--------------------------------------------------------------------------------
CITIFUNDS(SM)
---------
--------------------------------------------------------------------------------
LARGE CAP
GROWTH PORTFOLIO
SEMI-ANNUAL REPORT
APRIL 30, 2000
--------------------------------------------------------------------------------
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
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 4
................................................................................
Portfolio Highlights 5
................................................................................
Fund Performance 6
................................................................................
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
Statement of Assets and Liabilities 7
................................................................................
Statement of Operations 8
................................................................................
Statement of Changes in Net Assets 9
................................................................................
Financial Highlights 10
................................................................................
Notes to Financial Statements 12
................................................................................
LARGE CAP GROWTH PORTFOLIO
Portfolio of Investments 15
................................................................................
Statement of Assets and Liabilities 17
................................................................................
Statement of Operations 18
................................................................................
Statement of Changes in Net Assets 19
................................................................................
Financial Highlights 20
................................................................................
Notes to Financial Statements 21
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
During the past six months, the U.S. stock and bond markets experienced
historic levels of volatility, leaving many investors with little or no clear
indication of the future direction of the financial markets. Despite the ongoing
strength and expansion of both the U.S. and global economy, investor concerns
regarding inflation and rising interest rates led to wide fluctuations in stock
prices.
Throughout the six-month period, the CitiFunds' investment adviser, Citibank,
N.A., continued to manage CitiFundsSM Large Cap Growth Portfolio with the goal
of achieving its investment objective: providing long-term capital growth.
This report reviews the Portfolio's investment activities and performance
during the reporting period, and provides a summary of Citibank's perspective
on, as well as its outlook for, the U.S. stock market. On behalf of the Board of
Trustees, I want to thank you for your continued confidence and participation in
these challenging times for investors.
Sincerely,
/s/ Philip W. Coolidge
----------------------
Philip W. Coolidge
President
May 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PERFORMANCE OF LARGE CAP GROWTH STOCKS DURING THE REPORTING PERIOD CAN
BEST BE DESCRIBED IN 19TH CENTURY AUTHOR CHARLES DICKENS' FAMOUS WORDS AS BOTH
"THE BEST OF TIMES AND THE WORST OF TIMES." (Growth stocks are shares of those
companies that are expected to grow earnings faster than the overall market.) To
many investors, the performance of stocks in the fourth quarter of 1999 was
reflective of the "best of times." Many large cap growth stocks, especially
technology and telecommunications stocks, rose sharply as investors drove up
prices amid optimism about the so-called "New Economy," represented primarily by
technology stocks in the biotechnology, communications, Internet and software
industries.
During the first quarter of 2000, however, investor optimism waned,
triggering a decline in many share prices, resulting in what seemed like the
"worst of times." The prices of many stocks, especially those in the technology
sector, fell amid investors' concerns regarding the fundamentals and valuations
of their issuers.
IN THE OPINION OF MANAGEMENT, INVESTORS BEGAN TO CONCLUDE THAT SOME
COMPANIES' STOCK PRICES MAY BE TOO HIGH RELATIVE TO FUNDAMENTALS SUCH AS
REVENUES AND EARNINGS. THE HIGH LEVELS OF VOLATILITY OF THE U.S. STOCK MARKET
TOOK PLACE AGAINST AN ECONOMIC BACKDROP OF ROBUST ECONOMIC GROWTH AND RISING
INTEREST RATES. Strengthening economies worldwide encouraged many investors to
believe that expanding global demand for goods and services would in turn fuel
rising revenues and earnings for large U.S. companies.
However, rising U.S. interest rates tended to have the opposite effect during
the reporting period, dampening investor enthusiasm because of the adverse
effects of higher financing costs that can negatively impact corporate earnings.
Indeed, higher interest rates were the result of more restrictive monetary
policies adopted by several central banks that became increasingly concerned
that unsustainable economic growth might reignite inflationary pressures.
In an attempt to reduce the rate of economic growth, the Federal Reserve
Board raised short-term interest rates three times in 25-basis point* increments
(to 6.00%) during the reporting period**. Despite these rate hikes, SEVERAL
MAJOR U.S. STOCK MARKET INDEXES, INCLUDING THE STANDARD & POOR'S 500 INDEX ("S&P
500"),*** REACHED RECORD LEVELS BY THE END OF 1999. However, a closer
examination revealed that many investors had already begun to turn their
attention away from the large and well-known companies that had previously led
the market and in which the Large Cap Growth Portfolio invests. Investors
instead gravitated toward young and, for the most part, relatively unproven
technology companies that they believed had great investment potential.
Additionally, for the first time in several years, the small cap growth sector
of the U.S. stock market outperformed the large cap growth sector during the
reporting period. The value sector continued to underperform the overall market.
(Value stocks are the shares
* A basis point is .01% or one one-hundredth of one percent.
** Please note that on May 16, 2000, after this letter was written, the Fed
raised interest rates 50 basis points to 6.5%.
*** The S&P 500 is an index of U.S. common stocks and is used as a gauge of
general U.S. stock market performance.
2
<PAGE>
of those companies that are believed to be inexpensive compared to other
companies with similar earnings or assets.)
However, during the first quarter of 2000, the performance of the U.S. stock
market dramatically changed. Faced with evidence that the U.S. economy was
gaining momentum and that inflationary pressures were building, investor
sentiment shifted dramatically. The prices of many large cap stocks fell sharply
in January and February before recovering in early March. Between mid-March and
the end of April, however, the market experienced a substantial correction. The
tech-laden NASDAQ Composite Index**** fell by more than 30%, including a
single-day drop of 10% on April 14, 2000. Shares of more seasoned "blue chip"
(or so-called "Old Economy") companies declined less severely, reflected by the
7.18% return of the S&P 500.
IN SPITE OF HIGHER MARKET VOLATILITY AND OFTEN VIOLENT SECTOR SWINGS,
CITIFUNDS(SM) LARGE CAP GROWTH PORTFOLIO MAINTAINED ITS INVESTMENT FOCUS ON
LARGE, HIGH-QUALITY GROWTH COMPANIES. The Portfolio's management follows a
specific discipline which requires that a company have a track record of
profitability to be considered for purchase, and avoids speculative companies
without profits. The Portfolio's management uses fundamental analysis to
discover today's large, profitable companies that it expects to perform well
over the long term.
Because of the Portfolio's stringent investment criteria and growth-oriented
focus, the Portfolio's technology holdings were primarily in established market
leaders in the technology sector. Rather than investing in some of the newer,
fast-growing so-called "dot.com" and software businesses, management invested in
those companies involved with the infrastructure of the Internet. While the
Portfolio's telecommunications stocks performed competitively during the period,
management later reduced the Portfolio's holdings in this area and took profits
in regional and long-distance telephone companies.
The Portfolio's holdings in the retail and financial sectors produced solid
returns for the Portfolio. On the other hand, the Portfolio's performance during
the period was hampered by holdings in the consumer products and health care
sectors, both of which experienced slower earnings growth.
THE PORTFOLIO'S MANAGEMENT EXPECTS THE HIGH LEVEL OF MARKET VOLATILITY TO
CONTINUE THROUGH THE END OF 2000. Over the long term, however, management
believes that conditions generally remain positive for well-known companies in
the growth sector. And while no guarantees can be made, management also believes
that when prevailing investor uncertainty dissipates, investors may once again
favor large, well-established companies that grow profits consistently and have
the ability to generate higher earnings in both the "New" and "Old" Economies.
****The NASDAQ Composite Index is a market value-weighted index that measures
all domestic and non-U.S. based securities listed on the NASDAQ stock
market.
3
<PAGE>
FUND FACTS
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.
INVESTMENT MANAGER, DIVIDENDS
Large Cap Growth Portfolio Paid semi-annually, if any
Citibank, N.A.
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
October 19, 1990 Distributed annually, if any
NET ASSETS AS OF 4/30/00 BENCHMARKS
Class A shares o Standard & Poor's Barra Growth Index*
$478.8 million o Lipper Growth Funds Average**
Class B shares
$28.0 million
* The Standard & Poor's 500 Index ("S&P 500") is an index of U.S. common stocks
and is used as a gauge of general U.S. stock market performance. The Standard
& Poor's Barra Growth Index represents the growth stocks in the S&P 500.
** The Lipper Growth Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
4
<PAGE>
PORTFOLIO HIGHLIGHTS
--------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS AS OF APRIL 30, 2000
COMPANY, INDUSTRY % OF NET ASSETS
General Electric Co., Conglomerates 7.91%
...............................................................................
Cisco Systems Inc., Computer & Telecommunications Equipment 7.17%
...............................................................................
Intel Corp., Semi-Conductors 6.69%
...............................................................................
Microsoft Corp., Computer Software 4.79%
...............................................................................
International Business Machines Corp.,
Computer & Telecommunications Equipment 4.40%
...............................................................................
Wal-Mart Stores Inc., Retail 3.97%
...............................................................................
Oracle Corp., Computer Software 3.77%
...............................................................................
Pfizer Inc., Healthcare 2.85%
...............................................................................
Sun Microsystems Inc., Computer & Telecommunications Equipment 2.80%
...............................................................................
Nortel Networks Corp., Computer & Telecommunications Equipment 2.71%
...............................................................................
PORTFOLIO DIVERSIFICATION AS OF APRIL 30, 2000
[Table below represents Pie chart in its printed piece]
Consumer Non-Durable 1%
Finance 7%
Commercial Serivices 4%
Retail 9%
*Short-Term 7%
Healthcare 13%
Semi-Conductors 12%
Conglomerates 8%
Communication Services 3%
Computer & Telecommunication
Equipment 23%
Computer Software 12%
Capital Goods/Producer
Manufacturer 1%
*Includes cash and net other assets
5
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE 10/19/90
ALL PERIODS ENDED APRIL 30, 2000 SIX MONTHS** YEAR YEARS* (INCEPTION)*
--------------------------------------------------------------------------------
CitiFunds Large Cap Growth Portfolio
(Class A) without sales charge 7.86% 14.18% 22.73% 18.33%
Lipper Growth Funds Average 16.83% 22.75% 23.27% 19.34%+
S&P Barra Growth Index 10.83% 19.02% 30.20% 22.79%+
CitiFunds Large Cap Growth Portfolio
(Class A) with a maximum sales
charge of 5.00% 2.47% 8.47% 21.48% 17.69%
CitiFunds Large Cap Growth Portfolio
(Class B) without deferred sales
charge 7.50% 13.34% -- 11.04%#
Lipper Growth Funds Average 16.83% 22.75% -- 22.35%++
S&P Barra Growth Index 10.83% 19.02% -- 19.60%++
CitiFunds Large Cap Growth Portfolio
(Class B) with a maximum deferred
sales charge of 5.00% 2.13% 7.67% -- 6.81%#
* Average Annual Total Return
** Not Annualized
+ From 10/31/90
++ From 12/31/98
# Commencement of Operations 1/4/99
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$47,277 with sales charge (as of 4/30/00). The graph shows how the Fund compares
to its benchmarks over the same period.
[Table below represents line Chart in its printed piece]
CitiFunds Large Cap Lipper Growth S&P Barra Growth
Growth Portfolio Funds Index
(Class A) Average (unmanaged)
------------------- ------------- ------------------
10/19/90 9500 10000 10000
9354 10000 10000
9916 10660 10604
10007 11014 10941
10447 11690 11396
11220 12534 12280
11294 12938 12744
4/30/91 11053 12922 12720
11806 13456 13200
11137 12795 12649
11791 13430 13325
12456 13838 13754
12034 13712 13453
12308 13993 13617
11781 13435 13270
13083 14921 15140
12871 14997 14608
13189 15208 14695
12840 14755 14354
4/30/92 12893 14656 14506
12861 14738 14619
12451 14309 14316
12982 14821 14962
12621 14499 14790
12897 14724 14964
13226 15021 15189
13959 15769 15803
14077 16061 15907
14152 16259 15735
13950 16004 15608
14758 16447 15828
4/30/93 14524 15937 15098
14939 16516 15636
14794 16566 15503
14602 16526 15183
15262 17225 15737
15305 17401 15497
15518 17643 16073
15326 17297 16062
15804 17797 16174
16124 18322 16520
15868 18036 16225
15163 17187 15475
4/30/94 15441 17244 15545
15750 17310 15798
15298 16727 15462
15777 17169 15955
16169 17955 16807
15755 17632 16567
16049 17911 16953
15516 17239 16397
15740 17398 16680
15840 17520 17094
16397 18173 17761
16798 18678 18318
4/30/95 16976 19061 18794
17522 19616 19467
17799 20420 20213
18362 21372 20858
18182 21537 20789
18733 22157 21816
18789 21825 21990
19801 22585 22782
20076 22664 23039
20601 23149 23920
20729 23672 24137
21103 23883 24036
4/30/96 21266 24669 24505
21651 25323 25406
21890 24958 25724
20641 23475 24538
21195 24304 24901
22373 25682 26629
22385 25857 27207
23635 27398 29240
22854 27001 28564
24207 28381 30801
24044 27969 31059
22779 26646 29585
4/30/97 24720 27637 31972
25948 29682 33868
27217 30851 35585
29121 33446 38404
27164 32336 35850
28433 34134 37678
27944 32840 36544
29557 33392 38528
30026 33709 39002
30769 33867 40313
32933 36421 43114
34519 38024 45343
4/30/98 34552 38476 45724
33660 37349 44805
36401 38705 47995
35923 37807 47966
31265 31614 41725
33594 33489 44517
35460 35860 48247
37475 38037 51516
41192 41031 55434
43005 42709 58819
40941 40971 56512
42843 42766 59249
4/30/99 41407 44002 59134
39953 43192 57411
43023 45784 61519
41497 44584 59573
41982 44152 60399
41712 43410 59371
43830 45941 63477
45141 47935 66192
48268 52436 71092
45090 50396 66356
45069 52825 67749
49506 56127 74015
4/30/00 47277 53674 70351
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the indices) and assumes all dividends and distributions from the
Fund are reinvested at Net Asset Value.
Notes: 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. Total
return figures "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors, and reflect
voluntary fee waivers which may be terminated at any time. If the waivers were
not in place, the Fund's returns would have been lower. The maximum sales charge
of 5.00% went into effect on January 4, 1999. Investors may not invest directly
in an index.
6
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
==============================================================================
ASSETS:
Investment in Large Cap Growth Portfolio, at value (Note 1A) $508,239,666
Receivable for shares of beneficial interest sold 87,800
------------------------------------------------------------------------------
Total assets 508,327,466
------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 1,304,697
Payable to affiliates-- Management fees (Note 2) 26,177
Accrued expenses and other liabilities 208,395
------------------------------------------------------------------------------
Total liabilities 1,539,269
------------------------------------------------------------------------------
NET ASSETS $506,788,197
==============================================================================
NET ASSETS CONSIST OF:
Paid-in capital $367,094,953
Accumulated net investment loss (950,819)
Unrealized appreciation 85,181,294
Undistributed net realized gain 55,462,769
------------------------------------------------------------------------------
Total $506,788,197
==============================================================================
COMPUTATION OF
CLASS A SHARES:
Net Asset Value per share ($478,837,540/20,894,981 shares
outstanding) $22.92
Offering Price per share ($22.92 O 0.95) $24.13*
==============================================================================
CLASS B SHARES:
Net Asset Value per share and offering price
($27,950,657/1,232,076 shares outstanding) $22.69**
==============================================================================
* Based upon single purchases of less than $25,000.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
See notes to financial statements
7
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
================================================================================
INVESTMENT INCOME (NOTE 1B):
Dividend Income from Large Cap Growth Portfolio $ 1,689,257
Interest Income from Large Cap Growth Portfolio 280,957
Allocated Expenses from Large Cap Growth Portfolio (1,694,782)
--------------------------------------------------------------------------------
$ 275,432
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 804,120
Service fees Class A (Note 3) 634,280
Service fees Class B (Note 3) 143,280
Transfer agent fees 118,213
Shareholder reports 68,950
Legal fees 24,360
Registration fees 19,540
Custody and fund accounting fees 19,087
Audit fees 10,868
Trustees fees 12,423
Other 22,452
--------------------------------------------------------------------------------
Total expenses 1,877,573
Less aggregate amount waived by the Manager (Note 2) (651,322)
--------------------------------------------------------------------------------
Net expenses 1,226,251
--------------------------------------------------------------------------------
Net investment loss (950,819)
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN FROM
LARGE CAP GROWTH PORTFOLIO:
Net realized gain 38,878,592
Unrealized appreciation 3,886,790
--------------------------------------------------------------------------------
Net realized and unrealized gain from
Large Cap Growth Portfolio 42,765,382
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $41,814,563
================================================================================
See notes to financial statements
8
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss $ (950,819) $ (1,917,877)
Net realized gain 38,878,592 93,539,988
Unrealized appreciation 3,886,790 4,631,674
--------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 41,814,563 96,253,785
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- --
Net realized gain (73,988,765) (35,754,369)
--------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (73,988,765) (35,754,369)
--------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (NOTE 5):
CLASS A
Net proceeds from sale of shares 49,525,168 171,779,784
Net asset value of shares issued to
shareholders from reinvestment of
distributions 69,566,803 35,750,664
Cost of shares repurchased (123,834,472) (131,507,869)
--------------------------------------------------------------------------------
Total Class A (4,742,501) 76,022,579
--------------------------------------------------------------------------------
CLASS B*
Net proceeds from sale of shares 2,345,732 31,598,337
Net asset value of shares issued to
shareholders from reinvestment
of distributions 3,676,334 --
Cost of shares repurchased (4,474,913) (4,342,786)
--------------------------------------------------------------------------------
Total Class B 1,547,153 27,255,551
--------------------------------------------------------------------------------
Net increase (decrease) in net assets from
transactions in shares of beneficial
interest (3,195,348) 103,278,130
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (35,369,550) 163,777,546
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 542,157,747 378,380,201
--------------------------------------------------------------------------------
End of period (including overdistributed
and undistributed net investment loss
of $(950,819) and $0, respectively) $506,788,197 $542,157,747
================================================================================
</TABLE>
* January 4, 1999 (Commencement of Operations).
See notes to financial statements
9
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, OCTOBER 31 DECEMBER 31,
2000 ------------- 1997 -------------------------
(Unaudited) 1999 1998 (Note 1F) 1996 1995 1994++
========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $ 24.42 $ 21.47 $ 21.14 $ 18.25 $ 17.20 $ 14.13 $ 14.80
----------------------------------------------------------------------------------------
Income From Operations:
Net investment
income (loss) (0.038) (0.079) (0.022) 0.031 0.122 0.211 0.173
Net realized and
unrealized gain (loss)
on investments 1.976 4.944 4.735 4.016 2.250 3.651 (0.245)
----------------------------------------------------------------------------------------
Total from operations 1.938 4.865 4.713 4.047 2.372 3.862 (0.072)
----------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.012) (0.030) (0.118) (0.210) (0.169)
Net realized gain on
investments (3.438) (1.915) (4.371) (1.127) (1.204) (0.582) (0.429)
----------------------------------------------------------------------------------------
Total distributions (3.438) (1.915) (4.383) (1.157) (1.322) (0.792) (0.598)
----------------------------------------------------------------------------------------
Net Asset Value, end
of period $ 22.92 $ 24.42 $ 21.47 $ 21.14 $ 18.25 $ 17.20 $ 14.13
========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $478,837 $513,883 $378,380 $248,161 $228,954 $213,729 $183,975
Ratio of expenses to
average net assets (A) 1.05%* 1.05% 1.05% 1.05%* 1.05% 1.05% 1.05%
Ratio of net investment
income (loss) to
average net assets (0.31)%* (0.34)% (0.11)% 0.18%* 0.67% 1.30% 1.15%
Portfolio turnover (B) -- -- -- -- -- -- 1.00%
Total return 7.86%** 23.60% 26.90% 22.27%** 13.84% 27.55% (0.41)%
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees and had expenses been limited to that required by
certain state securities laws the net investment income (loss) per share and the
ratios would have been as follows:
Net investment income
(loss) per share $(0.068) $(0.131) $(0.078) $(0.023) $0.067 $0.170 $0.136
RATIOS:
Expenses to average
net assets (A) 1.29%* 1.27% 1.32% 1.35%* 1.35% 1.30% 1.29%
Net investment income
(loss) to average
net assets (0.55)%* (0.56)% (0.38)% (0.12)%* 0.37% 1.05% 0.91%
========================================================================================
</TABLE>
* Annualized.
** Not Annualized.
+ The per share amounts were computed using a monthly average number of shares
outstanding during the year.
(A)Includes the Fund's share of Large Cap Growth Portfolio allocated expenses
for the periods subsequent to May 1, 1994.
(B)Portfolio turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred all of its investable
assets to the Portfolio is shown in the Portfolio's financial statements
which are included elsewhere in this report.
++ On May 1, 1994 the Fund began investing all of its investable assets in Large
Cap Growth Portfolio.
See notes to financial statements
10
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
CLASS B
-----------------------------------
SIX MONTHS JANUARY 4, 1999
ENDED (COMMENCEMENT
APRIL 30, 2000 OF OPERATIONS) TO
(Unaudited) OCTOBER 31, 1999
================================================================================
Net Asset Value, beginning of period $24.28 $22.73
--------------------------------------------------------------------------------
Income From Operations:
Net investment loss (0.124) (0.206)
Net realized and unrealized gain on investments 1.972 1.756
--------------------------------------------------------------------------------
Total from operations 1.848 1.55
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
Net realized gain on investments (3.438) --
--------------------------------------------------------------------------------
Total distributions (3.438) --
--------------------------------------------------------------------------------
Net Asset Value, end of period $22.69 $24.28
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $27,951 $28,275
Ratio of expenses to average net assets (A) 1.80%* 1.80%*
Ratio of net investment loss to average net
assets (1.06)* (1.13)%*
Total return 7.50%** 6.82%**
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees the net investment loss per share and the ratios would
have been as follows:
Net investment loss per share $(0.153) $(0.258)
RATIOS:
Expenses to average net assets (A) 2.04%* 2.02%*
Net investment loss to average net assets (1.30)%* (1.35)%*
================================================================================
* Annualized.
** Not Annualized.
+ The per share amounts were computed using a monthly average number of shares
outstanding during the period.
(A) Includes the Fund's share of Large Cap Growth Portfolio allocated expenses.
See notes to financial statements
11
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Large Cap Growth Portfolio (the
"Fund") is a separate diversified series of CitiFunds Trust II (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.
The Fund currently invests all of its investable assets in Large Cap Growth
Portfolio (the "Portfolio"), a management investment company for which Citibank,
N.A. ("Citibank") serves as Investment Manager. The value of such investment
reflects the Fund's proportionate interest (77% at April 30, 2000) in the net
assets of the Portfolio. CFBDS, Inc ("CFBDS"), acts as the Fund's
Sub-Administrator and Distributor.
The Fund offers Class A and Class B shares. The Fund commenced its public
offering of Class B shares on January 4, 1999. Class A shares have a front-end,
or initial, sales charge effective January 4, 1999. This sales charge may be
reduced or eliminated in certain circumstances. Class B shares have no front-end
sales charge, pay a higher ongoing distribution fee than Class A, and are
subject to a deferred sales charge if sold within five years of purchase. Class
B shares automatically convert into Class A shares after eight years. Expenses
of the Fund are borne pro-rata by the holders of each class of shares, except
that each class bears expenses unique to that class (including the Rule 12b-1
service and distribution fees applicable to such class), and votes as a class
only with respect to its own Rule 12b-1 plan. Shares of each class would receive
their pro-rata share of the net assets of the Fund if the Fund were liquidated.
Class A shares have lower expenses than Class B shares. For the six months ended
April 30, 2000, CFBDS, acting as the distributor received $84,826 from sales of
Class A and $53,957 in deferred sales charges from redemptions of Class B
shares.
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 preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. INVESTMENT VALUATION Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.
C. Federal Taxes The Fund's 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
12
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
investment transactions. Accordingly, no provision for federal income or excise
tax is necessary.
D. EXPENSES The 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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
E. DISTRIBUTIONS Distributions to shareholders are recorded on 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 attributable to permanent book and tax accounting differences.
Reclassifications are made to the 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.
F. CHANGE IN FISCAL YEAR END During fiscal year 1997, the Fund changed its
fiscal year end from December 31 to October 31.
G. OTHER All the net investment income, realized and unrealized gain and loss
of the Portfolio is allocated pro rata, based on respective ownership interests,
among the Fund and the other investors in the Portfolio at the time of such
determination. Investment transactions are accounted for on the trade date
basis. Realized gains and losses are determined on the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's
business affairs, and has a Management Agreement with the Fund. Citibank also
provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs certain
duties and receives compensation from Citibank as from time to time is agreed to
by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.30% of the Fund's average
daily net assets. The management fee amounted to $804,120 of which $651,322 was
voluntarily waived for the six months ended April 30, 2000.
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. SERVICE FEES The Fund maintains separate Service Plans for Class A and Class
B shares, which have been adopted in accordance with Rule 12b-1 under the 1940
Act. Under the Class A Service Plan, the Fund may pay monthly fees at an
13
<PAGE>
CITIFUNDS LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
annual rate not to exceed 0.25% of the average daily net assets represented by
Class A shares of the Fund. The Service fees for Class A shares amounted to
$634,280 for the six months ended April 30, 2000. Under the Class B Service
Plan, the Fund may pay a combined monthly distribution and service fee at an
annual rate not to exceed 1.00% of the average daily net assets represented by
Class B shares of the Fund. The Distribution fees for Class B shares amounted to
$143,280 for the six months ended April 30, 2000. These fees may be used to make
payments to the Distributor for distribution services and to others as
compensation for the sale of shares of the applicable class of the Fund, for
advertising, marketing or other promotional activity, and for preparation,
printing and distribution of prospectuses, statements of additional information
and reports for recipients other than regulators and existing shareholders. The
Fund may also make payments to the Distributor and others for providing personal
service or the maintenance of shareholder accounts.
4. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio for the six months ended April 30, 2000 aggregated $52,096,737 and
$130,956,493, respectively.
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:
Six Months Ended Year Ended
April 30, 2000 October 31,
(Unaudited) 1999
================================================================================
CLASS A
Shares sold 2,122,269 7,419,389
Shares issued to shareholders from
reinvestment of distributions 3,029,913 1,619,142
Shares repurchased (5,302,660) (5,618,300)
--------------------------------------------------------------------------------
Class A net increase (decrease) (150,478) 3,420,231
================================================================================
CLASS B*
Shares sold 100,832 1,349,188
Shares issued to shareholders from
reinvestment of distributions 161,313 --
Shares repurchased (194,488) (184,769)
--------------------------------------------------------------------------------
Class B net increase 67,657 1,164,419
================================================================================
* January 4, 1999 (Commencement of Operations)
14
<PAGE>
LARGE CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
=============================================================-
COMMON STOCKS--92.8%
-------------------------------------------------------------
CAPITAL GOODS/PRODUCER
MANUFACTURER -- 1.4%
-------------------------------------------------------------
American Power
Conversion Corp.* 50,000 $ 1,765,625
Tyco International Ltd. 164,000 7,533,750
-------------
9,299,375
-------------
COMPUTER SOFTWARE--11.5%
-------------------------------------------------------------
America Online Inc.* 236,000 14,115,750
Microsoft Corp.* 446,600 31,150,350
National Instruments
Corp.* 38,000 1,852,500
Oracle Corp.* 307,000 24,540,812
Yahoo Inc.* 26,000 3,386,500
-------------
75,045,912
-------------
COMPUTER & TELECOMMUNICATIONS
EQUIPMENT--23.0%
-------------------------------------------------------------
Cisco Systems Inc.* 672,900 46,650,895
EMC Corp.* 121,100 16,825,331
International Business
Machines Corp. 256,600 28,642,975
Lexmark International
Group Inc.* 23,000 2,714,000
Network Appliance Inc.* 53,000 3,918,688
Nortel Networks Corp. 156,000 17,667,000
Qualcomm Inc.* 88,000 9,542,500
SCI Systems Inc.* 36,000 1,917,000
Sun Microsystems Inc.* 198,000 18,203,625
Tellabs Inc.* 63,000 3,453,188
-------------
149,535,202
-------------
COMMERCIAL SERVICES--3.5%
-------------------------------------------------------------
Automatic Data
Processing Inc. 71,000 3,820,688
Concord Inc.* 84,000 1,879,500
Illinois Tool Works Inc. 54,000 3,459,375
Interpublic Group of
Companies Inc. 59,600 2,443,600
PayChex Inc. 32,000 1,684,000
Time Warner Inc. 106,000 9,533,375
-------------
22,820,538
-------------
COMMUNICATION SERVICES--3.1%
-------------------------------------------------------------
SBC Communications 337,000 14,764,812
Sprint Corp.* 94,000 5,170,000
-------------
19,934,812
-------------
CONGLOMERATES--8.2%
-------------------------------------------------------------
General Dynamics Corp. 37,000 2,164,500
General Electric Co. 327,400 51,483,650
-------------
53,648,150
-------------
CONSUMER NON-DURABLES--1.1%
-------------------------------------------------------------
Pepsico Inc. 188,000 6,897,250
-------------
CONSUMER SERVICES--0.4%
-------------------------------------------------------------
Harley Davidson Inc. 62,000 2,468,375
-------------
FINANCE--7.0%
-------------------------------------------------------------
American Express Co. 59,000 8,853,687
Bank of New York 142,100 5,834,981
Charles Schwab Corp. 81,000 3,604,500
Federal Home Loan
Mortgage Corp. 64,000 2,964,250
Federal National
Mortgage Association 99,000 6,040,267
Marsh & McLennan
Company Inc. 20,000 1,971,250
MBNA Corp. 136,000 3,612,500
Morgan Stanley
Dean Witter & Co. 98,000 7,521,500
Northern Trust Corp. 77,000 4,937,625
-------------
45,340,560
-------------
HEALTHCARE--13.0%
-------------------------------------------------------------
Abbott Labs 174,000 6,688,125
Amgen Inc.* 131,000 7,336,000
Biogen Inc.* 34,000 1,999,625
Cardinal Health Inc. 41,000 2,257,562
Eli Lilly & Co. 84,600 6,540,638
Johnson & Johnson 169,700 14,000,250
Medtronic Inc. 170,000 9,162,796
Pfizer Inc. 440,000 18,535,000
Schering-Plough Corp. 182,200 7,344,938
Warner Lambert Co. 92,681 10,548,256
-------------
84,413,190
-------------
RETAIL--8.6%
-------------------------------------------------------------
Bed Bath & Beyond Inc.* 58,100 2,131,544
GAP Inc. 126,000 4,630,500
Home Depot 228,500 12,810,281
Kohl's Corp.* 92,000 4,416,000
Lowes Company Inc. 57,000 2,821,500
WalGreen Co. 129,000 3,628,125
Wal-Mart Stores Inc. 466,200 25,815,825
-------------
56,253,775
-------------
15
<PAGE>
LARGE CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
=============================================================-
SEMI-CONDUCTORS--12.0%
-------------------------------------------------------------
Applied Materials Inc. * 89,500 $ 9,112,219
Dallas Semiconductor
Corp. 40,000 1,717,500
Intel Corp. 343,600 43,572,775
Linear Technologies Corp. 52,000 2,970,500
Micrel Inc.* 14,000 1,211,000
Qlogic Corp.* 21,000 2,106,562
Texas Instruments Inc. 93,000 15,147,375
Xilinx Inc.* 33,500 2,453,875
-------------
78,291,806
-------------
TOTAL COMMON STOCKS
(Identified Cost
$464,169,453) 603,948,945
-------------
SHORT-TERM OBLIGATIONS
AT AMORTIZED COST--4.2%
-------------------------------------------------------------
First Union National Bank
Repurchase Agreement
5.84% due 05/01/00
proceeds at maturity
$27,260,260
(collateralized by
$9,500,000 Federal Home
Loan Mortgage 6.75% due
2/15/02 valued at
$9,583,125; $10,000,000
Freddie Mac 6.44% due
8/21/01, valued at
$9,948,260 and
$8,110,000 Federal
National Mortgage 5.72%
due 1/09/01, value at
$8,191,000) $ 27,247,000
-------------
TOTAL INVESTMENTS
(Identified Cost
$491,416,453) 97.0% 631,195,945
OTHER ASSETS,
LESS LIABILITIES 3.0 19,674,234
----- -------------
NET ASSETS 100.0% $650,870,179
===== =============
* Non-income producing security
See notes to financial statements
16
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $491,416,453) $631,195,945
Cash 473
Receivable for investments sold 39,955,808
Dividends and interest receivable 331,732
--------------------------------------------------------------------------------
Total assets 671,483,958
--------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 19,870,564
Payable to affiliates-- Management fees (Note 2) 324,991
Accrued expenses and other liabilities 418,224
--------------------------------------------------------------------------------
Total liabilities 20,613,779
--------------------------------------------------------------------------------
Net Assets $650,870,179
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $650,870,179
================================================================================
See notes to financial statements
17
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $ 2,170,088
Interest income 360,756
--------------------------------------------------------------------------------
Total investment income $ 2,530,844
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 2,072,328
Custody and fund accounting fees 54,402
Legal fees 17,002
Audit fees 13,945
Trustees fees 11,230
Other 6,846
--------------------------------------------------------------------------------
Total expenses 2,175,753
--------------------------------------------------------------------------------
Net investment income 355,091
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions 49,909,264
Unrealized appreciation of investments 5,797,574
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments 55,706,838
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $56,061,929
================================================================================
See notes to financial statements
18
<PAGE>
LARGE CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31,
(Unaudited) 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 355,091 $ 286,398
Net realized gain on investment transactions 49,909,264 130,508,299
Unrealized appreciation of investments 5,797,574 16,171,002
--------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 56,061,929 146,965,699
--------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 82,321,931 301,816,661
Value of withdrawals (190,813,892) (356,386,616)
--------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions (108,491,961) (54,569,955)
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS: (52,430,032) 92,395,744
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 703,300,211 610,904,467
--------------------------------------------------------------------------------
End of period $650,870,179 $703,300,211
================================================================================
See notes to financial statements
19
<PAGE>
LARGE CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TEN MONTHS MAY 1, 1994
SIX MONTHS YEAR ENDED ENDED YEAR ENDED (COMMENCEMENT
ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31, OF OPERATIONS)
APRIL 30, 2000 --------------- 1997 ---------------- TO DECEMBER 31,
(Unaudited) 1999 1998 (Note 1F) 1996 1995 1994
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets,
end of period
(000's omitted) $650,870 $703,300 $610,904 $324,913 $288,562 $246,158 $186,685
Ratio of expenses
to average
net assets 0.63%* 0.67% 0.71% 0.60%* 0.60% 0.60% 0.60%*
Ratio of net
investment income
to average
net assets 0.10%* 0.04% 0.23% 0.62%* 1.10% 1.73% 1.81%*
Portfolio turnover 49% 108% 53% 103% 90% 67% 35%
================================================================================================================
</TABLE>
* Annualized
See notes to financial statements
20
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Large Cap Growth Portfolio (the "Portfolio"),
a separate series of The Premium Portfolios (the "Trust"), is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio. The Investment Manager of the Portfolio
is Citibank, N.A. ("Citibank"). Signature Financial Group (Grand Cayman), Ltd.
("SFG") acts as the Portfolio's Sub-Administrator.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. INVESTMENT SECURITY VALUATIONS Equity securities listed on securities
exchanges or reported through the NASDAQ system are valued at last sale prices.
Unlisted securities or listed securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in sixty days or less), are valued on the basis
of valuations furnished by pricing services approved by the Board of Trustees
which take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, and other market data, without exclusive reliance on quoted prices or
exchange or over-the-counter prices. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. Securities, if any, for which there are no such
valuations or quotations are valued at fair value as determined in good faith by
or under guidelines established by the Trustees.
B. INCOME Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on long-term debt securities
when required for U.S. federal income tax purposes. Dividend income is recorded
on the ex-dividend date.
C. U.S. FEDERAL INCOME TAXES The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. REPURCHASE AGREEMENTS It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
21
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
E. EXPENSES The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
F. CHANGE IN FISCAL YEAR END During the fiscal year 1997, the Portfolio
changed its fiscal year end from December 31 to October 31.
G. OTHER Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank is a
wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank amounted to $2,072,328 for the six
months ended April 30, 2000. Management fees are computed at the annual rate of
0.60% of the Portfolio's average daily net assets.
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. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $326,425,959 and $464,288,210,
respectively, for the six months ended April 30, 2000.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 2000, as
computed on a federal income tax basis, are as follows:
Aggregate cost $491,416,453
================================================================================
Gross unrealized appreciation $159,480,900
Gross unrealized depreciation (19,701,408)
--------------------------------------------------------------------------------
Net unrealized appreciation $139,779,492
================================================================================
22
<PAGE>
LARGE CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
5. LINE OF CREDIT The Portfolio, along with various other Portfolios in the
CitiFunds Family, entered into an ongoing agreement with a bank which allows the
Portfolios collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio executing the borrowing at the base rate of the bank. The line of
credit requires a quarterly payment of a commitment fee based on the average
daily unused portion of the line of credit. For the six months ended April 30,
2000, the commitment fee allocated to the Portfolio was $1,049. Since the line
of credit was established, there have been no borrowings.
23
<PAGE>
This page intentionally left blank.
<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
Robert Frenkel**
TREASURER
Linwood Downs*
* AFFILIATED PERSON OF SUB-ADMINISTRATOR AND DISTRIBUTOR
** AFFILIATED PERSON OF INVESTMENT MANAGER
*** TRUSTEE EMERITUS
INVESTMENT MANAGER
(of Large Cap Growth Portfolio)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
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
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
================================================================================
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds Growth
& Income Portfolio. It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus of CitiFunds Growth
& Income Portfolio.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds Growth &Income Portfolio, 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.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)2000 Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFS/GI/400
<PAGE>
================================================================================
CITIFUNDS(SM)
--------------------
================================================================================
SMALL CAP
GROWTH
SEMI-ANNUAL REPORT PORTFOLIO
APRIL 30, 2000
CitiFunds
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
--------------------------------------------------------------------------------
Portfolio Environment and Outlook 2
--------------------------------------------------------------------------------
Fund Facts 4
--------------------------------------------------------------------------------
Portfolio Highlights 5
--------------------------------------------------------------------------------
Fund Performance 6
--------------------------------------------------------------------------------
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
Statement of Assets and Liabilities 7
--------------------------------------------------------------------------------
Statement of Operations 8
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 9
--------------------------------------------------------------------------------
Financial Highlights 10
--------------------------------------------------------------------------------
Notes to Financial Statements 12
--------------------------------------------------------------------------------
SMALL CAP GROWTH PORTFOLIO
Portfolio of Investments 15
--------------------------------------------------------------------------------
Statement of Assets and Liabilities 18
--------------------------------------------------------------------------------
Statement of Operations 19
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 20
--------------------------------------------------------------------------------
Financial Highlights 21
--------------------------------------------------------------------------------
Notes to Financial Statements 22
--------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
During the six months ended April 30, 2000, the U.S. stock markets
experienced historic levels of volatility. The continuing growth of the U.S. and
global economies coupled with rising interest rates and shifts in investor
psychology largely contributed to the wide fluctuations in stock prices. Yet,
despite market volatility, some small company stocks provided competitive
returns during the period.
Throughout the reporting period, the CitiFunds' investment adviser, Citibank,
N.A., continued to manage CitiFundsSM Small Cap Growth Portfolio with the goal
of achieving its investment objective: long-term capital growth.
This report reviews the Portfolio's investment activities and performance
during the reporting period, and provides a summary of Citibank's perspective on
as well as its outlook for the small cap growth stock sector of the U.S. market.
On behalf of the Board of Trustees, I want to thank you for your continued
confidence and participation in these challenging times.
Sincerely,
/s/ Philip W. Coolidge
----------------------
Philip W. Coolidge
President
May 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
DURING NOVEMBER AND DECEMBER 1999, THE SMALL CAP GROWTH SECTOR OF THE U.S.
STOCK MARKET EXPERIENCED A STRONG RALLY FUELED BY INVESTOR OPTIMISM OVER THE
GROWTH OF THE SO-CALLED "NEW ECONOMY"--NAMELY, THOSE COMPANIES OPERATING IN THE
TECHNOLOGY, TELECOMMUNICATIONS AND INTERNET ARENAS. In fact, small cap growth
stocks (i.e., companies with the potential for faster-than-average growth within
their industries) significantly outperformed small, value-oriented stocks (i.e.,
companies whose shares are considered to be inexpensive relative to their asset
values or earning power) as well as most areas of the large cap sector of the
stock market. The rise of small cap growth stocks during the period was driven
primarily by the performance of technology and telecommunications stocks.
AS A RESULT, SEVERAL MAJOR U.S. STOCK MARKET INDEXES, INCLUDING THE RUSSELL
2000(R) INDEX,* REACHED RECORD LEVELS BY THE END OF 1999. However, a closer look
showed that many investors had started to turn their attention away from the
better-known and high-quality companies that had previously led the U.S. market.
Many investors had gravitated instead to younger and more speculative technology
companies that they believed had great future potential.
During the first four months of 2000, however, investor optimism regarding
the "New Economy" dissipated, triggering a drop in the prices of both many large
and small cap growth stocks. Despite a rally in February 2000, small cap shares
began to fall primarily due to investors' concerns regarding these companies'
underlying fundamentals.
Faced with evidence that the U.S. economy was gaining momentum and that
inflationary pressures were building, many investors thought that some growth
stock prices might have risen too high relative to traditional measures such as
revenues and earnings. As a result, despite a rally in February, small cap
stocks have for the most part declined so far in 2000. In fact, between
mid-March and the end of April, the tech-laden NASDAQ Composite Index** fell
more than 35%, including a single-day drop of 10% on April 14, 2000.
THE STOCK MARKET'S GYRATIONS TOOK PLACE AGAINST A BACKDROP OF ROBUST U.S.
ECONOMIC GROWTH AND RISING INTEREST RATES. Strengthening economies worldwide
caused investors to think that robust global and domestic demand for goods and
services would in turn fuel rising revenues and earnings for U.S. companies.
However, higher interest rates tended to have the opposite effect, dampening
investor enthusiasm due to the adverse effects of higher financing costs on
corporate earnings.
CitiFunds(SM) Small Cap Growth Portfolio maintained its investment focus on
small cap growth companies that meet its stated investment criteria. Despite the
*The Russell 2000(R)Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index, which represents approximately 8% of the
total market capitalization of the Russell 3000 Index. The Russell 3000(R)
Index measures the performance of the 3,000 largest U.S. companies based on
total market capitalization, which represents approximately 98% of the
investable U.S. equity market.
**The NASDAQ Composite Index is a market value-weighted index that measures all
domestic and non-U.S. based securities listed on the NASDAQ stock market.
2
<PAGE>
challenges present in the market, management has continued to allocate a portion
of its assets judiciously to Internet stocks, focusing on those companies
believed to have attractive growth potential and definable valuation parameters.
Approximately 50% of the Fund's assets were invested in technology stocks during
the reporting period, comparable to the technology weighting of the Russell 2000
Index.
However, the Portfolio's management team tended to avoid many of those
speculative high-flyers that most investors associate with the Internet during
the period. Instead of investing in the so-called "dot.com" companies, THE
MANAGEMENT TEAM ESTABLISHED OR INCREASED POSITIONS PRIMARILY IN SMALL TECHNOLOGY
COMPANIES THAT PROVIDE HARDWARE AND INFRASTRUCTURE FOR THE INTERNET. This area
includes telecommunications companies that, in management's view, should be
prime beneficiaries of growing demand for the transmission of voice, video and
data over telephone lines at faster speeds. Many of these companies have
business models that are either proven or profitable today.
WIRELESS TELECOMMUNICATIONS STOCKS ALSO CONTRIBUTED POSITIVELY TO THE FUND'S
PERFORMANCE during the period, reflecting a strong demand for wireless services.
The Fund also benefited from the competitive performance of energy services
companies, primarily because of higher oil prices. Certain health care
companies, including several pharmaceutical companies scheduled to offer new
drugs, also positively contributed to the Portfolio's performance.
Looking forward, management expects heightened market volatility to continue
in 2000. While no guarantees can be given, management also believes that the
recent market correction was a generally positive development, setting new
standards for many technology company valuations. The managers intend to take
advantage of buying opportunities created during this correction, upgrading the
Fund with high-quality small-cap companies at what they deem to be relatively
attractive prices. (Of course, no assurances can be made that they will be
successful.)
OVER THE LONG TERM, MANAGEMENT BELIEVES THAT CONDITIONS REMAIN POSITIVE FOR
MANY SMALL CAP GROWTH COMPANIES and believe that investors may be beginning to
recognize that small cap growth companies embody dynamic entrepreneurial forces
driving the U.S. economy. In the opinion of management, these burgeoning
enterprises can often provide excellent opportunities to participate in some of
the fastest growing sectors of the economy.
3
<PAGE>
FUND FACTS
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective
INVESTMENT MANAGER, DIVIDENDS
Small Cap Growth Portfolio Paid semi-annually, if any
Citibank, N.A.
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
June 21, 1995 Distributed annually, if any
NET ASSETS AS OF 4/30/00 BENCHMARKS
Class A shares o Lipper Small Cap Funds Average*
$30 million o Russell 2000(R) Growth Index**
Class B shares $1.2 million
* The Lipper Small Cap Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
**The Russell 2000(R) Growth Index measures the performance of those Russell
2000 companies with higher price to book ratios and higher forecasted growth
values.
4
<PAGE>
PORTFOLIO HIGHLIGHTS
================================================================================
TOP TEN EQUITY HOLDINGS AS OF APRIL 30, 2000
COMPANY, INDUSTRY % OF NET ASSETS
Mercury Interactive Corp., Electronics/Technical Services 2.96%
--------------------------------------------------------------------------------
R & B Falcon Corp., Energy Minerals 2.70%
--------------------------------------------------------------------------------
Powerwave Technologies, Inc., Electronics/Technical Services 2.17%
--------------------------------------------------------------------------------
Amkor Technology, Inc., Semi-Conductor 2.16%
--------------------------------------------------------------------------------
Pinnacle Holdings, Inc., Telecommunications 2.10%
--------------------------------------------------------------------------------
Macromedia, Inc., Electronics/Technical Services 2.08%
--------------------------------------------------------------------------------
Methode Electronics Inc., Electronics/Technical Services 1.86%
--------------------------------------------------------------------------------
Cal Dive International, Inc., Energy Minerals 1.63%
--------------------------------------------------------------------------------
Micrel, Inc., Semi-Conductor 1.63%
--------------------------------------------------------------------------------
Catalina Marketing Corp., Consumer Services 1.62%
--------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION AS OF APRIL 30, 2000
[TABLE BELOW REPRESENTS PIE CHART IN ITS PRINTED PIECE]
*Short-Term 6%
Commercial Services 4%
Technology 2%
Electronics/Technical Services 21%
Telecommunications 8%
Semi-Conductor 15%
Consumer Service 6%
Software 3%
Finance 6%
Healthcare 9%
Retail 3%
Capital Goods/Producer
Manufacturing 8%
Energy Minerals 7%
Transportation 1%
Industrial Services 1%
*Includes cash and net other assets.
5
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
SIX ONE JUNE 21, 1995
ALL PERIODS ENDED APRIL 30, 2000 MONTHS** YEAR (INCEPTION)*
================================================================================
CitiFunds Small Cap Growth Portfolio (Class A)
without sales charge 33.02% 56.53% 27.64%
Lipper Small Cap Funds Average 25.87% 36.64% 18.39%
Russell 2000 Growth Index 27.79% 31.38% 15.66%
CitiFunds Small Cap Growth Portfolio (Class A)
with a maximum sales charge of 5.00% 26.37% 48.70% 26.30%
CitiFunds Small Cap Growth Portfolio (Class B)
without deferred sales charge 32.52% 55.25% 35.27%#
Lipper Small Cap Funds Average 25.87% 36.64% 25.53%
Russell 2000 Growth Index 27.79% 31.38% 29.16%
CitiFunds Small Cap Growth Portfolio (Class B)
with a maximum deferred sales charge of 5.00% 25.89% 47.49% 30.12%#
* Average Annual Total Return
** Not Annualized
+ From 6/30/95
++ From 12/31/98
# Commencement of Operations 1/4/99
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$31,128 with sales charge (as of 4/30/00). The graph shows how the Fund compares
to its benchmarks over the same period
[TABLE BELOW REPRESENTS LINE CHART IN ITS PRINTED PIECE]
CifiFunds Lipper Russell 2000(R)
Small Cap Growth Small Cap Growth Index
Portfolio (Class A) Funds Average (unmanaged)
6/21/95 9,500.00
6/30/95 9548.00 10000.00 10000.00
7/31/95 10422.00 10748.00 10779.00
8/31/95 11058.00 10925.00 10912.00
9/30/95 11400.00 11188.00 11136.00
10/31/95 11381.00 10812.00 10588.00
11/30/95 12873.00 11212.00 11055.00
12/31/95 13754.00 11375.00 11301.00
1/31/96 14099.00 11295.00 11207.00
2/29/96 15483.00 11763.00 11718.00
3/31/96 16270.00 12077.00 11950.00
4/30/96 18239.00 12980.00 12868.00
5/31/96 19555.00 13547.00 13528.00
6/30/96 18965.00 13023.00 12649.00
7/31/96 16790.00 11903.00 11104.00
8/31/96 18877.00 12624.00 11926.00
9/30/96 19676.00 13265.00 12540.00
10/31/96 19072.00 13000.00 12000.00
11/30/96 19423.00 13378.00 12333.00
12/31/96 18952.00 13582.00 12574.00
1/31/97 19764.00 13929.00 12878.00
2/28/97 18619.00 13333.00 12100.00
3/31/97 17495.00 12634.00 11246.00
4/30/97 16975.00 12538.00 11115.00
5/31/97 19473.00 14062.00 12786.00
6/30/97 20534.00 14804.00 13220.00
7/31/97 21234.00 15727.00 13896.00
8/31/97 21547.00 16014.00 14313.00
9/30/97 23396.00 17228.00 15456.00
10/31/97 22184.00 16463.00 14527.00
11/30/97 21986.00 16221.00 14181.00
12/31/97 21949.00 16358.00 14189.00
1/31/98 20967.00 16076.00 14001.00
2/28/98 23456.00 17327.00 15237.00
3/31/98 24405.00 18133.00 15875.00
4/30/98 24503.00 18281.00 15972.00
5/31/98 22593.00 17250.00 14811.00
6/30/98 24263.00 17387.00 14962.00
7/31/98 22211.00 16136.00 13713.00
8/31/98 16667.00 12908.00 10548.00
9/30/98 18173.00 14074.00 11617.00
10/31/98 18511.00 14633.00 12224.00
11/30/98 19690.00 15580.00 13172.00
12/31/98 20978.00 16722.00 14365.00
1/31/99 21054.00 16785.00 15011.00
2/28/99 18981.00 15414.00 13637.00
3/31/99 19417.00 15713.00 14123.00
4/30/99 19886.00 16720.00 15370.00
5/31/99 19876.00 17041.00 15394.00
6/30/99 21229.00 18175.00 16206.00
7/31/99 21491.00 18046.00 15705.00
8/31/99 21556.00 17566.00 15117.00
9/30/99 22364.00 17627.00 15409.00
10/31/99 23401.00 17983.00 15804.00
11/30/99 25518.00 19406.00 17474.00
12/31/99 29611.00 21748.00 20555.00
1/31/00 29404.00 21217.00 20364.00
2/29/00 37263.00 24457.00 25102.00
3/31/00 34032.00 24124.00 22464.00
4/30/00 31128.00 22636.00 20195.00
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the indices) and assumes all dividends and distributions from the
Fund are reinvested at Net Asset Value.
Notes: 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. Total
return figures "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors and reflect
certain voluntary fee waivers which may be terminated at any time. If the
waivers were not in place, the Fund's returns would have been lower. The maximum
sales charge of 5.00% went into effect on January 4, 1999. Investors may not
invest directly in an index.
6
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
================================================================================
ASSETS:
Investment in Small Cap Growth Portfolio, at value (Note 1A) $31,282,407
Receivable for shares of beneficial interest sold 36,547
Receivable from the Sub-Administrator (Note 6) 11,330
--------------------------------------------------------------------------------
Total assets 31,330,284
--------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 21,175
Accrued expenses and other liabilities 60,615
--------------------------------------------------------------------------------
Total liabilities 81,790
--------------------------------------------------------------------------------
NET ASSETS $31,248,494
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $16,668,415
Unrealized appreciation 1,249,286
Accumulated net realized gain 13,482,133
Undistributed net investment loss (151,340)
--------------------------------------------------------------------------------
Total $31,248,494
================================================================================
COMPUTATION OF
CLASS A SHARES:
Net Asset Value per share ($30,024,601/1,052,957 shares outstanding) $28.52
Offering Price per share ($28.52 O 0.95) $30.02*
================================================================================
CLASS B SHARES:
Net Asset Value per share and offering price ($1,223,893/43,343
shares outstanding) $28.24**
================================================================================
* Based upon single purchases of less than $25,000.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements
7
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
================================================================================
INVESTMENT INCOME (Note 1B):
Dividend Income from Small Cap Growth Portfolio $ 26,705
Interest Income from Small Cap Growth Portfolio 31,081
Allocated Expenses from Small Cap Growth Portfolio (130,034)
--------------------------------------------------------------------------------
$ (72,248)
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 53,200
Service fees Class A (Note 3) 36,689
Service fees Class B (Note 3) 5,243
Transfer agent fees 33,853
Custody and fund accounting fees 13,512
Audit fees 13,060
Shareholder reports 11,425
Legal fees 9,526
Trustees fees 6,070
Other 21,527
--------------------------------------------------------------------------------
Total expenses 204,105
Less expenses assumed by the Sub-Administrator (Note 6) (71,813)
Less aggregate amount waived by the Manager (Note 2) (53,200)
--------------------------------------------------------------------------------
Net expenses 79,092
--------------------------------------------------------------------------------
Net investment loss (151,340)
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM
SMALL CAP GROWTH PORTFOLIO:
Net realized gain 11,831,862
Unrealized depreciation (4,195,662)
--------------------------------------------------------------------------------
Net realized and unrealized gain from
Small Cap Growth Portfolio 7,636,200
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,484,860
================================================================================
See notes to financial statements
8
<PAGE>
CitiFunds Small Cap Growth Portfolio
statement of Changes in Net Assets
SIX MONTHS
ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss $ (151,340) $ (280,709)
Net realized gain 11,831,862 3,177,000
Unrealized appreciation (depreciation) (4,195,662) 3,137,565
--------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 7,484,860 6,033,856
--------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 5):
CLASS A
Net proceeds from sale of shares 4,534,368 8,184,015
Cost of shares repurchased (5,594,363) (18,128,031)
--------------------------------------------------------------------------------
Total Class A (1,059,995) (9,944,016)
--------------------------------------------------------------------------------
CLASS B*
Net proceeds from sale of shares 419,539 710,202
Cost of shares repurchased (126,906) (71,357)
--------------------------------------------------------------------------------
Total Class B 292,633 638,845
--------------------------------------------------------------------------------
Net decrease in net assets
from transactions in shares of
beneficial interest (767,362) (9,305,171)
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 6,717,498 (3,271,315)
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 24,530,996 27,802,311
--------------------------------------------------------------------------------
End of period (undistributed
net investment income (loss) of $(151,340) and
$0, respectively) $31,248,494 $ 24,530,996
================================================================================
* January 4, 1999 (Commencement of Operations).
See notes to financial statements
9
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------
SIX MONTHS JUNE 21, 1995
ENDED YEAR ENDED TEN MONTHS (COMMENCEMENT
APRIL 30, OCTOBER 31, ENDED YEAR ENDED OF OPERATIONS)
2000 ----------------- OCTOBER 31, DECEMBER 31, TO DECEMBER 31,
(Unaudited) 1999 1998 1997 1996 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period $21.44 $16.96 $21.24 $18.21 $14.32 $10.00
------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (loss) (0.394) (0.196) (0.193) (0.138) (0.016) 0.050
Net realized and unrealized
gain (loss) 7.474 4.676 (3.224) 3.236 5.407 4.420
------------------------------------------------------------------------------------------------------------
Total from operations 7.080 4.480 (3.417) 3.098 5.391 4.470
------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- -- -- -- (0.050)
Net realized gain -- -- (0.863) (0.068) (1.501) (0.100)
------------------------------------------------------------------------------------------------------------
Total distributions -- -- (0.863) (0.068) (1.501) (0.150)
------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $28.52 $21.44 $16.96 $21.24 $18.21 $14.32
=============================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $30,025 $23,794 $27,802 $25,799 $24,311 $5,148
Ratio of expenses to average
net assets (A) 1.35%* 1.35% 1.35% 1.35%* 0.88% 0.00%*
Ratio of net investment income
(loss) to average net assets (0.96)%* (1.03)% (0.98)% (0.87)%* (0.13)% 1.21%*
Total return 33.02%** 26.42% (16.56)% 17.05%** 37.80% 44.78%**
Note: If Agents of the Fund and Agents of Small Cap Growth Portfolio had not
voluntarily waived a portion of their fees and assumed Fund expenses for the
periods indicated, and had expenses been limited to that required by certain
state securities laws for the period ended December 31, 1995, the net investment
loss per share and the ratios would have been as follows:
Net investment loss per share $(0.508) $(0.351) $(0.319) $(0.252) $(0.133) $(0.288)
RATIOS:
Expenses to average
net assets (A) 2.17%* 2.16% 1.99% 2.06%* 1.83% 2.50%*
Net investment loss to
average net assets (1.78)%* (1.84)% (1.62)% (1.58)%* (1.08)% (1.29)%*
=============================================================================================================
</TABLE>
* Annualized
** Not Annualized
+ The per share amounts were computed using a monthly average number of shares
outstanding during the period.
(A) Includes the Fund's share of Small Cap Growth Portfolio allocated expenses
for the periods indicated.
See notes to financial statements
10
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
CLASS B
------------------------------------
SIX MONTHS JANUARY 4, 1999
ENDED (COMMENCEMENT
APRIL 30, 2000 OF OPERATIONS) TO
(Unaudited) OCTOBER 31, 1999
================================================================================
Net Asset Value, beginning
of period $21.31 $18.95
--------------------------------------------------------------------------------
Income From Operations:
Net investment loss (0.386) (0.265)
Net realized and unrealized
gain 7.316 2.625
--------------------------------------------------------------------------------
Total from operations 6.930 2.360
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
Net realized gain -- --
--------------------------------------------------------------------------------
Total distributions -- --
--------------------------------------------------------------------------------
Net Asset Value, end of period $28.24 $21.31
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $1,224 $737
Ratio of expenses to average net assets (A) 2.10%* 2.10%*
Ratio of net investment loss to average
net assets (1.71)%* (1.77)%*
Total return 32.52%** 12.45%**
Note: If Agents of the Fund and Agents of Small Cap Growth Portfolio had not
voluntarily waived a portion of their fees, assumed Fund expenses for the
periods indicated, the net investment loss per share and the ratios would have
been as follows:
Net investment loss per share $(0.502) $(0.420)
RATIOS:
Expenses to average net assets (A) 2.92%* 2.91%*
Net investment loss to average net assets (2.53)%* (2.58)%*
================================================================================
* Annualized
** Not Annualized
(A) Includes the Fund's share of Small Cap Growth Portfolio allocated expenses
for the periods indicated.
+ The per share amounts were computed using a monthly average number of
shares outstanding during the period.
See notes to financial statements
11
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Small Cap Growth Portfolio, (the
"Fund") is a separate diversified series of CitiFunds Trust II (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.
The Fund invests all of its investable assets in Small Cap Growth Portfolio (the
"Portfolio"), a management investment company for which Citibank, N.A.
("Citibank") serves as Investment Manager. The value of such investment reflects
the Fund's proportionate interest (39.3% at April 30, 2000) in the net assets of
the Portfolio. CFBDS, Inc. ("CFBDS") acts as the Fund's Sub-Administrator and
Distributor.
The Fund offers Class A and Class B shares. The Fund commenced its public
offering of Class B shares on January 4, 1999. Class A shares have a front-end,
or initial, sales charge effective January 4, 1999. This sales charge may be
reduced or eliminated in certain circumstances. Class B shares have no front-end
sales charge, pay a higher ongoing distribution fee than Class A shares, and are
subject to a deferred sales charge if sold within five years of purchase. Class
B shares automatically convert into Class A shares after eight years. Expenses
of the Fund are borne pro-rata by the holders of each class of shares, except
that each class bears expenses unique to that class (including the Rule 12b-1
service and distribution fees applicable to such class), and votes as a class
only with respect to its own Rule 12b-1 plan. Shares of each class would receive
their pro-rata share of the net assets of the Fund, if the Fund were liquidated.
Class A shares have lower expenses than Class B shares. For the six months ended
April 30, 2000, CFBDS, acting as the distributor, received net commissions paid
by investors of $12,495 from sales of Class A and $3,588 in deferred sales
charges from redemptions of Class B shares.
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 preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. INVESTMENT VALUATION Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.
C. FEDERAL TAXES The Fund's 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
12
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
excise tax is necessary. At October 31, 1999, the Fund, for federal income tax
purposes, had a capital loss carryover of $1,682,701 which will expire on
October 31, 2006. 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 the distributions to shareholders which would otherwise be necessary
to relieve the Fund of any liability for federal income or excise tax.
D. EXPENSES The 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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the 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 attributable to permanent book and tax accounting
differences. Reclassifications are made to the 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.
F. OTHER All the net investment income, realized and unrealized gain and loss
of the Portfolio are allocated pro rata, based on respective ownership
interests, among the Fund and the other investors in the Portfolio at the time
of such determination. Investment transactions are accounted for on the trade
date basis. Realized gains and losses are determined on the identified cost
basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the Funds'
business affairs, and has a Management Agreement with the Fund. Citibank also
provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs certain
duties and receives compensation from Citibank as from time to time is agreed to
by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank, are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.35% of the Funds' average
daily net assets. The management fee amounted to $53,200 all of which was
voluntarily waived for the six months ended April 30, 2000.
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.
13
<PAGE>
CITIFUNDS SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
3. SERVICE FEES The Fund maintains separate Service Plans for Class A and Class
B shares, which have been adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended. Under the Class A Service Plan, the
Fund may pay monthly fees at an annual rate not to exceed 0.25% of the average
daily net assets represented by Class A shares of the Fund. The Service fees for
Class A shares amounted to $36,689 for the six months ended April 30, 2000.
Under the Class B Service Plan, the Fund may pay a combined monthly distribution
and service fee at an annual rate not to exceed 1.00% of the average daily net
assets represented by Class B shares of the Fund. The Service fees for Class B
shares amounted to $5,243 for the six months ended April 30, 2000. These fees
may be used to make payments to the Distributor for distribution services and to
others as compensation for the sale of shares of the applicable class of the
Fund, for advertising, marketing, or other promotional activity, and for
preparation, printing and distribution of prospectuses, statements of additional
information and reports for recipients other than regulators and existing
shareholders. The Fund also may make payments to the Distributor and others for
providing personal service or the maintenance of shareholder accounts.
4. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio for the period aggregated $5,203,207 and $5,999,189, respectively.
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:
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
CLASS A
Shares sold 143,715 444,606
Shares issued to shareholders from
reinvestment of distributions -- --
Shares repurchased (200,728) (973,797)
--------------------------------------------------------------------------------
Class A net decrease (57,013) (529,191)
================================================================================
CLASS B*
Shares sold 13,583 38,207
Shares issued to shareholders from
reinvestment of distributions -- --
Shares repurchased (4,838) (3,609)
--------------------------------------------------------------------------------
Class B net increase 8,745 34,598
================================================================================
*January 4, 1999 (Commencement of Operations).
6. ASSUMPTION OF EXPENSES CFBDS has voluntarily agreed to pay a portion of the
unwaived expenses of the Fund for the six months ended April 30, 2000, which
amounted to $71,813.
14
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
----------------------------------------------------------
COMMON STOCKS-- 94.5%
----------------------------------------------------------
CAPITAL GOODS/
PRODUCER MANUFACTURING--8.3%
----------------------------------------------------------
Alliant Techsystems, Inc.* 5,700 $ 396,862
Applied Power, Inc. 13,700 392,162
Aptargroup, Inc. 29,495 840,608
Cleco Corp. 15,100 520,006
Flextronics International 11,370 798,742
Mettler Toledo
International, Inc.* 22,500 776,250
National Instruments
Corp.* 21,000 1,023,750
Newport Corp. 3,700 448,856
Shaw Group Inc.* 23,300 828,606
Verticalnet Inc.* 10,500 567,000
-------------
6,592,842
-------------
COMMERCIAL SERVICES--3.6%
----------------------------------------------------------
Aeroflex Inc.* 11,400 424,650
Akamai Technologies Inc.* 1,489 147,225
Art Technology
Group Inc.* 7,500 455,625
Broadvision Inc.* 15,200 667,850
Clarus Corp.* 4,250 170,797
Cylink Corp.* 21,800 312,012
Source Information
Management Co.* 44,308 653,543
-------------
2,831,702
-------------
CONSUMER SERVICES--6.4%
----------------------------------------------------------
Beringer Wine Estate
Holdings* 9,370 338,491
Callaway Golf Co. 22,600 375,725
Catalina Marketing Corp.* 12,690 1,284,862
Emmis Communications
Corp.* 10,500 446,250
Ethan Allen Interiors, Inc. 12,250 326,922
Hispanic Broadcasting
Corp.* 6,435 650,337
Houghton Mifflin Co. 9,300 386,531
National Information
Consortium, Inc.* 4,988 61,727
PF Changes China
Bistro Inc.* 11,300 395,500
Scholastic Corp.* 6,500 303,469
Westwood One, Inc.* 10,356 366,344
XM Satellite Radio
Holdings Inc.* 6,300 181,519
-------------
5,117,677
-------------
ELECTRONICS/TECHNICAL SERVICES--21.2%
----------------------------------------------------------
Ancor Communications,
Inc.* 10,000 301,875
CTS Corp. 6,100 384,681
C-Cube
Microsystems, Inc.* 17,195 1,104,779
Concentric Network
Corp.* 7,800 339,300
E Piphany Inc.* 3,700 244,431
Emulex Corp.* 10,560 479,160
Intertrust Technologies
Corp.* 4,600 105,800
Iona Technologies Plc.
ADR's* 7,200 409,050
MMC Networks Inc.* 18,700 495,550
Macromedia, Inc.* 18,985 1,651,695
Macrovision Corp.* 9,300 454,537
Methode Electronics Inc. 35,400 1,475,184
Mercury Interactive
Corp.* 26,120 2,350,800
Network Appliance, Inc.* 7,900 584,106
Power One Inc.* 7,200 491,400
Powerwave
Technologies, Inc.* 8,300 1,726,919
Remedy Corp.* 14,000 743,750
Sandisk Corp.* 10,900 998,713
Sawtek Inc.* 10,100 482,906
Semtech Corp.* 12,800 872,800
Silicon Storage
Technology Inc.* 5,000 487,500
Usinternet Working Inc.* 9,250 230,094
WatchGuard
Technologies Inc.* 4,200 202,388
Wink Communications
Inc.* 11,300 223,175
-------------
16,840,593
-------------
ENERGY MINERALS--7.4%
----------------------------------------------------------
Cal Dive
International, Inc.* 26,000 1,293,500
Coflexip ADR's 15,600 791,700
Hanover
Compressor Co.* 14,800 862,100
Precision Drilling Corp.* 25,100 803,200
R & B Falcon Corp.* 103,400 2,145,550
-------------
5,896,050
-------------
FINANCE--5.9%
----------------------------------------------------------
Bisys Group, Inc.* 13,220 827,076
Chittenden Corp. 26,400 701,250
Cullen Frost Bankers, Inc. 32,660 806,294
Peoples Heritage
Financial Group 45,295 591,666
15
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
----------------------------------------------------------
FINANCE -- CONT'D
----------------------------------------------------------
S1 Corp.* 4,000 $ 217,250
SEI Investments Co. 6,100 728,188
U.S. Trust Corp. 3,910 601,651
West America
Bancorporation 7,500 187,969
-------------
4,661,344
-------------
HEALTHCARE--9.3%
----------------------------------------------------------
Affymetrix Inc.* 1,600 216,100
Alpharma, Inc. 12,000 463,500
Andrx Corp.* 7,900 404,381
Apria Healthcare
Group, Inc.* 32,500 452,969
Corixa Corp.* 14,000 430,500
Curagen Corp.* 4,200 111,825
Enzon Inc.* 10,700 398,575
Gilead Sciences, Inc.* 10,400 563,550
Genset SA., ADR's* 10,500 299,250
Idec Pharmaceuticals
Corp.* 6,700 428,800
Incyte Pharmaceuticals Inc.* 3,700 284,900
Lifepoint Hospitals Inc.* 18,500 316,813
Medarex Inc.* 3,900 206,700
Medimmune, Inc.* 3,010 481,412
Millennium
Pharmaceuticals* 10,502 833,596
Nanogen Inc.* 4,600 112,412
Pharmacyclics* 6,300 285,862
Shire Pharmaceuticals
Group Plc., ADR's 20,516 825,769
Transkaryotic
Therapies Inc.* 3,000 89,813
Triad Hospitals Inc.* 12,400 213,125
-------------
7,419,852
-------------
INDUSTRIAL SERVICES--0.9%
----------------------------------------------------------
Gentex Corp.* 12,900 416,025
Harmonic, Inc.* 3,600 265,725
-------------
681,750
-------------
RETAIL--3.4%
----------------------------------------------------------
Cost Plus, Inc.* 23,950 731,972
Linens 'n Things, Inc.* 20,310 627,071
O'Reilly Automotive, Inc.* 49,000 661,500
Zale Corp.* 16,900 697,125
-------------
2,717,668
-------------
SEMI-CONDUCTOR--14.9%
----------------------------------------------------------
Alpha Industries Inc.* 14,000 728,000
Amkor Technology, Inc.* 28,100 1,719,369
Anadigics Inc.* 10,100 760,025
Cree Inc.* 1,600 232,800
Cypress Semiconductor
Corp.* 15,000 779,063
Emcore Corp.* 13,086 1,135,210
Micrel, Inc.* 15,000 1,297,500
Microchip Technology * 11,677 724,704
Novellus Systems, Inc.* 13,785 919,287
Transwitch Corp.* 13,900 1,224,069
Triquint Semiconductor
Inc.* 10,800 1,110,375
Varian Inc.* 32,700 1,189,463
-------------
11,819,865
-------------
SOFTWARE--2.6%
----------------------------------------------------------
Active Software* 8,400 338,625
Activision, Inc.* 69,300 433,125
Bindview Dev Corp.* 18,800 151,575
HNC Software* 4,200 207,900
Manugistics Group Inc.* 11,100 475,219
Microstrategy, Inc.* 7,000 181,125
Virata Corp.* 2,000 250,500
-------------
2,038,069
-------------
TECHNOLOGY--2.1%
----------------------------------------------------------
Idex Corp. 15,900 496,875
Nextel Partners Inc.* 8,018 175,895
Western Wireless Corp.* 20,050 996,234
-------------
1,669,004
-------------
TELECOMMUNICATIONS--7.8%
----------------------------------------------------------
ATMI Inc* 8,400 323,400
Covad Communications
Group, Inc.* 13,618 377,900
Digital Lightwave Inc.* 2,800 191,800
Digital Microware Corp.* 22,300 823,706
Dobson Communications
Corp.* 13,000 333,125
Exar Corp.* 7,100 569,220
Exodus
Communications, Inc.* 3,500 309,531
P C Telephone Inc.* 3,400 113,900
Pinnacle Holdings, Inc.* 29,710 1,669,331
Powertel, Inc.* 6,600 443,850
Remic Inc.* 24,450 927,572
Research in Motion Ltd.* 3,314 140,845
-------------
6,224,180
-------------
TRANSPORTATION-- 0.7%
----------------------------------------------------------
CH Robinson Worldwide 9,000 450,000
EGL Inc.* 6,462 148,222
-------------
598,222
-------------
16
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
----------------------------------------------------------
TOTAL COMMON STOCK
(Identified Cost
$58,925,105) $75,108,818
-------------
SHORT-TERM OBLIGATIONS AT
AMORTIZED COST -- 5.3%
----------------------------------------------------------
First Union National Bank
Repurchase Agreement
5.84% due 5/01/00
proceeds at maturity
$4,233,059
(collateralized by
$4,720,000 Federal Home
Mortgage Corp. 6.625%
due 1/28/14 valued
at $4,243,765) 4,231,000
-------------
TOTAL INVESTMENTS
(Identified Cost
$63,156,105) 99.8% 79,339,818
OTHER ASSETS,
LESS LIABILITIES 0.2 165,029
----- -------------
NET ASSETS 100.0% $79,504,847
===== =============
ADR's--American Depositary Receipts
*Non income producing securities
See notes to financial statements
17
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $58,925,105) $75,108,818
Short-term holdings at value (Note 1A)
(Identified Cost, $4,231,000) 4,231,000
Cash 736
Receivable for investments sold 266,845
Dividends and interest receivable 6,728
--------------------------------------------------------------------------------
Total assets 79,614,127
--------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliates-- Management fees (Note 2) 48,722
Accrued expenses and other liabilities 60,558
--------------------------------------------------------------------------------
Total liabilities 109,280
--------------------------------------------------------------------------------
NET ASSETS $79,504,847
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $79,504,847
================================================================================
See notes to financial statements
18
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
================================================================================
INVESTMENT INCOME:
Dividend income $ 87,075
Interest income 88,339
--------------------------------------------------------------------------------
$ 175,414
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 345,033
Custody and fund accounting fees 23,024
Audit fees 13,940
Legal fees 4,850
Trustees fees 3,252
Other 971
--------------------------------------------------------------------------------
Total expenses 391,070
--------------------------------------------------------------------------------
Net investment loss (215,656)
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions $36,921,300
Unrealized depreciation of investments (8,173,761)
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments 28,747,539
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $28,531,883
================================================================================
See notes to financial statements
19
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31,
(Unaudited) 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss $ (215,656) $ (799,868)
Net realized gain on investment transactions 36,921,300 16,500,537
Unrealized appreciation (depreciation) of
investments (8,173,761) 18,520,946
--------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 28,531,883 34,221,615
--------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 14,882,323 22,851,267
Value of withdrawals (60,860,677) (154,792,807)
--------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions (45,978,354) (131,941,540)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS: (17,446,471) (97,719,925)
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 96,951,318 194,671,243
--------------------------------------------------------------------------------
End of period $ 79,504,847 $ 96,951,318
================================================================================
See notes to financial statements
20
<PAGE>
SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS JUNE 21, 1995
ENDED YEAR ENDED TEN MONTHS (COMMENCEMENT
APRIL 30, OCTOBER 31, ENDED YEAR ENDED OF OPERATIONS)
2000 ------------------ OCTOBER 31, DECEMBER 31, TO DECEMBER 31,
(Unaudited) 1999 1998 1997 1996 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $79,505 $96,951 $194,671 $49,598 $47,142 $4,989
Ratio of expenses to average
net assets 0.85%* 0.86% 0.88% 0.85%* 0.61% 0.00%*
Ratio of net investment income
(loss) to average net assets (0.47)%* (0.54)% (0.50)% (0.37)%* 0.15% 1.22%*
Portfolio turnover 49% 104% 51% 108% 89% 41%
Note: If Agents of the Portfolio had not voluntarily waived a portion of their
fees and assumed Portfolio expenses for the periods indicated and had expenses
been limited to that required by certain state securities laws for the period
ended December 31, 1995, the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.85%* 0.86% 0.88% 1.04%* 1.17% 2.50%*
Net investment loss to average
net assets (0.47)%* (0.54)% (0.50)% (0.56)%* (0.41)% (1.28)%*
=============================================================================================================
</TABLE>
* Annualized
See notes to financial statements
21
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIEs Small Cap Growth Portfolio (the "Portfolio"),
a separate series of The Premium Portfolios (the "Portfolio Trust"), is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company which was organized as a
trust under the laws of the State of New York. The Declaration of Trust permits
the Trustees to issue beneficial interests in the Portfolio. The Investment
Manager of the Portfolio is Citibank, N.A., ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's Sub-Administrator.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. INVESTMENT SECURITY VALUATIONS Equity securities listed on securities
exchanges or reported through the NASDAQ system are valued at last sale prices.
Unlisted securities or listed securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in sixty days or less), are valued on the basis
of valuations furnished by pricing services approved by the Board of Trustees
which take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, and other market data, without exclusive reliance on quoted prices or
exchange or over-the-counter prices. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. Securities, if any, for which there are no such
valuations or quotations are valued at fair value as determined in good faith by
or under guidelines established by the Trustees.
B. INCOME Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on long-term debt securities
when required for U.S. federal income tax purposes. Dividend income is recorded
on the ex-dividend date.
C. U.S. FEDERAL INCOME TAXES The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. EXPENSES The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
22
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
E. REPURCHASE AGREEMENTS It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
F. OTHER Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub- Administrator and performs certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank is a
wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank, amounted to $345,033 for the six months
ended April 30, 2000. The management fees are computed at the annual rate of
0.75% of the Portfolio's average daily net assets.
3. PURCHASES AND SALES OF INVESTMENTs Purchases and sales of investments, other
than short-term obligations, aggregated $42,330,245 and $90,424,924,
respectively, for the six months ended April 30, 2000.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 2000, as
computed on a federal income tax basis, are as follows:
Aggregate cost $63,156,105
================================================================================
Gross unrealized appreciation $24,080,619
Gross unrealized depreciation (7,896,906)
--------------------------------------------------------------------------------
Net unrealized appreciation $16,183,713
================================================================================
23
<PAGE>
SMALL CAP GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
5. LINE OF CREDIT The Portfolio, along with various other Portfolios in the
CitiFunds family, entered into an ongoing agreement with a bank which allows the
Portfolios collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio executing the borrowing at the base rate of the bank. The line of
credit requires a quarterly payment of a commitment fee based on the average
daily unused portion of the line of credit. For the six months ended April 30,
2000, the commitment fee allocated to the Portfolio was $136. Since the line of
credit was established, there have been no borrowings.
24
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong Jr., CHAIRMAN
Philip W. Coolidge*, PRESIDENT
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Heath B. McLendon**
E. Kirby Warren
William S. Woods Jr.***
SECRETARY
Robert Frenkel**
TREASURER
Linwood Downs*
* AFFILIATED PERSON OF SUB-ADMINISTRATOR AND DISTRIBUTOR
** AFFILIATED PERSON OF INVESTMENT MANAGER
*** TRUSTEE EMERITUS
INVESTMENT MANAGER
(of Small Cap Growth Portfolio)
Citibank, N.A
153 East 53rd Street, New York, NY 10043
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
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
================================================================================
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds Small
Cap Growth Portfolio. It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus of CitiFunds Small
Cap Growth Portfolio.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds Small Cap Growth Portfolio, 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.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)2000 Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFS/SCG/400
<PAGE>
================================================================================
CITIFUNDS(SM)
-------------------------
================================================================================
SMALL CAP
VALUE
SEMI-ANNUAL REPORT
APRIL 30, 2000
CitiFunds
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 3
................................................................................
Portfolio Highlights 4
................................................................................
Fund Performance 5
................................................................................
CITIFUNDS SMALL CAP VALUE PORTFOLIO
Statement of Assets and Liabilities 6
................................................................................
Statement of Operations 7
................................................................................
Statement of Changes in Net Assets 8
................................................................................
Financial Highlights 9
................................................................................
Notes to Financial Statements 11
................................................................................
SMALL CAP VALUE PORTFOLIO
Portfolio of Investments 14
................................................................................
Statement of Assets and Liabilities 16
................................................................................
Statement of Operations 16
................................................................................
Statement of Changes in Net Assets 17
................................................................................
Financial Highlights 17
................................................................................
Notes to Financial Statements 18
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
During the six months ended April 30, 2000, U.S. stock and bond markets were
influenced by historic levels of volatility, leaving many investors with little
or no clear indication of the future direction of the financial markets. Despite
the ongoing strength and expansion of the U.S. and global economies, growing
concerns emerged regarding inflation and rising interest rates, which resulted
in major fluctuations in many stock prices.
Throughout the reporting period, the Fund's investment Subadviser, Franklin
Advisory Services, LLC, continued to manage CitiFundsSM Small Cap Value
Portfolio with the goal of achieving its investment objective of providing
long-term capital growth.
This report reviews the Fund's investment activities and performance during
the reporting period and provides a summary of the Subadviser's perspective on
and outlook for the small cap value sector of the U.S. stock market. On behalf
of the Board of Trustees, I want to thank you for your continued confidence and
participation in these challenging times.
Sincerely,
/s/ Philip W. Coolidge
----------------------
Philip W. Coolidge
President
May 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
Up until the end of the reporting period, small cap value stocks remained
largely out of favor among investors and continued to underperform the growth
sector. (Value investing consists of identifying securities of companies that
are believed to be undervalued but have good longer-term business prospects.)
During the first quarter of 2000, however, long-standing trends began to
reverse, suggesting to the managers that investors may soon gravitate back to
long-neglected small cap value stocks.
During the first quarter of the year, investor sentiment appeared to begin to
shift dramatically. Despite a rally in February 2000, the first few months of
2000 saw growth stock prices fall when many investors began to focus more
intently on the underlying financial fundamentals of their equity investments.
In fact, between mid-March and the end of April, the tech-heavy NASDAQ Composite
Index* fell more than 35%, including a single-day drop of 10% on April 14, 2000.
Small cap value stocks also declined, but not nearly as much as growth stocks.
Faced with these turbulent market conditions, CitiFundsSM Small Cap Value
Portfolio continued to follow its long-term strategy of investing in
high-quality companies deemed to be undervalued relative to their future
prospects. Consistent with their approach, management avoided those speculative
high-flyers associated with the Internet. Instead, the managers continued to
focus on individual companies that they believe have high-quality businesses not
reflected in their stock prices. The Fund's managers believe that the recent
deregulation of the banking industry may benefit many companies in the insurance
sector, as larger companies look to acquire these companies operating in niche
markets.
Additionally, the managers think that the manufacturing industry will
continue to grow due to ongoing demand for automobiles and other types of
equipment. Finally, the managers were able to invest in several companies
operating in the oil & gas sector when prices were at all-time lows. Due to the
recent increase of oil prices, shares of many companies increased, which helped
the Portfolio's performance.
In management's opinion, the recent correction of many technology stocks is
evidence that investors may be returning to a more rational approach where
financial fundamentals and valuations really matter. While there is no way to
predict whether this encouraging trend for value investors will persist, the
managers believe that many small cap value companies stand to benefit if this
development continues. Looking forward, the managers anticipate high levels of
market volatility to continue this year.
Over the longer term, management believes that present market conditions are
positive for many small cap value companies. While no guarantees can be given,
management believes that investors may be starting to recognize that select
small cap companies may represent an excellent opportunity to purchase stocks of
attractive businesses.
*The NASDAQ Composite Index is a market value-weighted index that measures all
domestic and non-U.S. based securities listed on the NASDAQ stock market.
2
<PAGE>
FUND FACTS
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.
INVESTMENT MANAGER, DIVIDENDS
Small Cap Value Portfolio Paid semi-annually, if any
Citibank, N.A.
CAPITAL GAINS
PORTFOLIO SUBADVISER Distributed annually, if any
Franklin Advisory Services, LLC
BENCHMARKS
COMMENCEMENT OF OPERATIONS o Lipper Small Cap Funds Average*
March 2, 1998 o Russell 2000(R) Value Index**
NET ASSETS AS OF 4/30/00
Class A shares
$10.0 million
Class B shares
$122,552
*The Lipper Small Cap Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
**The Russell 2000(R) Value Index measures the performance of those Russell 2000
companies with lower price to book ratios and lower forecasted growth values.
3
<PAGE>
PORTFOLIO HIGHLIGHTS
================================================================================
TOP TEN EQUITY HOLDINGS AS OF APRIL 30, 2000
COMPANY, INDUSTRY % OF NET ASSETS
Presidential Life Corp., Finance 4.61%
--------------------------------------------------------------------------------
JLG Industries Inc., Producer Manufacturing 3.87%
--------------------------------------------------------------------------------
Professionals Group Inc., Finance 3.39%
--------------------------------------------------------------------------------
Timken Co., Producer Manufacturing 3.29%
--------------------------------------------------------------------------------
Wolverine World Wide Inc., Consumer Non-Durables 2.88%
--------------------------------------------------------------------------------
American National Insurance Co., Finance 2.80%
--------------------------------------------------------------------------------
Teleflex Inc., Producer Manufacturing 2.54%
--------------------------------------------------------------------------------
Diebold Inc., Electronic Technology 2.42%
--------------------------------------------------------------------------------
West Pharmaceutical Services Inc., Health Technology 2.42%
--------------------------------------------------------------------------------
ENSCO International Inc., Industrial Services 2.37%
--------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION AS OF APRIL 30, 2000
[Figures below represent pie chart in printed piece.]
Technology Services 2%
Consumer 15%
Producer Manufacturing 24%
Retail Trade 3%
Process Industries 4%
Non-Energy Minerals 4%
Finance 19%
Commercial Services 2%
Health Technology 2%
Electronic Technology 4%
Energy Minerals 1%
*Short-Term 3%
Transportation 7%
Industrial Services 10%
*Includes cash and net other assets
4
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
SIX ONE 3/2/98
ALL PERIODS ENDED APRIL 30, 2000 MONTHS** YEAR (INCEPTION)*
================================================================================
CitiFunds SmallCap Value Portfolio (Class A)
without sales charge 5.84% (0.28)% (13.81)%
Lipper Small Cap Funds Average 25.87% 36.64% 13.11%+
Russell 2000(R) Value Index 8.19% 4.40% (3.56)%+
CitiFunds SmallCap Value Portfolio (Class A)
with maximum sales charge of 5.00% 0.55% (5.26)% (15.83)%
CitiFunds SmallCap Value Portfolio (Class B)
without deferred sales charge 5.29% (1.10)% (3.15)%#
Lipper Small Cap Funds Average 25.87% 36.64% 25.53%++
Russell 2000(R) Value Index 8.19% 4.40% 2.15%++
CitiFunds SmallCap Value Portfolio (Class B)
with maximum deferred sales charge of 5.00% 0.02% (6.05)% (6.84)%#
*Average Annual Total Return
**Not Annualized
+From 2/28/98
++From 12/31/98
#Commencement of Operations 1/4/99
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment
in the Fund made on inception date would have declined to $6,887 with sales
charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks
over the same period.
[Figures below represent line chart in printed piece.]
CitiFunds Small Russell 2000 (R)
Cap Value Lipper Small Value Index
Portfolio (Class A) Cap Funds Avg. (unmanaged)
3/2/98 9500 10000 10000
3/31/98 9861 10465 10406
4/30/98 9823 10551 10457
5/31/98 9234 9956 10086
6/30/98 8816 10034 10030
7/31/98 7819 9313 9245
8/31/98 6394 7449 7797
9/30/98 6489 8123 8237
10/31/98 6802 8445 8482
11/30/98 6811 8992 8712
12/31/98 7020 9651 8985
1/31/99 6944 9687 8782
2/28/99 6232 8896 8182
3/31/99 6232 9069 8115
4/30/99 6906 9650 8856
5/31/99 7172 9835 9127
6/30/99 7533 10489 9458
7/31/99 7429 10415 9234
8/31/99 7087 10138 8896
9/30/99 6754 10173 8718
10/31/99 6507 10379 8543
11/30/99 6602 11200 8588
12/31/99 6906 12551 8851
1/31/00 6279 12245 8620
2/29/00 6384 14115 9146
3/31/00 6792 13923 9189
4/30/00 6887 13064
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the indices) and assumes all dividends and distributions from the
Fund are reinvested at Net Asset Value.
Notes: 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. Total
return figures "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors, and reflect
voluntary fee waivers which may be terminated at anytime. If the waivers were
not in place, the Fund's returns would have been lower. The maximum sales
charge of 5.00% went into effect January 4, 1999. Investors may not invest
directly in an index.
5
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
sTATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
==============================================================================
ASSETS:
Investment in Small Cap Value Portfolio, at value (Note 1A) $10,199,759
Receivable from Sub-Administrator 9,347
------------------------------------------------------------------------------
Total assets 10,209,106
------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 52,569
Accrued expenses and other liabilities 37,977
------------------------------------------------------------------------------
Total liabilities 90,546
------------------------------------------------------------------------------
NET ASSETS $10,118,560
==============================================================================
NET ASSETS CONSIST OF:
Paid-in capital $26,179,298
Unrealized depreciation (11,359,102)
Accumulated net realized loss (4,700,063)
Undistributed net investment loss (1,573)
------------------------------------------------------------------------------
Total $10,118,560
==============================================================================
COMPUTATION OF
CLASS A SHARES:
Net Asset Value per share ($9,996,008/1,379,682 shares outstanding) $7.25
Offering Price per share ($7.25 O 0.95) $7.63*
==============================================================================
CLASS B SHARES:
Net Asset Value per share and offering price ($122,552/17,092
shares outstanding) $7.17**
==============================================================================
* Based upon single purchases of less than $25,000.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements
6
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
===============================================================================
INVESTMENT INCOME (Note 1B):
Dividend Income from Small Cap Value Portfolio $ 95,010
Interest Income from Small Cap Value Portfolio 3,954
Allocated Expenses from Small Cap Value Portfolio (57,183)
-------------------------------------------------------------------------------
$ 41,781
-------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 16,683
Service fees Class A (Note 3) 16,534
Service fees Class B (Note 3) 597
Transfer agent fees 34,183
Custody and fund accounting fees 14,097
Legal fees 12,360
Shareholder reports 10,631
Audit fees 9,250
Trustees fees 2,226
Other 23,169
-------------------------------------------------------------------------------
Total expenses 139,730
Less expenses assumed by the Sub-Administrator (Note 6) (79,693)
Less aggregate amount waived by the Manager (Note 2) (16,683)
-------------------------------------------------------------------------------
Net expenses 43,354
-------------------------------------------------------------------------------
Net investment loss (1,573)
-------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM
SMALL CAP VALUE PORTFOLIO:
Net realized loss (276,314)
Unrealized appreciation 911,452
-------------------------------------------------------------------------------
Net realized and unrealized gain from Small Cap Value
Portfolio 635,138
-------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $633,565
===============================================================================
See notes to financial statements
7
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss $ (1,573) $ (81,468)
Net realized loss (276,314) (6,044,888)
Unrealized appreciation 911,452 5,143,558
--------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 633,565 (982,798)
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- --
Net realized gain -- --
--------------------------------------------------------------------------------
Decrease in net assets from distributions to
shareholders -- --
--------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 5):
CLASS A
Net proceeds from sale of shares 86,724 1,707,566
Net asset value of shares issued to shareholders from
reinvestment of distributions -- --
Cost of shares repurchased (8,380,932) (16,385,629)
--------------------------------------------------------------------------------
Total Class A (8,294,208) (14,678,063)
--------------------------------------------------------------------------------
CLASS B*
Net proceeds from sale of shares 18,924 152,569
Net asset value of shares issued to shareholders from
reinvestment of distributions -- --
Cost of shares repurchased (37,292) (6,795)
--------------------------------------------------------------------------------
Total Class B (18,368) 145,774
--------------------------------------------------------------------------------
Net decrease in net assets from transactions
in shares of beneficial interest (8,312,576) (14,532,289)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (7,679,011) (15,515,087)
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 17,797,571 33,312,658
--------------------------------------------------------------------------------
End of period (Including undistributed
net investment loss of $1,573 and $0) $ 10,118,560 $ 17,797,571
================================================================================
* January 4, 1999 (Commencement of Operations).
See notes to financial statements
8
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
Financial Highlights
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------
FOR THE PERIOD
SIX MONTHS MARCH 2, 1998
ENDED (COMMENCEMENT
APRIL 30, 2000 YEAR ENDED OF OPERATIONS) TO
(Unaudited) OCTOBER 31, 1999 OCTOBER 31, 1998
==================================================================================================
<S> <C> <C> <C>
Net Asset Value, beginning of period $6.85 $7.16 $10.00
--------------------------------------------------------------------------------------------------
Income From Operations:
Net investment loss (0.059) (0.023) (0.022)
Net realized and unrealized gain (loss)
on investments 0.459 (0.287) (2.818)
--------------------------------------------------------------------------------------------------
Total from operations 0.400 (0.310) (2.840)
--------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- --
Net realized gain on investments -- -- --
--------------------------------------------------------------------------------------------------
Total distributions -- -- --
--------------------------------------------------------------------------------------------------
Net Asset Value, end of period $7.25 $6.85 $ 7.16
==================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $9,996 $17,662 $33,313
Ratio of expenses to average
net assets (A) 1.50% *1.50% 1.50%*
Ratio of net investment
loss to average net assets (0.02)%* (0.31)% (0.39)%*
Total return 5.84%** (4.33)% (28.40)%**
Note: If Agents of the Fund had not voluntarily waived a portion of their fees, the net investment
loss per share and the ratios would have been as follows:
Net investment loss per share ($0.128) ($0.058) ($0.036)
RATIOS:
Expenses to average net assets (A) 2.95%* 1.97% 1.74%*
Net investment loss to average
net assets (1.47)%* (0.79)% (0.63)%*
==================================================================================================
* Annualized
** Not Annualized
+ The per share amounts were computed using monthly average of shares during the period.
(A) Includes the Fund's share of Small Cap Value Portfolio allocated expenses for the period indicated.
</TABLE>
See notes to financial statements
9
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
CLASS B
-------------------
FOR THE PERIOD
JANUARY 4, 1999
SIX MONTHS ENDED (COMMENCEMENT
APRIL 30, 2000 OF OPERATIONS) TO
(Unaudited) OCTOBER 31, 1999
================================================================================
Net Asset Value, beginning of period $6.81 $7.48
--------------------------------------------------------------------------------
Income From Operations:
Net investment loss (0.074) (0.059)
Net realized and unrealized (gain) loss
on investments 0.434 (0.611)
--------------------------------------------------------------------------------
Total from operations 0.360 (0.670)
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
Net realized gain on investments -- --
--------------------------------------------------------------------------------
Total distributions -- --
--------------------------------------------------------------------------------
Net Asset Value, end of period $7.17 $6.81
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $122,552 $135,411
Ratio of expenses to average net assets (A) 2.25%* 2.25%*
Ratio of net investment loss to
average net assets (0.77)% *(1.06)%*
Total return 5.29%** (8.96)%**
Note: If Agents of the Fund had not voluntarily waived a portion of their fees,
the net investment loss per share and the ratios would have been as follows:
Net investment loss per share $(0.142) $ (0.094)
RATIOS:
Expenses to average net assets (A) 3.70%* 2.72%*
Net investment loss to average net assets (2.22)%* (1.54)%*
================================================================================
* Annualized
** Not Annualized
+ The per share amounts were computed using monthly average of shares during
the period.
(A) Includes the Fund's share of Small Cap Value Portfolio allocated expenses
for the period indicated.
See notes to financial statements
10
<PAGE>
#
CITIFUNDS SMALL CAP VALUE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Significant Accounting Policies CitiFunds Small Cap Value Portfolio (the
"Fund") is a separate diversified series of CitiFunds Trust II (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.
The Fund invests all of its investable assets in Small Cap Value Portfolio (the
"Portfolio"), a management investment company for which Citibank, N.A.
("Citibank") serves as Investment Manager. The value of such investment reflects
the Fund's proportionate interest (19.9% at April 30, 2000) in the net assets of
the Portfolio. CFBDS, Inc. ("CFBDS") acts as the Fund's Sub-Administrator and
Distributor.
The Fund offers Class A and Class B shares. The Fund commenced its public
offering of Class B shares on January 4, 1999. Class A shares have a front-end,
or initial sales charge effective January 4, 1999. This sales charge may be
reduced or eliminated in certain circumstances. Class B shares have no front-end
sales charges, pay a higher ongoing distribution fee than Class A and are
subject to a deferred sales charge if sold within five years of purchase. Class
B shares automatically convert into Class A shares after eight years. Expenses
of the Fund are borne pro-rata by the holders of each class of shares, except
that each class bears expenses unique to that class (including the Rule 12b-1
service and distribution fees applicable to such class), and votes as a class
only with respect to its own Rule 12b-1 plan. Shares of each class would receive
their pro-rata share of the assets of the Fund, if the Fund were liquidated.
Class A shares have lower expenses than Class B shares. For the six months ended
April 30, 2000, CFBDS, acting as the distributor, received $1,569 from sales of
Class A and $405 in deferred sales charges from redemptions of Class B shares.
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 preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. INVESTMENT VALUATION Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.
C. FEDERAL TAXES The Fund's 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. At October 31, 1999, the Fund, for federal income tax
purposes, had a capital loss carryover of $17,226,672, of which $7,280,447 will
expire on Octo-
11
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
ber 31, 2006 and $9,946,225 will expire on October 31, 2007. 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 the distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal income or excise tax.
D. EXPENSES The 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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
E. DISTRIBUTIONS Distributions to shareholders are recorded on 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 attributable to permanent book and tax accounting differences.
Reclassifications are made to the 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, 1999, the Fund reclassified $81,468 to accumulated net investment loss from
paid in capital.
F. OTHER All the net investment income, realized and unrealized gain and loss
of the Portfolio is allocated pro rata, based on respective ownership interests,
among the Fund and the other investors in the Portfolio at the time of such
determination. Investment transactions are accounted for on the trade date
basis. Realized gains and losses are determined on the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's
business affairs and has a separate Management Agreement with the Fund. Citibank
also provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs certain
duties and receives compensation from Citibank as from time to time is agreed to
by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.25% of the Fund's average
daily net assets. The management fee amounted to $16,683, all of which was
voluntarily waived for the six months ended April 30, 2000.
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.
12
<PAGE>
CITIFUNDS SMALL CAP VALUE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
3. SERVICE FEES The Fund maintains separate Service Plans for Class A and Class
B shares, which have been adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended. Under the Class A Service Plan, the
Fund may pay monthly fees at an annual rate not to exceed 0.25% of the average
daily net assets represented by Class Ashares of the Fund. The Service fees for
Class A shares amounted to $16,534 for the six months ended April 30, 2000.
Under the Class B Service Plan, the Fund may pay a combined monthly distribution
and service fee at an annual rate not to exceed 1.00% of the average daily net
assets represented by Class B shares of the Fund. The Service fees for Class B
shares amounted to $597 for the six months ended April 30, 2000. These fees may
be used to make payments to the Distributor for distribution services and to
others as compensation for the sale of shares of the applicable class of the
Fund, for advertising, marketing or other promotional activity, and for
preparation, printing and distribution of prospectuses, statements of additional
information and reports for recipients other than regulators and existing
shareholders. The Fund also may make payments to the Distributor and others for
providing personal service or the maintenance of shareholder accounts.
4. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio for the six months ended April 30, 2000, aggregated $105,652 and
$8,763,862, respectively.
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:
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
CLASS A
Shares sold 12,308 234,291
Shares repurchased (1,210,011) (2,310,393)
--------------------------------------------------------------------------------
Class A net decrease (1,197,703) (2,076,102)
================================================================================
CLASS B*
Shares sold 2,680 20,822
Shares repurchased (5,480) (930)
--------------------------------------------------------------------------------
Class B net increase (decrease) (2,800) 19,892
================================================================================
* January 4, 1999 (Commencement of Operations).
6. ASSUMPTION OF EXPENSES CFBDS has voluntarily agreed to pay a portion of the
unwaived expenses of the Fund for the six months ended April 30, 2000, which
amounted to $79,693.
13
<PAGE>
SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS-- 97.4%
--------------------------------------------------------------------------------
COMMERCIAL SERVICES-- 2.2%
--------------------------------------------------------------------------------
Reynolds & Reynolds Co. 46,500 $ 1,104,375
-------------
CONSUMER DURABLE GOODS-- 4.4%
--------------------------------------------------------------------------------
D.R. Horton Inc. 82,500 1,067,344
Engle Homes Inc. 28,200 269,662
Flexsteel Industries Inc. 27,400 363,050
La-Z-Boy Inc. 34,900 547,494
--------------------------------------------------------------------------------
2,247,550
-------------
CONSUMER NON-DURABLES-- 8.7%
--------------------------------------------------------------------------------
Block Drug Inc. 7,500 213,750
Dimon Inc. 135,000 320,625
Standard
Commercial Corp. 306,900 939,881
Timberland Co.* 10,000 693,750
Tropical Sportswear
International Corp.* 45,800 807,225
Wolverine World
Wide Inc. 122,900 1,474,800
-------------
4,450,031
CONSUMER SERVICES-- 1.8%
--------------------------------------------------------------------------------
Aztar Corp.* 75,600 902,475
-------------
ELECTRONIC TECHNOLOGY-- 4.2%
--------------------------------------------------------------------------------
Diebold Inc. 43,000 1,241,625
ESCO Electronics
Corp.* 30,700 500,794
Spacehab Inc.* 76,100 390,013
-------------
2,132,432
-------------
ENERGY MINERALS-- 1.4%
--------------------------------------------------------------------------------
Nuevo Energy Co.* 40,600 710,500
-------------
Finance-- 18.5%
--------------------------------------------------------------------------------
Acceptance
Insurance Co.* 53,300 236,519
American National
Insurance Co. 27,800 1,435,175
Harleysville
Group Inc. 58,500 939,656
Matrix Bancorp * 52,900 396,750
PBOC Holdings Inc.* 54,600 477,750
PMI Group Inc. 15,850 767,734
Penn-America
Group Inc. 63,300 565,744
Presidential
Life Corp. 148,200 2,359,622
Professionals
Group Inc.* 98,120 1,735,497
Reinsurance Group
of America Inc. 2,600 64,675
Stancorp Financial
Group Inc. 18,900 550,463
-------------
9,529,585
-------------
HEALTH TECHNOLOGY-- 2.8%
--------------------------------------------------------------------------------
SkyePharma PLC 12,773 204,368
West Pharmaceutical
Services Inc. 50,800 1,241,425
-------------
1,445,793
-------------
INDUSTRIAL SERVICES-- 9.9%
--------------------------------------------------------------------------------
Atwood
Oceanics Inc.* 16,400 994,250
ENSCO
International Inc. 36,500 1,211,344
R&B Falcon Corp.* 53,100 1,101,825
Rowan Companies Inc.* 38,400 1,072,800
Santa Fe
International Corp. 19,700 677,188
-------------
5,057,407
-------------
NON-ENERGY MINERALS-- 3.9%
--------------------------------------------------------------------------------
LTV Corp. 317,300 1,130,381
Lone Star
Technologies Inc.* 18,800 867,150
-------------
1,997,531
PROCESS INDUSTRIES-- 4.4%
--------------------------------------------------------------------------------
Lancaster
Colony Corp. 42,000 1,102,500
RPM Inc. 77,200 781,650
Tuscarora Inc. 30,700 389,506
-------------
2,273,656
-------------
PRODUCER MANUFACTURING-- 23.7%
--------------------------------------------------------------------------------
Baldor Electric Co. 40,900 759,206
Circor International Inc. 21,550 246,478
Commonwealth
Industries Inc. 79,600 597,000
Graco Inc. 5,000 169,375
JLG Industries Inc. 208,600 1,981,700
Kaydon Corp. 40,500 946,688
Myers Industries Inc. 85,130 1,191,820
Patrick Industries Inc. 35,200 261,800
Superior Industries
International Inc. 33,000 1,062,187
14
<PAGE>
SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
--------------------------------------------------------------------------------
Teleflex Inc. 37,600 $ 1,299,550
Timken Co. 91,100 1,685,350
Tower Automotive Inc.* 70,800 1,106,250
Watts Industries Inc. 51,900 694,163
Woodhead Industries 9,800 164,150
-------------
12,165,717
-------------
Retail Trade-- 2.7%
--------------------------------------------------------------------------------
Schultz Sav-O Stores Inc. 85,550 973,131
Syms Corp.* 102,000 408,000
-------------
1,381,131
TECHNOLOGY SERVICES-- 2.1%
--------------------------------------------------------------------------------
Ultrak Inc.* 120,000 1,080,000
-------------
TRANSPORTATION-- 6.7%
--------------------------------------------------------------------------------
Atlantic Coast
Airlines Holdings * 25,600 764,800
Kenan Transport Co. 55,200 1,104,000
Midwest Express
Holdings Inc.* 21,000 531,562
Motor Cargo
Industries Inc.* 53,100 242,269
Tidewater Inc. 26,300 782,425
-------------
3,425,056
-------------
TOTAL COMMON STOCKS
(Identified Cost
$59,695,557) 49,903,239
-------------
SHORT-TERM OBLIGATIONS-- 1.1%
--------------------------------------------------------------------------------
Federal Home Loan
Bank Consumer
Discount Note
5.50% due 5/01/00 542,000
-------------
TOTAL INVESTMENTS
(Identified Cost
$60,237,557) 98.5% 50,445,239
OTHER ASSETS,
LESS LIABILITIES 1.5% 772,949
----- -------------
Net Assets 100.0% $51,218,188
===== =============
* Non-income producing
See notes to financial statements
15
<PAGE>
SMALL CAP VALUE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $60,237,557) $50,445,239
Cash 327
Receivable for investments sold 858,339
Dividend and interest receivable 27,222
--------------------------------------------------------------------------------
Total assets 51,331,127
--------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 1,535
Payable to affiliates-- Management fees (Note 2) 7,803
Accrued expenses and other liabilities 103,601
--------------------------------------------------------------------------------
Total liabilities 112,939
--------------------------------------------------------------------------------
NET ASSETS $51,218,188
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $51,218,188
================================================================================
SMALL CAP VALUE PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
================================================================================
Dividend income $ 455,467
Interest income 19,133
--------------------------------------------------------------------------------
$ 474,600
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 242,696
Audit fees 14,645
Legal fees 7,317
Custody and fund accounting fees 6,265
Trustee fees 3,505
Other 589
--------------------------------------------------------------------------------
Total expenses 275,017
--------------------------------------------------------------------------------
Net investment income 199,583
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Unrealized appreciation of investments 4,656,122
Net realized loss from investment transactions (1,359,626)
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments 3,296,496
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,496,079
================================================================================
See notes to financial statements
16
<PAGE>
SMALL CAP VALUE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
Net investment income $ 199,583 $ 408,347
Net realized loss on investment transactions (1,359,626) (32,586,180)
Unrealized appreciation of investments 4,656,122 30,267,299
--------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 3,496,079 (1,910,534)
--------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 436,610 11,738,321
Value of withdrawals (37,141,916) (96,265,899)
--------------------------------------------------------------------------------
Net decrease in net assets
from capital transactions (36,705,306) (84,527,578)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS: (33,209,227) (86,438,112)
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 84,427,415 170,865,527
--------------------------------------------------------------------------------
End of period $ 51,218,188 $ 84,427,415
================================================================================
SMALL CAP VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $51,218 $84,427
Ratio of expenses to average net assets 0.85%* 0.86%
Ratio of net investment income
to average net assets 0.62%* 0.31%
Portfolio Turnover 7% 37%
================================================================================
* Annualized
See notes to financial statements
17
<PAGE>
SMALL CAP VALUE PORTFOLIO
Notes to Financial Statements (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Small Cap Value Portfolio (the "Portfolio"),
a separate series of Asset Allocation Portfolios (the "Portfolio Trust"), is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company which was organized as a
trust under the laws of the State of New York. The Declaration of Trust permits
the Trustees to issue beneficial interests in the Portfolio. The Investment
Manager of the Portfolio is Citibank N.A., ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's Sub-Administrator.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. INVESTMENT SECURITY VALUATIONS Equity securities listed on securities
exchanges or reported through the NASDAQ system are valued at last sale prices.
Unlisted securities or listed securities for which last sales prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in sixty days or less) are valued on the basis
of valuations furnished by pricing services approved by the Board of Trustees
which take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, and other market data, without exclusive reliance on quoted prices or
exchange or over-the-counter prices. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. Securities, if any, for which there are no such
valuations or quotations are valued at fair value as determined in good faith by
or under guidelines established by the Trustees.
B. INCOME Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on long-term debt securities
when required for U.S. federal income tax purposes. Dividend income is recorded
on the ex-dividend date.
C. U.S. FEDERAL INCOME TAXES The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. EXPENSES The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Trust with respect to any two or more portfolios or series are allocated in
proportion to the average net assets of each portfolio, except when allocations
of direct expenses to each portfolio can otherwise be made fairly. Expenses
directly attributable to a portfolio are charged to that portfolio.
E. REPURCHASE AGREEMENTS It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve
18
<PAGE>
SMALL CAP VALUE PORTFOLIO
Notes to Financial Statements (Unaudited)
Book Entry System or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
F. OTHER Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses on investment
transactions are determined on the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank has
delegated the daily management of the Portfolio to Franklin Advisory Services,
LLC ("the Subadviser"). Citibank is a wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank, amounted to $63,789 for the six months
ended April 30, 2000. Management fees are computed at the annual rate of 0.75%
of the Portfolio's average daily net assets less the aggregate amount, if any,
payable by the Portfolio pursuant to the Sub-Management Agreement with the
Subadviser. The Portfolio pays the Subadviser the following fees, which are
accrued daily and payable monthly and are at the annual rates equal to the
percentages of the aggregate assets of the Portfolio allocated to the
Subadviser: 0.55% on first $250 million and 0.50% on remaining assets.
The management fees paid to the Subadviser amounted to $178,907 for the six
months ended April 30, 2000.
3. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $4,187,802 and $39,996,184 respectively,
for the six months ended April 30, 2000.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 2000, as
computed on a federal income tax basis, are as follows:
Aggregate Cost $ 60,237,557
================================================================================
Gross unrealized appreciation $ 7,058,767
Gross unrealized depreciation (16,851,085)
--------------------------------------------------------------------------------
Net unrealized depreciation $ (9,792,318)
================================================================================
19
<PAGE>
SMALL CAP VALUE PORTFOLIO
Notes to Financial Statements (Unaudited) (Continued)
5. LINE OF CREDIT The Portfolio, along with various other portfolios in the
CitiFunds Family, entered into an ongoing agreement with a bank which allows the
Portfolios collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio executing the borrowing at the base rate of the bank. The line of
credit requires a quarterly payment of a commitment fee based on the average
daily unused portion of the line of credit. For the six months ended April 30,
2000, the commitment fee allocated to the Portfolio was $94. Since the line of
credit was established, there have been no borrowings.
20
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds Small
Cap Value Portfolio. It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus of CitiFunds Small
Cap Value Portfolio.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds Small Cap Value Portfolio, 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.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)2000 Citicorp [GRAPHIC] Printed on recycled paper CFS/SCV/400
<PAGE>
CITIFUNDS(SM)
--------------------------
GROWTH & INCOME
PORTFOLIO
SEMI-ANNUAL REPORT
APRIL 30, 2000
INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
--------------------------------------------------------------------------------
Portfolio Environment and Outlook 2
--------------------------------------------------------------------------------
Fund Facts 4
--------------------------------------------------------------------------------
Portfolio Highlights 5
--------------------------------------------------------------------------------
Fund Performance 6
CITIFUNDS GROWTH & INCOME PORTFOLIO
Statement of Assets and Liabilities 7
--------------------------------------------------------------------------------
Statement of Operations 8
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 9
--------------------------------------------------------------------------------
Financial Highlights 10
--------------------------------------------------------------------------------
Notes to Financial Statements 12
--------------------------------------------------------------------------------
LARGE CAP VALUE PORTFOLIO
Portfolio of Investments 15
--------------------------------------------------------------------------------
Statement of Assets and Liabilities 16
--------------------------------------------------------------------------------
Statement of Operations 16
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 17
--------------------------------------------------------------------------------
Financial Highlights 17
--------------------------------------------------------------------------------
Notes to Financial Statements 18
--------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
During the six months ended April 30, 2000, the U.S. stock and bond markets have
been highly challenging and volatile for almost all types of investments. A
strengthening global economy, rising interest rates and shifting investor
sentiment have created wide fluctuations in the prices of many stocks and bonds.
In the U.S., robust economic growth and inflation fears caused the Federal
Reserve Board (the "Fed") to raise key short-term interest rates three times
during the six months ended April 30, 2000. When added to the two rate hikes
implemented before the current reporting period began, the Fed has raised
interest rates a total of 1.25 percentage points since last summer.
In this environment, the CitiFunds' subadviser, SSB Citi Fund Management LLC,
continued to manage CitiFunds(SM) Growth & Income Portfolio with the goal of
achieving its investment objective: providing long-term capital growth and
current income.
This report reviews the Fund's investment activities and performance during the
period and provides a summary of Citibank's perspective on and outlook for the
value-oriented sector of the U.S. stock market. Thank you for your continued
confidence and participation in these challenging times.
Sincerely,
/s/ PHILIP W. COOLIDGE
----------------------
Philip W. Coolidge
President
May 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
BY MOST MEASURES, PRICES OF DIVIDEND-PAYING, VALUE-ORIENTED STOCKS ENDED THE
SIX-MONTH REPORTING PERIOD NEAR WHERE THEY BEGAN and the U.S. stock market
experienced high levels of day-to-day volatility. (Value investing consists of
identifying securities of companies that are believed to be undervalued but have
good long-term business practices. Volatility describes a market characterized
by rapid and extreme fluctuations within a short time period.) In the view of
management, this higher volatility was caused primarily by a dramatic change in
investor sentiment that occurred after the start of 2000.
Throughout 1999, and especially during November and December, value-oriented
stocks were virtually ignored by most investors and continued to provide
lackluster performance. In contrast, growth stocks went up dramatically during
November and December, primarily because of growing optimism regarding the
beneficial effects of new information technologies and its potentially
beneficial impact on global businesses.
Many investors flocked to speculative technology companies that they believed
had the greatest future growth potential and prices seemed to be less of a
factor in their investment decisions.
During the first four months of 2000, however, long-standing market trends
began to reverse, suggesting that some global investors were rediscovering the
long-neglected, dividend-paying sectors of the U.S. stock market. Positive
expectations regarding the information revolution dissipated when evidence of
renewed inflationary pressures appeared, triggering a decline in growth stocks
of all company sizes. In fact, between mid-March and the end of April, the
market experienced a substantial correction. The tech-laden NASDAQ Composite
Index* fell more than 35%, including a single-day drop of 10% on April 14, 2000.
Shares of blue-chip companies, popularly defined as the "Old Economy", declined
less severely, with the Standard & Poor's 500 Index ("S&P 500")** generating a
return of 7.18% for the six-month period ended April 30, 2000. As a result, many
value stocks only modestly underperformed growth stocks during January through
April 2000, and many long-ignored stocks began to rally strongly.
FACED WITH THESE TURBULENT MARKET CONDITIONS, CITIFUNDSSM GROWTH & INCOME
PORTFOLIO CONTINUED TO ADHERE TO ITS LONG-TERM STRATEGY OF INVESTING IN
HIGH-QUALITY, LARGE-CAPITALIZATION COMPANIES DEEMED TO BE UNDERVALUED RELATIVE
TO THEIR FUTURE PROSPECTS. Management searches for such values one company at a
time, assessing the merits of each opportunity individually rather than based on
an analysis of market-wide or macroeconomic trends.
* The NASDAQ Composite Index is a market value-weighted index that measures all
domestic and non-U.S. based securities listed on the NASDAQ stock market.
** The S&P 500 is an index of U.S. common stocks and is used as a gauge of
general U.S. stock market performance.
2
<PAGE>
Consistent with their approach, management avoided the speculative
high-flyers that most investors associate with the Internet. INSTEAD, THE
INVESTMENT TEAM CONTINUED TO FOCUS ON LARGE CAP, MULTINATIONAL COMPANIES THAT
THEY DEEMED POSSESSED HIGH-QUALITY BUSINESSES NOT REFLECTED IN THEIR STOCK
PRICES, AND THAT WERE AT LEAST LESS LIKELY TO BE AFFECTED BY CURRENT MARKET
VOLATILITY. Management found such opportunities primarily in large,
well-established "Old Economy" companies that were, in their view, aggressively
adopting the technologies needed to expand their businesses while still managing
existing franchises.
Looking ahead, the investment team expects the emergence of promising online
markets for chemicals, industrial goods and other commodity-like products, which
should be particularly beneficial for companies in the basic materials and
capital goods industries. Although the prospects of the Fund's basic materials
and capital goods holdings have not been reflected in their stock prices, the
Fund positively benefited from competitive results achieved by other industry
groups during the period, including natural gas producers, money-center banks
and brokerage firms.
In the financial services sector, the Fund's managers have focused primarily
on businesses with coherent strategies for targeting "New Economy" industries.
These companies include financial institutions that provide capital to
fast-growing technology, media and communications companies.
ALTHOUGH NO ASSURANCES CAN BE MADE, THE FUND'S MANAGEMENT TEAM CONTINUES TO
BELIEVE THAT STRENGTHENING GLOBAL DEMAND SHOULD ULTIMATELY BENEFIT THE FUND'S
PORTFOLIO. In management's view, the recent correction of technology stocks is
evidence that many investors are returning to a more "rational" approach to
investing where financial fundamentals and valuations matter. While there is no
way to predict whether this encouraging development will persist, management
believes that this new trend may be positive for select value-oriented stocks
over time.
3
<PAGE>
FUND FACTS
FUND OBJECTIVE
Long-term capital growth and current income.
INVESTMENT MANAGER DIVIDENDS
Citibank, N.A. Paid quarterly, if any
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
March 2, 1998 Distributed annually, if any
NET ASSETS AS OF 4/30/00 BENCHMARKS
Class A shares o Standard & Poor's Barra Value Index*
$25.3 million o Lipper Growth & Income
Class B shares Funds Average**
$740,318
* The Standard & Poor's 500 Index ("S&P500") is an index of U.S. common stocks
and is used as a gauge of general U.S. stock market performance. The Standard
& Poor's Barra Value Index represents the value stocks in the S&P 500.
** The Lipper Growth &Income Funds Average reflects the performance (excluding
sales charges) of mutual funds with similar objectives.
4
<PAGE>
PORTFOLIO HIGHLIGHTS
================================================================================
TOP TEN EQUITY HOLDINGS AS OF APRIL 30, 2000
COMPANY, INDUSTRY % OF NET ASSETS
Exxon Corp., Energy 3.56%
--------------------------------------------------------------------------------
Kimberly-Clark Corp., Consumer Staples 3.41%
--------------------------------------------------------------------------------
Marsh & McLennan Companies, Inc., Finance 3.38%
--------------------------------------------------------------------------------
PepsiCo, Inc., Consumer Staples 3.31%
--------------------------------------------------------------------------------
Williams Companies Inc., Utilities 3.31%
--------------------------------------------------------------------------------
BP Amoco plc ADR, Energy 3.26%
--------------------------------------------------------------------------------
Mellon Bank Corp., Finance 3.23%
--------------------------------------------------------------------------------
Chevron Corp., Energy 3.19%
--------------------------------------------------------------------------------
SBC Communications, Inc., Communication Equipment & Services 3.16%
--------------------------------------------------------------------------------
AT&T Corp., Communication Equipment & Services 3.13%
--------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION AS OF APRIL 30, 2000
Transportation ................................ 2%
Raw & Intermediate Materials .................. 8%
*Short-term ................................... 1%
Fnance ........................................ 20%
Capital Goods ................................. 9%
Energy ........................................ 15%
Consumer ...................................... 9%
Communication Equipment & Services ............ 14%
Utilities ..................................... 9%
Technology .................................... 4%
Healthcare .................................... 9%
*Includes cash and net other assets
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE
SIX ONE 3/2/98
ALL PERIODS ENDED APRIL 30, 2000 MONTH** YEAR (INCEPTION)*
================================================================================
<S> <C> <C> <C>
CitiFunds Growth & Income Portfolio (Class A)
without sales charge (2.46)% (7.52)% 1.36%
Lipper Growth & Income Funds Average 6.41% 5.72% 9.82%+
S&P Barra Value Index 2.70% 0.46% 9.24%+
CitiFunds Growth & Income Portfolio (Class A)
with a maximum sales charge of 5.00% (7.34)% (12.15)% (1.01)%
CitiFunds Growth & Income Portfolio (Class B)
without deferred sales charge (2.87)% (8.12)% 2.27%#
Lipper Growth & Income Funds Average 6.41% 5.72% 10.06%++
S&P Barra Value Index 2.70% 0.46% 9.04%++
CitiFunds Growth & Income Portfolio (Class B)
with a maximum deferred sales charge of 5.00% (7.73)% (12.71)% (1.63)%#
</TABLE>
*Average Annual Total Return
**Not Annualized
+From 2/28/98
++From 12/31/98
#Commencement of Operations 1/4/99
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have declined to
$9,782 with sales charge (as of 4/30/00). The graph shows how the Fund compares
to its benchmarks over the same period.
[Figures below represent line chart in printed piece.]
CitiFunds Lipper S&P Barra
Growth & Income Growth & Income Value
Portfolio (Class A) Funds Average Index
2/28/98 9500 10000 10000
3/31/98 9956 10441 10507
4/30/98 9985 10513 10631
5/31/98 9624 10294 10481
6/30/98 9624 10468 10561
7/31/98 9158 10197 10327
8/31/98 7665 8702 8667
9/30/98 7997 9163 9195
10/31/98 8749 9827 9915
11/30/98 9035 10325 10432
12/31/98 9371 10786 10798
1/31/99 9629 10963 11016
2/28/99 9409 10626 10779
3/31/99 9670 10972 11106
4/30/99 10578 11621 12063
5/31/99 10636 11471 11850
6/30/99 10897 11968 12305
7/31/99 10466 11623 11927
8/31/99 10083 11381 11623
9/30/99 9616 11017 11168
10/31/99 10029 11515 11799
11/30/99 9828 11672 11730
12/31/99 9806 12203 12170
1/31/00 9690 11694 11783
2/29/00 8889 11446 11047
3/31/00 10005 12477 12199
4/30/00 9782 12253 12117
The graph includes the initial sales charge on the Fund (no comparable charge
exists for the indices) and assumes all dividends and distributions from the
Fund are reinvested at Net Asset Value.
Notes: 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. Total
return figures are provided in accordance with SEC guidelines for comparative
purposes for prospective investors and reflect certain voluntary fee waivers
which may be terminated at any time. If the waivers were not in place, the
Fund's returns would have been lower. The maximum sales charge of 5.00% went
into effect on January 4, 1999. Investors may not invest directly in an index.
6
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
April 30, 2000 (Unaudited)
================================================================================
<S> <C>
ASSETS:
Investment in Large Cap Value Portfolio, at value (Note 1A) $26,339,901
Receivable for shares of beneficial interest sold 641
--------------------------------------------------------------------------------
Total assets 26,340,542
--------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 298,665
Accrued expenses and other liabilities 38,821
--------------------------------------------------------------------------------
Total liabilities 337,486
--------------------------------------------------------------------------------
NET ASSETS $26,003,056
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital 28,343,337
Unrealized depreciation (2,587,591)
Accumulated net realized gain 243,394
Undistributed net investment income 3,916
--------------------------------------------------------------------------------
Total $26,003,056
================================================================================
COMPUTATION OF
CLASS A SHARES:
Net Asset Value per share ($25,262,738/2,499,916 shares outstanding) $10.11
Offering price per share ($10.11 / O 0.95) $10.64*
================================================================================
CLASS B SHARES:
Net Asset Value per share and offering price
($740,318/73,276 shares outstanding) $10.10**
================================================================================
</TABLE>
* Based upon single purchases of less than $25,000.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements
7
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
================================================================================
INVESTMENT INCOME (Note 1B):
Dividend Income from Large Cap Value Portfolio $ 395,280
Interest Income from Large Cap Value Portfolio 2,089
Allocated Expenses from Large Cap Value Portfolio (134,670)
--------------------------------------------------------------------------------
$262,699
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 35,647
Service fees Class A (Note 3) 43,555
Service fees Class B (Note 3) 4,015
Transfer agent fees 33,912
Legal fees 24,742
Custody and fund accounting fees 13,513
Shareholder reports 10,567
Audit fees 8,060
Trustees fees 2,737
Other 24,771
--------------------------------------------------------------------------------
Total expenses 201,519
Less expenses assumed by the Sub-Administrator (Note 6)(65,880)
Less aggregate amounts waived by the Manager (Note 2) (35,647)
--------------------------------------------------------------------------------
Net expenses 99,992
--------------------------------------------------------------------------------
Net investment income 162,707
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
Net realized gain from Large Cap Value Portfolio 335,164
Unrealized depreciation (2,020,306)
--------------------------------------------------------------------------------
Net realized and unrealized loss from
Large Cap Value Portfolio (1,685,142)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,522,435)
================================================================================
See notes to financial statements
8
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 162,707 $ 397,839
Net realized gain 335,164 4,342,840
Unrealized appreciation (depreciation) (2,020,306) 4,434,853
--------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (1,522,435) 9,175,532
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income Class A (174,374) (541,997)
In excess of net investment income Class B (2,178)
Net realized gain Class A (80,549) --
Net realized gain Class B (1,692) --
--------------------------------------------------------------------------------
Decrease in net assets from distributions
to shareholders (256,615) (544,175)
--------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 5):
CLASS A
Net proceeds from sale of shares 544,970 9,244,494
Net asset value of shares issued to shareholders
from reinvestment of distributions 254,923 541,997
Cost of shares repurchased (21,239,993) (41,482,656)
--------------------------------------------------------------------------------
Total Class A (20,440,100) (31,696,165)
--------------------------------------------------------------------------------
CLASS B*
Net proceeds from sale of shares 126,107 1,089,411
Net asset value of shares issued to shareholders
from reinvestment of distributions 1,617 2,100
Cost of shares repurchased (224,216) (168,557)
--------------------------------------------------------------------------------
Total Class B (96,492) 922,954
--------------------------------------------------------------------------------
Net decrease in net assets from
transactions in shares of
beneficial interest (20,536,592) (30,773,211)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (22,315,642) (22,141,854)
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 48,318,698 70,460,552
--------------------------------------------------------------------------------
End of period (including undistributed
net investment income of $3,916
and $15,583, respectively) $ 26,003,056 $ 48,318,698
================================================================================
* January 4, 1999 (Commencement of Operations).
See notes to financial statements
9
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------
FOR THE PERIOD
SIX MONTHS MARCH 2, 1998
ENDED (COMMENCEMENT
APRIL 30, 2000 YEAR ENDED OF OPERATIONS)
(UNAUDITED) OCTOBER 31, 1999 TO OCTOBER 31, 1998
======================================================================================================
<S> <C> <C> <C>
Net Asset Value, beginning of period $10.44 $9.19 $10.00
------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.028 0.068+ 0.041
Net realized and unrealized gain (loss)
on investments (0.312) 1.276 (0.831)
------------------------------------------------------------------------------------------------------
Total from operations (0.284) 1.344 (0.790)
------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.026) (0.094) (0.020)
Net realized gain on investments (0.020) -- --
------------------------------------------------------------------------------------------------------
Total distributions (0.046) (0.094) (0.020)
------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $10.11 $10.44 $9.19
======================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $25,263 $47,451 $70,461
Ratio of expenses to
average net assets (A) 1.30%* 1.30% 1.30%*
Ratio of net investment income to
average net assets 0.93%* 0.67% 0.68%*
Total return (2.46)%** 14.63% (7.90)%**
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees the net investment income per share and the ratios would
have been as follows:
Net investment income per share $(0.017) $0.054 $0.030
RATIOS:
Expenses to average net assets (A) 1.86%* 1.45% 1.47%*
Net investment income to
average net assets 0.37%* 0.52% 0.51%*
======================================================================================================
</TABLE>
* Annualized.
** Not Annualized
+ The per share amounts were computed using monthly average of shares during
the period.
(A) Includes the Fund's share of Growth & Income Portfolio and Large Cap Value
Portfolio allocated expenses for the periods indicated.
See notes to financial statements
10
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
CLASS B
----------------------------------------
SIX MONTHS JANUARY 4, 1999
ENDED (COMMENCEMENT OF
APRIL 30, 2000 OPERATIONS) TO
(Unaudited) OCTOBER 31, 1999
--------------------------------------------------------------------------------
Net Asset Value, beginning of period $10.42 $9.87
--------------------------------------------------------------------------------
Income From Operations:
Net investment income (loss) (0.005) (0.003)
Net realized and unrealized gain (loss)
on investments (0.295) 0.601
--------------------------------------------------------------------------------
Total from operations (0.300) 0.598
--------------------------------------------------------------------------------
Less Distributions From:
In excess of net income -- (0.048)
Net realized gain on investments (0.020) --
--------------------------------------------------------------------------------
Total distributions (0.020) (0.048)
--------------------------------------------------------------------------------
Net Asset Value, end of period $10.10 $10.42
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $740 $868
Ratio of expenses to average net assets (A) 2.05%* 2.05%*
Ratio of net investment income (loss)
to average net assets 0.18%* (0.09)%*
Total return (2.87)%** 6.05%**
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees the net investment income (loss) per share and the
ratios would have been as follows:
Net investment loss per share $(0.044) $(0.019)
RATIOS:
Expenses to average net assets 2.61%* 2.20%*
Net investment income (loss) to
average net assets (0.38)%* (0.23)%*
================================================================================
* Annualized.
** Not Annualized.
+ The per share amounts were computed using monthly average of shares during
the period.
(A) Includes the Fund's share of Growth & Income Portfolio and Large Cap Value
Portfolio allocated expenses for the periods indicated.
See notes to financial statements
11
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Growth & Income Portfolio (the
"Fund") is a separate diversified series of CitiFunds Trust II (the "Trust"), a
Massachusetts business trust. The Fund commenced operations on March 2, 1998.
The Trust is registered under the Investment Company Act of 1940, as amended, as
an open-end, management investment company. The Fund invested all of its
investable assets in Growth & Income Portfolio until July 31, 1999. On August 1,
1999 the Fund invested all of its investable assets in Large Cap Value Portfolio
(the "Portfolio"), a management investment company for which Citibank, N.A.
("Citibank") serves as Investment Manager. The value of such investment reflects
the Fund's proportionate interest (approximately 13.7% at April 30, 2000) in the
net assets of the Portfolio. CFBDS, Inc. ("CFBDS") acts as the Fund's
Sub-Administrator and Distributor.
The Fund offers Class A and Class B shares. The Fund commenced its public
offering of Class B shares on January 4, 1999. Class A shares have a front-end,
or initial sales charge, effective January 4, 1999. This sales charge may be
reduced or eliminated in certain circumstances. Class B shares have no front-end
sales charge, pay a higher ongoing distribution fee than Class A, and are
subject to a deferred sales charge if sold within five years of purchase. Class
B shares automatically convert into Class A shares after eight years. Expenses
of the Fund are borne pro-rata by the holders of each class of shares, except
that each class bears expenses unique to that class (including the Rule 12b-1
service and distribution fees applicable to such class), and votes as a class
only with respect to its own Rule 12b-1 plan. Shares of each class would receive
their pro-rata share of the net assets of the Fund if the Fund were liquidated.
Class A shares have lower expenses than Class B shares. For the six months ended
April 30, 2000, CFBDS, acting as the distributor received $5,304 from sales of
Class A and $2,183 in deferred sales charges from redemptions of Class B shares.
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 preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. INVESTMENT VALUATION Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT Income The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.
C. FEDERAL TAXES The Fund's 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.
12
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
D. EXPENSES The 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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
E. DISTRIBUTIONS Distributions to shareholders are recorded on 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 attributable to permanent book and tax accounting differences.
Reclassifications are made to the 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.
F. OTHER All the net investment income, realized and unrealized gain and loss
of the Portfolio is allocated pro rata, based on respective ownership interests,
among the Fund and the other investors in the Portfolio at the time of such
determination. Investment transactions are accounted for on the trade date
basis. Realized gains and losses are determined on the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's
business affairs and has a Management Agreement with the Fund. Citibank also
provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs certain
duties and receives compensation from Citibank as from time to time is agreed to
by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of Citigroup Inc.
The management fees paid to Citibank are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.20% of the Fund's average
daily net assets. The management fee amounted to $35,647, all of which was
voluntarily waived for the six months ended April 30, 2000. 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. SERVICE FEES The Fund maintains separate Service Plans for Class A and Class
B shares, which have been adopted in accordance with Rule 12b-1 under the 1940
Act. Under the Class A Service Plan, the Fund may pay monthly fees at an annual
rate not to exceed 0.25% of the average daily net assets represented by Class A
shares of the Fund. The Service fees for Class A shares amounted to $43,555 for
the six months ended April 30, 2000. Under the Class B Service Plan, the Fund
may pay a combined monthly distribution and service fee at an annual rate not to
exceed 1.00% of the average daily net assets represented by Class B
13
<PAGE>
CITIFUNDS GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
shares of the Fund. The Service fees for Class B shares amounted to $4,015 for
the period ended April 30, 2000. These fees may be used to make payments to the
distributor for distribution services and to others as compensation for the sale
of shares of the applicable class of the Fund, for advertising, marketing or
other promotional activity, and for preparation, printing and distribution of
prospectuses, statements of additional information and reports for recipients
other than regulators and existing shareholders. The Fund may also make payments
to the Distributor and others for providing personal service or the maintenance
of shareholder accounts.
4. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio for the six months ended April 30, 2000 aggregated $756,606 and
$21,593,333, respectively.
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:
SIX MONTHS
ENDED
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
================================================================================
CLASS A:
Shares sold 54,046 864,186
Shares issued to shareholders from
reinvestment of distributions 25,813 52,628
Shares repurchased (2,126,301) (4,036,505)
--------------------------------------------------------------------------------
Net increase (decrease) (2,046,442) (3,119,691)
--------------------------------------------------------------------------------
CLASS B*:
Shares sold 12,529 98,965
Shares issued to shareholders from
reinvestment of distributions 164 194
Shares repurchased (22,706) (15,870)
--------------------------------------------------------------------------------
Net increase (decrease) (10,013) 83,289
================================================================================
* January 4, 1999 (Commencement of Operations)
6. ASSUMPTION OF EXPENSE CFBDS has voluntarily agreed to pay a portion of the
unwaived expenses of the Fund for the six months ended April 30, 2000, which
amounted to $65,880.
14
<PAGE>
LARGE CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 2000
(Unaudited)
ISSUER SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS-- 99.6%
--------------------------------------------------------------------------------
CAPITAL GOODS-- 9.5%
--------------------------------------------------------------------------------
Emerson Electronics Co. 89,025 $ 4,885,247
General Electric Co. 24,725 3,888,006
Honeywell, Inc. 90,275 5,055,400
United Technologies Corp. 69,940 4,349,394
-------------
18,178,047
-------------
COMMUNICATION
EQUIPMENT & SERVICES-- 13.8%
--------------------------------------------------------------------------------
AT&T Corp. 128,600 6,004,013
Alltel Corp. 47,500 3,164,688
Bell Atlantic Corp. 55,900 3,312,075
Bellsouth Corp. 76,000 3,700,250
SBC Communications, Inc. 138,500 6,068,030
Sprint Corp. 70,000 4,305,000
-------------
26,554,056
-------------
CONSUMER CYCLICALS-- 2.4%
--------------------------------------------------------------------------------
McGraw Hill
Companies, Inc. 89,000 4,672,500
-------------
CONSUMER STAPLES-- 6.7%
--------------------------------------------------------------------------------
Kimberly-Clark Corp. 112,775 6,547,998
PepsiCo, Inc. 173,125 6,351,523
-------------
12,899,521
-------------
ENERGY-- 14.8%
--------------------------------------------------------------------------------
BP Amoco plc, ADR 122,700 6,257,700
Chevron Corp. 72,000 6,129,000
Conoco Inc., Class A 154,300 3,674,269
El Paso Energy Corp. 50,000 2,125,000
Exxon Corp. 87,900 6,828,731
Halliburton Co. 74,200 3,278,713
-------------
28,293,413
-------------
FINANCE-- 20.5%
--------------------------------------------------------------------------------
Bank of America Corp. 106,400 5,213,600
Chase Manhattan Corp. 73,500 5,296,594
Chubb Corp. 89,000 5,662,625
Hartford Financial
Services Group 111,800 5,834,563
Marsh & McLennan
Companies, Inc. 65,875 6,492,805
Mellon Bank Corp. 192,900 6,196,913
Merrill Lynch & Co, Inc. 44,900 4,576,992
-------------
39,274,092
-------------
HEALTHCARE-- 8.6%
--------------------------------------------------------------------------------
American Home
Products Corp. 97,900 5,500,756
Bristol-Myers Squibb Co. 96,250 5,047,109
Pharmacia & Upjohn, Inc. 120,000 5,992,500
-------------
16,540,365
-------------
RAW & INTERMEDIATE MATERIALS-- 8.2%
--------------------------------------------------------------------------------
Alcoa Inc. 76,700 4,975,912
Dow Chemical Co. 29,675 3,353,275
E. I. du Pont de
Nemours & Co. 60,918 2,889,798
International Paper Co. 123,650 4,544,138
-------------
15,763,123
-------------
TECHNOLOGY-- 4.2%
--------------------------------------------------------------------------------
Pitney Bowes Inc. 138,500 5,661,188
Xerox Corp. 92,000 2,432,250
-------------
8,093,438
-------------
TRANSPORTATION-- 1.7%
--------------------------------------------------------------------------------
Union Pacific Corp. 79,140 3,333,773
-------------
UTILITIES-- 9.2%
--------------------------------------------------------------------------------
Duke Energy Co 100,005 5,750,288
Unicom Corp. 138,100 5,489,475
Williams Companies Inc. 170,350 6,356,184
-------------
17,595,947
-------------
TOTAL INVESTMENTS
(Identified Cost
$201,471,830) 99.6% 191,198,275
OTHER ASSETS,
LESS LIABILITIES 0.4% 706,510
---- -------------
NET ASSETS 100% $191,904,785
==== =============
ADR's-- American Depositary Receipts
See notes to financial statements
15
<PAGE>
LARGE CAP VALUE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $201,471,830) $191,198,275
Cash 681,273
Dividends receivable 349,102
--------------------------------------------------------------------------------
Total assets 192,228,650
--------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliates-- Management fees (Note 2) 99,610
Accrued expenses and other liabilities 224,255
--------------------------------------------------------------------------------
Total liabilities 323,865
--------------------------------------------------------------------------------
NET ASSETS $191,904,785
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $191,904,785
================================================================================
LARGE CAP VALUE PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
================================================================================
INVESTMENT INCOME: (Note 1B)
Dividend income (net of foreign
Withholding tax of $8,267) $2,529,075
Interest income 12,383
--------------------------------------------------------------------------------
$ 2,541,458
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 696,966
Custody and fund accounting fees 122,678
Audit fees 21,700
Legal fees 20,048
Trustees fees 8,239
Other 1,132
--------------------------------------------------------------------------------
Total expenses 870,763
--------------------------------------------------------------------------------
Net investment income 1,670,695
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net unrealized depreciation of investments (11,015,119)
Net realized gain from investment transactions 2,643,058
--------------------------------------------------------------------------------
Net realized and unrealized loss on investments (8,372,061)
--------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(6,701,366)
================================================================================
See notes to financial statements
16
<PAGE>
LARGE CAP VALUE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
APRIL 30, 2000 YEAR ENDED
(Unaudited) OCTOBER 31, 1999
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 1,670,695 $ 2,045,703
Net realized gain (loss)
on investment transactions 2,643,058 (9,875,483)
Net unrealized appreciation
(depreciation) of investments (11,015,119) 2,601,041
--------------------------------------------------------------------------------
Net decrease in net assets resulting
from operations (6,701,366) (5,228,739)
--------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions (Note 1) 9,165,472 249,127,874
Value of withdrawals (86,378,409) (97,340,274)
--------------------------------------------------------------------------------
Net increase(decrease) in net assets
from capital transactions (77,212,937) 151,787,600
--------------------------------------------------------------------------------
NET INCREASE (DECREASE)IN NET ASSETS: (83,914,303) 146,558,861
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 275,819,088 129,260,227
--------------------------------------------------------------------------------
End of period $191,904,785 $275,819,088
================================================================================
LARGE CAP VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS NOVEMBER 1, 1997
ENDED (COMMENCEMENT
APRIL 30, 2000 YEAR ENDED OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1999 OCTOBER 31, 1998
===========================================================================================
<S> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $191,905 $275,819 $129,260
Ratio of expenses to average net assets 0.75%* 0.75% 0.78%
Ratio of net investment income to
average net assets 1.43%* 1.34% 1.20%
Portfolio turnover 8% 74% 61%
---------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
See notes to financial statements
17
<PAGE>
LARGE CAP VALUE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Large Cap Value Portfolio (the "Portfolio"),
a separate series of Asset Allocation Portfolios (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio. The Investment Manager of the Portfolio
is Citibank, N.A. ("Citibank"). Signature Financial Group (Grand Cayman), Ltd.
("SFG") acts as the Portfolio's Sub-Administrator.
On August 1, 1999, Growth & Income Portfolio and Balanced Portfolio
transferred all or a portion of their investable assets in the amounts of
$83,477,271 and $142,169,402 including $783,244 and $4,538,654, respectively, of
unrealized appreciation to the Portfolio in exchange for an interest in the
Portfolio. The total investable assets and contributions are included in the
Year Ended October 31, 1999 "Proceeds from contributions" in the Statement of
Changes in Net Assets.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. INVESTMENT SECURITY VALUATIONS Equity securities listed on securities
exchanges or reported through the NASDAQ system are valued at last sale prices.
Unlisted securities or listed securities for which last sale price are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in sixty days or less), are valued on the basis
of valuations furnished by pricing services approved by the Board of Trustees
which take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, and other market data, without exclusive reliance on quoted prices or
exchange or over-the-counter prices. Short-term obligations, maturing in sixty
days or less, are valued at amortized cost, which constitutes fair value as
determined by the Trustees. Securities, if any, for which there are no such
valuations or quotations are valued at fair value as determined in good faith by
or under guidelines established by the Trustees.
B. INCOME Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on long-term debt securities
when required for U.S. federal income tax purposes. Dividend income is recorded
on the ex-dividend date.
C. U.S. FEDERAL INCOME TAXES The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. REPURCHASE AGREEMENTS It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
18
<PAGE>
LARGE CAP VALUE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established by the Portfolio to monitor, on a
daily basis, the market value of the repurchase agreement's underlying
investments to ensure the existence of a proper level of collateral.
E. EXPENSES The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Trust with respect to any two or more portfolios or series are allocated in
proportion to the average net assets of each portfolio, except when allocations
of direct expenses to each portfolio can otherwise be made fairly. Expenses
directly attributable to a portfolio are charged to that portfolio.
F. OTHER Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses on investment
transactions are determined on the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs certain duties and receives compensation from
Citibank as from time to time are agreed to by Citibank and SFG. Citibank has
delegated the daily management of the Portfolio to SSBCiti Fund Management LLC
(the "Subadviser"), an affiliate of Citibank. Citibank is a wholly-owned
subsidiary of Citigroup Inc.
The management fees paid to Citibank amounted to $314,240 for the six months
ended April 30, 2000. Citibank management fees are computed at the annual rate
of 0.60% of the Portfolio's average daily net assets less the aggregate amount
payable by the Portfolio's Trust pursuant to the Sub-Management Agreement with
the Subadviser. The Portfolio pays the Subadviser the following fee, which is
accrued daily and payable monthly and is at the annual rates equal to the
percentages of the aggregate assets of the Portfolio allocated to the
Subadvisers. SSB Citi Fund Management LLC, the fee structure is: 0.65% on the
first $10 million; 0.50% on the next $10 million; 0.40% on the next $10 million;
and 0.30% on assets in excess of $30 million. The fees paid to the Subadvisers
amounted to $382,726 for SSB Citi Fund Management LLC for the six months ended
April 30, 2000.
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. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $19,155,624 and $91,620,395,
respectively, for the six months ended April 30, 2000.
19
<PAGE>
LARGE CAP VALUE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 2000, as
computed on a federal income tax basis, are as follows:
Aggregate cost $ 201,471,830
================================================================================
Gross unrealized appreciation $ 9,614,584
Gross unrealized depreciation (19,888,139)
--------------------------------------------------------------------------------
Net unrealized depreciation $ (10,273,555)
================================================================================
5. LINE OF CREDIT The Portfolio, along with various other portfolios in the
CitiFunds Family, entered into an ongoing agreement with a bank which allows the
Portfolios collectively to borrow up to $75 million for temporary or emergency
purposes. Interest on the borrowings, if any, is charged to the specific
portfolio executing the borrowing at the base rate of the bank. The line of
credit requires a quarterly payment of a commitment fee based on the average
daily unused portion of the line of credit. For the six months ended April 30,
2000, the commitment fee allocated to the Portfolio was $338. Since the line of
credit was established, there have been no borrowings.
20
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong Jr., CHAIRMAN
Philip W. Coolidge*, PRESIDENT
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Heath B. McLendon**
E. Kirby Warren
William S. Woods Jr.***
SECRETARY
Robert Frenkel**
TREASURER
Linwood Downs*
* AFFILIATED PERSON OF SUB-ADMINISTRATOR AND DISTRIBUTOR
** AFFILIATED PERSON OF INVESTMENT MANAGER
*** TRUSTEE EMERITUS
INVESTMENT MANAGER
(of Large Cap Value Portfolio)
Citibank, N.A.
153 East 53rd Street,
New York, NY 10043
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
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds Growth
& Income Portfolio. It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus of CitiFunds Growth
& Income Portfolio.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds Growth &Income Portfolio, 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. Mutual fund shares are not guaranteed or
insured by the Federal Deposit Insurance Corporation or any other government
agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)2000 Citicorp [GRAPHIC] Printed on recycled paper CFS/GI/400
