[CitiFunds]
TO: Securities and Exchange Commission
Division of Investment Management
Judiciary Plaza
450 Fifth Street, N.W.
Washington D.C. 20549
FROM: CitFunds Multi-State Tax Free Trust --
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
(CIK No. 0000775613)
(CCC No. jz#dnk4y)
(Registration File Nos. 2-99977; 811-4596,
33-44749; 811-4596 and 2-99977; 811-4596 respectively)
DATE: April 21, 1999
On behalf of the above-noted registrant, transmitted herewith for filing
pursuant to Rule 30b2-1 are the semi-annual financial statements for the period
ended February 28, 1999.
Please call Linda T. Gibson of CFBDS, Inc. at (617) 423-0800 with any comments
or questions relating to this report.
Semi Annual Report o February 28, 1999
CITFUNDS(TM)
- ------------
New York
Tax Free Reserves
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
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 3
................................................................................
Fund Performance 4
................................................................................
Portfolio of Investments 5
................................................................................
Statement of Assets and Liabilities 12
................................................................................
Statement of Operations 13
................................................................................
Statement of Changes in Net Assets 14
................................................................................
Financial Highlights 15
................................................................................
Notes to Financial Statements 16
................................................................................
<PAGE>
Letter To Our Shareholders
Dear Shareholder:
The 6-month period ended February 28, 1999, was a good one for the U.S.
economy and New York's tax-exempt money market securities. Early in the period,
concerns about the potential spread of the Asian currency and credit crisis to
Latin America contributed to the Federal Reserve Board's decision to reduce key
short-term interest rates three times between September and November. While this
easing of monetary policy caused short-term money market yields to decline, very
low inflation continued to support above-average real returns, which are nominal
yields less the rate of inflation.
In contrast, in both the taxable and tax-exempt markets, longer term
fixed-income securities did not fare as well as money market securities. That's
because longer term yields rose in response to reports of robust U.S. economic
growth in the fourth quarter of 1998 and the first two months of 1999. When
yields of longer term securities rise, their prices decline. Accordingly, money
market funds such as CitiFunds New York Tax Free Reserves generally performed
better than longer term tax-exempt bond funds over the six-month period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
LOW INFLATION IN THE U.S. AND RECESSIONARY CONDITIONS IN SOME OVERSEAS ECONOMIES
CONTRIBUTED TO LOWER YIELDS on tax-exempt money market securities. The financial
crisis that began in Southeast Asia in mid-1997 spread to other emerging markets
during the third quarter of 1998. Russia was forced by the credit crunch to
devalue its currency and effectively defaulted on its government bonds.
Similarly, the flight of foreign capital from Latin America adversely affected
Brazil, which devalued its currency in January, 1999.
Why did economic events overseas affect short-term securities issued by New
York State and its municipalities? A major reason is that the Federal Reserve
Board became concerned that the problems in the emerging markets might curtail
exports of U.S. companies, which could, in turn, dampen domestic economic
growth. To help stop the further spread of the Asian crisis and stimulate the
U.S. economy, the Federal Reserve Board reduced key short-term interest rates in
three steps between September and November.
In anticipation of the Federal Reserve Board's action, WE BEGAN THE REPORTING
PERIOD WITH THE PORTFOLIO'S AVERAGE MATURITY TOWARD THE LONG END OF ITS RANGE.
By October, the average maturity reached 63 days. This strategy enabled us to
capture higher yields for as long as practical while interest rates fell.
As our holdings matured, we reinvested the proceeds in tax-exempt money
market instruments with modestly shorter maturities. Consequently, the
Portfolio's average maturity gradually declined to about 47 days, enabling us to
respond faster to opportunities for higher yields. Such opportunities arose in
December, 1998, for example, when seasonal fund redemptions caused tax-exempt
yields to rise temporarily before declining again in January.
As we noted in our shareholder report six months ago, SHORT-TERM TAX-EXEMPT
SECURITIES WERE RELATIVELY SCARCE IN 1998. That's because strong national and
regional economies helped boost tax revenues, reducing the need for New York
municipalities to borrow to cover short-term operating expenses. In fact,
issuance of short-term, tax-exempt notes declined about 25% nationally in 1998
from the previous year to its lowest level in more than 10 years.
At the same time, demand for tax-exempt money market securities rose
significantly in the second half of 1998. Dislocations in the world's stock
markets triggered a "flight to quality" among domestic and foreign investors.
Many domestic investors turned to tax-exempt money market funds as a safe harbor
during this volatile time. The combination of reduced supply and increased
demand made it more difficult to find attractive values in tax-exempt notes.
As a result, WE CONTINUED TO FOCUS ON TAX-EXEMPT VARIABLE-RATE DEMAND NOTES
(VRDNs), which are securitized and issued by investment banks. These "floaters"
generally offered higher yields than other high-quality, short-term tax-exempt
securities. We also continued to find attractive values in non-rated securities
issued by New York school districts. These securities have been deemed to be of
comparable quality to the portfolio's other investments by Citibank's credit
analysts.
2
<PAGE>
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. The state and many New York municipalities have set aside reserves from
the budget surpluses of the past few years. They expect to be well positioned
should the rate of economic growth begin to moderate. At the same time,
persistently low inflation should, in our view, prevent the Federal Reserve
Board from raising short-term interest rates in 1999 in an attempt to forestall
inflationary pressures.
If our outlook is correct, tax-exempt money market yields should remain
relatively stable over the foreseeable future, while longer term yields may rise
modestly. We intend to continue to monitor economic influences carefully, with
an eye toward adjusting our investment strategy in a way that attempts to
capture the opportunities and reduce the risks of prevailing market conditions.
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 2/28/99 BENCHMARKS
$1,232.8 million o Lipper New York Tax Exempt Money
Market Funds Average
o IBC New York Tax Free Money
Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SIX ONE FIVE TEN
ALL PERIODS ENDED FEBRUARY 28, 1999 (Unaudited) MONTHS** YEAR YEARS* YEARS*
================================================================================
CitiFunds New York Tax Free Reserves 1.31% 2.83% 2.91% 3.27%
Lipper New York Tax Exempt Money Market
Funds Average 1.29% 2.77% 2.89% 3.24%
* Average Annual Total Return
** Not Annualized
7-DAY YIELDS
Annualized Current 2.36%
Effective 2.39%
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 MONEY 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.
[The following table represents a chart in the printed piece.]
IBC New York CitiFunds New York
Date Tax Free Avg. Tax Free Res.
- ---- ------------- -------------------
3/3/98 2.82% 2.87%
3/10/98 2.43% 2.63%
3/17/98 2.47% 2.59%
3/24/98 2.76% 2.83%
3/31/98 2.92% 2.99%
4/7/98 2.88% 2.98%
4/14/98 2.88% 2.98%
4/21/98 3.15% 3.21%
4/28/98 3.34% 3.40%
5/5/98 3.22% 3.31%
5/12/98 3.10% 3.16%
5/19/98 3.12% 3.17%
5/26/98 3.09% 3.15%
6/2/98 3.14% 3.15%
6/9/98 2.92% 3.00%
6/16/98 2.94% 2.98%
6/23/98 2.92% 2.97%
6/30/98 2.95% 2.97%
7/7/98 2.60% 2.73%
7/14/98 2.55% 2.68%
7/21/98 2.85% 2.92%
7/28/98 2.92% 3.01%
8/4/98 2.91% 3.00%
8/11/98 2.57% 2.77%
8/18/98 2.71% 2.81%
8/25/98 2.64% 2.82%
9/1/98 2.66% 2.79%
9/8/98 2.47% 2.57%
9/15/98 2.63% 2.74%
9/22/98 2.96% 3.05%
9/29/98 3.11% 3.19%
10/6/98 2.88% 3.00%
10/13/98 2.66% 2.78%
10/20/98 2.66% 2.75%
10/27/98 2.56% 2.67%
11/3/98 2.56% 2.64%
11/10/98 2.48% 2.59%
11/17/98 2.56% 2.67%
11/24/98 2.64% 2.78%
12/1/98 2.59% 2.68%
12/8/98 2.29% 2.49%
12/15/98 2.47% 2.57%
12/22/98 2.65% 2.72%
12/29/98 2.86% 2.90%
1/5/99 3.01% 3.03%
1/12/99 2.43% 2.56%
1/19/99 2.35% 2.45%
1/26/99 2.30% 2.41%
2/2/99 2.24% 2.33%
2/9/99 1.89% 2.04%
2/16/99 1.88% 2.02%
2/23/99 2.13% 2.22%
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. Yields and total returns will fluctuate and past
performance is no guarantee of future results. Total return figures include
reinvestment of dividends. Returns and yields reflect certain voluntary fee
waivers. If the waivers were not in place, the Fund's returns and yields would
have been lower. CITIFUNDS NEW YORK TAX FREE RESERVES portfolio of
investmentsFebruary 28, 1999 (Unaudited)
4
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 8.9%
- --------------------------------------------------------------------------------
Long Island Power
Authority,
2.80% due 3/16/99 $ 3,500 $ 3,500,000
Metropolitan Transit
Authority, NY,
2.90% due 3/10/99 7,000 7,000,000
Metropolitan Transit
Authority, NY,
2.95% due 3/10/99 25,000 25,000,000
Metropolitan Transit
Authority, NY,
2.60% due 4/01/99 15,000 15,000,000
Metropolitan Transit
Authority, NY,
2.65% due 4/05/99 16,000 16,000,000
Metropolitan Transit
Authority, NY,
2.60% due 6/04/99 1,000 1,000,000
Metropolitan Transit
Authority, NY,
2.60% due 6/14/99 8,000 8,000,000
Metropolitan Transit
Authority, NY,
2.70% due 7/14/99 7,000 7,000,000
New York State Medical
Care,
3.85% due 7/15/99 14,050 14,050,000
Puerto Rico Government
Development Authority,
2.40% due 5/06/99 8,000 8,000,000
Puerto Rico Government
Development Authority,
2.35% due 5/10/99 4,584 4,584,000
------------
109,134,000
------------
REVENUE , TAX, BOND AND TAX REVENUE
ANTICIPATION NOTES AND GENERAL OBLIGA-
TION BONDS AND NOTES --13.9%
- --------------------------------------------------------------------------------
Albany, NY, City School
District, TANs,
7.10% due 10/01/99 785 825,397
Baldwin, NY, Union Free
School District, TANs,
3.90% due 6/30/99 5,500 5,510,663
Central Islip, NY, Union Free
School District, BANs,
4.00% due 6/30/99 14,000 14,013,403
City of New York, G. O.,
2.65% due 3/15/99 2,700 2,700,000
Colonie, NY, BANs,
4.00% due 7/30/99 1,662 1,663,993
East Hampton, NY, G.O.,
4.38% due 4/15/99 679 679,590
East Islip, NY, Union Free
School District, TANs,
4.00% due 6/25/99 10,000 10,009,177
Erie County, NY, RANs,
4.00% due 10/13/99 4,000 4,024,040
Galway, NY, Central School
District, BANs,
4.00% due 3/16/99 3,950 3,950,538
Hempstead, NY, BANs,
3.50% due 9/15/99 1,890 1,893,977
Hewlett-Woodmere, NY,
Union Free School
District, TANs,
3.90% due 6/29/99 5,000 5,008,071
Levittown, NY, Union Free
School District, TANs,
4.00% due 6/23/99 9,000 9,008,112
Longwood, NY, Central
School District, TANs,
4.00% due 6/30/99 11,000 11,010,543
Lynbrook, NY, Union Free
School District, TANs,
3.90% due 6/29/99 5,000 5,009,670
Massapequa, NY, Union
Free School District,
BANs,
3.50% due 10/28/99 3,000 3,008,062
Middletown, NY, City
School District, BANs,
3.50% due 6/30/99 3,000 3,004,870
Middletown, NY, City
School District, BANs,
3.25% due 6/30/99 2,500 2,502,848
Miller Place, NY, Union
Free School District,
TANs,
4.00% due 6/30/99 5,000 5,004,788
Monroe County, NY, BANs,
4.00% due 7/23/99 3,000 3,004,569
Monroe County, NY, BANs,
3.50% due 7/23/99 11,000 11,025,682
Monroe County, NY, G.O.,
4.50% due 6/01/99 2,000 2,007,360
Monroe County, NY, G.O.,
6.00% due 3/01/99 565 565,000
North Colonie, NY, Central
School District, BANs,
3.25% due 10/09/99 4,481 4,489,016
North Hempstead, NY, G.O.,
4.00% due 3/01/99 425 425,000
5
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) FEBRUARY 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Puerto Rico
Commonwealth, G.O.,
7.75% DUE 7/01/99 $ 2,450 $ 2,526,429
Puerto Rico
Commonwealth TRANS,
3.50% due 7/30/99 9,000 9,023,882
Puerto Rico Municipal
Finance Agency, RANs,
5.00% due 7/01/99 500 502,862
Sachem, NY, Central School
District, TANs,
4.00% due 6/25/99 5,000 5,005,066
Sayville, NY, Union Free
School District, TANs,
4.00% due 6/29/99 5,000 5,005,059
South Country, NY, Central
School District, TANs,
4.00% due 6/24/99 8,000 8,007,295
Thousand Island, NY, Central
School District, BANs,
4.00% due 4/28/99 10,000 10,003,512
Wayne, NY, Central School
District, BANs,
4.00% due 3/30/99 6,000 6,001,840
West Islip, NY, Union Free
School District, TANs,
3.90% due 6/30/99 2,800 2,801,786
Westchester County, TANs,
2.83% due 12/30/99 12,000 12,001,263
------------
171,223,363
------------
ANNUAL, SEMI-ANNUAL AND QUARTERLY TEN-
DER REVENUE BONDS AND NOTES
(PUTS)--18.2%
- --------------------------------------------------------------------------------
Battery Park City, NY,
Authority Revenue,
7.70% due 5/01/99 2,665 2,737,580
DeKalb County, GA,
Industrial Development
Revenue,
2.90% due 8/01/01 1,500 1,500,000
Dutchess County, NY,
6.00% due 10/15/99 100 101,738
Guam Power Authority
Revenue,
2.45% due 4/15/99 4,000 4,000,000
Guam Power Authority
Revenue,
2.55% due 4/15/99 4,000 4,000,000
Metropolitan Transit Authority,
NY, 6.70% due 1/01/00 375 385,076
Morgan Keegan Municipal
Products Inc.,
3.22% due 5/06/99 5,770 5,770,000
Municipal Assistance
Corp., NY,
5.50% due 7/01/99 6,550 6,603,882
Municipal Security Trust
Certificates,
3.45% due 3/04/99 20,000 20,000,000
Nassau County, NY,
Industrial Development
Agency,
5.13% due 11/01/99 4,385 4,448,592
New York City, NY, Cultural
Affairs (Museum of
Modern Art),
5.00% due 1/01/00 4,635 4,708,752
New York City, NY, Housing
Development Corp.,
4.40% due 5/01/99 250 250,202
New York City, NY, Municipal
Water Finance,
2.95% due 3/31/99 6,000 6,000,000
New York City, NY, Municipal
Water Finance,
7.38% due 6/15/99 4,625 4,748,298
New York City, NY, Water
Finance,
2.70% due 4/07/99 4,600 4,600,000
New York City, NY,
3.00% due 3/09/99 5,000 5,000,000
New York City, NY,
7.50% due 3/15/99 500 500,839
New York City, NY,
8.00% due 6/01/99 1,005 1,017,259
New York City, NY,
7.00% due 8/01/99 1,445 1,487,967
New York City, NY,
7.75% due 8/01/99 2,000 2,071,208
New York City, NY,
4.70% due 10/01/99 500 504,294
New York City, NY,
5.88% due 10/01/99 4,000 4,054,858
New York City, NY,
7.50% due 10/01/99 470 488,505
New York State Dormitory
Authority Revenue,
3.30% due 3/11/99 7,950 7,950,000
New York State Dormitory
Authority Revenue,
2.70% due 4/12/99 4,500 4,500,000
6
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) FEBRUARY 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
New York State
Dormitory Authority
Revenue,
6.60% due 5/01/99 $ 500 $ 502,896
New York State Dormitory
Authority Revenue,
6.75% due 5/15/99 6,415 6,459,366
New York State Dormitory
Authority Revenue,
4.00% due 7/01/99 1,360 1,365,165
New York State Dormitory
Authority Revenue,
4.00% due 7/01/99 500 500,549
New York State
Environmental Revenue,
2.85% due 4/07/99 3,100 3,100,000
New York State
Environmental Revenue,
5.60% due 5/15/99 2,000 2,009,704
New York State
Environmental Revenue,
2.70% due 6/04/99 2,000 2,000,000
New York State
Environmental Revenue,
2.80% due 6/15/99 6,500 6,500,000
New York State
Environmental Revenue,
4.00% due 6/15/99 750 750,521
New York State
Environmental Revenue,
3.00% due 12/08/99 12,000 12,000,000
New York State Housing
Finance Authority,
2.70% due 11/15/99 8,700 8,700,000
New York State Medical
Care Facilities,
4.35% due 8/15/99 450 451,702
New York State Medical
Care Facilities,
7.38% due 8/15/99 7,815 8,122,799
New York State Medical
Care Facilities Agency,
7.45% due 2/15/00 1,250 1,328,130
New York State Power
Authority Revenue,
3.05% due 3/01/99 10,000 10,000,000
New York State Power
Authority Revenue,
3.45% due 3/01/99 15,000 15,000,000
New York State Power
Authority Revenue,
3.45% due 3/01/99 7,500 7,500,000
New York State Urban
Development
Corporation Revenue,
7.75% due 1/01/00 9,950 10,528,594
Puerto Rico Commonwealth
Highway Transportation,
2.40% due 7/01/99 1,200 1,200,000
Suffolk County, NY,
Cooperative Bonds,
4.88% due 8/01/99 2,900 2,924,093
Suffolk County, NY,
Cooperative Bonds,
4.00% due 9/09/99 20,000 20,066,104
Suffolk County, NY,
Cooperative Bonds,
4.10% due 10/15/99 2,440 2,455,627
Triborough Bridge & Tunnel
Authority, NY,
7.00% due 1/01/00 1,500 1,570,973
University of Puerto Rico,
6.00% due 6/01/99 1,910 1,924,708
------------
224,389,981
------------
Variable Rate Demand Notes*--58.9%
- --------------------------------------------------------------------------------
Alaska State Housing
Finance Corp.,
due 6/01/26 12,500 12,500,000
Alaska State Housing
Finance Corp.,
due 12/01/36 2,500 2,500,000
Ascension River, LA, AMT,
due 12/01/27 2,000 2,000,000
Babylon, NY, Industrial
Development Agency,
due 7/01/14 700 700,000
Clark County, NV, Industrial
Development Revenue,
due 10/01/30 2,000 2,000,000
Clipper Tax Exempt Trust,
AMT, due 3/01/15 1,460 1,460,000
Clipper Tax Exempt Trust,
AMT, due 3/01/16 9,115 9,115,000
Coastal Bend, TX, Health
Facilities Development
Authority, due 8/15/28 4,000 4,000,000
Connecticut State Housing
Financial Authority,
due 5/15/18 3,745 3,745,000
Connecticut State Housing
Financial Authority, AMT,
due 11/15/27 2,875 2,875,000
7
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) FEBRUARY 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
District of Columbia Housing
Mortgage Revenue, AMT,
due 6/01/28 $ 8,080 $ 8,080,000
Escambia County, FL,
Industrial Development
Revenue,
due 3/01/22 3,700 3,700,000
Faculty Municipal Trust,
due 1/01/06 4,895 4,895,000
Florida Housing Finance
Agency, due 6/01/26 5,000 5,000,000
Fort Wayne, IN, Hospital
Authority Revenue,
due 1/01/16 2,450 2,450,000
Fulton County, GA, Develop-
ment Authority, AMT,
due 6/01/27 2,400 2,400,000
Glens Falls, NY, Industrial
Development Agency,
due 12/01/04 1,410 1,410,000
Hampton,VA, Redevelopment
and Housing Authority,
due 6/15/26 1,200 1,200,000
Harris County, TX,
due 10/01/16 7,000 7,000,000
Howard County, MD,
Mulitfamily Revenue,
due 6/15/26 1,200 1,200,000
Indianapolis, IN, Industrial
Development Revenue,
AMT, due 12/01/04 2,000 2,000,000
Iowa Industrial Development
Finance Authority
Revenue, AMT,
due 10/01/15 1,000 1,000,000
Jackson County, MS,
Pollution Control,
due 6/01/23 2,100 2,100,000
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 1,750 1,750,000
Joplin, MO, Industrial
Development Authority,
due 10/01/01 1,865 1,865,000
Kenton County, KY,
Airport Board Revenue,
due 3/01/06 1,910 1,910,000
Laurens County, GA,
Development Authority,
AMT, due 5/01/17 1,000 1,000,000
Lone Star, TX, Tax Airport
Authority, due 12/01/14 600 600,000
Long Island Power Authority,
NY, due 5/01/33 17,400 17,400,000
Louisiana Housing Finance
Agency Mortgage Revenue,
due 6/01/27 1,880 1,880,000
Lubbock, TX, Health Facilities
Development Authority,
due 7/01/13 700 700,000
Macon, Georgia Trust Receipts,
due 3/03/07 31,410 31,410,000
Macon, Georgia Trust
Receipts, AMT,
due 2/05/30 1,510 1,510,000
Macon, Georgia Trust
Receipts, AMT,
due 12/05/30 1,810 1,810,000
Massachusetts State Health
& Educational Facilities,
due 2/01/16 5,800 5,800,000
Massachusetts State Housing
Finance Authority,
due 7/01/18 9,500 9,500,000
Massachusetts State Housing
Finance Authority, AMT,
due 7/01/19 695 695,000
Mercer County,WV, Industrial
Development Revenue,
due 5/01/01 1,000 1,000,000
Metropolitan Pier and
Exposition Authority, IL,
due 12/15/19 9,000 9,000,000
Metropolitan Transit
Authority, NY,
due 7/01/26 1,000 1,000,000
Mississippi Single Family
Home Corp.,
due 6/01/30 9,135 9,135,000
Montgomery County, MD,
Housing Opportunities,
due 7/15/07 2,000 2,000,000
Moorhead, MN, Solid
Waste Disposal, AMT,
due 4/01/12 2,500 2,500,000
Municipal Assistance
Corp., NY,
due 7/01/08 6,000 6,000,000
8
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) FEBRUARY 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Municipal Electrical
Authority, GA,
due 6/01/20 $ 1,600 $ 1,600,000
Municipal Security Trust
Certificates,
due 1/01/03 10,000 10,000,000
Nebraska Industrial
Financial Authority,
due 9/01/27 5,185 5,185,000
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 8/01/10 1,200 1,200,000
New York City, NY,
due 2/15/13 1,300 1,300,000
New York City, NY,
due 5/15/13 8,900 8,900,000
New York City, NY,
due 8/01/13 7,395 7,395,000
New York City, NY,
due 8/01/16 9,300 9,300,000
New York City, NY,
due 6/01/17 7,175 7,175,000
New York City, NY,
due 8/01/17 7,300 7,300,000
New York City, NY,
due 8/15/17 1,800 1,800,000
New York City, NY,
due 8/01/18 1,400 1,400,000
New York City, NY,
due 8/15/18 3,500 3,500,000
New York City, NY,
due 8/01/20 2,400 2,400,000
New York City, NY,
due 8/01/21 3,645 3,645,000
New York City, NY,
due 6/01/22 2,000 2,000,000
New York City, NY,
due 8/01/23 500 500,000
New York City, NY,
due 2/15/26 2,705 2,705,000
New York City, NY,
due 5/15/28 13,620 13,620,000
New York City, NY, Cultural
Affairs (Carnegie Hall),
due 12/01/10 2,000 2,000,000
New York City, NY, Municipal
Water Finance,
due 6/15/24 2,750 2,750,000
New York City Health and
Hospital Corp.,
due 2/15/26 4,925 4,925,000
New York City Health and
Hospital Corp.,
due 2/15/26 5,395 5,395,000
New York City Health and
Hospital Corp.,
due 2/15/26 3,100 3,100,000
New York City Housing
Development,
due 4/15/07 6,000 6,000,000
New York City Housing
Development,
due 1/15/19 500 500,000
New York City Housing
Development,
due 11/15/19 6,000 6,000,000
New York City Housing
Development,
due 3/15/25 900 900,000
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 1,800 1,800,000
New York City Industrial
Development Agency, AMT,
due 12/01/17 7,300 7,300,000
New York City Industrial
Development Agency,
due 7/01/21 585 585,000
New York City Industrial
Development Agency, AMT,
due 6/01/22 1,180 1,180,000
New York City Industrial
Development Agency, AMT,
due 11/01/24 5,800 5,800,000
New York City Transitional,
due 8/15/21 1,550 1,550,000
New York State,
due 1/01/06 3,945 3,945,000
New York State Dormitory
Authority Revenue,
due 7/01/15 2,200 2,200,000
New York State Dormitory
Authority Revenue,
due 7/01/19 2,815 2,815,000
9
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) FEBRUARY 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
New York State Dormitory
Authority Revenue,
due 2/15/23 $ 6,400 $ 6,400,000
New York State Dormitory
Authority Revenue,
due 7/01/25 700 700,000
New York State Energy,
Research and
Development,
due 12/01/20 3,200 3,200,000
New York State Energy,
Research and
Development, AMT,
due 7/01/27 1,000 1,000,000
New York State Environ-
mental Facility Revenue,
due 6/15/11 9,895 9,895,000
New York State Environ-
mental Facility Revenue,
due 6/15/12 7,000 7,000,000
New York State Housing
Finance Authority,
due 11/15/19 2,000 2,000,000
New York State Housing
Finance Authority, AMT,
due 11/01/30 1,000 1,000,000
New York State Job
Development Authority,
due 3/01/00 1,735 1,735,000
New York State Job
Development Authority,
due 3/01/03 8,630 8,630,000
New York State Job
Development Authority,
due 3/01/05 2,060 2,060,000
New York State Job
Development Authority,
due 3/01/07 6,025 6,025,000
New York State Local
Government Assistance
Corp., due 4/01/22 11,400 11,400,000
New York State Local
Government Assistance
Corp., due 4/01/23 3,700 3,700,000
New York State Local
Government Assistance
Corp., due 4/01/25 27,700 27,700,000
New York State Medical
Care Facilities Agency,
due 11/01/08 2,900 2,900,000
New York State Medical
Care Facilities Agency,
due 8/15/14 6,900 6,900,000
New York State Medical
Care Facilities Agency,
due 8/15/22 4,200 4,200,000
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 1,000 1,000,000
New York State Thruway
Authority,
due 4/01/08 10,000 10,000,000
New York State Thruway
Authority,
due 4/01/10 4,495 4,495,000
New York State Thruway
Authority,
due 1/01/27 4,505 4,505,000
New York State Thruway
Authority,
due 7/01/27 5,000 5,000,000
North Carolina, Medical Care,
due 10/01/20 400 400,000
Orange County, FL, Housing
Finance Authority,
due 2/01/04 575 575,000
Orange County, FL, Housing
Finance Authority,
due 6/01/25 2,000 2,000,000
Orlando, FL, Special
Assessment Revenue,
due 10/01/21 3,200 3,200,000
Port Authority of New York
& New Jersey, AMT,
due 1/01/01 65,000 65,000,000
Puerto Rico Commonwealth,
due 12/01/15 4,000 4,000,000
Puerto Rico Commonwealth,
due 7/01/20 5,655 5,655,000
Puerto Rico Commonwealth,
due 7/01/24 2,000 2,000,000
Puerto Rico Commonwealth,
due 7/01/28 16,000 16,000,000
Puerto Rico Commonwealth
Highway Transportation,
due 7/01/14 4,800 4,800,000
Puerto Rico Commonwealth
Highway Transportation,
due 7/01/28 5,300 5,300,000
10
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Puerto Rico Electric Power
Authority, due 1/01/12 $ 2,180 $ 2,180,000
Puerto Rico Electric Power
Authority, due 7/01/22 9,500 9,500,000
Puerto Rico Finance Corp.,
due 6/01/13 10,640 10,640,000
Puerto Rico Public Buildings
Authority, due 6/01/12 3,000 3,000,000
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
Puttable Floating Option,
Tax Exempt,
due 7/01/28 7,000 7,000,000
Puttable Floating Option,
Tax Exempt,
due 10/11/30 505 505,000
Puttable Floating Option,
Tax Exempt,
due 10/01/32 8,925 8,925,000
Red Bay, AL, Industrial
Development Revenue
Board, due 11/01/10 1,900 1,900,000
Richmond, VA,
Redevelopment and
Housing Authority,
due 11/01/05 3,400 3,400,000
Rockingham County, NC,
Industrial Finance, AMT,
due 4/01/18 6,000 6,000,000
Rockport, IN, Pollution
Control Authority,
due 7/01/25 300 300,000
Rutherford County, TN,
Industrial Development,
AMT, due 6/01/03 1,750 1,750,000
Saint Charles Parish, LA,
Pollution, due 3/01/24 5,525 5,525,000
Schenectady County, NY,
Industrial Development,
due 6/01/09 1,830 1,830,000
Seneca, NY, Industrial
Development Authority,
due 11/01/27 6,850 6,850,000
Seveir County, TN, Public
Building Authority,
due 6/01/09 500 500,000
Seveir County, TN, Public
Building Authority,
due 6/01/17 1,765 1,765,000
South Carolina Educational
Facilities Authority,
due 10/01/26 4,600 4,600,000
South Carolina Jobs Economy
Development, AMT,
due 11/01/10 2,320 2,320,000
South Carolina Jobs Economy
Development, AMT,
due 4/01/17 1,000 1,000,000
Southwestern, IL,
Environmental Develop-
ment Authority,
due 11/01/25 300 300,000
Triborough Bridge &
Tunnel Authority, NY,
due 1/01/04 3,100 3,100,000
Triborough Bridge &
Tunnel Authority, NY,
due 1/01/12 6,320 6,320,000
University of Puerto Rico,
University Revenue,
due 6/01/25 4,475 4,475,000
Walton County, GA,
Industrial Building
Authority, AMT,
due 10/01/17 1,600 1,600,000
Washington State Health
Care Facilities,
due 10/01/05 1,000 1,000,000
Wayne Charter County, MI,
Airport Revenue, AMT,
due 12/01/28 4,400 4,400,000
Wisconsin Housing &
Economic Development,
AMT, due 9/01/17 1,675 1,675,000
--------------
726,585,000
--------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 99.9% 1,231,332,344
OTHER ASSETS,
LESS LIABILITIES 0.1 1,446,007
--------------
NET ASSETS 100.0% $1,232,778,351
===== ==============
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
11
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999 (Unaudited)
================================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $1,231,332,344
Interest receivable 9,124,418
Receivable for shares of beneficial interest sold 116,650
- -------------------------------------------------------------------------------
Total assets 1,240,573,412
- -------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 1,270,478
Payable for shares of beneficial interest repurchased 5,811,738
Payable to affiliates:
Investment advisory fees (Note 3) 138,298
Shareholder servicing agents' fees (Note 4B) 231,351
Accrued expenses and other liabilities 343,196
- -------------------------------------------------------------------------------
Total liabilities 7,795,061
- -------------------------------------------------------------------------------
Net Assets for 1,232,833,262 shares of beneficial
interest outstanding $1,232,778,351
===============================================================================
NET ASSETS CONSIST OF:
Paid-in capital $1,232,833,262
Accumulated net realized loss on investments (54,911)
- -------------------------------------------------------------------------------
Total $1,232,778,351
===============================================================================
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
===============================================================================
See notes to financial statements
12
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
================================================================================
INTEREST INCOME (NOTE 1B): $18,186,222
EXPENSES:
Administrative fees (Note 4A) $1,391,140
Shareholder Servicing Agents' fees (Note 4B) 1,391,140
Investment Advisory fees (Note 3) 1,112,912
Distribution fees (Note 5) 556,456
Custody and fund accounting fees 148,030
Trustees' fees 34,918
Shareholder reports 19,501
Registration fees 14,727
Auditing fees 11,100
Legal fees 10,685
Transfer agent fees 5,237
Miscellaneous 17,697
- --------------------------------------------------------------------------------
Total expenses 4,713,543
Less aggregate amounts waived by Investment Adviser,
Administrator, and Distributor (Notes 3, 4A, and 5) (1,092,745)
Less fees paid indirectly (Note 1E) (4,328)
- --------------------------------------------------------------------------------
Net expenses 3,616,470
- --------------------------------------------------------------------------------
Net investment income 14,569,752
NET REALIZED GAIN ON INVESTMENTS 34,780
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,604,532
================================================================================
See notes to financial statements
13
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED
(Unaudited) AUGUST 31, 1998
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 14,569,752 $ 31,493,777
Net realized gain (loss) on investments 34,780 6,011
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 14,604,532 31,499,788
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (14,569,752) (31,493,777)
- --------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST AT NET ASSET VALUE OF 1.00
PER SHARE (Note 6):
Proceeds from sale of shares 543,850,364 1,419,667,585
Net asset value of shares issued to
shareholders from reinvestment of
dividends 5,739,172 14,122,083
Cost of shares repurchased (411,577,929) (1,316,023,080)
- --------------------------------------------------------------------------------
Net increase in net assets from
transactions in shares of beneficial
interest 138,011,607 117,766,588
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 138,046,387 117,772,599
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,094,731,964 976,959,365
- --------------------------------------------------------------------------------
End of period $1,232,778,351 $1,094,731,964
================================================================================
See notes to financial statements
14
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED AUGUST 31,
(Unaudited) 1998 1997 1996 1995 1994
===================================================================================================
<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 0.01301 0.02990 0.02949 0.02936 0.03136 0.01954
Dividends from net
investment income (0.01301) (0.02990) (0.02949) (0.02936) (0.03136) (0.01954
- ---------------------------------------------------------------------------------------------------
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) $1,232,778 $1,094,732 $976,959 $941,691 $767,129 $684,687
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 2.62%* 2.99% 2.95% 2.92% 3.15% 1.96%
Total return 1.31%** 3.03% 2.99% 2.98% 3.18% 1.97%
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 $0.01093 $0.02739 $0.02739 $0.02725 $0.02917 $0.01715
RATIOS:
Expenses to average net assets 0.85%* 0.85% 0.86% 0.86% 0.87% 0.88%
Net investment income to
average net assets 2.42%* 2.79% 2.74% 2.71% 2.93% 1.72%
===================================================================================================
</TABLE>
* Annualized
** Not Annualized
See notes to financial statements
15
<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. The Investment Adviser of the Fund is Citibank,
N.A. ("Citibank"). CFBDS, Inc. ("CFDBS") 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. Citibank is
a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as a
result of the merger of Citicorp and Travelers Group, inc.
which was completed on October 8, 1998.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. 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, 1998, the
Fund, for federal income tax purposes, had a capital loss carryover of $89,691,
$5,031 of which will expire on August 31, 1999, $18,487 will expire on August
31, 2005 and $66,173 will expire on August 31, 2006. Such capital loss carryover
will reduce the Fund's taxable income arising from future net realized gain on
investment transactions, if any, to the extent permitted by the Internal Revenue
Code, and thus will reduce the amount of 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.
16
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
D. EXPENSES The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more funds 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 $1,112,912
of which $499,590 was voluntarily waived for the six months ended February 28,
1999. 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. For the six months ended February 28, 1999, Management agreed to
voluntarily limit Fund expenses to 0.65%.
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 $1,391,140 of which $319,969 was voluntarily
waived for the
17
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
six months ended February 28, 1999. Citibank acts as Sub-Administrator and
performs such duties and receives such compensation from CFBDS as from time to
time is agreed to by CFBDS and Citibank. The Fund pays no compensation directly
to any Trustee or any officer who is affiliated with the Administrator, all of
whom receive remuneration for their services to the Fund from the Administrator
or its affiliates. Certain of the officers and a Trustee of the Fund are
officers 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 $1,391,140 for the six months ended February 28, 1999.
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 $556,456 of
which $273,186 was voluntarily waived for the six months ended February 28,
1999. 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, 1999.
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 $1,351,771,238 and $1,252,485,863, respectively, for the
six months ended February 28, 1999.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1999, for federal income tax purposes, amounted
to $1,231,332,344.
18
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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, 1999, the commitment fee allocated to the Fund was $1,631.
Since the line of credit was established, there have been no borrowings.
19
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<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 Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York Tax Free Reserves
This report is prepared for the information of shareholders. 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)1999 Citicorp R Printed on recycled paper CFS/RNY/299
<PAGE>
SEMI-ANNUAL REPORT o FEBRUARY 28, 1999
CitiFunds(SM)
- --------------
California
Tax Free Reserves
- -----------------------------------------------------------------------
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 6-month period ended February 28, 1999, was a good one for the U.S.
economy and California's tax-exempt money market securities. Early in the
period, concerns about the potential spread of the Asian currency and credit
crisis to Latin America contributed to the Federal Reserve Board's decision to
reduce key short-term interest rates three times between September and November.
While this easing of monetary policy caused short-term money market yields to
decline, very low inflation continued to support above-average REAL returns,
which are nominal yields less the rate of inflation.
In contrast, in both the taxable and tax-exempt markets, longer term
fixed-income securities did not fare as well as money market securities. That's
because longer term yields rose in response to reports of robust U.S. economic
growth in the fourth quarter of 1998 and the first two months of 1999. When
yields of longer term securities rise, their prices decline. Accordingly, money
market funds such as CitiFunds California Tax Free Reserves generally performed
better than longer term tax-exempt bond funds over the six-month period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
LOW INFLATION IN THE U.S. AND RECESSIONARY CONDITIONS IN SOME OVERSEAS
ECONOMIES CONTRIBUTED TO LOWER YIELDS on tax-exempt money market securities. The
financial crisis that began in Southeast Asia in mid-1997 spread to other
emerging markets during the third quarter of 1998. Russia was forced by the
credit crunch to devalue its currency and effectively defaulted on its
government bonds. Similarly, the flight of foreign capital from Latin America
adversely affected Brazil, which devalued its currency in January, 1999.
Why did economic events overseas affect short-term securities issued by
California and its municipalities? A major reason is that the Federal Reserve
Board became concerned that the problems in the emerging markets might curtail
exports of U.S. companies, which could, in turn, dampen domestic economic
growth. To help stop the further spread of the Asian crisis and stimulate the
U.S. economy, the Federal Reserve Board reduced key short-term interest rates in
three steps between September and November.
In anticipation of the Federal Reserve Board's action, WE BEGAN THE REPORTING
PERIOD WITH THE PORTFOLIO'S AVERAGE MATURITY TOWARD THE LONG END OF ITS RANGE.
In September, the average maturity reached 63 days. This strategy enabled us to
capture higher yields for as long as practical while interest rates fell.
As our holdings matured, we reinvested the proceeds in tax-exempt money
market instruments with modestly shorter maturities. Consequently, the
portfolio's average maturity gradually declined to about 48 days in February,
enabling us to respond faster to opportunities for higher yields. Such
opportunities arose in December, 1998, for example, when seasonal fund
redemptions caused tax-exempt yields to rise temporarily before declining again
in January.
As we noted in our shareholder report six months ago, HIGH-QUALITY SHORT-TERM
TAX-EXEMPT SECURITIES WERE RELATIVELY SCARCE IN 1998. That's because strong
national and regional economies helped boost tax revenues, reducing the need for
California municipalities to borrow to cover short-term operating expenses. In
fact, issuance of short-term, tax-exempt notes declined about 25% nationally in
1998 from the previous year to its lowest level in more than 10 years.
At the same time, demand for tax-exempt money market securities rose
significantly in the second half of 1998. Dislocations in the world's stock
markets triggered a "flight to quality" among domestic and foreign investors.
Many domestic investors turned to tax-exempt money market funds as a safe harbor
during this volatile time. The combination of reduced supply and increased
demand made it more difficult to find attractive values in tax-exempt notes. As
a result, WE CONTINUED TO FOCUS ON TAX-EXEMPT VARIABLE-RATE DEMAND NOTES
(VRDNs), which are securitized and issued by investment banks. These "floaters"
generally offered higher yields than other high-quality, short-term tax-exempt
securities.
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. California and many of its municipalities have set aside reserves from the
budget surpluses of the past few years. They expect to be well positioned should
the rate of economic growth begin to moderate. At the same time, persistently
low inflation should, in our view, prevent the Federal Reserve Board from
raising short-term interest rates in 1999 in an attempt to forestall
inflationary pressures.
2
<PAGE>
If our outlook is correct, tax-exempt money market yields should remain
relatively stable over the foreseeable future, while longer term yields may rise
modestly. We intend to continue to monitor economic influences carefully, with
an eye toward adjusting our investment strategy in a way that attempts to
capture the opportunities and reduce the risks of prevailing market conditions.
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 MANAGER DIVIDENDS
Citibank, N.A Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
March 10, 1992 Distributed annually, if any
NET ASSETS AS OF 2/28/99 BENCHMARKS
$323.5 million o Lipper California Tax Exempt Money
Funds Average
o IBC California Tax Free Money
Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
MARCH 10,
ALL PERIODS ENDING FEBRUARY 28, 1999 SIX ONE FIVE 1992
(Unaudited) MONTHS** YEAR YEARS* INCEPTION*
======================================================================================
<S> <C> <C> <C> <C>
Citifunds California Tax Free Reserves 1.26% 2.74% 3.00% 2.86%
Lipper California Tax Exempt Money
Funds Average 1.23% 2.62% 2.90% 2.68%
</TABLE>
* Average Annual Total Return
** Not Annualized
+ Since 2/29/92
7-DAY YIELDS
Annualized Current2.22%
Effective 2.24%
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 FUNDS AVERAGE
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 ReportTM, for the one-year period.
[FIGURES BELOW REPRESENTS CHART]
IBC California Tax Free Funds Avg. California Tax Free Res.
3/3/98 0.0273 0.0281
3/10/98 0.0238 0.0259
3/17/98 0.0239 0.0254
3/24/98 0.0269 0.0276
3/31/98 0.0289 0.0292
4/7/98 0.0286 0.0293
4/14/98 0.0286 0.0293
4/21/98 0.0314 0.0316
4/28/98 0.0336 0.0333
5/5/98 0.0326 0.0323
5/12/98 0.0309 0.0312
5/19/98 0.0313 0.0314
5/26/98 0.0307 0.0309
6/2/98 0.0307 0.0311
6/9/98 0.0285 0.0293
6/16/98 0.0286 0.0292
6/23/98 0.0282 0.0291
6/30/98 0.0286 0.0294
7/7/98 0.0244 0.0268
7/14/98 0.0236 0.0258
7/21/98 0.0266 0.0281
7/28/98 0.0273 0.0291
8/4/98 0.0272 0.0289
8/11/98 0.0233 0.0259
8/18/98 0.0232 0.0264
8/25/98 0.023 0.0263
9/1/98 0.0242 0.0263
9/8/98 0.0225 0.0239
9/15/98 0.0237 0.0259
9/22/98 0.0275 0.0295
9/29/98 0.0298 0.0311
10/6/98 0.0273 0.0292
10/13/98 0.0249 0.0268
10/20/98 0.0248 0.0265
10/27/98 0.0239 0.0259
11/3/98 0.024 0.0256
11/10/98 0.0227 0.0246
11/17/98 0.0241 0.0256
11/24/98 0.0251 0.0265
12/1/98 0.0245 0.0255
12/8/98 0.0215 0.0234
12/15/98 0.0235 0.0247
12/22/98 0.0253 0.0268
12/29/98 0.0276 0.0289
1/5/99 0.0299 0.0306
1/12/99 0.0233 0.0252
1/19/99 0.0225 0.0237
1/26/99 0.0215 0.0232
2/2/99 0.0211 0.0224
2/9/99 0.0171 0.0191
2/16/99 0.0172 0.0184
2/23/99 0.0199 0.0209
Citifunds California Tax Free Feserves
IBC California Tax Free Money Funds Average
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. Yields and total returns will fluctuate and past
performance is no guarantee of future results. Total return figures include
reinvestment of dividends. Returns and yields reflect certain voluntary fee
waivers. If the waivers were not in place, the Fund's returns and yields would
have been lower.
4
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 20.3%
- --------------------------------------------------------------------------------
Clipper Tax Exempt Trust,
Certificates of
Participation, AMT
2.23% due 5/01/06 $ 2,530 $ 2,530,000
Clipper Tax Exempt Trust,
Certificates of
Participation, AMT
2.58% due 3/01/15 4,470 4,470,000
Clipper Tax Exempt Trust,
Certificates of
Participation, AMT
2.33% due 8/01/26 4,150 4,150,000
Long Beach, CA, Harbor
Authority, AMT,
2.90% due 3/10/99 2,000 2,000,000
Long Beach, CA, Harbor
Authority, AMT,
2.45% due 5/06/99 3,000 3,000,000
Modesto California Irrigation
District,
2.20% due 3/05/99 10,000 10,000,000
Puttable Floating Option
Tax Exempt Receipt,
3.02% due 10/01/32 22,670 22,670,000
Riverside County, CA,
Certificates of
Participation,
7.00% due 6/01/99 450 454,569
Sacramento County, CA,
Municipal Utility District
Electric Revenue,
2.95% due 9/30/99 5,000 5,000,000
San Diego County, CA,
Certificates of
Participation,
4.00% due 5/01/99 2,675 2,679,609
San Joaquin County, CA,
Certificates of
Participation,
6.75% due 11/15/99 2,500 2,614,714
San Joaquin County, CA,
Transportation Authority,
2.60% due 7/08/99 6,000 6,000,000
----------
65,568,892
==========
ANNUAL AND SEMI-ANNUAL TENDER REVENUE BONDS AND NOTES (PUTS) -- 17.7%
- --------------------------------------------------------------------------------
California State,
4.00% due 6/30/99 10,000 10,027,491
California State Pollution
Control Finance Authority,
3.10% due 11/15/99 2,100 2,103,646
Government Development
Bank of Puerto Rico,
2.85% due 3/05/99 2,500 2,500,000
Government Development
Bank of Puerto Rico,
2.35% due 3/10/99 2,500 2,500,000
Government Development
Bank of Puerto Rico,
2.35% due 5/10/99 7,000 7,000,000
Long Beach Harbor, CA,
Revenue,
7.10% due 5/15/99 2,780 2,800,744
Los Angeles, CA,
Convention and Exhibition,
6.60% due 8/15/99 1,205 1,225,034
Los Angeles, CA,
Convention and Exhibition,
7.38% due 8/15/99 6,000 6,203,847
Metropolitan Water District,
SC, Waterworks Revenue,
2.70% due 7/09/99 2,000 2,000,000
Pitney Bowes Credit Corp.,
3.28% due 10/10/01 5,677 5,676,582
Puerto Rico Commonwealth,
3.50% due 7/30/99 5,000 5,013,268
Puerto Rico Electric Power
Authority,
7.13% due 7/01/99 5,595 5,745,995
Puerto Rico Industrial
Tourist Educational,
2.20% due 10/01/21 2,300 2,300,000
San Francisco, CA,
County Airports,
2.40% due 4/07/99 1,010 1,010,000
San Francisco, CA, Revenue,
5.50% due 10/01/99 755 765,821
Virgin Islands Public
Finance Authority,
6.50% due 10/01/99 270 275,341
Virgin Islands Public
Finance Authority,
7.65% due 10/01/99 260 266,861
----------
57,414,630
==========
BOND, REVENUE, TAX AND REVENUE ANTICIPATION NOTES AND GENERAL OBLIGATION
BONDS AND NOTES -- 11.1%
- --------------------------------------------------------------------------------
Fremont, CA, Uniondale
High School District,
TRANs,
3.90% due 6/30/99 2,000 2,001,403
5
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Kern County, CA,
Board of Education,
TRANs,
4.25% due 6/30/99 $ 3,000 $ 3,006,181
Los Angeles County, CA,
Unified School, TRANs,
4.50% due 6/30/99 4,000 4,010,597
North City West, CA,
School Facility, G.O. Bonds,
7.85% due 9/01/99 455 474,416
Oakland, CA, Unit School
District, G.O. Bonds,
3.25% due 11/09/99 3,000 3,009,091
Placer, CA, Unit High School
District, G.O. Bonds,
4.00% due 9/21/99 2,000 2,006,747
Sacramento County, CA,
Office of Education, TRANs,
4.25% due 3/17/99 5,000 5,002,166
San Diego, CA, Unit High
School District, G.O. Bonds,
4.50% due 10/01/99 1,000 1,008,897
San Diego, CA, TANs,
4.50% due 9/30/99 4,150 4,178,678
San Diego, CA, TRANs
7.75% due 4/01/99 1,500 1,506,152
San Francisco, CA, City and
County, G.O. Bonds,
4.50% due 6/15/99 1,100 1,105,363
Santa Barbara County, CA
4.50% due 10/01/99 1,000 1,008,895
Santa Clara County, CA,
G.O. Bonds,
4.50% due 10/01/99 4,400 4,437,455
Tahoe Truckee, CA, Unit
School District, G.O.
Bonds,
4.00% due 9/21/99 3,000 3,010,122
----------
35,766,163
==========
VARIABLE RATE DEMAND NOTES* -- 51.6%
- --------------------------------------------------------------------------------
ABN Amro Municipal
Trust Receipts,
due 7/05/06 1,000 1,000,000
Alameda County, CA,
Industrial Development
Authority, AMT,
due 5/01/03 1,800 1,800,000
Alameda County, CA,
Industrial Development
Authority, AMT,
due 7/01/27 1,550 1,550,000
Anaheim CA, Housing
Authority, AMT,
due 11/15/28 1,500 1,500,000
California Health Facilities
Finance Authority,
due 7/01/13 500 500,000
California Health Facilities
Finance Authority,
due 12/01/15 500 500,000
California Health Facilities
Finance Authority,
due 7/01/16 100 100,000
California Health Facilities
Finance Authority,
due 3/01/20 350 350,000
California Housing Finance
Agency Revenue,
due 3/12/99 880 880,000
California Housing Finance
Agency Revenue,
due 5/06/99 4,935 4,935,000
California Pollution Control
Finance Authority
due 3/08/99 3,550 3,550,000
California Pollution Control
Finance Authority,
due 9/01/13 1,100 1,100,000
California State, due 3/05/99 3,000 3,000,000
California State, due 5/06/99 5,000 5,000,000
California State, G. O.
Bonds, AMT,
due 12/01/16 4,000 4,000,000
California Statewide
Community Development,
due 9/30/99 6,000 6,000,000
California Statewide
Community Development,
due 11/01/15 995 995,000
California Statewide
Community Development,
due 12/01/22 4,900 4,900,000
California Statewide
Community Development,
due 6/01/26 1,750 1,750,000
California Statewide
Community Development,
due 8/15/27 400 400,000
6
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
California Transition
Finance Authority,
due 10/01/27 $ 6,800 $ 6,800,000
Campbell County, CA,
Industrial Development
Authority, AMT,
due 4/01/15 200 200,000
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
Clark County, NV,
Airport Revenue, AMT,
due 7/01/28 1,200 1,200,000
Covina, CA, Redevelopment
Agency Revenue,
due 12/01/15 500 500,000
Gordon County, GA,
Development Authority,
AMT, due 9/01/17 1,000 1,000,000
Henderson, NV, Health Care
Facility Revenue,
due 7/01/20 2,000 2,000,000
Illinois Health Facilities
Authority, due 5/01/11 100 100,000
Irvine Ranch, CA,
due 9/02/24 5,000 5,000,000
Irvine Ranch, CA,
Water District,
due 6/01/15 500 500,000
Irvine Ranch, CA,
Water District,
due 9/01/06 600 600,000
Jackson County, MS,
Pollution Control,
due 6/01/23 3,800 3,800,000
Kenton County, KY,
Revenue, AMT,
due 3/01/06 1,000 1,000,000
Kentucky State Turnpike
Authority,
due 7/01/03 395 395,000
Los Angeles, CA,
due 5/10/99 2,500 2,500,000
Los Angeles, CA,
due 9/01/15 10,515 10,515,000
Los Angeles, CA,
due 5/15/20 1,200 1,200,000
Los Angeles, CA,
due 12/01/25 1,600 1,600,000
Los Angeles, CA, Wastewater
Systems Revenue,
due 6/01/28 9,480 9,480,000
Macon Trust Pool, AMT,
due 12/05/30 2,490 2,490,000
Metropolitan Pier and
Exploration Oil,
due 12/15/19 1,000 1,000,000
Metropolitan Water District,
SC, Waterworks Revenue,
due 3/01/99 165 165,000
Metropolitan Water District,
SC, Waterworks Revenue,
due 7/01/28 7,300 7,300,000
Mississippi Home Corp., AMT
due 6/01/28 300 300,000
Murray County, GA,
Development Authority,
AMT due 9/01/17 1,000 1,000,000
National City, CA,
Community Development,
due 4/01/39 500 500,000
New Hampshire Health and
Education,
due 6/01/23 1,300 1,300,000
New York, NY, due 8/01/20 5,100 5,100,000
New York State Thruway
Authority, General Revenue,
due 1/01/27 1,000 1,000,000
Oakland, CA, Economic
Development Revenue, AMT
due 8/01/27 1,220 1,220,000
Pittsburgh, CA,
Mortgage Obligation,
due 12/30/31 2,400 2,400,000
Puerto Rico Commonwealth,
due 7/01/20 5,200 5,200,000
Puerto Rico Commonwealth,
Government Revenue,
due 12/01/15 3,400 3,400,000
Puerto Rico Electric Power
Authority,
due 7/01/22 500 500,000
Puerto Rico Public
Finance Corp.,
due 6/01/12 4,015 4,015,000
Richmond, VA, Redevelopment
and Housing Authority,
due 11/01/29 1,600 1,600,000
Riverside County, CA,
Certificates of Participation,
due 9/01/14 500 500,000
7
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Riverside County, CA,
Certificates of Participation,
due 12/01/15 $ 200 $ 200,000
Saint Charles Parish, LA,
Pollution,
due 3/01/24 6,200 6,200,000
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 Joaquin Hills, CA,
Transportation Tolls,
due 1/15/29 3,940 3,940,000
San Joaquin Hills, CA,
Transportation Tolls,
due 1/15/32 10,115 10,115,000
Sevier County, TN,
Public Building Authority,
due 6/01/09 440 440,000
Sevier County, TN, Public
Building Authority,
due 6/01/17 175 175,000
Sevier County, TN, Public
Building Authority,
due 6/01/21 600 600,000
Shawnee, KS, Private
Activity Revenue, AMT,
due 12/01/16 1,500 1,500,000
Southern California Public
Power Project Authority,
due 7/01/12 3,000 3,000,000
Washington State, Health
Care Facilities,
due 10/01/05 200 200,000
Washington State, Public
Power Supply
due 7/01/17 1,000 1,000,000
Water and Power, LA
due 5/07/99 2,000 2,000,000
Westminster, CA,
Redevelopment Tax
Allocation,
due 8/01/27 2,905 2,905,000
-----------
166,965,000
===========
TOTAL INVESTMENTS,
AT AMORTIZED
COST 100.7% 325,714,685
OTHER ASSETS, LESS
LIABILITIES (0.7) (2,217,040)
----- ===========
Net Assets 100.0% $323,497,645
===== ============
AMT - Subject to Alternative Minimum Tax
P* 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
8
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued)
FEBRUARY 28, 1999 (Unaudited)
================================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $325,714,685
Interest receivable 2,378,502
Receivable for shares of beneficial interest sold 11,500
- --------------------------------------------------------------------------------
Total assets 328,104,687
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 328,893
Payable for shares of beneficial interest repurchased 4,068,574
Payable to affiliates:
Investment advisory fees (Note 3) 31,801
Shareholder servicing agents' fees (Note 4B) 61,491
Accrued expenses and other liabilities 116,283
- --------------------------------------------------------------------------------
Total liabilities 4,607,042
- --------------------------------------------------------------------------------
NET ASSETS for 323,500,977 shares of beneficial interest
outstanding $323,497,645
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $323,500,977
Accumulated net realized loss on investments (3,332)
- --------------------------------------------------------------------------------
Total $323,497,645
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
9
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
================================================================================
INTEREST INCOME (Note 1B): $4,779,891
EXPENSES
Administrative fees (Note 4A) $ 377,582
Shareholder Servicing Agents' fees (Note 4B) 377,582
Investment Advisory fees (Note 3) 302,066
Distribution fees (Note 5) 151,033
Custody and fund accounting fees 53,238
Audit fees 17,300
Legal fees 11,685
Trustees' fees 10,298
Shareholder reports 9,188
Registration fees 6,725
Transfer agent fees 5,000
Miscellaneous 5,746
- --------------------------------------------------------------------------------
Total expenses 1,327,443
Less aggregate amounts waived by Investment Adviser,
Administrator, and Distributor (Notes 3, 4A and 5) (341,969)
Less fees paid indirectly (Note 1E) (4,017)
- --------------------------------------------------------------------------------
Net expenses 981,457
- --------------------------------------------------------------------------------
Net Investment Income 3,798,434
NET REALIZED GAIN ON INVESTMENTS 6,632
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,805,066
================================================================================
See notes to financial statements
10
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28. 1999 AUGUST 31,
(Unaudited) 1998
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,798,434 $ 7,243,957
Net realized gain (loss) on investments 6,632 (2,205)
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 3,805,066 7,241,752
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,798,434) (7,243,957)
- --------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST AT NET ASSET VALUE OF $1.00 PER
SHARE (Note 6):
Proceeds from sale of shares 249,478,953 420,217,573
Net asset value of shares issued to shareholders
from reinvestment of dividends 538,964 1,145,435
Cost of shares repurchased (212,154,972) (343,078,029)
- --------------------------------------------------------------------------------
Net increase in net assets from transactions in
shares of beneficial interest 37,862,945 78,284,979
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 37,869,577 78,282,774
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 285,628,068 207,345,294
- --------------------------------------------------------------------------------
End of period $323,497,645 $285,628,068
================================================================================
See notes to financial statements
11
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED AUGUST 31,
-------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
=========================================================================================
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.01251 0.02928 0.02899 0.03089 0.03434 0.02288
Less dividends from net
investment income (0.01251) (0.02928) (0.02899) (0.03089) (0.03434) (0.02288)
- -----------------------------------------------------------------------------------------
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) $323,498 $285,628 $207,345 $150,557 $51,832 $52,863
Ratio of expenses to
average net assets 0.65%* 0.65% 0.65% 0.42% 0.30% 0.25%
Ratio of net investment
income to average
net assets 2.51%* 2.92% 2.91% 3.05% 3.43% 2.30%
Total return 1.26%** 2.97% 2.94% 3.13% 3.49% 2.31%
</TABLE>
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income
per share $0.01144 $0.02687 $0.02630 $0.02481 $0.02513 $0.01423
RATIOS:
Expenses to average
net asset s0.88% *0.90% 0.92% 1.01% 1.21% 1.12%
Net investment income to
average net assets 2.28%* 2.67% 2.64% 2.45% 2.51% 1.43%
- -----------------------------------------------------------------------------------------
* Annualized
** Not Annualized
See notes to financial statements
</TABLE>
12
<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. The Investment Adviser of the Fund is Citibank,
N.A. ("Citibank"). CFBDS, Inc. ("CFBDS"), the Trust's Administrator and
Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers through various Shareholder Servicing Agents. Citibank is
a wholly owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as a
result of the merger of Citicorp and Travelers Group, Inc. which was completed
on October 8, 1998.
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, 1998, the
Fund, for federal income tax purposes, had a capital loss carryover of $7,774,
of which $5,710 will expire August 31, 2004 and $2,064 will expire August 31,
2006. Such capital loss carryover will reduce the Fund's taxable income arising
from future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of
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
13
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
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 $302,066 of
which $113,876 was voluntarily waived for the six months ended February 28,
1999. 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. For the six months ended February 28, 1999, Management agreed to
voluntarily limit Fund expenses to 0.65%.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee 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 $377,582 of which $113,876 was
voluntarily waived for the six months ended February 28, 1999. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
CFBDS as from time to time is agreed to by CFBDS and Citibank. The Fund pays no
compensation
14
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
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
$377,582 for the six months ended February 28, 1999.
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 $151,033, of
which $114,217 was voluntarily waived for the six months ended February 28,
1999. 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, 1999.
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 $473,330,947 and $434,461,527, respectively, for the six
months ended February 28, 1999.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1999 for federal income tax purposes, amounted
to $325,714,685.
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 six months ended
February 28, 1999, the commitment fee allocated to the Fund was $431. Since the
line of credit was established there have been no borrowings.
15
<PAGE>
This page intentionally left blank.
<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
c CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York Tax Free Reserves
This report is prepared for the information of shareholders. 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.
<PAGE>
SEMI-ANNUAL REPORT o FEBRUARY 28, 1999
CITIFUNDS
- --------------
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 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 6-month period ended February 28, 1999, was a good one for the U.S.
economy and Connecticut's tax-exempt money market securities. Early in the
period, concerns about the potential spread of the Asian currency and credit
crisis to Latin America contributed to the Federal Reserve Board's decision to
reduce key short-term interest rates three times between September and November.
While this easing of monetary policy caused short-term money market yields to
decline, very low inflation continued to support above-average REAL returns,
which are nominal yields less the rate of inflation.
In contrast, in both the taxable and tax-exempt markets, longer term
fixed-income securities did not fare as well as money market securities. That's
because longer term yields rose in response to reports of robust U.S. economic
growth in the fourth quarter of 1998 and the first two months of 1999. When
yields of longer term securities rise, their prices decline. Accordingly, money
market funds such as CitiFunds Connecticut Tax Free Reserves generally performed
better than longer term tax-exempt bond funds over the six-month period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
LOW INFLATION IN THE U.S. AND RECESSIONARY CONDITIONS IN SOME OVERSEAS
ECONOMIES CONTRIBUTED TO LOWER YIELDS on tax-exempt money market securities. The
financial crisis that began in Southeast Asia in mid-1997 spread to other
emerging markets during the third quarter of 1998. Russia was forced by the
credit crunch to devalue its currency and effectively defaulted on its
government bonds. Similarly, the flight of foreign capital from Latin America
adversely affected Brazil, which devalued its currency in January, 1999.
Why did economic events overseas affect short-term securities issued by
Connecticut and its municipalities? A major reason is that the Federal Reserve
Board became concerned that the problems in the emerging markets might curtail
exports of U.S. companies, which could, in turn, dampen domestic economic
growth. To help stop the further spread of the Asian crisis and stimulate the
U.S. economy, the Federal Reserve Board reduced key short-term interest rates in
three steps between September and November.
In anticipation of the Federal Reserve Board's action, WE BEGAN THE REPORTING
PERIOD WITH THE PORTFOLIO'S AVERAGE MATURITY TOWARD THE LONG END OF ITS RANGE.
Early in the reporting period, the average maturity reached 74 days. This
strategy enabled us to capture higher yields for as long as practical while
interest rates fell.
As our holdings matured, we reinvested the proceeds in tax-exempt money
market instruments with modestly shorter maturities. Consequently, the
Portfolio's average maturity gradually declined over the six months to about 54
days, enabling us to respond faster to opportunities for higher yields. Such
opportunities arose in December, 1998, for example, when seasonal fund
redemptions caused tax-exempt yields to rise temporarily before declining again
in January.
As we noted in our shareholder report six months ago, SHORT-TERM TAX-EXEMPT
SECURITIES WERE RELATIVELY SCARCE IN 1998. That's because strong national and
regional economies helped boost tax revenues, reducing the need for Connecticut
municipalities to borrow to cover short-term operating expenses. In fact,
issuance of short-term, tax-exempt notes declined about 25% nationally in 1998
from the previous year to its lowest level in more than 10 years.
At the same time, demand for tax-exempt money market securities rose
significantly in the second half of 1998. Dislocations in the world's stock
markets triggered a "flight to quality" among domestic and foreign investors.
Many domestic investors turned to tax-exempt money market funds as a safe harbor
during this volatile time. The combination of reduced supply and increased
demand made it more difficult to find attractive values in tax-exempt notes.
As a result, WE CONTINUED TO FOCUS ON TAX-EXEMPT VARIABLE-RATE DEMAND NOTES
(VRDNs), which are securitized and issued by investment banks. These "floaters"
generally offered higher yields than other high-quality, short-term tax-exempt
securities. We also found relatively attractive values in the secondary market.
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. The state and many Connecticut municipalities have set aside reserves from
the budget surpluses of the past few years. They expect to be well positioned
2
<PAGE>
should the rate of economic growth begin to moderate. At the same time,
persistently low inflation should, in our view, prevent the Federal Reserve
Board from raising short-term interest rates in 1999 in an attempt to forestall
inflationary pressures.
If our outlook is correct, tax-exempt money market yields should remain
relatively stable over the foreseeable future, while longer term yields may rise
modestly. We intend to continue to monitor economic influences carefully, with
an eye toward adjusting our investment strategy in a way that attempts to
capture the opportunities and reduce the risks of prevailing market conditions.
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 2/28/99 BENCHMARKS
$176.9 million o Lipper Connecticut Tax Exempt
Money Funds Average
o IBC Connecticut Tax Free Money
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
<TABLE>
<CAPTION>
SINCE
SIX ONE DECEMBER 1, 1993
ALL PERIODS ENDED FEBRUARY 28, 1999 (Unaudited) MONTHS** YEAR INCEPTION*
==============================================================================================
<S> <C> <C> <C>
CitiFunds Connecticut Tax Free Reserves 1.30% 2.85% 3.02%
Lipper Connecticut Tax Exempt Money Funds Average 1.27% 2.64% 2.75%
</TABLE>
* Average Annual Total Return
** Not Annualized
+ Since 11/30/93
7-DAY YIELDS
Annualized Current 2.37%
Effective 2.40%
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 FUNDS AVERAGE
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 ReportTM, for the one-year period.
[FIGRUES BELOW REPRESENT LINE CHART]
<TABLE>
<CAPTION>
Date IBC Connecticut Connecticut Tax IBC Connecticut Connecticut Tax
Tax Free Funds Avg. Free Res. Tax Free Funds Avg. Free Res.
<S> <C> <C> <C> <C>
3/3/98 2.67% 2.86% 0.0267 0.0286
3/10/98 2.39% 2.56% 0.0239 0.0256
3/17/98 2.38% 2.57% 0.0238 0.0257
3/24/98 2.65% 2.81% 0.0265 0.0281
3/31/98 2.84% 2.98% 0.0284 0.0298
4/7/98 2.80% 2.59% 0.028 0.0259
4/14/98 2.80% 2.95% 0.028 0.0295
4/21/98 3.05% 3.17% 0.0305 0.0317
4/28/98 3.27% 3.46% 0.0327 0.0346
5/5/98 3.17% 3.24% 0.0317 0.0324
5/12/98 3.01% 3.10% 0.0301 0.031
5/19/98 3.00% 3.13% 0.03 0.0313
5/26/98 2.95% 3.06% 0.0295 0.0306
6/2/98 2.97% 3.09% 0.0297 0.0309
6/9/98 2.83% 2.95% 0.0283 0.0295
6/16/98 2.84% 2.95% 0.0284 0.0295
6/23/98 2.81% 2.96% 0.0281 0.0296
6/30/98 2.79% 2.96% 0.0279 0.0296
7/7/98 2.52% 2.99% 0.0252 0.0299
7/14/98 2.50% 2.94% 0.025 0.0294
7/21/98 2.74% 3.11% 0.0274 0.0311
7/28/98 2.80% 3.16% 0.028 0.0316
8/4/98 2.78% 3.11% 0.0278 0.0311
8/11/98 2.52% 2.94% 0.0252 0.0294
8/18/98 2.61% 2.97% 0.0261 0.0297
8/25/98 2.61% 2.98% 0.0261 0.0298
9/1/98 2.62% 2.95% 0.0262 0.0295
9/8/98 2.39% 2.54% 0.0239 0.0254
9/15/98 2.56% 2.69% 0.0256 0.0269
9/22/98 2.86% 3.01% 0.0286 0.0301
9/29/98 3.03% 3.15% 0.0303 0.0315
10/6/98 2.79% 3.03% 0.0279 0.0303
10/13/98 2.58% 2.83% 0.0258 0.0283
10/20/98 2.57% 2.75% 0.0257 0.0275
10/27/98 2.49% 2.69% 0.0249 0.0269
11/3/98 2.46% 2.67% 0.0246 0.0267
11/10/98 2.39% 2.58% 0.0239 0.0258
11/17/98 2.45% 2.65% 0.0245 0.0265
11/24/98 2.54% 2.75% 0.0254 0.0275
12/1/98 2.44% 2.67% 0.0244 0.0267
12/8/98 2.22% 2.39% 0.0222 0.0239
12/15/98 2.38% 2.53% 0.0238 0.0253
12/22/98 2.52% 2.70% 0.0252 0.027
12/29/98 2.69% 2.84% 0.0269 0.0284
1/5/99 2.86% 2.99% 0.0286 0.0299
1/12/99 2.37% 2.57% 0.0237 0.0257
1/19/99 2.28% 2.46% 0.0228 0.0246
1/26/99 2.19% 2.44% 0.0219 0.0244
2/2/99 2.14% 2.37% 0.0214 0.0237
2/9/99 1.83% 2.05% 0.0183 0.0205
2/16/99 1.81% 2.01% 0.0181 0.0201
2/23/99 2.03% 2.23% 0.0203 0.0223
</TABLE>
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. Yields and total returns will fluctuate and past
performance is no guarantee of future results. Total return figures include
reinvestment of dividends. Returns and yields reflect certain voluntary fee
waivers. If the waivers were not in place, the Fund's returns and yields would
have been lower.
4
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 5.4%
- --------------------------------------------------------------------------------
Connecticut State Health
and Educational Facilities,
2.60% due 5/11/99 $ 800 $ 800,000
Connecticut State Housing
Financial Authority, AMT,
2.95% due 3/09/99 960 960,000
Government Development
Bank, Puerto Rico,
2.35% due 5/10/99 2,000 2,000,000
Government Development
Bank, Puerto Rico,
2.50% due 6/08/99 3,000 3,000,000
Government Development
Bank, Puerto Rico,
2.65% due 7/09/99 2,836 2,836,000
------------
9,596,000
------------
BOND, REVENUE, TAX, TAX AND REVENUE
ANTICIPATION NOTES AND GENERAL
OBLIGATION BONDS AND NOTES -- 6.2%
- --------------------------------------------------------------------------------
East Lyme, CT, BANs,
4.25% due 3/01/99 100 100,000
Groton City, CT, BANs,
3.75% due 10/15/99 250 250,839
Guilford, CT, BANs,
3.75% due 8/17/99 1,000 1,000,891
Middlebury, CT, BANs,
3.74% due 3/09/99 630 630,005
Naugatuck, CT, BANs,
3.74% due 8/11/99 250 250,075
Newtown, CT, BANs,
4.00% due 6/15/99 500 501,537
Newtown, CT, BANs,
4.00% due 6/17/99 465 465,464
Oxford, CT, G. O.,
3.25% due 5/04/99 3,400 3,402,076
Puerto Rico
Commonwealth, BANs,
3.50% due 7/30/99 2,000 2,005,307
Stratford, CT, BANs,
4.00% due 6/16/99 2,000 2,002,264
Tolland, CT, BANs,
6.00% due 6/01/99 400 402,464
------------
11,010,922
------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS) -- 32.3%
- --------------------------------------------------------------------------------
Branford, CT,
6.00% due 6/15/99 500 504,224
Bristol, CT,
5.40% due 6/15/99 150 150,677
Connecticut State,
5.00% due 3/15/99 750 750,572
Connecticut State,
5.70% due 3/15/99 2,500 2,501,868
Connecticut State,
5.20% due 5/01/99 2,215 2,221,477
Connecticut State,
6.80% due 9/15/99 1,000 1,021,430
Connecticut State,
6.00% due 12/01/99 2,000 2,047,417
Connecticut State
Clean Water Fund,
4.90% due 4/01/99 200 200,250
Connecticut State
Clean Water Fund,
5.25% due 8/01/99 500 503,773
Connecticut State Health
and Educational Facilities,
7.25% due 7/01/99 2,620 2,705,719
Connecticut State
Second Injury Fund,
2.75% due 5/07/99 2,000 2,000,000
Connecticut State
Special Assessment
Unemployment,
4.50% due 5/15/99 3,040 3,047,839
Connecticut State
Special Assessment
Unemployment,
4.50% due 11/15/99 350 353,383
Connecticut State
Special Assessment
Unemployment,
5.00% due 11/15/99 1,625 1,649,932
Connecticut State
Special Tax Obligation,
5.10% due 6/01/99 300 301,331
Connecticut State
Special Tax Obligation,
4.25% due 10/01/99 250 251,860
Connecticut State
Special Tax Obligation,
6.50% due 7/01/99 950 979,124
Danbury, CT,
5.50% due 8/01/99 1,120 1,128,912
Darien, CT,
6.25% due 8/15/99 280 283,692
Easton, CT,
5.00% due 2/01/00 325 331,011
5
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Guilford, CT,
5.10% due 10/15/99 $ 250 $ 253,524
Hartford, CT,
6.375% due 10/01/99 600 610,119
Litchfield, CT,
3.20% due 10/21/99 1,300 1,301,613
Manchester, CT,
4.00% due 7/08/99 637 637,869
Middletown, CT,
6.00% due 4/15/99 200 200,776
Milford, CT,
4.00% due 11/01/99 145 145,950
Milford, CT,
3.50% due 11/15/99 310 311,071
Monroe, CT,
3.25% due 10/27/99 1,810 1,814,174
New Britain, CT,
3.70% due 4/13/99 200 200,018
New Fairfield, CT,
4.40% due 3/15/99 185 185,041
New Fairfield, CT,
3.25% due 8/02/99 815 816,177
New Fairfield, CT,
3.50% due 8/15/99 420 420,746
New Milford, CT,
6.00% due 1/15/00 1,000 1,025,187
Puerto Rico
Commonwealth,
7.70% due 7/01/99 500 514,795
Puerto Rico Public Buildings
Authority Revenue,
6.85% due 7/01/99 1,700 1,718,256
Regional School District
No. 5, CT,
3.50% due 3/01/99 630 630,000
Shelton, CT,
3.25% due 12/01/99 2,000 2,005,853
Simsbury, CT,
6.90% due 4/15/99 500 502,378
Somers, CT,
3.25% due 7/15/99 1,400 1,401,796
South Central
Connecticut Regulation
Water Authority,
4.00% due 7/28/99 3,000 3,005,035
South Central
Connecticut Regulation
Water Authority,
5.00% due 8/01/99 125 126,048
Stamford, CT,
7.00% due 3/15/99 1,325 1,326,822
Stonington, CT,
3.40% due 5/20/99 3,500 3,503,036
Tolland, CT,
4.10% due 6/10/99 227 227,242
Torrington, CT,
3.50% due 8/17/99 3,000 3,006,800
University of Puerto Rico,
University Revenue,
6.00% due 6/01/99 1,000 1,007,883
Wallingford, CT,
5.55% due 6/15/99 700 705,216
Watertown, CT,
6.00% due 9/15/99 710 719,951
West Hartford, CT,
4.00% due 9/15/99 900 905,978
West Haven, CT,
3.25% due 2/01/00 2,305 2,313,805
Weston, CT,
4.40% due 4/15/99 680 680,652
Westport, CT,
5.75% due 6/25/99 1,675 1,677,498
Woodbridge, CT,
6.00% due 10/15/99 245 249,449
------------
57,085,249
------------
VARIABLE RATE DEMAND NOTES* -- 57.6%
- --------------------------------------------------------------------------------
Alaska State Housing
Authority, due 12/01/36 300 300,000
Beloit, KS, Industrial Revenue,
AMT, due 12/01/16 900 900,000
Campbell County, VA,
Industrial Development,
AMT, due 4/01/15 500 500,000
Chesterfield County, VA,
Industrial Development,
due 2/01/03 1,400 1,400,000
Chicago, IL, due 1/01/27 1,100 1,100,000
Clark County, NV,
Airport Revenue, AMT,
due 7/01/28 1,600 1,600,000
Coastal Bend Health
Facilities, due 8/15/28 1,000 1,000,000
Cobb County, GA,
Development Authority,
due 8/01/99 690 690,000
Connecticut State,
due 8/01/12 1,800 1,800,000
Connecticut State
Development Authority
Revenue, AMT,
due 6/01/13 4,000 4,000,000
6
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Connecticut State
Development Authority
Revenue, AMT,
due 6/01/18 $ $ 1,100 $ 1,100,000
Connecticut State
Development Authority
Revenue, due 10/01/23 3,925 3,925,000
Connecticut State Health
and Educational Facilities,
due 7/01/13 1,500 1,500,000
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 2,000 2,000,000
Connecticut State Health
and Educational Facilities,
due 7/01/29 1,500 1,500,000
Connecticut State Health
and Educational Facilities,
due 6/10/30 13,200 13,200,000
Connecticut State Housing
Finance Authority,
due 5/15/17 4,095 4,095,000
Connecticut State Housing
Finance Authority, AMT,
due 11/15/27 1,880 1,880,000
Connecticut State Housing
Finance Authority,
due 11/15/28 2,500 2,500,000
Connecticut State
Special Tax Obligation,
due 12/01/10 3,400 3,400,000
Connecticut State
Special Tax Obligation,
due 11/01/17 2,000 2,000,000
Hartford, CT,
Redevelopment Agency,
due 6/01/20 2,000 2,000,000
Illinois Health Facilities
Authority Revenue,
due 5/01/11 200 200,000
Illinois Health Facilities
Authority Revenue,
due 1/01/20 1,300 1,300,000
Jackson County, MS,
Pollution Control,
due 6/01/23 1,600 1,600,000
Long Island Power
Authority, NY,
due 5/01/33 1,700 1,700,000
Los Angeles, CA,
Regional Airport Lease,
due 12/01/25 300 300,000
Macon Trust Pooled
Variable Rate Certificates,
due 3/03/07 5,250 5,250,000
Macon Trust Pooled
Variable Rate Certificates,
AMT, due 12/05/30 2,125 2,125,000
Maryland State
Community Development
Administration,
due 4/01/25 720 720,000
Mississippi Home Corp.,
AMT, due 6/01/28 2,100 2,100,000
Morgan Keegan Municipal
Trust Receipts, AMT,
due 5/06/99 60 60,000
New York State Dormitory
Authority Revenue,
due 2/15/23 2,600 2,600,000
New York State
Energy Research
and Development,
due 7/01/27 1,600 1,600,000
New York State Jobs
Development Authority,
AMT, due 3/01/03 500 500,000
New York State
Medical Care Facilities,
due 8/15/22 200 200,000
New York State
Thruway Authority,
due 1/01/27 1,400 1,400,000
Puerto Rico Commonwealth,
due 7/01/20 1,900 1,900,000
Puerto Rico Commonwealth
Highway, due 7/01/28 800 800,000
7
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
Puerto Rico Electrical
Power Authority,
due 7/01/12 $4,850 $ 4,850,000
Puerto Rico Electrical
Power Authority,
due 7/01/13 2,000 2,000,000
Puerto Rico Electrical
Power Authority,
due 7/01/22 1,200 1,200,000
Puttable Floating Optional
Tax Exempt Receipt,
due 9/01/07 3,400 3,400,000
Puttable Floating Optional
Tax Exempt Receipt,
due 10/01/32 5,745 5,745,000
Shawnee, KS, Private Activity,
due 12/01/16 1,000 1,000,000
Shelton, CT, Housing
Authority Revenue,
due 12/01/30 1,800 1,800,000
Washington State
Health Care Facilities,
due 10/01/09 600 600,000
Washington State
Public Power Supply,
due 7/01/17 2,900 2,900,000
------------
101,840,000
------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 101.5% 179,532,171
OTHER ASSETS,
LESS LIABILITIES (1.5) (2,644,200)
----- ------------
NET ASSETS 100.0% $176,887,971
===== ============
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
8
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999 (Unaudited)
================================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $179,532,171
Interest receivable 1,370,587
- --------------------------------------------------------------------------------
Total assets 180,902,758
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 2,700,406
Payable for shares of beneficial interest repurchased 934,453
Dividends payable 248,027
Payable to affiliates:
Investment Advisory fees (Note 3) 14,502
Shareholder Servicing Agents' fees (Note 4B) 32,844
Accrued expenses and other liabilities 84,555
- --------------------------------------------------------------------------------
Total liabilities 4,014,787
- --------------------------------------------------------------------------------
NET ASSETS for 176,893,011 shares of beneficial interest
outstanding $176,887,971
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $176,893,011
Accumulated net realized loss on investments (5,040)
- --------------------------------------------------------------------------------
Total $176,887,971
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
9
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
================================================================================
Investment Income (Note 1B) $2,555,722
- --------------------------------------------------------------------------------
EXPENSES:
Administrative fees (Note 4A) $196,025
Shareholder Servicing Agents' fees (Note 4B) 196,025
Investment Advisory fees (Note 3) 156,819
Distribution fees (Note 5) 78,410
Custody and fund accounting fees 37,112
Audit fees 16,100
Legal fees 11,685
Shareholder reports 8,217
Trustees' fees 6,603
Registration fees 5,522
Transfer agent fees 5,000
Miscellaneous 4,304
- --------------------------------------------------------------------------------
Total expenses 721,822
Less aggregate amounts waived by Investment Adviser,
Administrator, and Distributor (Notes 3, 4A and 5) (211,265)
Less fees paid indirectly (Note 1E) (1,130)
- --------------------------------------------------------------------------------
Net expenses 509,427
- --------------------------------------------------------------------------------
Net investment income 2,046,295
NET REALIZED GAIN ON INVESTMENTS 1,755
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,048,050
- -===============================================================================
See notes to financial statements
10
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31,
(UNAUDITED) 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $2,046,295 $4,491,392
Net realized gain (loss) on investments 1,755 2,693
- ----------------------------------------------------------------------------------
Net increase in net assets from operations 2,048,050 4,494,085
- ----------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,046,295) (4,491,392)
- ----------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 6):
Proceeds from sale of shares 121,247,542 282,812,520
Net asset value of shares issued to shareholders
from reinvestment of dividends 294,724 632,962
Cost of shares repurchased (101,207,559) (296,218,329)
- ----------------------------------------------------------------------------------
Net increase (decrease) in net assets from
transactions in shares of beneficial interest 20,334,707 (12,772,847)
NET INCREASE (DECREASE) IN NET ASSETS 20,336,462 (12,770,154)
- ----------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 156,551,509 169,321,663
- ----------------------------------------------------------------------------------
End of period $176,887,971 $156,551,509
==================================================================================
</TABLE>
See notes to financial statements
11
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 1, 1993
SIX MONTHS ENDED (COMMENCEMENT
FEBRUARY 28, 1999 YEAR ENDED AUGUST 31, OF OPERATIONS) TO
_________________________________________ AUGUST 31,
(UNAUDITED) 1998 1997 1996 1995 1994
===================================================================================================
<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 0.01297 0.02971 0.02914 0.03135 0.03564 0.01754
Less dividends from
net investment income (0.01297) (0.02971) (0.02914) (0.03135) (0.03564) (0.01754)
- ---------------------------------------------------------------------------------------------------
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) $176,888 $156,552 $169,322 $116,025 $46,556 $15,949
Ratio of expenses to
average net assets (A) 0.65%* 0.66% 0.65% 0.42% 0.22% 0.00%*
Ratio of expenses to
average net assets after
fees paid indirectly (A) 0.65%* 0.65% 0.65% 0.42% 0.22% 0.00%*
Ratio of net investment
income to average net
assets 2.61%* 2.98% 2.92% 3.08% 3.60% 2.61%*
Total return 1.30%** 3.01% 2.95% 3.18% 3.62% 1.75%**
</TABLE>
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:
<TABLE>
<CAPTION>
Net investment income
<S> <C> <C> <C> <C> <C> <C>
per share $0.01178 $0.02712 $0.02615 $0.02504 $0.02732 $0.00128
RATIOS:
Expenses to average net
assets 0.92%* 0.91% 0.95% 1.04% 1.06% 2.42%*
Net investment income to
average net assets 2.34%* 2.72% 2.62% 2.46% 2.76% 0.19%*
===================================================================================================
</TABLE>
* Annualized
** Not Annualized
(A) The expense ratios for the year ended August 31, 1996 and the periods
thereafter have been adjusted to reflect a change in reporting requirements.
The new report guidelines require the Fund to increase its expense ratio by
the effect of any expense offset arrangements with its service providers.
The expense ratios for the period ended on August 31, 1995 have not been
adjusted to reflect this change.
See notes to financial statements
12
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Connecticut 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. The Investment Adviser of the Fund is Citibank,
N.A. ("Citibank"). CFBDS, Inc. ("CFBDS") 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. Citibank is
a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as a
result of the merger of Citicorp and Travelers Group, Inc. which was completed
on October 8, 1998.
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, 1998, the
Fund, for federal income tax purposes, had a capital loss carryover of $6,795,
of which $2,291 will expire on August 31, 2004 and $4,504 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.
13
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $156,819 of
which $70,351 was voluntarily waived for the six months ended February 28, 1999.
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. For the six months ended February 28, 1999, Management agreed to
voluntarily limit Fund expenses to 0.65%.
A. ADMINISTRATIVE FEES Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is computed
14
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
at the annual rate of 0.25% of the Fund's average daily net assets. The
Administrative fees amounted to $196,025, of which $70,563 was voluntarily
waived for the six months ended February 28, 1999. Citibank acts as
Sub-Administrator and performs such duties and receives such compensation from
CFBDS as from time to time is agreed to by CFBDS and Citibank. The Fund pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the Fund
from the Administrator or its affiliates. Certain of the officers and a Trustee
of the Fund are officers and a director of the Administrator or its affiliates.
B. SHAREHOLDER SERVICING AGENT FEES The 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
$196,025 for the six months ended February 28, 1999.
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 $78,410 of
which $70,351 was voluntarily waived for the six months ended February 28, 1999.
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, 1999.
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 $261,171,118 and $238,497,510, respectively, for the six
months ended February 28, 1999.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1999 for federal income tax purposes, amounted
to $179,532,171.
15
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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, 1999, the commitment fee allocated to the Fund was $231.
Since the line of credit was established there have been no borrowings.
16
<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
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THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York Tax Free Reserves
This report is prepared for the information of shareholders. 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.
