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<PAGE> PAGE 2
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<PAGE> PAGE 4
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<PAGE> PAGE 6
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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SIGNATURE JOHN R.ELDER
TITLE TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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6-Oct-98
To the Shareholders and Board of Trustees of
CitiFunds Cash Reserves
In planning and performing our audit of the financial statements of
CitiFunds Cash Reserves (the "Fund"), a series of CitiFunds Trust III, for
the year ended August 31, 1998, we considered its internal control,
including controls for safeguarding investments, in order to determine our
auditing procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form N-SAR,
not to provide assurance on internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an
audit pertain to the Fund's objective of preparing financial statements
for external purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls include the
safeguarding of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal control, errors or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements caused by
error or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal
control and its operation, including controls for safeguarding
investments, that we consider to be material weaknesses as defined above
as of August 31, 1998.
This report is intended solely for the information and use of management
and the Board of Trustees of the Fund and the Securities and Exchange
Commission.
PricewaterhouseCoopers LLP
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of CitiFunds Trust III:
In planning and performing our audit of the financial statements of
CitiFunds U.S. Treasury Reserves (the "Fund") (a separate series of
CitiFunds Trust III) for the year ended August 31, 1998 (on which we have
issued our report dated October 6, 1998), we considered its internal
control, including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and to comply with the
requirements of Form N- SAR, and not to provide assurance on the Fund's
internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an
audit pertain to the entity's objective of preparing financial statements
for external purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls include the
safeguarding of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in any internal control, errors or fraud
may occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the Fund's internal control would not necessarily
disclose all matters in internal control that might be material weaknesses
under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not
reduce to a relatively low level the risk that errors or fraud in amounts
that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees
in the normal course of performing their assigned functions. However, we
noted no matters involving the Fund's internal control and its operation,
including controls for safeguarding securities that we consider to be
material weaknesses as defined above as of August 31, 1998.
This report is intended solely for the information and use of management,
the Board of Trustees of the Fund, and the Securities and Exchange
Commission.
Deloitte & Touche LLP
Boston, Massachusetts
6-Oct-98
