================================================================================
C I T I F U N D S(SM)
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NEW YORK TAX FREE RESERVES C I T I F U N D S
SEMI-ANNUAL REPORT
FEBRUARY 29, 2000
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INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
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 14
................................................................................
Statement of Operations 15
................................................................................
Statement of Changes in Net Assets 16
................................................................................
Financial Highlights 17
................................................................................
Notes to Financial Statements 18
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
Rising interest rates during the reporting period have benefited tax-exempt
money market investors, who earned higher yields while preserving capital. The
Federal Reserve Board (the "Fed") raised interest rates three times in 1999 and
most recently on February 2, 2000 for a total increase of 100 basis points. (A
basis point is .01% or one one-hundredth of a percent.) The Fed's actions were
implemented to forestall a reacceleration of inflation, a potential consequence
of the continued robust growth of the U.S. economy.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFunds New York Tax Free Reserves with the goal of
achieving its investment objective: providing high levels of current income that
are exempt from federal, New York State and New York City personal income taxes,
preservation of capital and liquidity.
This report reviews the Fund's investment activities and performance during
the six months ended February 29, 2000, and provides a summary of Citibank's
perspective on and outlook for the tax-exempt money market securities
marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
March 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST SIX MONTHS HAVE BEEN GENERALLY REWARDING FOR MANY MONEY MARKET
INVESTORS. Yields on tax-exempt money market securities ended the six-month
reporting period higher than where they began, reflecting the general trend of
higher short-term interest rates in a period of rising interest rates.
The economic conditions that led to higher interest rates during the
reporting period included strong U.S. economic growth, low inflation, robust
consumer spending and rising demand for U.S. exports. As a result of these
factors, many investors have become concerned that unsustainable economic growth
might cause inflationary pressures to resurface. In an attempt to forestall a
potential reacceleration of inflation, the Fed raised interest rates in three
25-basis point increments during 1999 and raised them an additional 25 basis
points on February 2, 2000.
DESPITE THE POSITIVE EFFECTS OF HIGHER INTEREST RATES, THE NEW YORK
TAX-EXEMPT MONEY MARKET'S RETURNS WERE CONSTRAINED DUE TO GREATER DEMAND FOR
TAX-EXEMPT MONEY MARKET SECURITIES FROM NEW YORK RESIDENTS SEEKING TO PRESERVE
CAPITAL WHILE POSSIBLY AWAITING REINVESTMENT IN LONGER TERM MARKETS. Because of
this surge in demand, tax-exempt money market yields tended to rise less than
yields of taxable money market instruments. On the supply side, while robust
economic conditions reduced the issuance of new tax-exempt money market
instruments nationally, there was sufficient new issuance in New York to satisfy
the Fund's needs.
THE FUND'S MANAGERS' STRATEGY DURING THE SIX-MONTH PERIOD WAS TO GRADUALLY
REDUCE THE FUND'S AVERAGE MATURITY, which was designed to enhance liquidity and
keep assets available for higher-yielding securities as they became available.
As of February 29, 2000, the Fund's average maturity was 35 days. (Maturity is
the date on which the principal amount of a note, draft, acceptance bond or
other debt instrument becomes due and payable.)
In addition, THE FUND'S MANAGERS ACTIVELY MANAGED THE MIX OF MONEY MARKET
INSTRUMENTS WITHIN THE FUND'S PORTFOLIO. During the period it was more difficult
to find high-yielding opportunities in high-quality, highly liquid instruments.
Instead, opportunities were found in non-rated securities issued by smaller
municipalities, authorities and school districts in anticipation of operating
revenues, tax payments or bond financing.
In addition, the Fund's holdings of Variable Rate Demand Notes (VRDNs), which
are short-term instruments that are securitized and issued by investment banks,
was increased during the period. At the end of 1999, daily and weekly VRDNs
comprised about 63% of the Fund's portfolio. This highly liquid asset mix was
designed to protect the Fund from potential Y2K-related problems that have not
surfaced. By the end of the reporting period, VRDNs comprised approximately 64%
of the Fund's portfolio, with the remainder allocated among municipal notes and
tax-exempt commercial paper from New York issuers.
2
<PAGE>
Looking forward, the Fund's management team expects interest rates to remain
near or slightly above current levels if the Fed continues to move toward a more
restrictive monetary policy. However, THE MANAGERS BELIEVE THAT OVER THE LONG
TERM, INTEREST RATES MAY BEGIN TO DECLINE IF THE ECONOMY BEGINS TO SHOW EVIDENCE
THAT IT IS MODERATING. Accordingly, the managers are carefully searching for
opportunities to take advantage of changes in interest rates, including possibly
extending the Fund's average maturity to lock in higher yields in the near term.
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 2/29/00 BENCHMARK**
$1,337.0 million o Lipper New York Tax Exempt Money
Market Funds Average
o IBC Financial Data New York Tax
Free Money Market Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax adviser.
** The Lipper Funds Average and IBC Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
ALL PERIODS ENDED FEBRUARY 29, 2000 SIX ONE FIVE TEN
(Unaudited) MONTHS** YEAR YEARS* YEARS*
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CitiFunds New York Tax Free Reserves 1.43% 2.73% 2.95% 2.99%
Lipper New York Tax Exempt Money Market
Funds Average 1.45% 2.74% 2.93% 2.98%
IBC Financial Data New York
Tax Free Money Market Funds Average 1.44% 2.71% 2.90% 2.96%
* Average Annual Total Return
** Not Annualized
7-DAY YIELDS
Annualized Current 3.02%
Effective 3.06%
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 FINANCIAL DATA NEW YORK TAX FREE MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds New York Tax Free Reserves generally provided a
similar annualized seven-day yield to that of a comparable IBC Financial Data
Money Funds Average, as published in IBC Money Fund ReportTM, for the one-year
period.
[Table below represents chart in it printed piece]
3/2/99 2.37% 2.29%
3/9/99 2.27% 2.20%
3/16/99 2.41% 2.36%
3/23/99 2.44% 2.38%
3/30/99 2.39% 2.35%
4/6/99 2.38% 2.33%
4/13/99 2.24% 2.16%
4/20/99 2.43% 2.42%
4/27/99 2.63% 2.67%
5/4/99 2.91% 2.92%
5/11/99 2.82% 2.81%
5/18/99 2.72% 2.71%
5/25/99 2.63% 2.61%
6/1/99 2.57% 2.57%
6/8/99 2.41% 2.39%
6/15/99 2.48% 2.47%
6/22/99 2.60% 2.59%
6/29/99 2.75% 2.83%
7/6/99 2.67% 2.69%
7/13/99 2.33% 2.20%
7/20/99 2.36% 2.33%
7/27/99 2.49% 2.43%
8/3/99 2.50% 2.46%
8/10/99 2.42% 2.39%
8/17/99 2.55% 2.51%
8/24/99 2.56% 2.52%
8/31/99 2.58% 2.57%
9/7/99 2.55% 2.53%
9/14/99 2.57% 2.55%
9/21/99 2.72% 2.73%
9/28/99 2.90% 2.95%
10/5/99 2.90% 2.92%
10/12/99 2.64% 2.66%
10/19/99 2.69% 2.68%
10/26/99 2.73% 2.71%
11/2/99 2.77% 2.77%
11/9/99 2.74% 2.73%
11/16/99 2.90% 2.90%
11/23/99 3.01% 3.01%
11/30/99 3.07% 3.08%
12/7/99 2.92% 2.90%
12/14/99 2.76% 2.75%
12/21/99 3.00% 3.02%
12/28/99 3.44% 3.45%
1/4/00 3.86% 3.89%
1/11/00 2.77% 2.75%
1/18/00 2.54% 2.57%
1/25/00 2.65% 2.65%
2/1/00 2.69% 2.71%
2/8/00 2.57% 2.59%
2/15/00 2.82% 2.82%
2/22/00 3.02% 3.01%
2/29/00 3.02% 3.09%
CitiFunds NY Tax Free Reserves
IBC Financial Date New York Tax Free Money
Market Funds Average
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. 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 NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 14.3%
- --------------------------------------------------------------------------------
Metropolitan Transit Authority, NY,
3.65% due 3/06/00 $18,000 $ 18,000,000
Metropolitan Transit Authority, NY,
3.50% due 3/08/00 5,000 5,000,000
Metropolitan Transit Authority, NY,
3.60% due 3/09/00 8,700 8,700,000
Metropolitan Transit Authority, NY,
3.42% due 3/29/00 25,300 25,300,000
Metropolitan Transit Authority, NY,
3.65% due 4/06/00 5,000 5,000,000
Metropolitan Transit Authority, NY,
3.70% due 4/07/00 15,000 15,000,000
Metropolitan Transit Authority, NY,
3.60% due 4/10/00 15,000 15,000,000
Metropolitan Transit Authority, NY,
3.50% due 5/03/00 9,000 9,000,000
New York State Environmental Revenue,
3.40% due 3/09/00 4,300 4,300,000
New York State Environmental Revenue,
3.65% due 5/04/00 15,000 15,000,000
New York State Power Authority Revenue,
3.70% due 4/03/00 5,000 5,000,000
Port Authority, New York and New Jersey,
4.29% due 1/01/01 65,000 65,000,000
Puerto Rico Government Development Authority,
3.15% due 4/27/00 1,836 1,836,000
-----------
192,136,000
-----------
REVENUE, TAX, BOND AND TAX REVENUE
ANTICIPATION NOTES AND GENERAL OBLIGATION
BONDS AND NOTES -- 15.2%
- --------------------------------------------------------------------------------
Beacon, NY, BANs,
4.00% due 8/18/00 3,135 3,138,495
Brockport, NY, Central School District,
BANs,
3.50% due 5/19/00 9,200 9,206,930
Carle Place, NY, Union Free School District, TANs,
4.00% due 6/28/00 3,000 3,004,712
Central Islip, NY, Union Free
School District, TANs,
4.00% due 6/30/00 $18,000 $18,022,959
Chautauqua County, NY, TANs,
4.38% due 12/21/00 10,000 10,021,359
Commack, NY, Union Free School District, BANs,
3.80% due 6/23/00 3,000 3,003,158
Dobbs Ferry, NY, Union Free School District,
4.25% due 4/17/00 2,500 2,501,573
East Moriches, NY, Union Free School
District, TANs,
3.80% due 6/23/00 4,500 4,504,736
Elmont, NY, Union Free School District, TANs,
4.00% due 6/29/00 2,000 2,002,850
Fallsburg, NY, Central School District,
BANs,
3.50% due 4/27/00 8,350 8,353,524
Fayetteville Manlius, NY,
Central School District,
TANs,
4.00% due 6/21/00 5,100 5,109,801
Hempstead, NY, BANs,
4.25% due 5/09/00 470 470,369
Jericho, NY, Union Free
School District, TANs,
3.75% due 6/28/00 1,000 1,000,942
Kenmore Tonawanda, NY, Union Free
School District, BANs,
3.30% due 5/04/00 3,195 3,195,539
Lawrence, NY, Union Free
School District,
4.00% due 6/29/00 5,000 5,004,782
Levittown, NY, Union Free
School District,
TANs,
3.80% due 6/21/00 13,000 13,013,437
Livingston County, NY, BANs,
3.25% due 3/04/00 4,040 4,040,083
Longwood, NY, Central School District, TANs,
4.00% due 6/30/00 5,000 5,006,373
Monroe Woodbury, NY, Central School
District, BANs,
3.50% due 5/26/00 2,589 2,589,681
Norwich, NY, BANs,
3.50% due 3/30/00 3,579 3,579,822
5
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
REVENUE, TAX, BOND AND TAX REVENUE
ANTICIPATION NOTES AND GENERAL OBLIGATION
BONDS AND NOTES -- (CONT'D)
- --------------------------------------------------------------------------------
Palmyra Macedon, NY,
Central School District,
BANs,
3.50% due 4/20/00 $ 3,265 $ 3,266,597
Patchogue-Medford, NY,
Union Free School
District, TANs,
4.25% due 6/28/00 8,200 8,215,558
Plainview-Old Bethpage, NY,
Central School District,
TANs,
4.00% due 6/30/00 10,000 10,014,877
Poughkeepsie, NY, City
School District, TANs,
4.00% due 6/30/00 4,900 4,906,256
Puerto Rico Municipal Finance Agency,
5.00% due 8/01/00 5,000 5,024,171
Rochester, NY, BANs,
3.50% due 3/08/00 10,000 10,000,984
Rockland County, NY,
BANs,
3.25% due 3/03/00 6,000 6,000,111
Rye, NY, City School District, G.O.,
5.13% due 8/15/00 525 528,550
Scotia Glenville, NY, Central
School District, BANs,
4.00% due 7/14/00 1,750 1,751,863
South Country, NY, Central
School District, TANs,
3.75% due 6/29/00 10,000 10,007,902
South Country, NY,
Central School District,
TANs,
4.25% due 6/29/00 4,000 4,009,495
Southern Cayuga, NY, Central
School District, BANs,
3.50% due 5/25/00 9,000 9,005,246
Syracuse NY, RANs,
4.25% due 6/30/00 7,000 7,014,853
Taconic Hills, NY, Central
School District, G.O.,
4.25% due 6/15/00 650 651,829
Ulster County, NY, BANs,
3.50% due 5/05/00 3,563 3,564,460
Valley Stream, NY, Central
School District, TANs,
4.00% due 6/30/00 7,000 7,010,046
Vestal, NY, Central
School District, BANs,
3.75% due 6/22/00 $5,267 $ 5,274,563
-----------
203,018,486
-----------
ANNUAL, SEMI-ANNUAL AND QUARTERLY
TENDER REVENUE BONDS
AND NOTES (PUTS) -- 8.2%
- ------------------------------------------------------------------------------
Dutchess County, NY,
4.50% due 6/15/00 1,250 1,252,216
Huntington, NY,
4.75% due 4/15/00 1,145 1,147,269
Metropolitan Transit Authority, NY,
7.75% due 7/01/00 1,420 1,460,891
Metropolitan Transit Authority, NY,
7.88% due 7/01/00 2,500 2,568,640
Municipal Assistance Corp., NY,
4.75% due 7/01/00 400 400,907
Municipal Assistance Corp., NY,
5.00% due 7/01/00 6,920 6,948,592
Municipal Assistance Corp., NY,
5.25% due 7/01/00 4,710 4,732,917
Municipal Assistance Corp., NY,
5.50% due 7/01/00 5,785 5,819,814
Municipal Security Trust Certificates,
3.92% due 9/07/00 20,000 20,000,000
New York City, NY,
7.50% due 3/15/00 505 505,806
New York City, NY,
8.00% due 3/15/00 840 854,060
New York City, NY,
6.10% due 8/01/00 1,080 1,090,116
New York State Dormitory
Authority Revenue,
7.25% due 5/15/00 490 502,925
New York State Dormitory
Authority Revenue,
7.25% due 5/15/00 1,065 1,095,010
New York State Dormitory
Authority Revenue,
7.25% due 5/15/00 1,000 1,026,877
New York State Dormitory
Authority Revenue,
7.70% due 5/15/00 7,305 7,515,156
New York State Dormitory
Authority Revenue,
3.50% due 7/01/00 1,000 995,114
6
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
ANNUAL, SEMI-ANNUAL AND QUARTERLY TENDER
REVENUE BONDS AND NOTES (PUTS) -- (CONT'D)
- --------------------------------------------------------------------------------
New York State Dormitory Authority Revenue,
4.00% due 7/01/00 $360 $ 360,761
New York State Dormitory Authority Revenue,
7.63% due 7/01/00 2,700 2,787,174
New York State Dormitory Authority Revenue,
7.70% due 7/01/00 500 517,212
New York State Dormitory Authority Revenue,
7.88% due 7/01/00 3,500 3,615,658
New York State Environmental Facilities,
5.10% due 6/15/00 700 702,460
New York State Medicare
Facilities Agency,
7.875% due 8/15/00 5,000 5,192,379
New York State Power Authority,
4.00% due 9/01/00 20,675 20,675,000
Oneida County, NY,
4.50% due 4/15/00 255 255,413
Puerto Rico Commonwealth,
3.50% due 7/30/00 11,800 11,800,000
Suffolk County, NY,
4.50% due 4/15/00 625 625,675
Suffolk County, NY, Judicial Revenue,
4.50% due 4/15/00 2,285 2,287,468
White Plains, NY, BANs,
4.00% due 7/12/00 2,654 2,659,594
-----------
109,395,104
-----------
VARIABLE RATE DEMAND NOTES* -- 63.2%
- --------------------------------------------------------------------------------
ABN AMRO Munitops Certificates Trust,
due 7/04/07 5,000 5,000,000
Alaska State Housing Finance Corp.,
due 6/01/07 18,000 18,000,000
Babylon, NY, Industrial Development Agency, AMT,
due 7/01/14 600 600,000
Bluffton, IN, Economic Development Revenue, AMT,
due 9/01/05 1,285 1,285,000
California State,
due 10/01/29 1,300 1,300,000
Chicago, IL, Board of Education,
due 6/01/21 $2,000 $2,000,000
Clark County, NV, Airport Revenue,
due 7/01/28 1,085 1,085,000
Clipper Tax Exempt Trust, AMT,
due 3/01/16 8,255 8,255,000
Cohasset, MN, Revenue,
due 6/01/20 500 500,000
<PAGE>
Columbia County, NY,
Industrial Development Agency,
due 2/01/11 1,800 1,800,000
Connecticut State,
due 5/15/14 6,200 6,200,000
Connecticut State Housing Financial Authority,
due 11/15/27 195 195,000
Farmington, NM, Pollution Control Revenue,
due 5/01/24 1,000 1,000,000
Franklin County, NY, Industrial Development Agency,
due 2/01/03 2,500 2,500,000
Georgia Local Government
Certificates of Participation,
due 6/01/28 200 200,000
Glens Falls, NY, Industrial
Development Agency,
due 12/01/04 1,210 1,210,000
Gulf Coast, TX, Waste
Disposal Authority,
due 6/01/24 900 900,000
Hamilton County, TN,
Industrial Development Board,
due 3/01/15 5,900 5,900,000
Harris County, TX,
Industrial Development Corporation,
due 2/01/23 1,100 1,100,000
Hempstead Town, NY,
Industrial Development Agency,
due 12/01/10 7,000 7,000,000
Illinois Health Facilities
Authority Revenue,
due 12/01/15 300 300,000
7
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- --------------------------------------------------------------------------------
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 12/01/16 455 455,000
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 1,500 1,500,000
Jefferson Parish, LA,
Home Mortgage Authority,
due 12/01/26 1,000 1,000,000
Kansas State
Development Finance Authority Revenue,
due 11/15/28 450 450,000
Kenton County, KY,
Airport Board Revenue,
due 3/01/06 1,910 1,910,000
Koch Trust STS,
due 10/06/03 20,595 20,595,000
Laurens County, GA,
Development Authority, AMT,
due 5/01/17 1,000 1,000,000
Lewis County, NY, Industrial
Development Agency,
due 9/01/04 1,300 1,300,000
Lincoln County, WY, Pollution Control,
due 8/01/15 1,000 1,000,000
Lone Star, TX, Tax Airport Authority,
due 12/01/14 200 200,000
Long Island Power Authority, NY,
due 4/01/10 3,200 3,200,000
Long Island Power Authority, NY,
due 4/01/25 5,000 5,000,000
Long Island Power Authority, NY,
due 4/01/25 1,000 1,000,000
Long Island Power Authority, NY,
due 12/01/29 $15,145 $15,145,000
Long Island Power Authority, NY,
due 5/01/33 1,100 1,100,000
Long Island Power Authority, NY,
due 5/01/33 19,750 19,750,000
Long Island Power Authority, NY,
due 5/01/33 1,090 1,090,000
Louisiana Housing Finance A
Agency Mortgage Revenue,
due 6/01/27 1,460 1,460,000
Louisiana State Health Education
Authority Revenue,
due 10/01/17 1,400 1,400,000
Lower Neches Valley Authority, TX,
due 4/01/29 1,700 1,700,000
Macon, GA Trust Receipts,
due 3/03/07 47,490 47,490,000
Macon, GA Trust Receipts, AMT,
due 2/05/30 1,250 1,250,000
Macon, GA Trust Receipts, AMT,
due 12/05/30 8,500 8,500,000
Marion, IN, Revenue,
due 11/01/14 2,500 2,500,000
Massachusetts State Housing Finance Authority, AMT,
due 7/01/19 640 640,000
Mercer County,WV, Industrial Development Revenue,
due 5/01/01 1,000 1,000,000
Metropolitan Pier and Exposition Authority, IL,
due 12/15/19 870 870,000
Metropolitan Transit Authority, NY,
due 7/01/23 10,000 10,000,000
Mississippi Single Family Home Corp., AMT,
due 6/01/28 695 695,000
Montgomery County, MD, Housing Opportunities,
due 9/01/29 2,700 2,700,000
8
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- --------------------------------------------------------------------------------
Moorhead, MN, Solid Waste Disposal, AMT,
due 4/01/12 $2,500 $ 2,500,000
Morgan County, UT, Solid Waste,
due 8/01/31 200 200,000
Municipal Security Trust Certificates,
due 1/01/03 10,000 10,000,000
New Hanover County, NC,
due 3/01/13 2,250 2,250,000
New Rochelle, NY, Industrial Development Agency,
due 12/01/05 5,500 5,500,000
New York City, NY,
due 8/01/09 2,100 2,100,000
New York City, NY,
due 8/15/09 500 500,000
New York City, NY,
due 8/15/11 1,000 1,000,000
New York City, NY,
due 8/01/15 1,700 1,700,000
New York City, NY,
due 2/15/16 2,800 2,800,000
New York City, NY,
due 8/01/16 1,000 1,000,000
New York City, NY,
due 6/01/17 7,175 7,175,000
New York City, NY,
due 8/01/17 1,500 1,500,000
New York City, NY,
due 8/01/19 1,400 1,400,000
New York City, NY,
due 8/01/19 1,000 1,000,000
New York City, NY,
due 2/01/20 1,300 1,300,000
New York City, NY,
due 8/01/20 4,800 4,800,000
New York City, NY,
due 8/01/20 3,000 3,000,000
New York City, NY,
due 8/01/21 4,660 4,660,000
New York City, NY,
due 8/01/21 4,900 4,900,000
New York City, NY,
due 8/01/21 6,000 6,000,000
New York City, NY,
due 6/01/22 2,000 2,000,000
New York City, NY,
due 8/01/22 800 800,000
New York City, NY,
due 8/15/22 1,000 1,000,000
New York City, NY,
due 8/01/23 $4,600 $ 4,600,000
New York City, NY,
due 8/15/24 3,010 3,010,000
New York City, NY,
due 2/15/26 5,100 5,100,000
New York City, NY,
Cultural Affairs (Carnegie Hall),
due 12/01/10 1,945 1,945,000
New York City, NY,
Cultural Affairs (Carnegie Hall),
due 12/01/15 2,000 2,000,000
New York City, NY,
Cultural Affairs (Carnegie Hall),
due 7/01/29 1,100 1,100,000
New York City, NY, M
Municipal Water Finance,
due 6/15/24 8,000 8,000,000
New York City, NY, Health & Hospital Corp.,
due 2/15/26 4,835 4,835,000
New York City, NY, Health & Hospital Corp.,
due 2/15/26 5,200 5,200,000
New York City, NY, Housing Development,
due 1/15/19 500 500,000
New York City, NY, Housing Development,
due 1/01/23 2,700 2,700,000
New York City, NY, Housing Development,
due 3/15/25 900 900,000
New York City, NY, Housing Development,
due 10/15/28 1,800 1,800,000
New York City, NY, Housing Development, AMT,
due 11/15/28 25,000 25,000,000
New York City, NY, Housing Development,
due 4/15/29 7,000 7,000,000
New York City, NY, Housing Development,
due 7/01/31 4,900 4,900,000
New York City, NY, Housing Development, AMT,
due 8/01/31 2,500 2,500,000
New York City, NY, Industrial
Development Agency,
due 12/01/01 1,000 1,000,000
9
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- --------------------------------------------------------------------------------
New York City, NY,
Industrial Development Agency,
due 6/30/14 $1,700 $ 1,700,000
New York City, NY,
Industrial Development Agency, AMT,
due 12/01/17 7,300 7,300,000
New York City, NY,
Industrial Development Agency, AMT,
due 6/01/22 1,160 1,160,000
New York City, NY,
Transitional Finance Authority Revenue,
due 11/01/08 3,995 3,995,000
New York City, NY,
Transitional Finance Authority Revenue,
due 8/15/13 5,885 5,885,000
New York City, NY,
Transitional Finance Authority Revenue,
due 11/15/15 3,475 3,475,000
New York City, NY,
Transitional Finance Authority Revenue,
due 11/15/21 14,000 14,000,000
New York City, NY,
Transitional Finance Authority Revenue,
due 11/01/26 2,100 2,100,000
New York City, NY,
Transitional Finance Authority Revenue,
due 11/01/27 3,600 3,600,000
New York City, NY,
Transitional Finance Authority Revenue,
due 11/15/27 13,200 13,200,000
New York City, NY,
Transitional Finance
Authority Revenue,
due 5/01/28 800 800,000
New York State
Dormitory Authority Lease,
due 1/15/23 5,000 5,000,000
New York State Dormitory
Authority Revenue,
due 1/01/06 3,895 3,895,000
New York State Dormitory
Authority Revenue,
due 1/01/06 3,945 3,945,000
New York State Dormitory
Authority Revenue,
due 5/15/15 $7,495 $ 7,495,000
New York State
Dormitory Authority Revenue,
due 7/01/19 1,000 1,000,000
New York State
Dormitory Authority Revenue,
due 7/01/19 1,300 1,300,000
New York State
Dormitory Authority Revenue,
due 7/01/19 2,700 2,700,000
New York State
Dormitory Authority Revenue,
due 7/01/25 700 700,000
New York State
Dormitory Authority Revenue,
due 7/01/26 1,800 1,800,000
New York State Dormitor
Authority Revenue,
due 7/01/28 8,860 8,860,000
New York State Dormitory
Authority Revenue,
due 5/15/29 10,000 10,000,000
New York State Energy,
Research & Development,
due 12/01/25 1,900 1,900,000
New York State Energy,
Research & Development,
due 3/01/27 1,100 1,100,000
New York State Energy,
Research & Development,
due 6/01/29 5,250 5,250,000
New York State Energy,
Research & Development,
due 10/01/29 2,200 2,200,000
New York State Energy,
Research & Development,
due 5/01/34 23,000 23,000,000
New York State Energy, Research & Development,
due 5/01/34 2,500 2,500,000
New York State Housing Finance Authority, AMT,
due 11/01/28 16,000 16,000,000
New York State Housing Finance Authority,
due 11/01/30 10,000 10,000,000
10
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- ------------------------------------------------------------------------------
New York State Housing Finance Authority, AMT,
due 11/01/32 $2,700 $ 2,700,000
New York State Job Development Authority,
due 3/01/00 1,520 1,520,000
New York State Job Development Authority, AMT,
due 3/01/03 6,575 6,575,000
New York State Job Development Authority,
due 3/01/03 3,300 3,300,000
New York State Job Development Authority,
due 3/01/07 4,300 4,300,000
New York State Local Government Assistance Corp.,
due 4/01/19 500 500,000
New York State Local Government Assistance Corp.,
due 4/01/22 47,410 47,410,000
New York State Local Government Assistance Corp.,
due 4/01/25 5,400 5,400,000
New York State Medicare Facilities Agency,
due 11/01/08 2,500 2,500,000
New York State Medicare Facilities Agency,
due 8/15/14 6,640 6,640,000
New York State Medicare
Facilities Agency,
due 2/05/29 5,625 5,625,000
New York State Thruway Authority,
due 4/01/10 2,700 2,700,000
New York State Thruway Authority,
due 1/01/27 14,800 14,800,000
New York State Thruway Authority,
due 7/01/27 5,000 5,000,000
New York State Thruway Authority,
due 10/01/30 10,000 10,000,000
North Carolina Educational Facilities Finance,
due 3/01/19 5,000 5,000,000
North Carolina Medical Care Community
Hospital Revenue,
due 10/01/20 $ 100 $ 100,000
Onondaga County, NY, Industrial
Development Agency,
due 12/01/07 490 490,000
Orange County, FL, Housing Finance Authority,
due 2/01/04 575 575,000
Orange County, FL, Housing Finance Authority,
due 6/01/25 2,250 2,250,000
Philadelphia, PA, Industrial Development Authority,
due 5/01/14 2,300 2,300,000
Port Authority of New York and New Jersey,
Special Obligation,
due 6/01/20 1,400 1,400,000
Puerto Rico Commonwealth,
due 12/01/15 7,200 7,200,000
Puerto Rico Commonwealth,
due 7/01/20 6,455 6,455,000
Puerto Rico Commonwealth,
due 7/01/20 3,000 3,000,000
Puerto Rico Commonwealth,
due 7/01/24 4,745 4,745,000
Puerto Rico Commonwealth
Highway Transportation,
due 7/01/18 3,210 3,210,000
Puerto Rico Commonwealth
Highway Transportation,
due 7/01/28 800 800,000
Puerto Rico Commonwealth Highway
Transportation,
due 7/01/28 1,870 1,870,000
Puerto Rico Commonwealth Infrastructure,
due 7/01/28 13,500 13,500,000
11
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- ------------------------------------------------------------------------------
Puerto Rico Commonwealth Infrastructure,
due 7/01/28 $3,920 $ 3,920,000
Puerto Rico Electric Power Authority,
due 1/01/12 2,180 2,180,000
Puerto Rico Electric Power Authority,
due 7/01/22 15,000 15,000,000
Puerto Rico Electric Power Authority,
due 7/01/23 1,000 1,000,000
Puerto Rico Industrial Tourist Educational Revenue,
due 10/01/20 2,300 2,300,000
Puerto Rico Public Finance Corp.,
due 6/01/12 5,900 5,900,000
Puerto Rico Public Finance Corp.,
due 6/01/24 13,410 13,410,000
Puerto Rico Public Buildings Authority,
due 1/01/25 3,500 3,500,000
Puerto Rico Public Buildings Authority,
due 7/01/21 9,380 9,380,000
Puerto Rico Public Buildings Authority,
due 7/01/25 2,830 2,830,000
Puttable Floating Option, Tax Exempt,
due 10/11/30 505 505,000
Puttable Floating Option, Tax Exempt,
due 12/05/30 15,590 15,590,000
Red Bay, AL, Industrial
Development Revenue Board,
due 11/01/10 1,900 1,900,000
Rutherford County, TN,
Industrial Development, AMT,
due 6/01/03 1,750 1,750,000
Saint Charles Parish, LA, Pollution Control,
due 3/01/24 1,325 1,325,000
Schenectady County, NY, Industrial Development,
due 6/01/09 1,730 1,730,000
Seveir County, TN, Public Building Authority,
due 6/01/09 $ 465 $ 465,000
Seveir County, TN, Public Building Authority,
due 6/01/08 1,425 1,425,000
Seveir County, TN, Public Building Authority,
due 6/01/17 5,000 5,000,000
Seveir County, TN, Public Building Authority,
due 6/01/19 3,000 3,000,000
Seveir County, TN, Public Building Authority,
due 6/01/27 2,500 2,500,000
South Carolina Jobs Economic Development, AMT,
due 11/01/10 2,320 2,320,000
South Carolina Jobs Economic Development, AMT,
due 12/01/12 475 475,000
South Carolina Jobs Economic Development, AMT,
due 6/01/15 1,000 1,000,000
Southeast, NY, Industrial Development Agency,
due 12/01/12 2,000 2,000,000
Tennessee Housing Development Agency,
due 7/01/04 7,000 7,000,000
Triborough Bridge and Tunnel Authority, NY,
due 1/01/12 6,240 6,240,000
Triborough Bridge and Tunnel Authority, NY,
due 1/01/16 2,400 2,400,000
University of Puerto Rico, University Revenue,
due 6/01/25 3,375 3,375,000
Walton County, GA, Industrial
Building Authority, AMT,
due 10/01/17 1,600 1,600,000
Washington State Housing Finance,
due 11/01/21 675 675,000
Washington State Nonprofit Housing,
due 1/01/27 3,000 3,000,000
12
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- ------------------------------------------------------------------------------
Wisconsin Housing and Economic Development, AMT,
due 9/01/17 $1,675 $ 1,675,000
Wisconsin State Health and Educational Facilities,
due 8/15/17 2,100 2,100,000
--------------
844,900,000
--------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 100.9% 1,349,449,590
OTHER ASSETS,
LESS LIABILITIES (0.9) (12,423,836)
--------------
NET ASSETS 100.0% $1,337,025,754
===== ==============
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
13
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (Unaudited)
================================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $1,349,449,590
Cash 350,068
Interest receivable 10,590,065
Receivable for shares of beneficial interest sold 1,117,384
- --------------------------------------------------------------------------------
Total assets 1,361,507,107
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 20,675,000
Dividends payable 2,032,854
Payable for shares of beneficial interest repurchased 1,010,871
Payable to affiliates:
Investment advisory fees (Note 3) 159,031
Shareholder servicing agents' fees (Note 4B) 265,311
Accrued expenses and other liabilities 338,286
- --------------------------------------------------------------------------------
Total liabilities 24,481,353
- --------------------------------------------------------------------------------
NET ASSETS for 1,337,056,248 shares of beneficial
interest outstanding $1,337,025,754
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $1,337,056,248
Accumulated net realized loss on investments (30,494)
- --------------------------------------------------------------------------------
Total $1,337,025,754
================================================================================
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
14
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (Unaudited)
================================================================================
INTEREST INCOME (Note 1B): $21,755,184
EXPENSES:
Administrative fees (Note 4A) $1,545,986
Shareholder Servicing Agents' fees (Note 4B) 1,545,986
Investment Advisory fees (Note 3) 1,236,789
Distribution fees (Note 5) 618,395
Custody and fund accounting fees 134,988
Registration fees 50,811
Legal fees 31,414
Trustees' fees 22,179
Audit fees 20,300
Shareholder reports 17,020
Transfer agent fees 8,046
Miscellaneous 8,824
- --------------------------------------------------------------------------------
Total expenses 5,240,738
Less aggregate amounts waived by Investment
Adviser, Administrator, and Distributor
(Notes 3, 4A, and 5) (1,214,652)
Less fees paid indirectly (Note 1E) (6,570)
- --------------------------------------------------------------------------------
Net expenses 4,019,516
- --------------------------------------------------------------------------------
Net investment income 17,735,668
NET REALIZED GAIN ON INVESTMENTS 13,620
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $17,749,288
================================================================================
See notes to financial statements
15
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(Unaudited) AUGUST 31, 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 17,735,668 $ 30,143,033
Net realized gain on investments 13,620 45,577
- -------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 17,749,288 30,188,610
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (17,735,668) (30,143,033)
- -------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST AT NET ASSET VALUE OF $1.00 PER
SHARE (Note 6):
Proceeds from sale of shares 698,812,771 1,161,019,287
Net asset value of shares issued
to shareholders
from reinvestment of dividends 6,217,409 11,517,849
Cost of shares repurchased (549,542,268) (1,085,790,455)
- -------------------------------------------------------------------------------
Net increase in net assets from
transactions in shares
of beneficial interest 155,487,912 86,746,681
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 155,501,532 86,792,258
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,181,524,222 1,094,731,964
- -------------------------------------------------------------------------------
End of period $1,337,025,754 $1,181,524,222
===============================================================================
See notes to financial statements
16
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 -----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
=======================================================================================================================
<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 0.01425 0.02572 0.02991 0.02949 0.02936 0.03136
Dividends from net
investment income (0.01425) (0,02572) (0.02991) (0.02949) (0.02936) (0.03136)
- -----------------------------------------------------------------------------------------------------------------------
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) $1,337,026 $1,181,524 $1,094,732 $976,959 $941,691 $767,129
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 2.87%* 2.56% 2.99% 2.95% 2.92% 3.15%
Total return 1.43%** 2.60% 3.03% 2.99% 2.98% 3.18%
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 $ 0.01334 $ 0.02391 $ 0.02791 $0.02739 $0.02725 $0.02917
RATIOS:
Expenses to average net assets 0.85%* 0.84% 0.85% 0.86% 0.86% 0.87%
Net investment income to
average net assets 2.67%* 2.38% 2.79% 2.74% 2.71% 2.93%
=======================================================================================================================
</TABLE>
* Annualized.
** Not Annualized.
See notes to financial statements
17
<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. ("CFBDS") 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.
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, 1999, the
Fund, for federal income tax purposes, had a capital loss carryover of $44,114,
all of which will expire on August 31, 2005. Such capital loss carryover will
reduce the Fund's taxable income arising from future net realized gain on
investment transactions, if any, to the extent permitted by the Internal Revenue
Code, and thus will reduce the amount of distributions to shareholders which
would otherwise be necessary to relieve the Fund of any liability for federal
income tax. Dividends paid by the Fund from net interest received on tax-exempt
money market instruments are not includable by shareholders as gross income for
federal income tax purposes because the Fund intends to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued after
August 7, 1986 may be considered a tax preference item to shareholders.
D. EXPENSES The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more funds in 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.
18
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
E. FEES PAID INDIRECTLY The Fund's custodian 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 $1,236,789
of which $554,720 was voluntarily waived for the six months ended February 29,
2000. 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 29, 2000, 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 $1,545,986 of which $355,964 was voluntarily
waived for the six months ended February 29, 2000. 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.
19
<PAGE>
CITIFUNDS NEW YORK TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $1,545,986 for the six months ended February 29, 2000.
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 $618,395 of
which $303,968 was voluntarily waived for the six months ended February 29,
2000. 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 29, 2000.
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 $1,497,704,023 and $1,323,810,500, respectively, for the
six months ended February 29, 2000.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 29, 2000, for federal income tax purposes, amounted
to $1,349,449,590.
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 $75
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 29, 2000, the commitment fee allocated to the Fund was $1,728.
Since the line of credit was established, there have been no borrowings.
20
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
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
Linwood Downs*
* AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
** TRUSTEE EMERITUS
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
200 Berkeley Street, Boston, MA 02116
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds New
York Tax Free Reserves. It is authorized for distribution to prospective
investors only when preceded or accompanied by an effective prospectus of
CitiFunds New York Tax Free Reserves.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds New York Tax Free Reserves, which preceded or
accompanies this report) containing more complete information, including all
sales charges (if any), fees and expenses. Please read the prospectus carefully
before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)2000 Citicorp [RECYCLE LOGO] Printed on recycled paper CFS/NYR/200
<PAGE>
CITIFUNDS(SM)
- ----------------------
CALIFORNIA
TAX FREE RESERVES
SEMI-ANNUAL REPORT
FEBRUARY 29, 2000
CITIFUNDS
- --------------------------------------------------------------------------------
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:
Rising interest rates during the reporting period have benefited tax-exempt
money market investors, who earned higher yields while preserving capital. The
Federal Reserve Board (the "Fed") raised interest rates three times in 1999 and
most recently on February 2, 2000, for a total increase of 100 basis points. (A
basis point is .01% or one one-hundredth of a percent.) The Fed's actions were
implemented to forestall a reacceleration of inflation, a potential consequence
of the continued robust growth of the U.S. economy.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFunds California Tax Free Reserves with the goal of
achieving its investment objective: providing high levels of current income that
are exempt from federal and California personal income taxes, preservation of
capital and liquidity.
This report reviews the Fund's investment activities and performance during
the six months ended February 29, 2000, and provides a summary of Citibank's
perspective on and outlook for the tax-exempt money market securities
marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
March 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST SIX MONTHS HAVE BEEN GENERALLY REWARDING FOR MANY MONEY MARKET
INVESTORS. Yields on California tax-exempt money market securities ended the
six-month reporting period higher than where they began, reflecting the general
trend of higher short-term interest rates in a period of rising interest rates.
The economic conditions that led to higher rates during the reporting period
included strong U.S. economic growth, low inflation, robust consumer spending
and rising demand for U.S. exports. As a result of these factors, many investors
became concerned that unsustainable economic growth might cause inflationary
pressures to resurface. In an attempt to forestall a potential reacceleration of
inflation, the Fed raised interest rates in three 25-basis point increments
during 1999 and raised rates an additional 25 basis points on February 2, 2000.
DESPITE THE POSITIVE EFFECTS OF HIGHER INTEREST RATES, THE CALIFORNIA
TAX-EXEMPT MONEY MARKET'S RETURNS WERE CONSTRAINED BY ADVERSE CHANGES IN THE
BALANCE BETWEEN SUPPLY AND DEMAND. Issuance of short-term municipal securities
generally fell during the reporting period, as California's strong economy
enabled the Golden State and many of its municipalities to improve their fiscal
operations, reducing their need to borrow in order to cover short-term deficits.
At the same time, demand rose sharply from California residents seeking
competitive tax-exempt yields. Because of this imbalance between supply and
demand, tax-exempt money market yields tended to rise less than the yields of
taxable money market instruments.
THE FUND'S MANAGERS' STRATEGY DURING THE SIX-MONTH PERIOD WAS TO GRADUALLY
REDUCE THE FUND'S AVERAGE MATURITY, which was designed to enhance liquidity and
keep assets available for higher-yielding securities as they became available.
(Maturity is the date on which the principal amount of a note, draft, acceptance
bond or other debt instrument becomes due and payable.) As of February 29, 2000,
the Fund's average maturity was 45 days.
ADDITIONALLY, THE FUND'S MANAGERS ACTIVELY MANAGED THE MIX OF MONEY MARKET
INSTRUMENTS WITHIN THE FUND'S PORTFOLIO. A relative shortage of municipal notes
made it more difficult to find high-yielding opportunities in high-quality,
highly liquid instruments, especially toward the end of 1999. Even Variable Rate
Demand Notes (VRDNs), which are short-term instruments that are securitized and
issued by investment banks, were in relatively short supply.
Nonetheless, at the end of 1999, daily and weekly VRDNs comprised about 68% of
the Fund's portfolio. This highly liquid asset mix was designed to protect the
Fund from potential Y2K-related problems that have not surfaced. By the end of
the reporting period, VRDNs comprised approximately 71% of the Fund's portfolio,
with the remainder allocated among fixed-rate municipal notes and tax-exempt
commercial paper of California issuers.
2
<PAGE>
Looking forward, the Fund's managers expect interest rates to remain near or
slightly above current levels if the Fed continues to move toward a more
restrictive monetary policy. However, THE MANAGERS BELIEVE THAT OVER THE LONG
TERM, INTEREST RATES MAY BEGIN TO DECLINE IF THE U.S. ECONOMY BEGINS TO SHOW
EVIDENCE THAT IT IS MODERATING. Accordingly, the Fund's managers are carefully
watching for opportunities to take advantage of changes in the interest rates,
including possibly extending the Fund's average maturity to lock in higher
yields in the near term.
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with high levels of current income exempt from both
federal and California personal income taxes*, preservation of capital and
liquidity.
INVESTMENT ADVISER DIVIDENDS
Citibank, N.A Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
March 10, 1992 Distributed annually, if any
NET ASSETS AS OF 2/29/00 BENCHMARKS**
$328.5 million o Lipper California Tax Exempt Money
Market Funds Average
o IBC Financial Data California Tax
Free Money Market Funds Average
*A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax adviser.
**The Lipper Funds Average and IBC Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ALL PERIODS ENDING FEBRUARY 29, 2000 SIX ONE FIVE MARCH 10, 1992
(Unaudited) MONTHS** YEAR YEARS* INCEPTION*
================================================================================
CitiFunds California Tax Free Reserves 1.32% 2.56% 2.94% 2.82%
Lipper California Tax Exempt Money Market
Funds Average 1.27% 2.52% 2.87% 2.67%+
IBC Financial Data California
Tax Free Money Market Funds Average 1.27% 2.51% 2.85% 2.66%+
* Average Annual Total Return
** Not Annualized
+ Since 2/29/92
7-DAY YIELDS
Annualized Current 2.51%
Effective 2.54%
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 FINANCIAL DATA CALIFORNIA TAX FREE MONEY MARKET
FUNDS AVERAGE
As illustrated, CitiFunds California Tax Free Reserves generally provided a
similar annualized seven-day yield to that of a comparable IBC Financial Data
Money Market Funds Average, as published in IBC Money Fund ReportTM, for the
one-year period.
[The figures below represent the chart in the printed piece]
3/2/99 2.24 2.17
2.16 2.06
2.35 2.26
2.37 2.28
2.32 2.26
2.32 2.26
2.22 2.04
2.34 2.35
2.53 2.63
2.74 2.88
2.72 2.77
2.63 2.66
2.55 2.59
6/1/99 2.49 2.52
2.35 2.3
2.39 2.31
2.51 2.47
2.68 2.75
2.58 2.57
2.28 2.06
2.27 2.15
2.37 2.24
2.39 2.32
2.31 2.22
2.4 2.36
2.41 2.37
8/31/99 2.42 2.4
2.33 2.28
2.3 2.21
2.59 2.39
2.7 2.72
2.76 2.71
2.44 2.35
2.48 2.41
2.53 2.47
2.62 2.61
2.59 2.59
2.77 2.75
2.91 2.84
11/30/99 2.96 2.91
2.83 2.7
2.54 2.52
2.81 2.77
3.38 3.18
3.78 3.57
2.58 2.41
2.23 2.16
2.27 2.27
2.38 2.32
2.2 2.11
2.34 2.34
2.42 2.18
2/29/00 2.49 2.28
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. 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.
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER-- 5.8%
- ------------------------------------------------------------------------
Government Development Bank of Puerto Rico,
3.70% due 4/06/00 $4,000 $4,000,000
Government Development Bank of Puerto Rico,
3.25% due 4/27/00 2,000 2,000,000
Government Development Bank of Puerto Rico,
3.10% due 5/04/00 2,190 2,190,000
Guam Power Authority Revenue,
3.30% due 3/10/00 3,600 3,600,000
Long Beach, CA, Harbor Authority,
7.15% due 5/15/00 2,000 2,015,421
San Francisco, CA, County Airports, Series A,
3.05% due 5/15/00 5,135 5,135,000
------------
18,940,421
------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS)-- 14.7%
- ------------------------------------------------------------------------
California Pollution Control Finance Authority,
3.80% due 11/15/00 2,100 2,100,000
California State Department of Water,
8.50% due 12/01/00 1,350 1,397,552
California State, AMT,
3.20% due 6/01/00 1,140 1,140,217
California State
10.50% due 10/01/00 3,000 3,118,756
Desert Hospital District, CA, Hospital Revenue,
8.10% due 7/01/00 4,035 4,176,650
Los Angeles County, CA, Correctional Facilities
6.50% due 9/01/00 4,000 4,135,840
Oakland, CA,
5.10% due 6/15/00 1,000 1,005,514
Pasadena, CA,
6.75% due 8/01/00 950 981,052
Pitney Bowes Credit Corp.,
3.80% due 7/12/00 8,289 8,289,157
Puerto Rico Commonwealth,
7.70% due 7/01/00 6,975 7,217,502
Puerto Rico Commonwealth,
3.50% due 7/30/00 3,000 3,000,000
Puerto Rico Municipal Finance Agency,
5.00% due 8/01/00 6,000 6,031,061
Sacramento County, CA, Municipal Utilities,
5.00% due 7/01/00 2,095 2,104,878
San Bernardino County, CA,
AMT, 5.16% due 6/01/00 1,850 1,858,896
San Diego, CA,
4.25% due 9/29/00 500 502,129
South Orange, CA, Public
Finance, 4.50%
due 8/15/0 1,290 1,294,919
------------
48,354,123
------------
BOND ANTICIPATION NOTES, TAX AND REVENUE
ANTICIPATION NOTES AND GENERAL OBLIGATION
BONDS AND NOTES-- 8.3%
- ------------------------------------------------------------------------
California Community College, TRANs,
4.00% due 6/30/00 2,500 2,507,293
California School Cash Reserves, TRANs,
4.00% due 7/03/00 5,000 5,014,782
California State, GO,
6.65% due 4/01/00 2,150 2,155,849
California Statewide Community Development,
TRANs,
4.00% due 6/30/00 4,000 4,010,502
Kern County, CA, TRANs,
4.00% due 6/30/00 1,200 1,200,047
Los Angeles County, CA, Unified School
District, TRANs,
4.00% due 6/30/00 2,000 2,005,576
Placer, CA, Unified High School District, TRANs,
4.13% due 10/01/00 1,000 1,002,692
Puerto Rico Commonwealth, Highway Authority,
7.20% due 7/01/01 1,000 1,031,016
San Bernardino, CA, Unified School
District, TANs,
4.25% due 12/07/00 3,000 3,013,380
San Bernardino County, CA, TRANs,
3.75% due 9/29/00 2,000 2,001,077
San Diego, CA, TRANs,
4.00% due 6/30/00 3,000 3,008,165
Turlock, CA, Public Financing Authority Sewer,
6.25% due 9/15/00 365 369,800
------------
27,320,179
------------
5
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES*-- 70.7%
- ------------------------------------------------------------------------
ABN -- Amro Municipal Trust Receipts,
due 7/05/06 $ 1,000 $ 1,000,000
ABN -- Amro Municipal Trust Receipts,
due 7/04/07 10,000 10,000,000
ABAG Financial Authority Nonprofit Corp.,
due 10/01/27 1,000 1,000,000
Alameda County, CA, Industrial Development
Authority, AMT, due 4/01/29 800 800,000
Anaheim, CA, Housing Authority, AMT,
due 11/15/28 1,500 1,500,000
Brazos River, TX, Authority,
AMT, due 4/01/30 100 100,000
California Educational Facility Authority
Revenue,
due 7/01/22 2,700 2,700,000
California Educational Facility Authority
Revenue,
due 11/01/29 3,000 3,000,000
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 Housing Finance Agency Revenue, AMT,
due 8/01/24 1,500 1,500,000
California Pollution Control Finance Authority,
due 12/01/12 400 400,000
California Pollution Control Finance Authority,
due 9/01/13 1,100 1,100,000
California Pollution Control Finance
Authority, AMT,
due 8/01/16 5,000 5,000,000
California Pollution Control Finance
Authority, AMT,
due 4/01/18 1,400 1,400,000
California Pollution Control Finance Authority,
due 11/01/26 800 800,000
California Pollution Control Finance
Authority, AMT,
due 10/01/31 3,000 3,000,000
California State,
due 12/01/23 1,200 1,200,000
California State,
due 10/01/29 4,000 4,000,000
California State, Economic Development, AMT,
due 6/01/13 1,500 1,500,000
California Statewide Community Development,
due 11/01/15 785 785,000
California Statewide Community Development,
due 12/01/15 3,100 3,100,000
California Statewide Community Development,
due 12/01/22 8,800 8,800,000
California Statewide Community Development,
due 6/01/24 4,080 4,080,000
California Statewide Community Development,
due 6/01/26 600 600,000
California Statewide Community Development,
due 10/01/26 1,700 1,700,000
California Statewide Community Development,
due 9/01/29 2,000 2,000,000
Carlsbad, CA, Multi-Family Housing Revenue,
due 6/01/11 400 400,000
Clarksville, TN, Public Building Authority,
due 6/01/29 1,400 1,400,000
Clipper Tax Exempt Trust, Certificates of
Participation, AMT,
due 3/01/15 3,505 3,505,000
Connecticut State, Housing Financial
Authority, AMT,
due 11/15/27 1,960 1,960,000
Contra Costa County, CA,
due 11/15/22 500 500,000
6
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- ------------------------------------------------------------------------
Covina, CA, Redevelopment Agency Revenue,
due 12/01/15 $ 200 $ 200,000
Cucamonga, CA, County Water District,
due 9/01/22 3,450 3,450,000
Golden Empire School Financial Authority,
due 8/01/29 6,000 6,000,000
Gordon County, GA, Development Authority,
due 9/01/17 1,000 1,000,000
Huntington Beach, CA,
due 6/15/20 3,000 3,000,000
Irvine Ranch, CA,
due 9/02/22 4,500 4,500,000
Irvine Ranch, CA, Water
District, due 9/02/20 2,800 2,800,000
Irvine Ranch, CA, Water
District, due 4/01/33 900 900,000
Kenton County, KY,
Revenue, due 3/01/06 1,000 1,000,000
Kentucky State Turnpike
Authority, due 7/01/03 285 285,000
Kern County, CA,
due 2/01/13 3,800 3,800,000
Kings River Conservation District of California,
due 1/01/20 1,000 1,014,234
Koch Trust States,
due 10/06/03 4,300 4,300,000
Long Beach, CA, Harbor
Authority, due 5/15/19 3,510 3,510,000
Los Angeles, CA, Multi-Family Revenue, AMT,
due 8/01/19 12,700 12,700,000
Los Angeles, CA, Regional
Airport, due 12/01/24 300 300,000
Los Angeles, CA,
Regional Airport,
due 12/01/25 400 400,000
Los Angeles, CA, Department of Water
and Power, due 10/15/39 3,000 3,000,000
Louisiana State, Health Education Authority
Revenue, due 10/01/17 2,000 2,000,000
Macon Trust Pooled, AMT,
due 12/05/30 4,445 4,445,000
Massachusetts State Industrial Financial
Agency, due 11/01/25 360 360,000
Metropolitan Pier and Exposition Authority
of Illinois,
due 12/15/19 625 625,000
Metropolitan Water District, SC, Waterworks
Revenue, due 7/01/28 3,300 3,300,000
Mississippi Home Corp.,
AMT, due 6/01/28 300 300,000
Missouri State Housing Development, AMT,
due 3/01/30 1,995 1,995,000
Morgan County, UT, Solid Waste, AMT,
due 8/01/31 700 700,000
Municipal Securities Trust Certificates, AMT,
due 11/01/06 8,055 8,055,000
National City, CA, Community Development , AMT,
due 4/01/39 500 500,000
New York Pooled Puttable
Trust due 10/01/30 1,590 1,590,000
New York State Local Government Assistant,
due 4/01/19 300 300,000
Newport Beach, CA, Revenue,
due 10/01/22 700 700,000
Newport Beach, CA, Revenue,
due 10/01/26 4,300 4,300,000
North Carolina Educational Facilities Finance,
due 9/01/26 200 200,000
Northern California Public Power Project
Authority,
due 7/01/28 5,000 5,000,000
Oakland, CA, Economic Development Revenue,
due 8/01/21 2,200 2,200,000
Orange County, CA,
due 11/01/09 2,500 2,500,000
Orange County, CA,
due 7/01/19 7,395 7,395,000
Pasadena, CA,
due 12/01/16 900 900,000
Pitney Bowes Credit Corp.,
due 10/01/01 4,322 4,322,413
Pittsburgh, CA, Mortgage Obligation,
due 12/30/31 2,400 2,400,000
7
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS (Continued) February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES*-- (CONT'D)
- ------------------------------------------------------------------------
Port Author, TX, Navagation
District, due 10/01/24 $ 700 $ 700,000
Puerto Rico Commonwealth,
due 7/01/20 500 500,000
Puerto Rico Commonwealth,
due 7/01/27 2,750 2,750,000
Puerto Rico Commonwealth, Highways &
Transportation
due 7/01/18 3,260 3,260,000
Puerto Rico Electric Power Authority,
due 7/01/22 1,900 1,900,000
Puerto Rico Public Finance Corp.,
due 6/01/12 815 815,000
Richmond, VA, Redevelopment and Housing
Authority,
due 11/01/29 100 100,000
Riverside County, CA, Certificates of
Participation,
due 9/01/14 500 500,000
Riverside County, CA, Certificates
of Participation,
due 12/01/15 200 200,000
Sacramento County, CA,
due 7/15/29 3,200 3,200,000
Saint Charles Parish, LA, Pollution,
due 3/01/24 1,000 1,000,000
Saline County, NE, Solid Waste Disposal, AMT,
due 10/01/16 1,500 1,500,000
San Diego, CA, Family Housing Revenue,
due 12/01/15 1,300 1,300,000
San Francisco, CA,
due 5/01/30 2,100 2,100,000
San Francisco, CA, County Airports, Series A,
due 5/01/29 1,675 1,675,000
San Jose, CA, Redevelopment Tax Allocation, AMT,
due 8/01/27 3,645 3,645,000
Santa Clara County, CA, Redevelopment
Tax Allocation,
due 6/01/23 3,300 3,300,000
Simi Valley, CA, Multi-family Housing,
due 7/01/23 2,400 2,400,000
Sevier County, TN, Public Building Authority,
due 6/01/09 410 410,000
<PAGE>
Sevier County, TN, Public Building Authority,
due 6/01/17 155 155,000
Sevier County, TN, Public Building Authority,
due 6/01/21 600 600,000
Stockton, Ca, Multifamily Housing,
due 9/01/18 1,900 1,900,000
University of California,
due 3/01/07 850 850,000
University of Puerto Rico Revenue,
due 6/01/25 1,100 1,100,000
Valley Health System, CA, Hospital Revenue,
due 5/15/25 2,395 2,395,000
Washington State Nonprofit Housing,
due 1/01/27 2,645 2,645,000
Westfield, IN, Industrial Development, AMT,
due 2/01/02 1,000 1,000,000
Westminster, CA, Redevelopment Tax Allocation,
due 8/01/27 2,860 2,860,000
Yolo County, CA, Multi-Family Revenue
due 11/01/27 11,7151 1,715,000
------------
232,151,647
------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 99.5% 326,766,370
OTHER ASSETS,
LESS LIABILITIES 0.5 1,735,484
----- ------------
NET ASSETS 100.0% $328,501,854
===== ============
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 CALIFORNIA TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (Unaudited)
========================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $326,766,370
Cash 79,552
Interest receivable 2,545,199
Receivable for shares of beneficial interest sold 16,000
- ------------------------------------------------------------------------
Total assets 329,407,121
- ------------------------------------------------------------------------
LIABILITIES:
Dividends payable 545,314
Payable for shares of beneficial interest repurchased 141,550
Payable to affiliates:
Investment Advisory fees (Note 3) 31,822
Shareholder Servicing Agents' fees (Note 4B) 66,011
Accrued expenses and other liabilities 120,570
- ------------------------------------------------------------------------
Total liabilities 905,267
- ------------------------------------------------------------------------
NET ASSETS for 328,500,146 shares of beneficial
interest outstanding $328,501,854
========================================================================
NET ASSETS CONSIST OF:
Paid-in capital $328,500,146
Accumulated net realized gain on investments 1,708
- ------------------------------------------------------------------------
Total $328,501,854
========================================================================
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 29, 2000 (Unaudited)
========================================================================
INTEREST INCOME (Note 1B): $5,340,355
EXPENSES
Administrative fees (Note 4A) $ 407,296
Shareholder Servicing Agents' fees (Note 4B) 407,296
Investment Advisory fees (Note 3) 325,837
Distribution fees (Note 5) 162,918
Custody and fund accounting fees 47,589
Legal fees 22,301
Audit fees 20,300
Shareholder reports 11,901
Transfer agent fees 9,000
Trustees' fees 7,800
Registration fees 6,176
Miscellaneous 3,775
- ------------------------------------------------------------------------
Total expenses 1,432,189
Less aggregate amounts waived by Investment
Adviser, Administrator, and Distributor
(Notes 3, 4A and 5) (365,800)
Less fees paid indirectly (Note 1E) (5,611)
- ------------------------------------------------------------------------
Net expenses 1,060,778
- ------------------------------------------------------------------------
Net investment income 4,279,577
NET REALIZED GAIN ON INVESTMENTS 1,708
- ------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,281,285
========================================================================
See notes to financial statements
10
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(Unaudited) AUGUST 31, 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 4,279,577 $ 7,594,166
Net realized gain on investments 1,708 17,377
- --------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 4,281,285 7,611,543
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (4,279,577) (7,594,166)
Net realized gain (7,413) --
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (4,286,990) (7,594,166)
- --------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 6):
Proceeds from sale of shares 263,684,705 515,988,320
Net asset value of shares issued to
shareholders from reinvestment of dividends 492,673 1,049,146
Cost of shares repurchased (241,703,280) (496,649,450)
- --------------------------------------------------------------------------------
Net increase in net assets from transactions
in shares of beneficial interest 22,474,098 20,388,016
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 22,468,393 20,405,393
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 306,033,461 285,628,068
- --------------------------------------------------------------------------------
End of period $328,501,854 $ 306,033,461
================================================================================
See notes to financial statements
11
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 ---------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
===============================================================================================
<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 0.01308 0.02473 0.02928 0.02899 0.03089 0.03434
Less dividends from net
investment income (0.01308) (0.02473) (0.02928) (0.02899) (0.03089) (0.03434)
- -----------------------------------------------------------------------------------------------
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) $328,502 $306,033 $285,628 $207,345 $150,557 $51,832
Ratio of expenses to average
net assets 0.65%* 0.65% 0.65% 0.65% 0.42% 0.30%
Ratio of net investment income
to average net assets 2.63%* 2.47% 2.92% 2.91% 3.05% 3.43%
Total return 1.32%** 2.50% 2.97% 2.94% 3.13% 3.49%
<FN>
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:
</FN>
Net investment income
per share $0.01195 $0.02243 $0.02687 $0.02630 $0.02481 $0.02513
RATIOS:
Expenses to average net assets 0.88%* 0.88% 0.90% 0.92% 1.01% 1.21%
Net investment income to
average net assets 2.40%* 2.24% 2.67% 2.64% 2.45% 2.51%
===============================================================================================
</TABLE>
* Annualized
** Not Annualized
See notes to financial statements
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") 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.
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.
Dividends paid by the Fund from net interest received on tax-exempt money
market instruments are not includable by shareholders as gross income for
federal income tax purposes because the Fund intends to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued after
August 7, 1986, may be considered a tax preference item to shareholders.
D. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more Funds in a series are allocated in proportion to the
average net assets of each fund, except when allocations of direct expenses to
each fund can otherwise be made fairly. Expenses directly attributable to a fund
are charged to that fund.
E. Fees Paid Indirectly The Fund's custodian 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.
13
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $325,837 of
which $121,774 was voluntarily waived for the six months ended February 29,
2000. 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 29, 2000, 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 $407,296 of which $121,662 was
voluntarily waived for the six months ended February 29, 2000. 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
14
<PAGE>
CITIFUNDS CALIFORNIA TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 $407,296 for the six months ended February 29,
2000.
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 $162,918 of
which $122,364 was voluntarily waived for the six months ended February 29,
2000. 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 29, 2000.
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 $498,509,323 and $476,990,430 respectively, for the six
months ended February 29, 2000.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 29, 2000 for federal income tax purposes, amounted
to $326,766,370.
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 $75
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 29, 2000, the commitment fee allocated to the Fund was $458.
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
Linwood Downs*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
**TRUSTEE EMERITUS
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
200 Berkeley Street, Boston, MA 02116
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
- --------------------------------------------------------------------------------
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds
California Tax Free Reserves. It is authorized for distribution to prospective
investors only when preceded or accompanied by an effective prospectus of
CitiFunds California Tax Free Reserves.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds California Tax Free Reserves, which preceded or
accompanies this report) containing more complete information, including all
sales charges (if any), fees and expenses. Please read the prospectus carefully
before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(c)2000Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFS/RCA/200
<PAGE>
================================================================================
C I T I F U N D S(SM)
================================================================================
CONNECTICUT C I T I F U N D S
TAX FREE
RESERVES
SEMI-ANNUAL REPORT
FEBRUARY 29, 2000
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
CITIFUNDS CONNECTICUT TAX FREE RESERVES
Letter to Our Shareholders 1
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 3
................................................................................
Fund Performance 4
................................................................................
Portfolio of Investments 5
................................................................................
Statement of Assets and Liabilities 8
................................................................................
Statement of Operations 9
................................................................................
Statement of Changes in Net Assets 10
................................................................................
Financial Highlights 11
................................................................................
Notes to Financial Statements 12
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
Rising interest rates during the reporting period have benefited tax-exempt
money market investors, who earned higher yields while preserving capital. The
Federal Reserve Board (the "Fed") raised interest rates three times in 1999 and
most recently on February 2, 2000 for a total increase of 100 basis points. (A
basis point is .01% or one one-hundredth of a percent.) The Fed's actions were
implemented to forestall a potential reacceleration of inflation, a potential
consequence of the continued robust growth of the U.S. economy.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFunds Connecticut Tax Free Reserves with the goal of
achieving its investment objective: providing high levels of current income that
are exempt from federal and Connecticut personal income taxes, preservation of
capital and liquidity.
This report reviews the Fund's investment activities and performance during
the six months ended February 29, 2000, and provides a summary of Citibank's
perspective on and outlook for the tax-exempt money market securities
marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
March 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST SIX MONTHS HAVE BEEN GENERALLY REWARDING FOR MANY MONEY MARKET
INVESTORS. Yields on Connecticut tax-exempt money market securities ended the
six-month reporting period higher than where they began, reflecting the general
trend of short-term interest rates in a period of rising interest rates.
The economic conditions that led to higher rates during the reporting period
included strong U.S. economic growth, low inflation, robust consumer spending
and rising demand for U.S. exports. As a result of these factors, many investors
became concerned that unsustainable economic growth might cause inflationary
pressures to resurface. In an attempt to forestall a potential reacceleration of
inflation, the Fed raised interest rates in three 25-basis point increments
during 1999 and raised them an additional 25 basis points on February 2, 2000.
DESPITE THE POSITIVE EFFECTS OF HIGHER INTEREST RATES, THE CONNECTICUT
TAX-EXEMPT MONEY MARKET'S RETURNS WERE CONSTRAINED BY ADVERSE CHANGES IN THE
BALANCE BETWEEN SUPPLY AND DEMAND. Issuance of short-term municipal securities
generally fell during the reporting period, as the strong U.S. economy enabled
Connecticut and many of its municipalities to improve their fiscal operations,
reducing their need to borrow in order to cover short-term deficits. At the same
time, demand rose from Connecticut residents seeking competitive tax-exempt
yields. Because of this imbalance between supply and demand, tax-exempt money
market yields tended to rise less than yields of taxable money market
instruments.
THE FUND'S MANAGERS' STRATEGY DURING THE SIX-MONTH PERIOD WAS TO GRADUALLY
REDUCE THE FUND'S AVERAGE MATURITY, which was designed to enhance liquidity and
keep assets available for higher-yielding securities as they became available.
(Maturity is the date on which the principal amount of a note, draft, acceptance
bond or other debt instrument becomes due and payable.) As of February 29, 2000,
the Fund's average maturity was 52 days.
ADDITIONALLY, THE MANAGERS ACTIVELY MANAGED THE MIX OF MONEY MARKET
INSTRUMENTS WITHIN THE PORTFOLIO. A relative shortage of municipal notes made it
difficult for the Fund's managers to find high-yielding opportunities in
high-quality, highly liquid instruments, especially toward the end of 1999.
However, these kinds of opportunities arose occasionally when several
Connecticut towns issued Bond Anticipation Notes to finance short-term
operations.
Even Variable Rate Demand Notes (VRDNs), which are short-term instruments that
are securitized and issued by investment banks, were in relatively short supply.
Nonetheless, at the end of 1999, daily and weekly VRDNs comprised about 52% of
the Fund's portfolio. This highly liquid asset mix was designed to protect the
portfolio from potential Y2K-related problems that have not surfaced. By the end
of the reporting period, VRDNs comprised approximately 56% of the Fund's
portfolio, with the remainder allocated among fixed-rate municipal notes and
tax-exempt commercial paper of Connecticut issuers.
2
<PAGE>
Looking forward, the Fund's managers expect interest rates to remain near or
slightly above current levels if the Fed continues to move toward a more
restrictive monetary policy. However, THEY BELIEVE THAT OVER THE LONG TERM,
INTEREST RATES MAY BEGIN TO DECLINE IF THE U.S. ECONOMY IN 2000 BEGINS TO SHOW
EVIDENCE THAT IT IS MODERATING. Accordingly, the managers are carefully looking
for opportunities to take advantage of changes in interest rates, including
possibly extending the Fund's average maturity to lock in higher yields in the
near term.
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 2/29/00 BENCHMARKS**
$179.0 million o Lipper Connecticut Tax Exempt
Money Market Funds Average
o IBC Financial Data Connecticut Tax
Free Money Market Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax adviser.
**The Lipper Funds Average and IBC Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
DECEMBER 1,
ALL PERIODS ENDED FEBRUARY 29, 2000 SIX ONE FIVE 1993
(Unaudited) MONTHS** YEAR YEARS* INCEPTION*
================================================================================
CitiFunds Connecticut Tax Free Reserves 1.39% 2.67% 2.99% 2.96%
Lipper Connecticut Tax Exempt Money
Market Funds Average 1.36% 2.56% 2.81% 2.72%+
IBC Financial Data Connecticut
Tax Free Money Market Funds Average 1.35% 2.56% 2.81% 2.72%+
* Average Annual Total Return
** Not Annualized
+ Since 11/30/93
7-DAY YIELDS
Annualized Current 2.96%
Effective 3.01%
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 FINANCIAL DATA CONNECTICUT TAX FREE MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds Connecticut Tax Free Reserves provided a similar
annualized seven-day yield to that of a comparable IBC Financial Data Money
Market Funds Average, as published in IBC's Money Fund ReportTM, for the
one-year period.
The following represents a chart in the printed piece:
- -----------------------------------------------------
CitiFunds Connecticut IBC Financial Data Connecticut
Tax Free Reserves Tax Free Money Market Funds Average
--------------------- -----------------------------------
3/2/99 ...... 2.39 2.15
2.27 2.04
2.38 2.18
2.4 2.22
2.38 2.2
2.39 2.19
4/15/99 .... 2.3 2.08
2.41 2.25
2.59 2.46
2.76 2.79
2.73 2.66
2.49 2.56
5/25/99 .... 2.6 2.45
2.55 2.41
2.41 2.25
2.47 2.34
2.57 2.47
2.7 2.65
2.65 2.52
7/15/99 ..... 2.33 2.18
2.34 2.21
2.44 2.3
2.45 2.3
2.38 2.24
2.46 2.41
2.5 2.43
2.52 2.45
2.5 2.4
9/30/99 .... 2.5 2.42
2.59 2.56
2.79 2.77
2.82 2.75
2.6 2.51
2.6 2.54
2.65 2.57
2.7 2.62
2.7 2.6
11/15/99 .... 2.78 2.73
2.98 2.84
3 2.88
2.83 2.73
2.72 2.59
2.93 2.8
3.32 3.22
3.64 3.61
1/30/00 ..... 2.75 2.61
2.48 2.36
2.48 2.48
2.6 2.53
2.5 2.44
2.73 2.73
2.93 2.78
2/29/00 ..... 2.96 2.85
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. 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 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
TAX EXEMPT COMMERCIAL PAPER -- 2.8%
- --------------------------------------------------------------------------------
Government Development
Bank, Puerto Rico,
3.15% due 4/27/00 $2,000 $2,000,000
Government Development
Bank, Puerto Rico,
3.25% due 4/27/00 3,000 3,000,000
------------
5,000,000
------------
BOND, REVENUE, TAX, TAX AND REVENUE
ANTICIPATION NOTES AND GENERAL
OBLIGATION BONDS AND NOTES -- 23.9%
- -------------------------------------------------------------------------------
Branford, CT, BANs,
4.00% due 7/26/00 4,020 4,029,358
Connecticut State, G.O.,
4.00% due 3/15/00 500 500,053
Connecticut State, G.O.,
5.90% due 3/15/00 1,450 1,451,496
Connecticut State, G.O.,
4.50% due 5/15/00 250 250,650
Connecticut State, G.O.,
5.00% due 8/01/00 900 904,199
Connecticut State, G.O.,
3.90% due 8/17/00 5,000 5,000,000
Ellington, CT, G.O.,
6.00% due 3/15/00 355 355,382
Enfield, CT, BANs,
6.00% due 10/15/00 1,000 1,014,552
Glastonbury, CT, G.O.,
4.00% due 4/01/00 700 700,638
Hartford County, CT, G.O.,
4.00% due 8/01/00 1,000 1,002,029
North Haven, CT,
4.38% due 10/25/00 2,100 2,104,980
Old Saybrook, CT,
4.25% due 9/06/00 2,000 2,004,001
Regional School District
No. 7, CT, BANs,
3.50% due 3/16/00 3,639 3,639,436
Regional School District
No. 14, CT, BANs,
6.00% due 6/01/00 250 251,687
Regional School District
No. 16, CT, BANs,
4.00% due 4/07/00 4,000 4,001,966
Scotland, CT, BANs,
4.10% due 11/17/00 890 890,910
Southeastern Connecticut,
Water Authority, TRANs,
3.19% due 3/16/00 773 773,058
Stafford, CT, BANs,
4.38% due 8/03/00 3,720 3,724,986
Stamford, CT,
5.25% due 2/15/01 450 455,235
Tolland, CT, BANs,
3.50% due 6/09/00 667 667,019
Torrington, CT, BANs,
5.00% due 9/15/00 1,500 1,511,133
Torrington, CT, BANs,
4.30% due 10/15/00 985 987,964
Watertown, CT,
6.00% due 9/15/00 350 354,327
West Haven, CT,
4.50% due 7/18/00 3,930 3,941,097
Windsor Locks, CT, BANs,
4.25% due 1/18/01 2,350 2,355,968
------------
42,872,124
------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS) -- 18.7%
- --------------------------------------------------------------------------------
Connecticut State Health
and Educational Facilities,
3.20% due 4/05/00 2,435 2,435,000
Connecticut State Health
and Educational Facilities,
3.50% due 3/08/00 5,000 5,000,000
Connecticut State Health
and Educational Facilities,
7.10% due 7/01/00 6,300 6,491,062
Connecticut State Health
and Educational Facilities,
7.38% due 7/01/00 2,595 2,678,280
Connecticut State Housing
Finance Authority, AMT,
3.90% due 9/05/00 1,700 1,700,000
Connecticut State Housing
Finance Authority,
3.50% due 3/07/00 2,185 2,185,000
Connecticut State Special
Assessment Unemployment,
4.60% due 5/15/00 150 150,360
Connecticut State Special
Tax Obligation,
4.00% due 10/01/00 200 199,706
Connecticut State Special
Tax Obligation,
5.50% due 10/01/00 275 277,495
East Lyme, CT,
7.00% due 1/15/01 350 358,755
Farmington, CT,
6.50% due 9/15/00 400 405,756
Indiana Health Facility
Financing Authority,
4.05% due 3/31/00 900 900,000
5
<PAGE>
PORTFOLIO OF INVESTMENTS(Continued) February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS) -- (CONT'D)
- --------------------------------------------------------------------------------
Montville, CT,
6.00% due 6/15/00 $250 $251,523
New Britain, CT,
6.80% due 4/01/00 250 250,568
Oxford, CT,
6.50% due 8/01/00 140 141,452
Puerto Rico Commonwealth,
7.70% due 7/01/00 450 464,320
Puerto Rico Commonwealth,
3.50% due 7/30/00 3,400 3,400,000
Redding, CT,
6.50% due 10/15/00 660 671,399
Stamford, CT,
4.50% due 7/15/00 285 285,998
University, CT,
2.95% due 4/01/00 1,450 1,450,000
Virgin Islands Public
Finance Authority,
7.30% due 10/01/00 1,000 1,032,330
West Hartford, CT,
6.00% due 10/15/00 500 506,827
Westport, CT,
5.88% due 7/15/00 1,795 1,811,744
Westport, CT,
4.75% due 9/15/00 400 401,462
------------
33,449,037
------------
VARIABLE RATE DEMAND NOTES* -- 56.2%
- ------------------------------------------------------------------------
Alabama State Public School
and College,
due 11/01/1 31,895 1,895,000
Alaska State Housing
Finance Authority, AMT,
due 6/01/07 2,200 2,200,000
Beloit, KS, Industrial
Revenue, AMT,
due 12/01/16 2,900 2,900,000
Brazos River Authority,
AMT, due 4/01/30 300 300,000
Connecticut State,
due 8/01/14 5,000 5,000,000
Connecticut State Development
Authority Revenue, AMT,
due 6/01/13 3,800 3,800,000
Connecticut State Development
Authority Revenue, AMT,
due 6/01/18 1,060 1,060,000
Connecticut State
Development Authority
Revenue, AMT,
due 10/01/23 3,925 3,925,000
Connecticut State Health
and Educational Facilities,
due 7/01/13 1,425 1,425,000
Connecticut State Health
and Educational Facilities,
due 7/01/20 2,500 2,500,000
Connecticut State Health
and Educational Facilities,
due 7/01/24 4,500 4,500,000
Connecticut State Health
and Educational Facilities,
due 7/01/27 1,000 1,000,000
Connecticut State Health
and Educational Facilities,
due 7/01/27 1,950 1,950,000
Connecticut State Health
and Educational Facilities,
due 7/01/29 10,300 10,300,000
Connecticut State Housing
Finance Authority,
due 11/15/28 3,300 3,300,000
Connecticut State Special
Tax Obligation,
due 12/01/10 5,200 5,200,000
Dinwiddie County Virginia
Industrial
Developmental
Authority, AMT,
due 9/01/28 300 300,000
Eastern Connecticut
Resource Recovery
Authority, AMT,
due 1/01/14 4,995 4,995,000
Emmaus Pennsylvania
General Authority,
due 3/01/24 1,100 1,100,000
Fort Wayne Indiana
Hospital Authority,
due 1/01/16 500 500,000
Hartford, CT,
Redevelopment Agency,
due 6/01/20 3,000 3,000,000
Illinois Health Facilities
Authority Revenue,
due 12/01/15 800 800,000
Illinois Health Facilities
Authority Revenue,
due 7/01/25 1,300 1,300,000
6
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
PORTFOLIO OF INVESTMENTS February 29, 2000
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- (CONT'D)
- --------------------------------------------------------------------------------
Kenton County, Airport
Revenue, AMT,
due 3/01/15 $ 400 $ 400,000
Macon Trust Pooled Variable
Rate Certificates, AMT,
due 12/05/30 6,895 6,895,000
Maryland State Community
Development
Administration, AMT,
due 4/01/25 370 370,000
Morgan County, UT, Solid
Waste, AMT,
due 8/01/31 800 800,000
North Carolina Educational
Facilities,
due 9/01/26 100 100,000
Port Authority Jefferson
County,
due 10/01/24 1,000 1,000,000
Puerto Rico
Commonwealth,
due 7/01/20 1,600 1,600,000
Puerto Rico
Commonwealth,
due 7/01/23 1,250 1,250,000
Puerto Rico
Commonwealth,
due 7/01/24 3,000 3,000,000
Puerto Rico
Commonwealth,
due 7/01/28 900 900,000
Puerto Rico
Commonwealth Financing
Authority,
due 7/01/28 1,150 1,150,000
<PAGE>
Puerto Rico
Commonwealth
Infrastructure Authority,
due 7/01/28 2,500 2,500,000
Puerto Rico Electrical
Power Authority,
due 7/01/22 2,300 2,300,000
Puerto Rico Electrical
Power Authority,
due 7/01/23 4,000 4,000,000
Puerto Rico Public Building
Authority Revenue,
due 7/01/25 3,000 3,000,000
Puerto Rico Public Finance
Corp.,
due 6/01/24 4,000 4,000,000
Puerto Rico Public Finance
Corp.,
due 6/01/26 1,300 1,300,000
Puttable Floating Option
Trust Receipt, AMT,
due 5/12/30 960 960,000
Shelton, CT, Housing
Authority Revenue,
due 12/01/30 1,800 1,800,000
------------
100,575,000
------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 101.6% 181,896,161
------ ------------
OTHER ASSETS,
LESS LIABILITIES (1.6) (2,891,372)
------ ------------
NET ASSETS 100.0% $179,004,789
====== ============
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
7
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (Unaudited)
================================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $181,896,161
Cash 93,253
Interest receivable 1,363,644
Receivable for shares of beneficial interest sold 32,000
- --------------------------------------------------------------------------------
Total assets 183,385,058
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 3,724,985
Dividends payable 330,027
Payable for shares of beneficial interest repurchased 191,000
Payable to affiliates:
Investment Advisory fees (Note 3) 16,278
Shareholder Servicing Agents' fees (Note 4B) 34,481
Accrued expenses and other liabilities 83,498
- --------------------------------------------------------------------------------
Total liabilities 4,380,269
- --------------------------------------------------------------------------------
NET ASSETS for 179,009,318 shares of beneficial
interest outstanding $179,004,789
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $179,009,318
Accumulated net realized loss on investments (4,529)
- --------------------------------------------------------------------------------
Total $179,004,789
================================================================================
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
8
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $2,701,872
EXPENSES:
Administrative fees (Note 4A) $196,933
Shareholder Servicing Agents' fees (Note 4B) 196,933
Investment Advisory fees (Note 3) 157,547
Distribution fees (Note 5) 78,773
Custody and fund accounting fees 34,211
Audit fees 20,300
Legal fees 20,201
Transfer agent fees 7,000
Shareholder reports 6,360
Trustees' fees 5,015
Registration fees 3,223
Miscellaneous 4,146
- --------------------------------------------------------------------------------
Total expenses 730,642
Less aggregate amounts waived by
Investment Adviser, Administrator, and
Distributor (Notes 3, 4A and 5) (214,982)
Less fees paid indirectly (Note 1E) (3,482)
- --------------------------------------------------------------------------------
Net expenses 512,178
- --------------------------------------------------------------------------------
Net investment income 2,189,694
NET REALIZED GAIN ON INVESTMENTS 554
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,190,248
================================================================================
See notes to financial statements
9
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31,
(Unaudited) 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,189,694 $ 4,178,453
Net realized gain on investments 554 1,712
- -------------------------------------------------------------------------------
Net increase in net assets from operations 2,190,248 4,180,165
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,189,694) (4,178,453)
- -------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 6):
Proceeds from sale of shares 150,884,528 38,697,352
Net asset value of shares issued to shareholders
from reinvestment of dividends 309,367 587,434
Cost of shares repurchased (134,242,508) (233,785,159)
- --------------------------------------------------------------------------------
Net increase in net assets from
transactions in shares of beneficial interest 16,951,387 5,499,627
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 16,951,941 5,501,339
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 162,052,848 156,551,509
- --------------------------------------------------------------------------------
End of period $179,004,789 $162,052,848
================================================================================
See notes to financial statements
10
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 ---------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
=======================================================================================================================
<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 0.01386 0.02550 0.02971 0.02914 0.03135 0.03564
Less dividends from
net investment income (0.01386) (0.02550) (0.02971) (0.02914) (0.03135) 0.03564)
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value,
end of period $1.00000 $1.00000 $1.00000 $ 1.0000 $1.00000 $1.00000
=======================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $179,005 $162,053 $156,552 $169,322 $116,025 $ 46,556
Ratio of expenses to
average net assets (A) 0.65%* 0.65% 0.66% 0.65% 0.42% 0.22%
Ratio of expenses to
average net assets after
fees paid indirectly (A) 0.65%* 0.65% 0.65% 0.65% 0.42% 0.22%
Ratio of net investment income
to average net assets 2.77%* 2.54% 2.98% 2.92% 3.08% 3.60%
Total return 1.39%** 2.58% 3.01% 2.95% 3.18% 3.62%
Note: If Agents of the Fund had not voluntarily waived all or a portion of their
fees from the Fund for the period indicated and the Administrator had not
voluntarily assumed expenses for the periods before August 31, 1996, and the
expenses were not reduced for the fees paid indirectly for the years after
August 31, 1995, the ratios and net investment income per share would have been
as follows:
Net investment income
per share $0.01251 $0.02289 $0.02712 $ 0.0261 $0.02504 $0.02732
RATIOS:
Expenses to average net assets 0.92%* 0.91% 0.91% 0.95% 1.04% 1.06%
Net investment income to
average net assets 2.50%* 2.28% 2.72% 2.62% 2.46% 2.76%
=======================================================================================================================
</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
11
<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.
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, 1999, the
Fund, for federal income tax purposes, had a capital loss carryover of $5,083,
of which $2,291 will expire on August 31, 2004 and $2,792 will expire on August
31, 2005. Such capital loss carryover will reduce the Fund's taxable income
arising from future net realized gain on investment transactions, if any, to the
extent permitted by the Internal Revenue Code, and thus will reduce the amount
of distributions to shareholders which would otherwise be necessary to relieve
the Fund of any liability for federal income tax. Dividends paid by the Fund
from net interest received on tax-exempt money market instruments are not
includable by shareholders as gross income for federal income tax purposes
because the Fund intends to meet certain requirements of the Internal Revenue
Code applicable to regulated investment companies which will enable the Fund to
pay exempt-interest dividends. The portion of such interest, if any, earned on
private activity bonds issued after August 7, 1986, may be considered a tax
preference item to shareholders.
D. EXPENSES The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more Funds in a series are allocated in proportion to the
average net assets of each fund, except when allocations of direct expenses to
each fund can otherwise be made fairly. Expenses directly attributable to a fund
are charged to that fund.
12
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
E. FEES PAID INDIRECTLY The Fund's custodian 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 $157,547 of
which $71,571 was voluntarily waived for the six months ended February 29, 2000.
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 29, 2000, 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 $196,933, of which $71,734 was
voluntarily waived for the six months ended February 29, 2000. 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.
13
<PAGE>
CITIFUNDS CONNECTICUT TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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
$196,933 for the six months ended February 29, 2000.
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 $78,773 of
which $71,677 was voluntarily waived for the six months ended February 29, 2000.
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 29, 2000.
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 $306,962,119 and $285,881,000, respectively, for the six
months ended February 29, 2000.
8. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 29, 2000 for federal income tax purposes, amounted
to $181,896,161.
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 $75
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 29, 2000, the commitment fee allocated to the Fund was $215.
Since the line of credit was established there have been no borrowings.
14
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<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
Linwood Downs*
* AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
** TRUSTEE EMERITUS
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
200 Berkeley Street, Boston, MA 02116
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
CitiFunds Growth & Income Portfolio
CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
CitiFunds Small Cap Growth Portfolio
CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
CitiFunds International Growth & Income Portfolio
CitiFunds International Growth Portfolio
GROWTH WITH INCOME
CitiFunds Balanced Portfolio
BONDS
CitiFunds Short-Term U.S. Government Income Portfolio
CitiFunds Intermediate Income Portfolio
CitiFunds National Tax Free Income Portfolio
CitiFunds New York Tax Free Income Portfolio
CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
CitiFunds Cash Reserves
CitiFunds U.S. Treasury Reserves
CitiFunds Tax Free Reserves
CitiFunds New York Tax Free Reserves
CitiFunds California Tax Free Reserves
CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders of CitiFunds
Connecticut Tax Free Reserves. It is authorized for distribution to prospective
investors only when preceded or accompanied by an effective prospectus of
CitiFunds Connecticut Tax Free Reserves.
For more information about any of the CitiFunds listed above, ask for a
prospectus (except for CitiFunds Connecticut Tax Free Reserves, which preceded
or accompanies this report) containing more complete information, including all
sales charges (if any), fees and expenses. Please read the prospectus carefully
before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(c)2000 Citicorp [RECYCLE LOGO] Printed on recycled paper CFS/RCT/200
