<PAGE>
Semi-Annual Report o February 28, 1998
[LOGO]
New York
Tax Free Reserves
[Graphic Omitted]
MONEY MARKETS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
CITIFUNDS NEW YORK TAX FREE RESERVES
Letter to Our Shareholders 1
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Portfolio Environment and Outlook 2
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Fund Facts 3
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Fund Performance 4
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Portfolio of Investments 5
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Statement of Assets and Liabilities 12
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Statement of Operations 12
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Statement of Changes in Net Assets 13
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Financial Highlights 13
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Notes to Financial Statements 14
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The six-month period ended February 28, 1998 was a good one for most
financial assets, especially U.S. stocks and bonds. A remarkably resilient
economy, low rates of inflation and lower interest rates were primarily
responsible for the above-average returns provided by longer-term investments.
However, shorter-term assets -- including tax-exempt money market securities --
did not share the benefits these positive economic influences provided. As
interest rates declined during the period, so did yields on most money market
securities.
Nonetheless, we are pleased with the performance of CitiFundsSM New York Tax
Free Reserves. Despite the difficult market environment for short-term
tax-exempt securities, the Fund continued to provide shareholders with a
competitive level of income that is largely free from federal, New York State
and New York City income taxes.
Among other highlights of the reporting period, your Fund has changed its
name to CitiFunds New York Tax Free Reserves. The Fund's investment objective
and management approach remain the same.
Finally, we would like to thank you for your continued confidence and
participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
March 20, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
SHORT-TERM INTEREST RATES GENERALLY DECLINED OVER THE PAST SIX MONTHS. At the
same time, the U.S. economy continued to grow in the late stages of one of the
longest expansions since World War II. Unlike previous economic cycles, however,
this one has been particularly notable for its persistently low inflation rate.
Inflation has remained benign despite strong economic growth and low
unemployment. As a result, fixed-income investors have grown increasingly
confident that inflation will not erode the future value of their principal and
income. They bid up the prices of bonds accordingly, and yields on money market
securities generally fell.
New York's short-term, tax-exempt bond market also responded during the
six-month period to its own unique influences. The improving financial condition
of some of the largest issuers in the state put downward pressure on tax-exempt
yields. For example, Moody's, a major bond rating agency, upgraded its credit
rating for New York City from Baa1 to A3 in response to the City's plans to
place a portion of its current budget surplus in reserve for future use. New
York State is also placing some of its estimated $1 billion budget surplus in
reserve.
THE FUND FOUND ATTRACTIVE OPPORTUNITIES IN VARIABLE-RATE SECURITIES, which
were available with yields up to one percentage point higher than comparable
fixed-rate notes. Consequently, short-term variable-rate notes comprised up to
64% of the fund's assets during the six-month period. Many municipalities used
variable-rate securities to refinance their longer term debt, potentially
enabling them to reduce their borrowing costs further if interest rates continue
to decline.
Despite the economic health of New York City and the state as a whole,
however, some localities and school districts have developed budget deficits.
Consequently, non-rated securities comprised only about 11% of the portfolio at
the end of the reporting period, down from a high of 16% in 1997. We also tended
to avoid notes issued in anticipation of state aid payments because of
persistent problems in approving the state budget on a timely basis which has
resulted in delayed state aid payments. Instead, we preferred to invest in tax
anticipation notes because funds for debt repayment are more likely to be
available at maturity.
WE ARE OPTIMISTIC ABOUT THE FUTURE. We expect short-term interest rates to
move modestly lower. Ultimately, however, we believe that the direction of New
York tax-exempt money market yields depends on the U.S. economy and the nation's
stock market. If the economy slows, yields of short-term tax-exempt and taxable
securities will generally move lower. If slower economic growth causes a stock
market correction, investors may shift their assets to the short-term tax-exempt
market in order to avoid potential losses. In this case, higher demand for
tax-exempt securities may cause yields to decline further.
Whatever the next six months hold, we will continue to manage the portfolio
according to the approach we have followed for years. We intend to adjust the
average maturity in anticipation of changes in interest rates and shift assets
among the most attractive sectors of New York's tax-exempt marketplace. We fully
expect this strategy to provide competitive levels of tax-exempt income
commensurate with a stable principal value.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with high levels of current income exempt from
federal, New York State and New York City personal income taxes*, preservation
of capital and liquidity.
INVESTMENT ADVISER DIVIDENDS
Citibank, N.A. Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
November 4, 1985 Distributed annually, if any
NET ASSETS AS OF 2/28/98 BENCHMARKS
$1,122.4 million o Lipper New York Tax Exempt Money
Market Funds Average
o IBC New York Tax Free Funds Average
*A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SIX ONE FIVE TEN
ALL PERIODS ENDED FEBRUARY 28, 1998 (Unaudited) MONTHS** YEAR YEARS* YEARS*
- --------------------------------------------------------------------------------
CitiFunds New York Tax Free Reserves 1.51% 3.06% 2.70% 3.42%
Lipper New York Tax Exempt Money Market
Funds Average 1.50% 3.07% 2.69% 3.44%
* Average Annual Total Return
** Not Annualized
7-DAY YIELDS
Annualized Current 2.85%
Effective 2.89%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven-day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized the
income earned by the investment during that seven-day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS NEW YORK TAX FREE RESERVES
VS. IBC NEW YORK TAX FREE FUNDS AVERAGE
As illustrated, CitiFunds New York Tax Free Reserves generally provided a
similar annualized seven-day yield to that of a comparable IBC Money Fund
Average, as published in IBC Money Fund ReportTM, for the one-year period.
CitiFunds IBC
New York New York
Tax Free Tax Free
Reserves Funds Average
--------- -------------
3/4/97 2.77% 2.75%
3/11/97 2.62% 2.53%
3/18/97 2.56% 2.47%
3/25/97 2.77% 2.67%
4/1/97 2.91% 2.82%
4/8/97 2.79% 2.74%
4/15/97 2.91% 2.86%
4/22/97 3.12% 3.08%
4/29/97 3.43% 3.46%
5/6/97 3.44% 3.39%
5/13/97 3.31% 3.29%
5/20/97 3.29% 3.28%
5/27/97 3.20% 3.22%
6/3/97 3.15% 3.17%
6/10/97 2.94% 2.98%
6/17/97 3.15% 3.15%
6/24/97 3.26% 3.25%
7/1/97 3.32% 3.37%
7/8/97 3.05% 2.97%
7/15/97 2.93% 2.85%
7/22/97 3.02% 2.97%
7/29/97 3.04% 3.01%
8/5/97 3.03% 2.98%
8/12/97 2.91% 2.84%
8/19/97 2.90% 2.85%
8/26/97 2.84% 2.78%
9/2/97 2.87% 2.83%
9/9/97 2.89% 2.88%
9/16/97 2.97% 2.97%
9/23/97 3.07% 3.08%
9/30/97 3.24% 3.24%
10/7/97 3.08% 3.04%
10/14/97 3.00% 2.98%
10/21/97 3.01% 2.99%
10/28/97 3.05% 3.03%
11/4/97 3.06% 3.04%
11/11/97 3.10% 3.09%
11/18/97 3.20% 3.19%
11/25/97 3.25% 3.22%
12/2/97 3.22% 3.19%
12/9/97 3.03% 2.95%
12/16/97 3.08% 3.06%
12/23/97 3.22% 3.18%
12/30/97 3.36% 3.29%
1/6/98 3.19% 3.17%
1/13/98 2.86% 2.86%
1/20/98 2.86% 2.80%
1/27/98 2.84% 2.84%
2/3/98 2.95% 2.92%
2/10/98 2.74% 2.60%
2/17/98 2.57% 2.51%
2/24/98 2.72% 2.70%
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns
would have been lower.
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
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TAX EXEMPT COMMERCIAL PAPER -- 6.3%
- ---------------------------------------------------------------------
Municipal Assistance
Corp., NY,
2.80% due 3/05/98 $ 6,000 $ 6,000,000
Municipal Assistance
Corp., NY,
3.00% due 3/12/98 5,000 5,000,000
Municipal Assistance
Corp., NY,
3.50% due 4/07/98 5,000 5,000,000
Municipal Assistance
Corp., NY,
3.25% due 5/07/98 2,000 2,000,000
Municipal Assistance
Corp., NY,
3.63% due 6/11/98 9,900 9,900,000
Municipal Security
Trust Certificates,
3.85% due 4/08/98 5,000 5,000,000
New York City, NY,
3.10% due 4/09/98 7,400 7,400,000
New York State,
2.80% due 3/05/98 5,000 5,000,000
New York State Dormitory
Authority Revenue,
3.15% due 3/13/98 6,700 6,700,000
New York State Dormitory
Authority Revenue,
3.50% due 4/07/98 2,250 2,250,000
New York State Medcare
Pooled Trust
4.00% due 8/13/98 10,730 10,730,000
New York State Power
Authority Revenue,
3.45% due 3/10/98 3,000 3,000,000
New York State Power
Authority Revenue,
3.20% due 4/09/98 2,000 2,000,000
Puerto Rico Commonwealth
Aqueduct Sewer,
7.88% due 7/01/98 1,000 1,032,341
--------------
71,012,341
--------------
REVENUE, TAX, BOND AND TAX REVENUE
ANTICIPATION NOTES AND GENERAL
OBLIGATION BONDS & NOTES -- 21.5%
- ---------------------------------------------------------------------
Ballston Spa, NY, Central
School District, G.O.,
4.25% due 12/30/98 3,000 3,009,588
Ballston Spa, NY, Central
School District, G.O.,
8.00% due 6/01/98 1,600 1,615,864
Bay Shore, NY, Union Free
School District, TANS,
4.25% due 6/29/98 5,400 5,406,506
California School
Cash Reserve Notes,
4.75% due 7/02/98 4,000 4,011,578
Central Islip, NY, Union
Free School, BANs,
4.25% due 12/23/98 1,000 1,002,725
Chautauqua County,
NY, TANs,
4.00% due 12/22/98 3,000 3,010,095
Chautauqua County,
NY, TANs,
4.00% due 2/18/99 10,000 10,034,526
Cortland, NY, City
School District RANs,
4.30% due 6/15/98 2,000 2,003,388
East Islip, NY, Union Free
School District TANs,
4.25% due 6/26/98 7,000 7,007,062
Hempstead, NY, BANs,
4.00% due 1/06/99 2,000 2,006,008
Hicksville, NY, Union Free
School District, TANs,
4.10% due 6/30/98 2,000 2,002,349
Hicksville, NY, Union Free
School District, TANs,
4.25% due 6/30/98 11,500 11,516,371
Holly, NY, Central School
District, BANs,
4.25% due 1/07/99 4,410 4,420,822
Marion, NY, Central
School District, BANs,
4.25% due 1/06/99 4,800 4,813,698
Middletown, NY, City
School District, BANs,
5.50% due 11/01/98 400 405,037
Monroe County, NY, BANs,
3.65% due 3/10/98 4,500 4,500,000
Nassau County, NY, TANs,
4.25% due 3/31/98 7,000 7,002,900
Nassau County, NY, BANs,
4.25% due 8/17/98 24,400 24,478,466
Nassau County, NY, TANs,
4.25% due 8/31/98 8,000 8,020,181
New Rochelle, NY, BANs,
4.00% due 4/30/98 4,645 4,646,839
New York City, NY, RANs,
4.50% due 6/30/98 25,950 26,011,556
North Warren, NY, Central
School District, BANs,
4.25% due 1/07/99 3,300 3,309,447
Onondaga County,
NY, BANs,
4.12% due 6/19/98 3,990 3,993,729
Oyster Bay, NY, BANs,
4.00% due 5/01/98 6,355 6,360,787
Oyster Bay, NY, BANs,
4.00% due 10/02/98 10,000 10,026,056
Pearl River, NY, Union
Free School
District, BANs,
4.25% due 6/23/98 3,350 3,353,786
Puerto Rico
Commonwealth
Government
Development, TRANs,
4.25% due 7/30/98 2,500 2,507,547
Rensselaer County,
NY, BANs,
4.25% due 3/24/98 6,000 6,001,740
Rochester, NY, BANs,
4.00% due 3/10/98 5,300 5,300,356
Rockville Centre, NY,
Union Free School
District, BANs,
4.10% due 6/29/98 2,600 2,604,420
Rush Henrietta, NY,
Central School
District, BANs,
4.12% due 6/30/98 7,000 7,006,076
Sachem, NY, Central
School District, TANs,
4.25% due 6/25/98 15,000 15,015,919
Sayville, NY, Union Free
School District, TANs,
4.25% due 6/29/98 3,000 3,003,293
Sayville, NY, Union Free
School District, TANs,
4.50% due 6/29/98 3,000 3,006,124
South Country, NY, Central
School District, TANs,
4.40% due 6/25/98 2,000 2,002,785
South Huntington, NY,
Union Free School
District, TANs,
4.25% due 6/30/98 4,500 4,505,695
Texas State, TRANs,
4.75% due 8/31/98 4,000 4,017,669
Tompkins County, NY, BANs,
4.25% due 4/10/98 4,500 4,501,851
Tompkins County, NY,
BANs, AMT,
4.25% due 4/10/98 4,200 4,201,423
Wallkill, NY, BANs,
4.25% due 4/30/98 4,025 4,027,870
Westchester County,
NY, TANs,
3.59% due 12/29/98 10,000 10,001,537
--------------
241,673,669
--------------
ANNUAL, SEMI-ANNUAL AND QUARTERLY
TENDER REVENUE BONDS AND NOTES
(PUTS) -- 9.7%
- ---------------------------------------------------------------------
Buffalo, NY,
3.70% due 2/01/99 800 800,000
Chicago, IL,
3.55% due 2/04/99 7,000 7,000,000
Dutchess County, NY,
7.00% due 2/15/99 650 671,246
Kentucky State,
Turnpike Authority,
3.60% due 7/01/98 5,000 5,000,000
Metropolitan Transportation
Authority, NY,
8.00% due 7/01/98 2,100 2,172,226
Municipal Assistance
Corp., NY,
4.00% due 7/01/98 1,530 1,532,528
Nassau County, NY,
Industrial
Development Agency,
3.10% due 12/01/99 3,000 3,000,000
New York City, NY,
4.00% due 8/15/98 500 507,490
New York State Dormitory
Authority Revenue,
3.60% due 9/10/98 8,260 8,260,000
New York State
Energy, Research
& Development,
3.65% due 3/15/98 10,000 10,000,000
New York State
Energy, Research
& Development,
3.80% due 10/15/98 5,000 5,000,000
New York State
Environmental Revenue,
3.50% due 6/03/98 19,000 19,000,000
New York State
Environmental Revenue,
4.50% due 6/15/98 3,725 3,732,822
New York State Housing
Finance Authority,
3.60% due 9/10/98 8,895 8,895,000
New York State Housing
Finance Authority,
3.35% due 11/15/99 12,700 12,700,000
New York State Medical
Care Facilities,
7.25% due 2/15/99 1,955 2,058,204
New York State Power
Authority Revenue,
5.50% due 1/01/99 825 837,056
New York State
Thruway Authority,
5.00% due 4/01/98 2,840 2,842,667
Sands Point, NY,
4.46% due 7/15/98 590 591,980
State of Kentucky
Trust Receipts, AMT,
3.60% due 12/03/98 14,000 14,000,000
--------------
108,601,219
--------------
VARIABLE RATE DEMAND NOTES* -- 62.0%
- ---------------------------------------------------------------------
Alaska State Housing
Finance Corp.,
due 6/01/26 3,500 3,500,000
Babylon, NY, Industrial
Development Agency,
due 7/01/14 800 800,000
Chicago, IL, O'Hare
International Airport
Revenue, AMT,
due 7/01/10 6,500 6,500,000
Chicago, IL, Tax Increment,
due 12/01/14 3,000 3,000,000
Clipper Tax Exempt
Trust, AMT,
due 3/01/15 12,619 12,618,847
Clipper Tax Exempt
Trust, AMT,
due 3/01/16 9,120 9,120,000
Connecticut State Health
and Educational Facility,
due 7/01/27 1,500 1,500,000
Connecticut State Housing
Financial Authority,
due 5/15/18 600 600,000
Connecticut State Housing
Financial Authority, AMT,
due 11/15/27 3,995 3,995,000
Connecticut State Special
Tax Obligation,
due 12/01/10 5,600 5,600,000
Dallas, TX, Fort Worth
Regulatory Airport
Revenue, AMT,
due 11/01/23 9,755 9,755,000
Denver, CO, City
and County,
due 11/15/15 6,000 6,000,000
Escambia County, FL,
Industrial
Development Revenue,
due 3/01/22 3,700 3,700,000
Facility Municipal Trust,
due 1/01/18 12,750 12,750,000
Farmington, NM, Pollution
Control Revenue,
due 9/01/24 400 400,000
Florence County, SC,
Solid Waste, AMT,
due 4/01/27 800 800,000
Florida Housing
Finance Agency,
due 6/01/26 5,000 5,000,000
Fulton County, GA,
Development Authority,
AMT, due 6/01/27 2,400 2,400,000
Glens Falls, NY, Industrial
Development Agency,
due 12/01/04 1,610 1,610,000
Hampton,VA,
Redevelopment and
Housing Authority,
due 6/15/26 1,200 1,200,000
Houston, TX, Water and
Sewer System Revenue,
due 12/01/25 5,300 5,300,000
Howard County, MD,
Multifamily Revenue,
due 6/15/26 1,200 1,200,000
Illinois Educational
Facilities Authority,
due 12/01/25 1,400 1,400,000
Illinois Health
Facilities Authority,
due 1/01/20 2,400 2,400,000
Iowa Student Loan
Liquidity Corp., AMT,
due 12/01/23 1,000 1,000,000
Jackson, MS, Pollution
Control, due 6/01/23 2,800 2,800,000
Jasper County, MO,
Industrial
Development Authority,
due 8/01/16 2,300 2,300,000
Jefferson County, NY,
Industrial Development,
AMT, due 7/01/05 2,000 2,000,000
Joplin, MO, Industrial
Development Authority,
due 10/01/01 1,865 1,865,000
Kentucky Economic
Development
Finance Authority,
due 11/01/20 1,900 1,900,000
Laurens County, GA,
Development Authority,
AMT, due 5/01/17 1,000 1,000,000
Lubbock, TX, Health
Facilities Development
Authority, due 7/01/13 1,400 1,400,000
Macon Trust, AMT,
due 2/05/30 2,750 2,750,000
Massachusetts State
Housing Finance
Authority, AMT,
due 7/01/19 9,640 9,640,000
Massachusetts State
Turnpike Authority,
due 1/01/17 14,395 14,395,000
Metropolitan Government,
due 5/15/25 2,400 2,400,000
Metropolitan Transit
Authority, NY,
due 7/01/17 8,000 8,000,000
Metropolitan Transit
Authority, NY,
due 7/01/24 10,200 10,200,000
Missouri Higher Education
Student Loan, AMT,
due 6/01/17 2,000 2,000,000
Missouri State Health
and Education
Facility Authority,
due 11/01/19 2,150 2,150,000
Moorhead, MN, Solid
Waste Disposal, AMT,
due 4/01/12 2,500 2,500,000
Municipal Pooled Trust,
due 10/01/32 15,955 15,955,000
Municipal Security
Trust Certificates,
due 1/01/03 10,000 10,000,000
New Hampshire Housing
Finance Authority,
due 7/01/03 8,535 8,535,000
New Hanover County,
NC, due 3/01/13 2,250 2,250,000
New Rochelle, NY,
due 12/01/05 5,500 5,500,000
New York City, NY,
due 2/15/12 25,100 25,100,000
New York City, NY,
due 2/15/13 1,300 1,300,000
New York City, NY,
due 8/01/15 500 500,000
New York City, NY,
due 6/01/17 7,175 7,175,000
New York City, NY,
due 8/01/17 1,000 1,000,000
New York City, NY,
due 2/01/19 5,100 5,100,000
New York City, NY,
due 8/15/20 200 200,000
New York City, NY,
due 6/01/22 2,000 2,000,000
New York City, NY,
due 6/01/27 10,000 10,000,000
New York City, NY,
Cultural Affairs
(Carnegie Hall),
due 12/01/10 2,000 2,000,000
New York City, NY,
Cultural Affairs
(Carnegie Hall),
due 12/01/15 4,325 4,325,000
New York City, NY,
Municipal Water Finance,
due 6/15/23 9,300 9,300,000
New York City, NY,
Municipal Water Finance,
due 6/15/24 700 700,000
New York City, NY,
Municipal Water Finance,
due 6/15/29 22,055 22,055,000
New York City, NY,
Municipal Water Finance,
due 6/15/30 800 800,000
New York City Health
and Hospital Corp.,
due 2/15/26 8,200 8,200,000
New York City
Housing Development,
due 4/15/07 6,000 6,000,000
New York City
Housing Development,
due 3/15/25 1,000 1,000,000
New York City Housing
Development, AMT,
due 12/01/29 7,000 7,000,000
New York City Industrial
Development Agency,
due 12/01/01 1,000 1,000,000
New York City Industrial
Development Agency,
due 6/30/14 1,900 1,900,000
New York City Industrial
Development Agency,
due 6/30/23 2,200 2,200,000
New York City Industrial
Development Agency,
AMT, due 12/01/17 3,000 3,000,000
New York City Industrial
Development Agency,
AMT, due 6/01/22 1,200 1,200,000
New York State,
due 1/01/06 8,050 8,050,000
New York State Dormitory
Authority Revenue,
due 7/01/25 700 700,000
New York State Dormitory
Authority Revenue,
due 7/01/27 3,625 3,625,000
New York State Energy,
Research and
Development,
due 12/01/20 5,200 5,200,000
New York State Energy,
Research and
Development,
due 6/01/27 2,000 2,000,000
New York State Housing
Finance Authority, AMT,
due 11/01/24 17,700 17,700,000
New York State Housing
Finance Authority, AMT,
due 11/01/28 4,000 4,000,000
New York State Housing
Finance Authority, AMT,
due 11/01/30 5,000 5,000,000
New York State Local
Government
Assistance Corp.,
due 4/01/11 1,000 1,000,000
New York State Local
Government
Assistance Corp.,
due 4/01/22 11,600 11,600,000
New York State Local
Government
Assistance Corp.,
due 4/01/25 20,830 20,830,000
New York State Medical
Care Facilities Agency,
due 11/01/08 3,200 3,200,000
New York State Medical
Care Facilities Agency,
due 8/15/14 2,010 2,010,000
New York State Medical
Care Facilities Agency,
due 8/15/22 8,395 8,395,000
New York State Medical
Care Facilities Agency,
due 2/05/29 5,625 5,625,000
New York State Power
Authority Revenue,
due 1/01/23 5,000 5,000,000
New York State
Thruway Authority,
due 1/01/25 12,665 12,665,000
New York State
Thruway Authority,
due 1/01/27 5,805 5,805,000
New York State
Thruway Authority,
due 7/01/27 5,000 5,000,000
North Texas, Higher
Educational Authority,
AMT, due 4/01/36 4,300 4,300,000
Pennsylvania State
Higher Education, AMT,
due 1/01/18 4,000 4,000,000
Perry County, MS,
due 3/01/02 2,900 2,900,000
Pitkin County, CO,
Industrial Development
Revenue, AMT,
due 4/01/14 800 800,000
Port Authority of New
York & New Jersey,
due 1/01/01 40,000 40,000,000
Port Authority of New
York & New Jersey,
AMT, due 1/01/01 25,000 25,000,000
Puerto Rico
Commonwealth
Government
Development,
due 12/01/15 1,500 1,500,000
Puerto Rico Electric
Power Authority,
due 7/01/22 9,500 9,500,000
Puerto Rico Public
Buildings Authority,
due 7/01/21 9,380 9,380,000
Puerto Rico Public
Buildings Authority,
due 7/01/25 9,330 9,330,000
Richmond, VA,
due 11/01/29 7,775 7,775,000
Rockport, IN, Pollution
Control Authority,
due 7/01/25 400 400,000
Rutherford County, TN,
Industrial Development,
AMT, due 6/01/03 1,750 1,750,000
Saint Charles Parish, LA,
Pollution Control
Authority,
due 6/01/05 7,600 7,600,000
Saint Charles Parish, LA,
Pollution Control
Authority,
due 3/01/24 8,325 8,325,000
Schenectady County, NY,
Industrial Development,
due 6/01/09 1,830 1,830,000
Seneca, NY, Industrial
Development Authority,
due 11/01/27 7,000 7,000,000
Seveir County, TN, Public
Building Authority, AMT,
due 6/01/12 4,985 4,985,000
Seveir County, TN, Public
Building Authority,
due 6/01/17 2,115 2,115,000
Seveir County, TN, Public
Building Authority,
due 6/01/27 2,500 2,500,000
South Carolina Educational
Facilities Authority,
due 10/01/26 4,600 4,600,000
Southwestern, IL,
Environmental
Development Authority,
AMT, due 8/01/21 1,200 1,200,000
Southwestern, IL,
Environmental
Development Authority,
due 11/01/25 300 300,000
State of Kentucky
Trust Receipts, AMT,
due 10/01/27 2,000 2,000,000
State of Kentucky
Trust Receipts, AMT,
due 5/01/29 9,500 9,500,000
State of Kentucky
Trust Receipts, AMT,
due 5/01/30 1,060 1,060,000
Suffolk County, NY,
Water Authority,
due 2/06/01 5,000 5,000,000
Trail County, ND,
Solid Waste, AMT,
due 12/01/11 16,000 16,000,000
Triborough Bridge &
Tunnel Authority, NY,
due 1/01/04 8,149 8,149,000
Triborough Bridge &
Tunnel Authority, NY,
due 6/07/09 6,930 6,930,000
Triborough Bridge &
Tunnel Authority, NY,
due 1/01/12 6,400 6,400,000
Uinta County, WY,
Pollution Control
Revenue,
due 8/15/20 550 550,000
Uinta County, WY,
Pollution Control
Revenue,
due 12/01/22 1,700 1,700,000
Utah State Board
Regents Student Loan,
AMT, due 11/01/31 3,500 3,500,000
Walton County, GA,
Industrial Building
Authority, AMT,
due 10/01/17 1,600 1,600,000
Warren and Washington
County, NY, Industrial
Development,
due 11/01/98 7,800 7,800,000
Washington State Health
Care Facilities,
due 10/01/05 1,800 1,800,000
Wisconsin State Health
and Educational
Facilities, due 9/01/26 4,000 4,000,000
--------------
695,227,847
--------------
TOTAL INVESTMENTS AT
AMORTIZED COST 99.5% $1,116,515,076
OTHER ASSETS,
LESS LIABILITIES 0.5 5,880,334
----- --------------
Net Assets 100.0% $1,122,395,410
----- --------------
AMT -- Subject to Alternative Minimum Tax
*Variable rate demand notes have a demand feature under which the fund could
tender them back to the issuer on no more than 7 day's notice.
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $1,116,515,076
Interest receivable 8,601,563
Receivable for shares of beneficial interest sold 20,928
- --------------------------------------------------------------------------------
Total assets 1,125,137,567
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 1,273,191
Payable for shares of beneficial interest repurchased 436,261
Payable to affiliates:
Investment advisory fees (Note 3) 127,988
Shareholder servicing agents' fees (Note 4B) 209,699
Accrued expenses and other liabilities 695,018
- --------------------------------------------------------------------------------
Total liabilities 2,742,157
- --------------------------------------------------------------------------------
Net Assets for 1,122,485,181 shares of beneficial
interest outstanding $1,122,395,410
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $1,122,485,181
Accumulated net realized loss on investments (89,771)
- --------------------------------------------------------------------------------
Total $1,122,395,410
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- --------------------------------------------------------------------------------
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INTEREST INCOME (Note 1B): $18,335,533
EXPENSES:
Administrative fees (Note 4A) $1,250,091
Shareholder Servicing Agents' fees (Note 4B) 1,250,091
Investment Advisory fees (Note 3) 1,000,072
Distribution fees (Note 5) 500,036
Custodian fees 135,456
Trustee fees 28,066
Registration fees 18,667
Shareholder reports 17,536
Auditing fees 12,700
Transfer agent fees 10,084
Legal fees 6,168
Miscellaneous 15,679
- --------------------------------------------------------------------------------
Total expenses 4,244,646
Less aggregate amounts waived by Investment Adviser,
Administrator, and Distributor (Notes 3, 4A, and 5) (993,455)
Less fees paid indirectly (Note 1E) (2,063)
- --------------------------------------------------------------------------------
Net expenses 3,249,128
- --------------------------------------------------------------------------------
Net investment income 15,086,405
NET REALIZED GAIN ON INVESTMENTS 5,931
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,092,336
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES STATEMENT
OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 28,1998 YEAR ENDED
(Unaudited) AUGUST 31, 1997
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 15,086,405 $ 28,370,732
Net realized gain (loss) on investments 5,931 (72,184)
- ------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 15,092,336 28,298,548
- ------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (15,086,405) (28,370,732)
- ------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST AT NET ASSET VALUE OF $1.00
PER SHARE (Note 6):
Proceeds from sale of shares 915,208,900 945,401,701
Net asset value of shares issued to
shareholders from reinvestment of
dividends 7,024,322 13,827,379
Cost of shares repurchased (776,803,108) (923,889,022)
- ------------------------------------------------------------------------------
Net increase in net assets from
transactions in shares of beneficial
interest 145,430,114 35,340,058
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 145,436,045 35,267,874
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 976,959,365 941,691,491
- ------------------------------------------------------------------------------
End of period $1,122,395,410 $ 976,959,365
- --------------------------------------------------------------------------------
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1998 ------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.01497 0.02949 0.02936 0.03136 0.01954 0.01858
Dividends from net investment income (0.01497) (0.02949) (0.02936) (0.03136) (0.01954) (0.01858)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $1,122,395 $976,959 $941,691 $767,129 $684,687 $607,992
Ratio of expenses to average
net assets 0.65%* 0.65% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income to
average net assets 3.02%* 2.95% 2.92% 3.15% 1.96% 1.86%
Total return 1.51%** 2.99% 2.98% 3.18% 1.97% 1.87%
Note: If agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the
periods indicated and the expenses were not reduced for fees paid indirectly for the years after August
31, 1995, the net investment income per share and ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $0.01398 $0.02739 $0.02725 $0.02917 $0.01715 $0.01628
Ratios:
Expenses to average net assets 0.85%* 0.86% 0.86% 0.87% 0.88% 0.88%
Net investment income to
average net assets 2.82%* 2.74% 2.71% 2.93% 1.72% 1.63%
- -------------------------------------------------------------------------------------------------------
* Annualized
** Not Annualized
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds New York Tax Free Reserves (the
"Fund") is a separate non-diversified series of CitiFunds Multi-State Tax Free
Trust (the "Trust") which is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. Effective January 2, 1998 the Landmark New York
Tax Free Reserves changed its name to CitiFunds New York Tax Free Reserves. The
Trust also changed its name from Landmark Multi-State Tax Free Funds to
CitiFunds Multi-State Tax Free Trust. The Investment Adviser of the Fund is
Citibank, N.A. ("Citibank"). CFBDS, Inc. ("CFDBS"), (formerly Landmark Funds
Broker-Dealer Services, Inc.) acts as the Trust's Administrator and Distributor.
Citibank also serves as Sub-Administrator and makes Fund shares available to
customers through various Shareholder Servicing Agents.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. Valuation of Investments Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Fund's use of amortized cost is subject to the Fund's compliance with
certain conditions as specified under Rule 2a-7 of the Investment Company Act of
1940.
B. Interest Income Interest income consists of interest accrued and accretion
of market discount less the amortization of any premium on the investments of
the Fund.
C. Federal Taxes The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its net investment income. Accordingly, no
provision for federal income or excise tax is necessary. At August 31, 1997, the
Fund, for federal income tax purposes, had a capital loss carryover of $23,518
of which $5,031 will expire on August 31, 1999, $18,487 will expire on August
31, 2005. Such capital loss carryover will reduce the Fund's taxable income
arising from future net realized gain on investment transactions, if any, to the
extent permitted by the Internal Revenue Code, and thus will reduce the amount
of distributions to shareholders which would otherwise be necessary to relieve
the Fund of any liability for federal income tax. Dividends paid by the Fund
from net interest received on tax-exempt money market instruments are not
includable by shareholders as gross income for federal income tax purposes
because the Fund intends to meet certain requirements of the Internal Revenue
Code applicable to regulated investment companies which will enable the Fund to
pay exempt-interest dividends. The portion of such interest, if any, earned on
private activity bonds issued after August 7, 1986 may be considered a tax
preference item to shareholders.
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 in the 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.
E. Fees Paid Indirectly The Fund's custodian bank calculates its fees based
on the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
F. Other Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 12:00
noon, Eastern time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent), on or prior to the last business
day of the month.
3. INVESTMENT ADVISORY FEES The Investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $1,000,072
of which $331,447 was voluntarily waived for the period ended February 28, 1998.
The investment advisory fee is computed at the annual rate of 0.20% of the
Fund's average daily net assets.
4. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services
Plan (the "Administrative Services Plan") which provides that the Trust on
behalf of each Fund may obtain the services of an Administrator, one or more
Shareholder Servicing Agents and other Servicing Agents and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Services Plan, the aggregate of the fee paid to the Administrator
from the Fund, the fees paid to the Shareholder Servicing Agents from the Fund
under such Plan and the Basic Distribution Fee paid from the Fund to the
Distributor under the Distribution Plan may not exceed 0.60% of the Fund's
average daily net assets on an annualized basis for the Fund's then-current
fiscal year.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is computed at
the annual rate of 0.25% of the Fund's average daily net assets. The
Administrative fees amounted to $1,250,091 of which $413,681 was voluntarily
waived for the six months ended February 28, 1998. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
CFBDS as from time to time is agreed to by CFBDS and Citibank. The Fund pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the Fund
from the Administrator or its affiliates. Certain of the officers and a Trustee
of the Fund are officers or a director of the Administrator or its affiliates.
B. Shareholder Servicing Agents Fees The Trust on behalf of the Fund has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, but may not exceed, on an annualized basis, an amount equal to
0.25% of the average daily net assets of the Fund represented by shares owned
during the period by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. Shareholder Servicing Agents fees amounted
to $1,250,091 for the period ended February 28, 1998.
5. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund compensates the Distributor at an annual rate not to exceed 0.10% of the
Fund's average daily net assets. The Distribution fees amounted to $500,036 of
which $248,327 was voluntarily waived for the period ended February 28, 1998.
The Distributor may also receive an additional fee from the Fund at an annual
rate not to exceed 0.10% of the Fund's average daily net assets in anticipation
of, or as reimbursement for, advertising expenses incurred by the Distributor in
connection with the sale of shares of the Fund. The additional fee has not been
assessed through February 28, 1998.
6. 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).
7. INVESTMENT TRANSACTIONS Purchases, and maturities and sales, of money market
instruments aggregated $1,368,860,460 and $1,230,819,407, respectively, for the
six months ended February 28, 1998.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1998, for federal income tax purposes, amounted
to $1,116,515,076.
9. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the six months
ended February 28, 1998, the commitment fee allocated to the Fund was $1,828.
Since the line of credit was established, there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Elliott J. Berv
Mark T. Finn
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Walter E. Robb, III
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent
or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [Recycle Logo] Printed on recycled paper CFS/RNY/298
<PAGE>
Semi-Annual Report o February 28, 1998
[LOGO]
California
Tax Free Reserves
[Graphic Omitted]
MONEY MARKETS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
CITIFUNDS CALIFORNIA TAX FREE RESERVES
Letter to Our Shareholders 1
- --------------------------------------------------------------------------------
Portfolio Environment and Outlook 2
- --------------------------------------------------------------------------------
Fund Facts 3
- --------------------------------------------------------------------------------
Fund Performance 4
- --------------------------------------------------------------------------------
Portfolio of Investments 5
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities 9
- --------------------------------------------------------------------------------
Statement of Operations 10
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets 11
- --------------------------------------------------------------------------------
Financial Highlights 12
- --------------------------------------------------------------------------------
Notes to Financial Statements 13
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The six-month period ended February 28, 1998 was a good one for most financial
assets, especially U.S. stocks and bonds. A remarkably resilient economy, low
rates of inflation and lower interest rates were primarily responsible for the
above-average returns provided by longer-term investments. However, shorter-term
assets -- including tax-exempt money market securities -- did not share the
benefits these positive economic influences provided. As interest rates declined
during the period, so did yields on most money market securities.
Nonetheless, we are pleased with the performance of CitiFundsSM California
Tax Free Reserves. Despite the difficult market environment for short-term
tax-exempt securities, the Fund continued to provide shareholders with a
competitive level of income that is largely free from federal and California
state income taxes.
Among other highlights of the reporting period, your Fund has changed its
name to CitiFunds California Tax Free Reserves. The Fund's investment objective
and management approach remain the same.
Finally, we would like to thank you for your continued confidence and
participation.
Sincerely,
/S/ Phillip W. Coolidge
Philip W. Coolidge
President
March 20, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
SHORT-TERM INTEREST RATES TRENDED LOWER OVER THE PAST SIX MONTHS. At the same
time, the U.S. economy continued to grow in the late stages of one of the
longest expansions since World War II. Unlike previous economic cycles, however,
this one has been particularly notable for its persistently low inflation rate.
Inflation has remained benign despite strong economic growth and low
unemployment. As a result, fixed-income investors have grown increasingly
confident that inflation will not erode the future value of their principal and
income. They bid up the prices of bonds accordingly, and yields on money market
securities generally fell.
In addition, California's tax-exempt bond market responded during the six-
month period to its own unique influences. While changes in the yields of short-
term tax-exempt securities generally tracked those of comparable taxable
securities, supply-and-demand factors helped keep tax-exempt yields high
relative to U.S. Treasury bills and notes. First, demand for short-term
investments was relatively constrained because the stellar returns provided by
stocks and longer-term bonds provided little incentive for investors to seek the
safety of money market funds. In addition, the possibility of changes in the
rules governing corporate holdings of municipal bonds reduced business demand
for tax-exempt securities. Yet, the available supply of short-term tax-exempt
securities rose as municipalities came to the market to take advantage of low
interest rates, putting upward pressure on rates.
THE FUND FOUND ATTRACTIVE OPPORTUNITIES IN VARIABLE-RATE SECURITIES, which
were available at yields up to one percentage point higher than comparable
fixed-rate notes. Consequently, variable-rate notes comprised up to 62% of the
portfolio's assets during the six-month period, with the remainder invested in
fixed-rate notes and commercial paper. Many municipalities used variable-rate
securities to refinance their longer-term debt, potentially enabling them to
reduce their borrowing costs further if interest rates continue to decline.
The portfolio's increased exposure to variable-rate securities caused its
average maturity to decline from about 47 days at the start of the six-month
period to as low as 29 days. Later in the period, we began to take advantage of
technical factors to purchase longer-dated tax-exempt notes at favorable rates
of interest, and the portfolio's average maturity rose modestly as a result. If
attractive longer-dated securities become available, we intend to create a
'barbell' portfolio structure -- short-term variable-rate securities on one end,
longer-term fixed-rate notes on the other. This structure should position the
portfolio well for the future. If short-term tax-exempt yields fall further, the
longer-dated, fixed-rate holdings should help us maintain relatively high
yields. If interest rates rise, the portfolio's shorter-term, variable-rate
securities should help us participate in higher yields as they become available.
WE BELIEVE THAT MODESTLY LOWER SHORT-TERM INTEREST RATES ARE LIKELY.
Ultimately, however, we believe that the direction of California's tax-exempt
money market yields hinges on the U.S. economy and the nation's stock market. If
the economy slows, yields of short-term tax-exempt and taxable securities will
generally move lower. If slower economic growth causes a stock market
correction, investors may shift their assets to the short-term tax-exempt market
in order to avoid potential losses. In this case, higher demand for tax-exempt
securities may cause yields to decline further.
Whatever the next six months hold, we will continue to manage the portfolio
according to the approach we have followed for years. We intend to adjust the
average maturity in anticipation of changes in interest rates and shift assets
among the most attractive sectors of California's tax-exempt marketplace. We
fully expect this strategy to provide competitive levels of tax-exempt income
commensurate with a stable principal value.
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with high levels of current income exempt from
both Federal and California personal income taxes,* preservation of capital
and liquidity.
INVESTMENT ADVISER DIVIDENDS
Citibank, N.A. Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
March 10, 1992 Distributed annually, if any
NET ASSETS AS OF 2/28/98 BENCHMARKS
$255.5 million Lipper California Tax Exempt Money
Market Funds Average
IBC California Tax Free Money Market
Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE
MARCH 10,
SIX ONE FIVE 1992
ALL PERIODS ENDING FEBRUARY 28, 1998 (Unaudited) MONTHS** YEAR YEARS* INCEPTION*
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiFunds California Tax Free Reserves 1.48% 3.02% 2.91% 2.87%
Lipper California Tax Exempt Money Market Funds
Average 1.46% 2.99% 2.76% 2.72%+
</TABLE>
* Average Annual Total Return
** Not Annualized
+ Since 2/29/92
7-DAY YIELDS
Annualized Current 2.79%
Effective 2.83%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized, the
income earned by the investment during that seven day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS CALIFORNIA TAX FREE
RESERVES VS. IBC CALIFORNIA TAX FREE MONEY MARKET FUNDS AVERAGE
IBC
California
CitiFunds Tax Free
California Money Market
Tax Free Funds
Reserves Average
---------- ------------
3/4/97 2.75% 2.74%
3/11/97 2.56% 2.52%
3/18/97 2.49% 2.44%
3/25/97 2.63% 2.63%
4/1/97 2.81% 2.77%
4/8/97 2.73% 2.69%
4/15/97 2.83% 2.81%
4/22/97 3.07% 3.06%
4/29/97 3.42% 3.49%
5/6/97 3.39% 3.41%
5/13/97 3.29% 3.29%
5/20/97 3.25% 3.25%
5/27/97 3.19% 3.20%
6/3/97 3.17% 3.14%
6/10/97 2.98% 2.91%
6/17/97 3.18% 3.13%
6/24/97 3.29% 3.24%
7/1/97 3.33% 3.33%
7/8/97 3.02% 2.93%
7/15/97 2.90% 2.81%
7/22/97 2.98% 2.89%
7/29/97 3.01% 2.94%
8/5/97 2.99% 2.92%
8/12/97 2.84% 2.77%
8/19/97 2.84% 2.77%
8/26/97 2.76% 2.70%
9/2/97 2.77% 2.72%
9/9/97 2.86% 2.76%
9/16/97 2.97% 2.95%
9/23/97 3.09% 3.06%
9/30/97 3.23% 3.21%
10/7/97 3.06% 3.00%
10/14/97 2.97% 2.90%
10/21/97 2.97% 2.93%
10/28/97 3.02% 2.97%
11/4/97 3.01% 2.96%
11/11/97 3.05% 2.99%
11/18/97 3.16% 3.11%
11/25/97 3.21% 3.14%
12/2/97 3.18% 3.11%
12/9/97 2.97% 2.87%
12/16/97 3.01% 2.97%
12/23/97 3.15% 3.09%
12/30/97 3.30% 3.22%
1/6/98 3.14% 3.12%
1/13/98 2.76% 2.73%
1/20/98 2.75% 2.69%
1/27/98 2.78% 2.75%
2/3/98 2.92% 2.84%
2/10/98 2.70% 2.53%
2/17/98 2.54% 2.43%
2/24/98 2.66% 2.58%
As illustrated, CitiFunds California Tax Free Reserves generally provided a
similar annualized seven- day yield to that of a comparable IBC Money Fund
Average, as published in IBC Money Fund Report'tm', for the one-year period.
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns
would have been lower.
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ---------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 10.6%
- ---------------------------------------------------
California Pollution
Control Finance
Authority,
3.45% due 4/07/98 $3,550 $3,550,000
Long Beach, CA, Harbor
Authority, AMT,
3.50% due 3/05/98 1,000 1,000,000
Long Beach, CA, Harbor
Authority, AMT,
3.65% due 3/11/98 3,000 3,000,000
Puerto Rico
Commonwealth
Government
Development Authority,
3.70% due 3/10/98 3,000 3,000,000
San Diego County, CA,
Water Authority,
3.45% due 4/08/98 1,500 1,500,000
San Francisco, CA,
County Airport, AMT,
3.40% due 3/06/98 2,000 2,000,000
San Joaquin County, CA,
Transportation
Authority,
3.65% due 3/06/98 5,000 5,000,000
Sacramento County, CA,
Municipal Utility
District Electric
Revenue,
3.40% due 4/07/98 3,000 3,000,000
Sacramento County, CA,
Municipal Utility
District Electric
Revenue,
3.20% due 5/13/98 5,000 5,000,000
-----------
27,050,000
-----------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE BONDS
AND NOTES (PUTS) -- 12.7%
- --------------------------------------------
California Education
Facilities Authority
Revenue,
6.50% due 10/01/98 730 742,283
California Pollution
Control Finance
Authority,
3.85% due 11/15/98 1,635 1,635,558
California University
Revenue,
10.00% due 9/01/98 1,000 1,032,330
Corona, CA,
Community
Facilities
District,
4.25% due 9/01/98 2,085 2,092,631
Encina, CA, Joint
Power Financing
Authority,
6.45% due 8/01/98 930 941,045
Northern
California Public
Power Agency
Revenue Bonds,
8.00% due 7/01/98 1,140 1,156,810
Puerto Rico
Commonwealth
Aqueduct Sewer
Revenue,
7.88% due 7/01/98 4,000 4,131,942
Puerto Rico
Commonwealth
Highway
Authority,
8.00% due 7/01/98 2,900 2,999,215
Puerto Rico
Commonwealth
Highway
Authority,
8.13% due 7/01/98 3,000 3,102,197
Puerto Rico
Electric Power
Authority,
8.00% due 7/01/98 2,000 2,066,826
Puerto Rico
University
Revenue,
4.55% due 6/01/98 500 501,277
Sacramento County,
CA,
4.50% due 9/30/98 4,000 4,022,941
Stanislaus County,
CA, Office of
Education,
4.50% due
11/04/98 6,590 6,632,653
Southern
California Public
Power Revenue,
4.13% due 7/01/98 1,000 1,002,350
Turlock, CA,
4.50% due 1/01/99 500 502,618
----------
32,562,676
----------
BOND ANTICIPATION NOTES, TAX AND REVENUE
ANTICIPATION NOTES AND GENERAL OBLIGATION BONDS AND
NOTES -- 14.4%
- ---------------------------------------------------
A B C California
Union
School District Bonds, G.O.
7.50% due 8/01/98 740 750,980
Alameda County,
CA,
TRANs,
4.50% due 7/22/98 1,000 1,002,243
California State,
General
Obligation Bonds,
4.50% due 6/30/98 7,000 7,017,928
California State
School Cash
Reserve Notes,
4.75% due 7/02/98 4,000 4,011,578
Los Angeles
County, CA,
Unified School,
TRANs,
4.50% due 6/30/98 4,000 4,008,229
Los Angeles
County, CA,
Wastewater Sewer, TRANs,
6.80% due 8/01/98 2,000 2,066,465
Oregon, WI, School
District, BANs,
4.50% due 4/15/98 4,000 4,001,852
Puerto Rico
Commonwealth,
TRANs,
4.50% due 7/30/98 7,000 7,027,595
Sacramento County,
CA, Municipal
Utility, TRANs
4.50% due 7/01/98 2,865 2,871,913
Santa Barbara
County, CA,
TRANs,
4.50% due
10/01/98 4,000 4,015,013
----------
36,773,796
----------
VARIABLE RATE DEMAND NOTES* -- 61.5%
- --------------------------------------------------------
Bassett, CA, Union
Free School
District Capital
Improvement,
due 5/01/17 6,435 6,435,000
Burke County, GA,
Pollution
Development
Authority, due
7/01/24 365 365,000
California Health
Facilities
Finance
Authority,
due 7/01/05 300 300,000
California Health
Facilities
Finance
Authority,
due 7/01/12 100 100,000
California Health
Facilities
Finance
Authority,
due 7/01/16 100 100,000
California Health
Facilities
Finance
Authority,
due 7/01/18 1,000 1,000,000
California Health
Facilities
Finance
Authority,
due 7/01/20 1,100 1,100,000
California Health
Facilities
Finance
Authority,
due 7/01/21 500 500,000
California Health
Facilities
Finance
Authority,
due 7/01/25 100 100,000
California Housing
Finance Agency
Revenue, AMT,
due 3/12/99 6,000 6,000,000
California
Pollution Control
Finance
Authority,
due 9/01/13 1,100 1,100,000
California
Pollution Control
Finance
Authority, AMT,
due 9/01/20 350 350,000
California
Pollution Control
Finance
Authority,
Pacific Gas &
Electric,
due 11/01/26 300 300,000
California
Pollution Control
Finance
Authority, Shell
Oil, due 10/01/09 200 200,000
California
Pollution Control
Solid Waste, AMT,
due 10/01/07 2,500 2,500,000
California State,
General
Obligation Bonds,
AMT,
due 12/01/08 3,205 3,205,000
California State,
General
Obligation Bonds,
due 6/01/14 4,300 4,300,000
California
Statewide
Community
Development,
due 11/01/15 1,305 1,305,000
California
Statewide
Community
Development,
due 6/01/26 500 500,000
California Student
Loan, AMT, due
6/01/98 2,600 2,600,000
California
Transition
Finance
Authority, due
10/01/27 5,000 5,000,000
Carlsbad, CA,
Multi-Family
Housing Revenue,
due 6/01/11 400 400,000
Chicago, Il, O'
Hare
International
Airport Revenue,
due 7/01/10 500 500,000
Clayton County,
GA, Housing
Authority,
due 1/01/21 700 700,000
Clipper, CA, Tax
Exempt Trust,
AMT, due 3/01/15 4,900 4,900,000
Clipper, CA, Tax
Exempt Trust, due
5/01/06 2,785 2,785,000
Clipper, CA, Tax
Exempt Trust, due
8/01/26 4,760 4,760,000
Concord, CA,
Multi-Family
Mortgage Revenue,
due 7/15/18 400 400,000
Eastern, CA,
Municipal Water
District Revenue,
due 7/01/20 1,850 1,850,000
Effingham County,
GA, Development
Authority, due
4/01/37 400 400,000
Facilities
Municipal Trust,
due 1/01/22 1,300 1,300,000
Fontana, CA,
Airport
Development
Revenue, due
11/01/07 3,895 3,895,000
Foothill/Eastern
Transportation
Toll Authority,
due 1/02/35 200 200,000
Gordon County, GA
Development
Authority, AMT,
due 9/01/17 1,000 1,000,000
Hawkins County,
TN, Industrial
Development
Board, due
10/01/27 1,350 1,350,000
Henderson, NV,
Health Care
Facility Revenue,
due 7/01/20 2,700 2,700,000
Independent
Cities, CA, Lease
Revenue,
due 6/01/98 90 90,000
Inland, FL,
Protection
Financing Corp.,
due 6/12/98 5,000 5,000,000
Jasper County, MO,
Industrial
Development
Authority, AMT,
due 10/01/27 1,000 1,000,000
Kentucky State
Turnpike
Authority, due
7/01/03 500 500,000
Kern County, CA,
Certificates of
Participation,
due 12/01/21 9,000 9,000,000
Los Angeles, CA,
due 5/15/20 1,200 1,200,000
Los Angeles
County, CA,
Certificates of
Participation,
due 11/01/05 300 300,000
Los Angeles
County, CA,
Regional Airport
Lease, due
12/01/24 400 400,000
Macon Trust Pool,
AMT, due 2/05/30 1,195 1,195,000
Massachusetts
State Turnpike
Authority
due 1/01/17 2,000 2,000,000
Metropolitan Water
District, SC,
Waterworks
Revenue, due
6/01/23 990 990,000
Missouri State
Health &
Educational
Facilities
Authority, due
11/01/19 800 800,000
New Hampshire
Health And
Education,
due 6/01/23 1,300 1,300,000
North Little Rock,
AR, Health
Facilities,
due 12/01/21 1,700 1,700,000
Pittsburgh, CA,
Mortgage
Obligation, due
12/30/22 2,400 2,400,000
Puerto Rico
Commonwealth,
due 1/14/99 1,000 1,000,000
Puerto Rico
Commonwealth
Highway
Authority, due
7/01/13 3,978 3,978,000
Puerto Rico
Electric Power
Authority, due
7/01/22 9,700 9,700,000
Puerto Rico
Electric Power
Authority, due
7/01/13 2,000 2,000,000
Puerto Rico
University
Revenue, due
6/01/25 1,875 1,875,000
Quakertown, PA,
General Authority
Revenue,
due 7/01/26 1,957 1,957,000
Riverside County,
CA, Certificates
of Participation,
due 9/01/14 500 500,000
Riverside County,
CA, Certificates
of Participation,
due 12/01/15 200 200,000
Sacramento County,
CA, Multi-Family
Housing
Authority, AMT,
due 5/01/27 4,500 4,500,000
Saint Charles
Parish, LA,
Pollution, due
3/01/24 1,000 1,000,000
Saline County, NE,
Solid Waste
Disposal, AMT,
due 10/01/16 1,500 1,500,000
San Antonio, TX,
Electric & Gas
Revenue,
due 2/01/19 1,100 1,100,000
San Diego, CA,
Public Finance
Facility,
due 5/15/25 1,100 1,100,000
San Francisco, CA,
International
Airport Revenue,
due 5/01/26 6,000 6,000,000
San Francisco, CA,
International
Airport Revenue,
AMT,
due 5/01/16 4,000 4,000,000
Sevier County, TN,
Public Building
Authority,
due 6/01/09 1,000 1,000,000
Sevier County, TN,
Public Building
Authority,
due 6/01/17 2,100 2,100,000
Southern
California Public
Power Project
Authority, due
7/01/12 3,000 3,000,000
Southern
California Public
Power Project
Authority, due
7/01/19 2,000 2,000,000
South Carolina
Jobs Economic
Development, AMT,
due 12/01/12 300 300,000
Tarrant County,
TX, Health
Facilities
Authority,
due 2/15/17 1,100 1,100,000
Tax Exempt
Receipts,
due 10/01/32 5,000 5,000,000
Tax Exempt
Receipts, AMT,
due 12/01/30 3,000 3,000,000
Uinta County, WY,
Pollution Control
Revenue, due
8/15/20 3,500 3,500,000
Washoe County, NV,
Water Facility
Revenue, due
12/01/20 200 200,000
Westminster, CA,
Redevelopment Tax
Allocation, due
8/01/27 3,000 3,000,000
-----------
156,985,000
-----------
TOTAL INVESTMENTS,
AT AMORTIZED
COST 99.2% 253,371,472
OTHER ASSETS, LESS
LIABILITIES 0.8 2,089,966
----------------------
NET ASSETS 100.0% $255,461,438
----------------------
AMT - Subject to Alternative Minimum Tax
* Variable rate demand notes have a demand
feature under which the fund could tender
them back to the issuer on no more than 7
day's notice.
See notes to financial statements
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
FEBRUARY 28, 1998 (Unaudited)
- -------------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $253,371,472
Interest receivable 2,454,496
Receivable for shares of beneficial interest sold 261,000
- -------------------------------------------------------------------------------------
Total assets 256,086,968
- -------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 429,640
Payable to affiliate:
Investment Advisory fee (Note 3) 23,221
Shareholder Servicing Agent's fee (Note 4B) 47,991
Accrued expenses and other liabilities 124,678
- -------------------------------------------------------------------------------------
Total liabilities 625,530
- -------------------------------------------------------------------------------------
NET ASSETS for 255,469,197 shares of beneficial interest
outstanding $255,461,438
- -------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $255,469,197
Accumulated net realized loss on investments (7,759)
- -------------------------------------------------------------------------------------
Total $255,461,438
- -------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- -------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
STATEMENT OF OPERATIONS
<TABLE>
<S> <C> <C>
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (Unaudited)
- ---------------------------------------------------------------------------------------
INTEREST INCOME (Note 1B): $4,087,936
EXPENSES:
Administrative fees (Note 4A) $ 282,303
Shareholder Servicing Agents' fees (Note 4B) 282,303
Investment Advisory fees (Note 3) 225,842
Distribution fees (Note 5) 112,921
Custodian fees 51,669
Registration fees 22,858
Auditing fees 14,900
Shareholder reports 10,534
Legal fees 8,968
Transfer agent fees 8,099
Trustee fees 7,546
Miscellaneous 6,023
- ---------------------------------------------------------------------------------------
Total expenses 1,033,966
Less aggregate amounts waived by Investment Adviser,
Administrator, and Distributor (Notes 3, 4A and 5) (298,885)
Less fees paid indirectly (Note 1E) (1,316)
- ---------------------------------------------------------------------------------------
Net expenses 733,765
- ---------------------------------------------------------------------------------------
Net investment income 3,354,171
NET REALIZED GAIN ON INVESTMENTS --
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,354,171
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1998 YEAR ENDED
(Unaudited) AUGUST 31, 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,354,171 $ 5,344,451
Net realized gain on investments -- 990
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 3,354,171 5,345,441
- ---------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,354,171) (5,344,451)
- ---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 6):
Proceeds from sale of shares 187,636,330 304,389,018
Net asset value of shares issued to shareholders
from reinvestment of dividends 542,740 1,106,914
Cost of shares repurchased (140,062,926) (248,708,463)
- ---------------------------------------------------------------------------------------
Net increase in net assets from transactions in
shares of
beneficial interest 48,116,144 56,787,469
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 48,116,144 56,788,459
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 207,345,294 150,556,835
- ---------------------------------------------------------------------------------------
End of period $ 255,461,438 $ 207,345,294
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1998 ---------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.01474 0.02899 0.03089 0.03434 0.02288 0.02467
Less dividends from net
investment income (0.01474) (0.02899) (0.03089) (0.03434) (0.02288) (0.02467)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, end of
period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $255,461 $207,345 $150,557 $51,832 $52,863 $37,808
Ratio of expenses to
average net assets 0.65%* 0.65% 0.42% 0.30% 0.25% 0.00%
Ratio of net investment
income to average net
assets 2.97%* 2.91% 3.05% 3.43% 2.30% 2.42%
Total return 1.48%** 2.94% 3.13% 3.49% 2.31% 2.50%
Note: If Agents of the Fund had not voluntarily waived all or a portion of their fees from the
Fund for the period indicated and the Administrator had not voluntarily assumed expenses for the
periods before August 31, 1996, and the expenses were not reduced for the fees paid indirectly for
the years after August 31, 1995, the ratios and net investment income per share would have been as
follows:
Net investment income per
share $0.01340 $0.02630 $0.02481 $0.02513 $0.01423 $0.01121
RATIOS:
Expenses to average net
assets 0.92%* 0.92% 1.01% 1.21% 1.12% 1.32%
Net investment income to
average net assets 2.70%* 2.64% 2.45% 2.51% 1.43% 1.10%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
See notes to financial statements
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds California Tax Free Reserves (the
'Fund') is a separate non-diversified series of CitiFunds Multi-State Tax Free
Trust (the 'Trust'), which is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. Effective January 2, 1998 Landmark California Tax
Free Reserves changed its name to CitiFunds California Tax Free Reserves. The
Trust also changed its name from Landmark Multi-State Tax Free Funds to
CitiFunds Multi-State Tax Free Trust. The Investment Adviser of the Fund is
Citibank, N.A. ('Citibank'). CFBDS, Inc. ('CFBDS'), (formerly Landmark Funds
Broker-Dealer Services, Inc.) acts as the Trust's Administrator and Distributor.
Citibank also serves as Sub-Administrator and makes shares available to
customers through various Shareholder Servicing Agents.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. Valuation of Investments Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Fund's use of amortized cost is subject to the Fund's compliance with
certain conditions as specified under Rule 2a-7 of the Investment Company Act of
1940.
B. Interest Income Interest income consists of interest accrued and accretion
of market discount, less the amortization of any premium on the investments of
the Fund.
C. Federal Taxes The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its net investment income. Accordingly, no
provision for federal income or excise tax is necessary. At August 31, 1997, the
Fund, for federal income tax purposes, had a capital loss carryover of $5,710,
all of which will expire August 31, 2004. Such capital loss carryover will
reduce the Fund's taxable income arising from future net realized gain on
investment transactions, if any, to the extent permitted by the Internal Revenue
Code, and thus will reduce the amount of distributions to shareholders which
would otherwise be necessary to relieve the Fund of any liability for federal
income tax.
Dividends paid by the Fund from net interest received on tax-exempt money
market instruments are not includable by shareholders as gross income for
federal income tax purposes because the Fund intends to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued after
August 7, 1986, may be considered a tax preference item to shareholders.
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 in a 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.
E. Fees Paid Indirectly The Fund's custodian bank calculates its fees based
on the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
F. Other Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 12:00
noon, Eastern time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent), on or prior to the last business
day of the month.
3. INVESTMENT ADVISORY FEES The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $225,842 of
which $99,529 was voluntarily waived for the six months ended February 28, 1998.
The investment advisory fee is computed at the annual rate of 0.20% of the
Fund's average daily net assets.
4. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative
Services Plan (the 'Administrative Services Plan') which provides that the
Trust, on behalf of each Fund, may obtain the services of an Administrator, one
or more Shareholder Servicing Agents and other Servicing Agents and may enter
into agreements providing for the payment of fees for such services. Under the
Administrative Services Plan, the aggregate of the fee paid to the Administrator
from the Fund, the fees paid to the Shareholder Servicing Agents from the Fund
under such plan and the Basic Distribution Fee paid from the Fund to the
Distributor under the Distribution Plan may not exceed 0.60% of the Fund's
average daily net assets on an annualized basis for the Fund's then-current
fiscal year.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is computed at the annual rate of 0.25% of the Fund's average daily net
assets. The Administrative fees amounted to $282,303, of which $93,675 was
voluntarily waived for the six months ended February 28, 1998. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
CFBDS as from time to time is agreed to by CFBDS and Citibank. The Fund pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the Fund
from the Administrator or its affiliates. Certain of the officers and a Trustee
of the Fund are officers and a director of the Administrator or its affiliates.
B. Shareholder Servicing Agent Fees The Trust, on behalf of the Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, but may not exceed, on an annualized basis, an amount equal to
0.25% of the average daily net assets of the Fund represented by shares owned
during the period by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. Shareholder Servicing Agent fees amounted to
$282,303 for the six months ended February 28, 1998.
5. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund compensates the Distributor at an annual rate not to exceed 0.10% of the
Fund's average daily net assets. The Distribution fees amounted to $112,921, of
which $105,681 was voluntarily waived for the six months ended February 28,
1998. The Distributor may also receive an additional fee from the Fund at an
annual rate not to exceed 0.10% of the Fund's average daily net assets in
anticipation of, or as reimbursement for, advertising expenses incurred by the
Distributor in connection with the sale of shares of the Fund. The additional
fee has not been assessed through February 28, 1998.
6. 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).
7. INVESTMENT TRANSACTIONS Purchases, and maturities and sales, of money
market instruments aggregated $347,868,120 and $300,628,000, respectively, for
the six months ended February 28, 1998.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1998 for federal income tax purposes, amounted
to $253,371,472.
9. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the six months
ended February 28, 1998, the commitment fee allocated to the Fund was $426.
Since the line of credit was established there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Elliott J. Berv
Mark T. Finn
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Walter E. Robb, III
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent
or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [recycle symbol] Printed on recycled paper CFS/RCR/298
<PAGE>
Semi-Annual Report o February 28, 1998
[Logo]
Connecticut
Tax Free Reserves
[graphic omitted]
MONEY MARKETS
- -------------------------------------------------------------------------------
INVESTMENT PRODUCTS
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
CITIFUNDS CONNECTICUT TAX FREE RESERVES
Letter to Our Shareholders 1
- --------------------------------------------------------------------------------
Portfolio Environment and Outlook 2
- --------------------------------------------------------------------------------
Fund Facts 3
- --------------------------------------------------------------------------------
Fund Performance 4
- --------------------------------------------------------------------------------
Portfolio of Investments 5
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities 8
- --------------------------------------------------------------------------------
Statement of Operations 8
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets 9
- --------------------------------------------------------------------------------
Financial Highlights 9
- --------------------------------------------------------------------------------
Notes to Financial Statements 10
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The six-month period ended February 28, 1998 was a good one for most financial
assets, especially U.S. stocks and bonds. A remarkably resilient economy, low
rates of inflation and lower interest rates were primarily responsible for the
above-average returns provided by longer-term investments. However, shorter-term
assets -- including tax-exempt money market securities -- did not share the
benefits these positive economic influences provided. As interest rates declined
during the period, so did yields on most money market securities.
Nonetheless, we are pleased with the performance of CitiFundsSM Connecticut
Tax Free Reserves. Despite the difficult market environment for short-term tax-
exempt securities, the Fund continued to provide shareholders with a competitive
level of income that is largely free from federal and Connecticut state income
taxes.
Among other highlights of the reporting period, your Fund has changed its
name to CitiFunds Connecticut Tax Free Reserves. The Fund's investment objective
and management approach remain the same.
Finally, we would like to thank you for your continued confidence and
participation.
Sincerely,
/s/ Philip Coolidge
Philip W. Coolidge
President
March 20, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
SHORT-TERM INTEREST RATES GENERALLY DECLINED OVER THE PAST SIX MONTHS. At the
same time, the U.S. economy continued to grow in the late stages of one of the
longest expansions since World War II. Unlike previous economic cycles, however,
this one has been particularly notable for its persistently low inflation rate.
Inflation has remained benign despite strong economic growth and low
unemployment. As a result, fixed-income investors have grown increasingly
confident that inflation will not erode the future value of their principal and
income. They bid up the prices of bonds accordingly, and yields on money market
securities generally fell.
Connecticut's tax-exempt bond market also responded during the six-month
period to its own unique influences. While changes in the yields of short-term
tax-exempt securities generally tracked those of comparable taxable securities,
supply-and-demand factors helped keep tax-exempt yields high relative to U.S.
Treasury bills and notes. First, demand for short-term investments was
relatively constrained because the stellar returns provided by stocks and longer
term bonds provided little incentive for investors to seek the safety of money
market funds. In addition, the possibility of changes in the rules governing
corporate holdings of municipal bonds reduced business demand for tax-exempt
securities.
THE FUND FOUND OPPORTUNITIES IN LONGER-DATED FIXED-RATE NOTES, as well as
non-rated notes issued primarily by towns in Connecticut. Because of the general
contraction in the availability of Connecticut investments, we also invested up
to 26.5% of the portfolio's assets in bonds issued by the Commonwealth of Puerto
Rico. Puerto Rico bonds are exempt from federal and state income taxes. We found
particularly attractive opportunities in short-term, variable-rate notes and
commercial paper from Puerto Rico issuers.
The portfolio's concentration in longer-dated, tax-exempt notes from
Connecticut issuers kept its average maturity in the 55 to 64 day range. This
structure should position the portfolio favorably if interest rates continue to
fall, as we expect.
WE BELIEVE THAT MODESTLY LOWER SHORT-TERM INTEREST RATES ARE LIKELY.
Ultimately, however, we believe that the direction of Connecticut's tax-exempt
money market yields hinges on the U.S. economy and the nation's stock market. If
the economy slows, yields of short-term tax-exempt and taxable securities will
generally move lower. If slower economic growth causes a stock market
correction, investors may shift their assets to the short-term tax-exempt market
in order to avoid potential losses. In this case, higher demand for tax-exempt
securities may cause yields to decline further.
Whatever the next six months hold, we will continue to manage the portfolio
according to the approach we have followed for years. We intend to adjust the
average maturity in anticipation of changes in interest rates and shift assets
among the most attractive sectors of Connecticut's tax-exempt marketplace. We
fully expect this strategy to provide competitive levels of tax-exempt income
commensurate with a stable principal value.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with high levels of current income exempt from
both Federal and Connecticut personal income taxes,* preservation of capital
and liquidity.
INVESTMENT ADVISER DIVIDENDS
Citibank, N.A. Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
December 1, 1993 Distributed annually, if any
NET ASSETS AS OF 2/28/98 BENCHMARKS
$161.5 million Lipper Connecticut Tax Exempt Money
Market Funds Average
IBC Connecticut Tax Free Money
Market Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ALL PERIODS ENDING FEBRUARY 28, 1998 SIX ONE DECEMBER 1, 1993
(Unaudited) MONTHS** YEAR INCEPTION*
- -------------------------------------------------------------------------------
CitiFunds Connecticut Tax Free Reserves 1.47% 3.00% 3.06%
Lipper Connecticut Tax Exempt Money Market
Funds Average 1.46% 2.92% 2.82%+
* Average Annual Total Return
** Not Annualized
+ Since 11/30/93
7-DAY YIELDS
Annualized Current 2.85%
Effective 2.89%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized, the
income earned by the investment during that seven day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS CONNECTICUT TAX FREE
RESERVES VS. IBC CONNECTICUT TAX FREE MONEY MARKET FUNDS AVERAGE
IBC
CitiFunds Connecticut
Connecticut Tax Free
Tax Free Money Funds
Reserves Average
----------- ------------
3/4/97 2.76% 2.72%
3/11/97 2.55% 2.51%
3/18/97 2.50% 2.50%
3/25/97 2.63% 2.63%
4/1/97 2.85% 2.77%
4/8/97 2.79% 2.71%
4/15/97 2.89% 2.79%
4/22/97 3.07% 2.97%
4/29/97 3.35% 3.29%
5/6/97 3.37% 3.31%
5/13/97 3.26% 3.20%
5/20/97 3.25% 3.17%
5/27/97 3.19% 3.12%
6/3/97 3.12% 3.07%
6/10/97 2.98% 2.90%
6/17/97 3.12% 3.05%
6/24/97 3.23% 3.16%
7/1/97 3.31% 3.19%
7/8/97 3.03% 2.93%
7/15/97 2.91% 2.82%
7/22/97 2.98% 2.90%
7/29/97 3.02% 2.96%
8/5/97 3.00% 2.93%
8/12/97 2.84% 2.80%
8/19/97 2.80% 2.79%
8/26/97 2.78% 2.77%
9/2/97 2.74% 2.77%
9/9/97 2.85% 2.78%
9/16/97 2.96% 2.89%
9/23/97 3.05% 2.98%
9/30/97 3.20% 3.12%
10/7/97 3.04% 2.95%
10/14/97 2.95% 2.87%
10/21/97 2.95% 2.88%
10/28/97 2.99% 2.90%
11/4/97 2.98% 2.89%
11/11/97 3.00% 2.92%
11/18/97 3.05% 3.05%
11/25/97 3.14% 3.06%
12/2/97 3.08% 3.04%
12/9/97 2.94% 2.85%
12/16/97 2.96% 2.91%
12/23/97 3.09% 3.01%
12/30/97 3.13% 3.12%
1/6/98 3.02% 3.01%
1/13/98 2.81% 2.72%
1/20/98 2.77% 2.68%
1/27/98 2.79% 2.70%
2/3/98 2.86% 2.78%
2/10/98 2.73% 2.59%
2/17/98 2.55% 2.41%
2/24/98 2.73% 2.53%
As illustrated, CitiFunds Connecticut Tax Free Reserves provided a similar
annualized seven-day yield to that of a comparable IBC Money Fund Average, as
published in IBC's Money Fund Report'tm', for the one- year period.
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns
would have been lower.
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ---------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 6.3%
- ---------------------------------------------------
Connecticut State
Health and Educational
Facilities, AMT, 3.65%
due 4/06/98 $1,800 $1,800,000
Connecticut State
Health and Educational
Facilities AMT, 7.50%
due 7/01/98 2,530 2,582,605
Connecticut State
Housing Financial
Authority, AMT, 3.80%
due 4/06/98 960 960,000
Connecticut State
Second Injury Fund,
3.40% due 4/08/98 3,000 3,000,000
Puerto Rico
Commonwealth
Government
Development
Authority, 3.70% due
3/10/98 1,880 1,880,000
-----------
10,222,605
-----------
BOND, TAX AND REVENUE ANTICIPATION NOTES AND
GENERAL OBLIGATION BONDS AND NOTES -- 13.6%
- --------------------------------------------
Beacon Falls, CT, BANs,
4.13% due 10/21/98 2,500 2,506,531
Danbury, CT, BANs,
4.00% due 8/07/98 2,000 2,004,802
East Lyme, CT, BANs,
3.82% due 7/28/98 400 400,261
Hamden, CT, BANs,
4.00% due 8/14/98 4,000 4,003,916
Milford, CT, BANs,
3.80% due 1/15/99 250 250,519
Monroe, CT, BANs,
4.00% due 4/15/98 3,000 3,001,358
Naugatuck, CT, BANs,
4.00% due 3/26/98 500 500,101
Redding, CT, BANs,
4.10% due 10/22/98 1,000 1,002,469
Tolland, CT, BANs,
4.00% due 6/11/98 1,000 1,000,829
Watertown, CT, BANs,
4.00% due 3/18/98 3,000 3,000,355
Wilton, CT, BANs,
4.50% due 7/21/98 2,600 2,607,745
Windsor, CT, BANs,
4.00% due
8/19/98 1,750 1,754,811
----------
22,033,697
----------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE BONDS AND
NOTES (PUTS) -- 22.6%
- ---------------------------------------------------
Connecticut State,
6.00% due
3/01/98 6,800 6,800,000
Connecticut State,
4.00% due
5/15/98 200 200,039
Connecticut State,
5.00% due
6/15/98 3,450 3,461,547
Connecticut State
Clean Water
Fund,
7.00% due
4/01/98 200 200,520
Connecticut State
Clean Water
Fund,
5.10% due
8/01/98 250 251,433
Connecticut State
Clean Water
Fund,
6.40% due
1/01/99 200 204,550
Connecticut State
Special
Assessment
Unemployment,
4.25% due
5/15/98 3,150 3,152,845
Connecticut State
Special Tax
Obligation,
5.10% due
6/01/98 2,000 2,006,798
Connecticut State
Special Tax
Obligation,
6.00% due
6/01/98 250 251,276
Connecticut State
Special Tax
Obligation,
7.20% due
2/01/99 200 210,303
Hartford, CT,
5.00% due
1/15/99 1,465 1,483,946
Madison, CT,
4.22% due
11/18/98 1,500 1,502,796
New Britain, CT,
6.38% due
4/15/98 900 902,823
New Milford, CT,
4.20% due
8/15/98 485 485,847
North Tonawanda,
NY, City School
District,
4.85% due
6/01/98 386 386,793
Oregon, WI, School
District,
4.50% due
4/15/98 3,375 3,376,562
Puerto Rico
Commonwealth
Aqueduct and
Sewer Authority,
7.88% due
7/01/98 1,750 1,807,429
Puerto Rico
Commonwealth
Aqueduct and
Sewer Authority,
7.90% due
7/01/98 1,200 1,240,104
Puerto Rico
Electrical Power
Authority,
8.00% due
7/01/98 1,000 1,033,961
South Central
Connecticut
Regulation Water
Authority,
4.75% due
8/01/98 1,000 1,003,842
South Central
Connecticut
Regulation Water
Authority,
4.75% due
8/01/98 1,000 1,005,441
Winchester, CT,
4.00% due
8/04/98 5,000 5,008,392
Windsor Locks, CT,
6.13% due
10/15/98 500 507,028
-----------
36,484,275
-----------
VARIABLE RATE DEMAND NOTES* -- 56.7%
- ---------------------------------------------------
Acension River,
LA, AMT,
due 12/01/27 2,000 2,000,000
Chesterfield
County, VA,
Industrial
Development,
due 2/01/03 1,400 1,400,000
Connecticut State,
due 3/15/12 3,500 3,500,000
Connecticut State,
due 5/15/14 9,000 9,000,000
Connecticut State
Development
Authority
Revenue, due
8/01/23 500 500,000
Connecticut State
Health and
Educational
Facilities,
due 7/01/22 1,600 1,600,000
Connecticut State
Health and
Educational
Facilities,
due 7/01/27 1,000 1,000,000
Connecticut State
Health and
Educational
Facilities,
due 7/01/29 2,500 2,500,000
Connecticut State
Health and
Educational
Facilities,
due 6/10/30 3,000 3,000,000
Connecticut State
Housing Finance
Authority,
due 5/15/17 2,495 2,495,000
Connecticut State
Housing Finance
Authority,
due 5/15/18 1,200 1,200,000
Connecticut State
Housing Finance
Authority, AMT,
due 11/15/27 2,980 2,980,000
Connecticut State
Special Tax
Obligations,
due 12/01/10 3,200 3,200,000
Clipper Tax Exempt
Trust, AMT, due
3/01/15 1,455 1,455,000
Clipper Tax Exempt
Trust, AMT, due
3/01/16 5,000 5,000,000
Facilities
Municipal Trust
due 1/01/22 6,200 6,200,000
Garfield County,
OK, Industrial
Development
Authority, AMT,
due 10/01/17 1,000 1,000,000
Harris County, TX,
Health
Development
Facilities, due
10/01/17 3,000 3,000,000
Lubbock, TX,
Health
Facilities
Development
Corporation,
due 7/01/13 400 400,000
Massachusetts
State Turnpike
Authority,
due 1/01/17 2,400 2,400,000
Morgan Keegan
Municipal Trust
Receipts, AMT,
due 5/01/30 2,700 2,700,000
New York City
Municipal Water
Authority,
due 6/15/24 200 200,000
New York State
Thruway
Authority
General Revenue,
due 1/01/27 1,400 1,400,000
Perry County, MI,
Pollution, due
3/01/02 1,100 1,100,000
Phoenix City, AL,
Environmental
Improvements,
due 3/01/31 1,300 1,300,000
Portland, OR,
Special
Obligation, AMT,
due 6/15/27 1,100 1,100,000
Puerto Rico
Commonwealth
Government
Development
Authority, due
12/01/15 2,600 2,600,000
Puerto Rico
Commonwealth
Government
Development
Authority, due
7/01/24 2,000 2,000,000
Puerto Rico
Commonwealth
Highway
Authority, due
7/01/13 6,120 6,120,000
Puttable Floating
Optional Tax
Exempt Receipt,
due 12/01/30 400 400,000
Puttable Floating
Optional Tax
Exempt Receipt,
due 10/01/32 800 8,000,000
Shelton, CT,
Housing
Authority
Revenue,
due 12/01/30 1,800 1,800,000
South Carolina
Jobs Economic
Development,
AMT, due 4/01/17 100 100,000
Stamford, CT,
Housing
Authority
Revenue,
due 8/01/24 200 200,000
Stamford, CT,
Housing
Authority
Revenue,
due 12/01/24 1,400 1,400,000
State of Utah
General
Obligation
Services,
due 7/01/22 3,050 3,050,000
Tarrant County,
TX, Health
Facilities
Development, due
2/15/17 1,595 1,595,000
Uinta County, WY,
Pollution
Control Revenue,
due 8/15/20 400 400,000
University of
Puerto Rico,
University
Revenue,
due 6/01/25 1,500 1,500,000
Walton County, GA,
Industrial
Building
Authority, due
10/01/17 700 700,000
----------
91,495,000
----------
TOTAL INVESTMENTS,
AT AMORTIZED
COST 99.2% 160,235,577
OTHER ASSETS, LESS
LIABILITIES 0.8 1,257,089
---------------------
NET ASSETS 100.0% $161,492,666
---------------------
AMT - Subject to Alternative Minimum Tax
* Variable rate demand notes have a demand
feature under which the fund could tender
them back to the issuer on no more than 7
days notice.
See notes to financial statements
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (Unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $160,235,577
Cash 77,266
Interest receivable 1,591,481
Receivable for shares of beneficial interest sold 14,500
- -------------------------------------------------------------------------------
Total assets 161,918,824
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 31,700
Dividends payable 269,116
Payable to affiliate:
Investment Advisory fees (Note 3) 10,867
Shareholder Servicing Agents fees (Note 4B) 28,149
Accrued expenses and other liabilities 86,326
- -------------------------------------------------------------------------------
Total liabilities 426,158
- -------------------------------------------------------------------------------
NET ASSETS for 161,499,461 shares of beneficial interest
outstanding $161,492,666
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $161,499,461
Accumulated net realized loss on investments (6,795)
- -------------------------------------------------------------------------------
Total $161,492,666
- -------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- -------------------------------------------------------------------------------
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $2,522,669
EXPENSES:
Administrative fees (Note 4A) $175,340
Shareholder Servicing Agents' fees (Note 4B) 175,340
Investment Advisory fees (Note 3) 140,272
Distribution fees (Note 5) 70,136
Custodian fees 40,491
Auditing fees 15,500
Shareholder reports 10,535
Legal fees 8,968
Transfer agent fees 7,708
Trustee fees 6,746
Miscellaneous 3,696
- --------------------------------------------------------------------------------
Total expenses 654,732
Less aggregate amounts waived by Investment Adviser,
Administrator, and
Distributor (Notes 3, 4A and 5) (197,202)
Less fees paid indirectly (Note 1E) (1,637)
- --------------------------------------------------------------------------------
Net expenses 455,893
- --------------------------------------------------------------------------------
Net investment income 2,066,776
NET REALIZED GAIN ON INVESTMENTS 2,693
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,069,469
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1998 YEAR ENDED
(Unaudited) AUGUST 31, 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 2,066,776 $ 4,406,570
Net realized gain (loss) on investments 2,693 (328)
- ---------------------------------------------------------------------------------------
Net increase in net assets from operations 2,069,469 4,406,242
- ---------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,066,776) (4,406,570)
- ---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 6):
Proceeds from sale of shares 140,306,245 289,667,461
Net asset value of shares issued to shareholders
from reinvestment of dividends 288,957 744,661
Cost of shares repurchased (148,426,892) (237,115,072)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
transactions in shares of beneficial interest (7,831,690) 53,297,050
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (7,828,997) 53,296,722
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 169,321,663 116,024,941
- ---------------------------------------------------------------------------------------
End of period $161,492,666 $ 169,321,663
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 1, 1993
(COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS)
FEBRUARY 28, YEAR ENDED AUGUST 31, TO
1998 ---------------------------- AUGUST 31,
(Unaudited) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Net Asset Value, beginning
of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.014601 0.02914 0.03135 0.03564 0.01754
Less dividends from net
investment income (0.014601) (0.02914) (0.03135) (0.03564) (0.01754)
- --------------------------------------------------------------------------------------------
Net Asset Value, end of
period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $161,493 $169,322 $116,025 $46,556 $15,949
Ratio of expenses to
average net assets 0.65%* 0.65% 0.42% 0.22% 0.00%*
Ratio of net investment
income to average net
assets 2.93%* 2.92% 3.08% 3.60% 2.61%*
Total return 1.47%** 2.95% 3.18% 3.62% 1.75%**
Note: If Agents of the Fund had not voluntarily waived all or a portion of their fees from
the Fund for the period indicated and the Administrator had not voluntarily assumed expenses
for the periods before August 31, 1996, and the expenses were not reduced for the fees paid
indirectly for the years after August 31, 1995, the ratios and net investment income per
share would have been as follows:
Net investment income per
share $0.01321 $0.02615 $0.25040 $0.02732 $0.00128
RATIOS:
Expenses to average net
assets 0.93%* 0.95% 1.04% 1.06% 2.42%*
Net investment income to
average net assets 2.65%* 2.62% 2.46% 2.76% 0.19%*
- ------------------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
See notes to financial statements
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Connectifcut Tax Free Reserves (the
'Fund') is a separate non-diversified series of CitiFunds Multi-State Tax Free
Trust (the 'Trust'), which is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. Effective January 2, 1998 the Landmark
Connecticut Tax Free Reserves changed its name to CitiFunds Connecticut Tax Free
Reserves. The Trust also changed its name from Landmark Multi-State Tax Free
Funds to CitiFunds Multi-State Tax Free Trust. The Investment Adviser of the
Fund is Citibank, N.A. ('Citibank'). CFBDS, Inc. ('CFBDS'), (formerly Landmark
Funds Broker-Dealer Services, Inc.) acts as the Trust's Administrator and
Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers through various Shareholder Servicing Agents.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. Valuation of Investments Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Fund's use of amortized cost is subject to the Fund's compliance with
certain conditions as specified under Rule 2a-7 of the Investment Company Act of
1940.
B. Interest Income Interest income consists of interest accrued, and
accretion of market discount less the amortization of any premium on the
investments of the Fund.
C. Federal Taxes The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its net investment income. Accordingly, no
provision for federal income or excise tax is necessary. At August 31, 1997, the
Fund, for federal income tax purposes, had a capital loss carryover of $9,160,
of which $4,984 will expire on August 31, 2004 and $4,176 which will expire on
August 31, 2005. Such capital loss carryover will reduce the Fund's taxable
income arising from future net realized gain on investment transactions, if any,
to the extent permitted by the Internal Revenue Code, and thus will reduce the
amount of distributions to shareholders which would otherwise be necessary to
relieve the Fund of any liability for federal income tax. Dividends paid by the
Fund from net interest received on tax-exempt money market instruments are not
includable by shareholders as gross income for federal income tax purposes
because the Fund intends to meet certain requirements of the Internal Revenue
Code applicable to regulated investment companies which will enable the Fund to
pay exempt-interest dividends. The portion of such interest, if any, earned on
private activity bonds issued after August 7, 1986, may be considered a tax
preference item to shareholders.
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 in a 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.
E. Fees Paid Indirectly The Fund's custodian bank calculates its fees based
on the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
F. Other Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 12:00
noon, Eastern standard time, and all of the net income of the Fund so determined
is declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent), on or prior to the last business
day of the month.
3. INVESTMENT ADVISORY FEES The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $140,272 of
which $65,312 was voluntarily waived for the six months ended February 28, 1998.
The investment advisory fee is computed at the annual rate of 0.20% of the
Fund's average daily net assets.
4. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative
Services Plan (the 'Administrative Services Plan') which provides that the
Trust, on behalf of each Fund, may obtain the services of an Administrator, one
or more Shareholder Servicing Agents and other Servicing Agents and may enter
into agreements providing for the payment of fees for such services. Under the
Administrative Services Plan, the aggregate of the fee paid to the Administrator
from the Fund, the fees paid to the Shareholder Servicing Agents from the Fund
under such plan and the Basic Distribution Fee paid from the Fund to the
Distributor under the Distribution Plan may not exceed 0.60% of the Fund's
average daily net assets on an annualized basis for the Fund's then-current
fiscal year.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is computed at the annual rate of 0.25% of the Fund's average daily net
assets. The Administrative fees amounted to $175,340, of which $62,237 was
voluntarily waived for the six months ended February 28, 1998. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
CFBDS as from time to time is agreed to by CFBDS and Citibank. The Fund pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the Fund
from the Administrator or its affiliates. Certain of the officers and a Trustee
of the Fund are officers and a director of the Administrator or its affiliates.
B. Shareholder Servicing Agent Fees The Trust, on behalf of the Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, but may not exceed, on an annualized basis, an amount equal to
0.25% of the average daily net assets of the Fund represented by shares owned
during the period by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. Shareholder Servicing Agent fees amounted to
$175,340 for the six months ended February 28, 1998.
5. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund compensates the Distributor at an annual rate not to exceed 0.10% of the
Fund's average daily net assets. The Distribution fees amounted to $70,136, of
which $69,653 was voluntarily waived for the six months ended February 28, 1998.
The Distributor may also receive an additional fee from the Fund at an annual
rate not to exceed 0.10% of the Fund's average daily net assets in anticipation
of, or as reimbursement for, advertising expenses incurred by the Distributor in
connection with the sale of shares of the Fund. The additional fee has not been
assessed through February 28, 1998.
6. 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).
7. INVESTMENT TRANSACTIONS Purchases, and maturities and sales of money
market instruments aggregated $196,206,520 and $205,269,209, respectively, for
six months ended February 28, 1998.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1998 for federal income tax purposes, amounted
to $160,235,577.
9. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the six months
ended February 28, 1998, the commitment fee allocated to the Fund was $247.
Since the line of credit was established there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Elliott J. Berv
Mark T. Finn
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Walter E. Robb, III
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [recycle symbol] Printed on recycled paper CFS/RCT/298
