 5.8%
Short-Term Portfolio 2,606 4,710 5.0%
Foreign Tax Reclaim (15) 11,408 --
- --------------------------------------------------------------------------------
Total $5,206,249 $(19,385,626)
================================================================================
21
<PAGE>
CITISELECT PORTFOLIOS
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES OF CITIFUNDS TRUST I (THE TRUST) AND
THE SHAREHOLDERS OF CITISELECT FOLIO 200,
CITISELECT FOLIO 300, CITISELECT FOLIO 400 AND
CITISELECT FOLIO 500:
In our opinion, the accompanying statement of assets and liabilities and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect Folio 400 and
CitiSelect Folio 500 (the "Funds"), each a series of CitiFunds Trust I, at
October 31, 1998, the results of each of their operations, the changes in their
net assets and their financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at October 31, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 1998
22
<PAGE>
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23
<PAGE>
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24
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., CHAIRMAN
Philip W. Coolidge*, PRESIDENT
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*AFFILIATED PERSON OF SUB-ADMINISTRATOR AND DISTRIBUTOR
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th floor
Boston, MA 02109
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company 225 Franklin
Street, Boston, MA 02110
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
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.
(C) 1998 Citicorp [LOGO] Printed on recycled paper CSA/1098
<PAGE>
[CitiSelect]
TO: Securities and Exchange Commission
Division of Investment Management
Judiciary Plaza
450 Fifth Street, N.W.
Washington D.C. 20549
FROM: CitiFunds Trust I
CitiSelect Folio 200
CitiSelect Folio 300
CitiSelect Folio 400
CitiSelect Folio 500
(CIK No. 0000744388)
(CCC No. 5m$ovccf)
(Registration File Nos. 2-90518; 811-4006)
DATE: December 28, 1998
On behalf of the above-noted registrant, transmitted herewith for filing
pursuant to Rule 30b2-1 are the annual financial statements for the period ended
October 31, 1998.
Please call Linda T. Gibson of CFBDS, Inc. at (617) 423-0800 with any comments
or questions relating to this report.
