<PAGE>
Semi-Annual Report o June 30, 1998
[LOGO]
New York Tax Free
Income Portfolio
[Graphic Omitted]
BONDS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
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<PAGE>
TABLE OF CONTENTS
CITIFUNDS NEW YORK TAX FREE INCOME PORTFOLIO
Letter to Our Shareholders 1
..............................................................................
Portfolio Environment and Outlook 2
..............................................................................
Fund Facts 4
..............................................................................
Portfolio Highlights 4
..............................................................................
Fund Performance 5
..............................................................................
Portfolio of Investments 6
..............................................................................
Statement of Assets and Liabilities 10
..............................................................................
Statement of Operations 11
..............................................................................
Statement of Changes in Net Assets 12
..............................................................................
Financial Highlights 13
..............................................................................
Notes to Financial Statements 14
..............................................................................
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
This semi-annual report covers the period from January 1, 1998, through June
30, 1998, for the CitiFundsSM New York Tax Free Income Portfolio. Inside, the
CitiFunds' investment manager, Citibank, N.A., discusses the market conditions
it faced, the strategies it employed and its outlook for the future.
Overall, the past six months were quite positive for the tax-exempt bond
market. Moderate economic growth, low inflation and an unchanged monetary
policy helped municipal bonds produce attractive total rates of return for the
six-month period. We are pleased to report that CitiFunds New York Tax Free
Income Portfolio participated in this market's gains.
Among the highlights of the reporting period, your fund has changed its name
to CitiFunds(SM) New York Tax Free Income Portfolio. In addition, as you have
probably heard, Citicorp recently announced its intention to merge with The
Travelers Group. The completion of the merger is subject to the satisfaction
of certain conditions. As necessary, we will provide you with information that
specifically affects the fund.
On behalf of the Board of Trustees, we want to thank you for your continued
participation and confidence in the CitiFunds family of funds.
/s/ Philip W. Coolidge
Philip W. Coolidge
President
July 16, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
DESPITE STRONGER-THAN-EXPECTED U.S. ECONOMIC GROWTH, inflation remained low
during the first six months of 1998. Even record-high employment levels and
robust consumer consumption failed to ignite inflationary pressures. In
addition, fears that economic growth was too strong were tempered by
widespread expectations that the financial crisis in Asia would soon constrain
growth. The potentially moderating effects of the Asian crisis apparently
convinced the Federal Reserve Board not to raise short-term interest rates.
This combination of economic influences produced excellent market conditions
for fixed-income securities, including both taxable and tax-exempt bonds.
However, the performance of the taxable bond market was generally stronger
than the municipal bond market over the past six months. That's primarily
because positive supply-and-demand influences in some sectors of the taxable
bond market did not apply to tax-exempt bonds. The federal government's
progress toward a balanced budget has reduced the government's need to finance
its operations by issuing U.S. Treasury securities. While the supply of U.S.
Treasury securities was shrinking, investor demand was growing, especially
from overseas investors, causing prices of those taxable securities to rise.
In contrast, the supply of tax-exempt securities grew over the past six
months while demand remained relatively steady. Municipalities took advantage
of the low interest-rate environment to finance a variety of new projects and
refinance existing ones. In fact, tax-exempt bond issuance during the first
six months of 1998 was more than 50% higher than in the first half of 1997.
When supply grows and investors have many bonds to choose from, issuers must
keep their yields relatively high to make their securities more attractive to
investors seeking high levels of tax-free income. As a result, prices of most
tax-exempt securities did not rise as much as comparable taxable securities.
The effects of the supply-and-demand imbalance were partially offset in New
York by the state's improving financial condition. Standard & Poor's, a major
bond rating agency, upgraded its credit rating for New York City from Baa1 to
A3 in response to the City's improving credit profile. New York State's credit
is also improving, as evidenced by the state's ability to place some of its
estimated $1 billion budget surplus in reserve.
THE PORTFOLIO SOUGHT TO MAINTAIN HIGH TAX-EXEMPT YIELDS COMMENSURATE WITH
ITS RISK PROFILE in this environment. Accordingly, we maintained a well
diversified portfolio containing tax-exempt securities with a variety of
maturities. Within that portfolio, we found the best values in bonds with
maturities of 10 to 15 years.
We allocated the portfolio's assets among New York's municipal bond issuers in
an attempt to maximize exposure to those tax-exempt securities providing the
best relative values. Early in the year, this led us to a relatively high
concentration of municipal bonds issued by New York City. New York City bonds
were particularly attractive because they offered relatively high yields at a
time when the city's credit quality was rising. Toward the end of the six-month
period, we reduced our position in New York City bonds to lock in profits and
take advantage of new opportu nities. For example, we invested in bonds issued
by such agencies as the Metropolitan Transit Authority (MTA) and New York State
Thruway Authority.
WE BELIEVE THAT NEW YORK MUNICIPAL BONDS REPRESENT ATTRACTIVE VALUES under
current market conditions, and we are optimistic about the market's prospects
over the second half of 1998. As of June 30, the average AAA-rated or Aaa-
rated 30-year New York tax-exempt bond provided about 87% of the yield of 30-
year U.S. Treasury bonds. Historically, that relationship averages around 83%.
We expect New York's municipal bondholders to benefit from potential capital
appreciation when tax-exempt bond yields return to their historical
relationship with taxable bond yields. This may occur during the second half
of 1998 if the supply of new tax-exempt securities moderates to more normal
levels.
In addition, we believe that U.S. economic growth will slow during the
second half of this year in response to falling demand for goods and services
from Asia. Slower economic growth usually means low inflation, which is good
for bonds. Therefore, we expect an economic slow-down to help municipal bond
prices move higher over the next six months.
Of course, no matter what the future brings, we will continue to monitor the
economy and bond markets, making every effort to generate high levels of
current income exempt from federal, New York State and New York City personal
income taxes and to preserve the value of our shareholders' investment.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To generate high levels of current income exempt from federal,
New York State and New York City personal income taxes+ and to
preserve the value of its shareholders' investment through
investing in debt obligations consisting primarily of municipal
bonds and notes.
INVESTMENT MANAGER DIVIDENDS
Citibank, N.A. Paid monthly, if any
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
September 8, 1986 Distributed semi-annually, if
any
NET ASSETS AS OF 06/30/98 BENCHMARKS
$205.6 million o Lipper New York State
Municipal Bond Funds Average
o Lehman Municipal Bond Index
+ A portion of the income may be subject to the Federal Alternative Minimum
Tax.
Consult your personal tax advisor.
PORTFOLIO HIGHLIGHTS
PORTFOLIO DIVERSIFICATION AS OF JUNE 30, 1998 (Unaudited)
Transportation Revenue 24%
State Agencies 18%
General Obligation Bonds 12%
Power Revenue 10%
Housing Revenue 9%
Healthcare 7%
*Short-Term 6%
Water/Sewer Revenue 5%
Other Revenue 5%
Sales Tax Revenue 4%
*Includes cash and net other assets.
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
SIX ONE FIVE TEN
MONTHS** YEAR YEARS* YEARS*
ALL PERIODS ENDING JUNE 30, 1998 (Unaudited)
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<S> <C> <C> <C> <C>
CitiFunds New York Tax Free Income
Portfolio 2.86% 8.84% 5.74% 7.85%
Lipper New York State Municipal Bond
Funds Average 2.37% 8.38% 5.44% 7.80%
Lehman Municipal Bond Index 2.69% 8.66% 6.46% 8.30%
* Average Annual Total Return
** Not Annualized
30-Day SEC Yield 4.20%
Income Dividends Per Share $0.273
</TABLE>
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund
made ten years ago (June 1988)
would have grown to $21,292 (as
of 6/30/98). The graph shows how
this compares to our benchmark
over the same period.
Lipper New York
CitiFunds State Municipal Lehman
New York Tax Bond Fund Municipal
Date Free Income Fund Average Bond Bond Index
---- ---------------- ---------------- ----------
6/30/88 $10,000 $10,000 $10,000
7/31/88 $10,057 $10,061 $10,065
8/31/88 $10,088 $10,097 $10,074
9/30/88 $10,294 $10,291 $10,256
10/31/88 $10,556 $10,519 $10,437
11/30/88 $10,429 $10,394 $10,342
12/31/88 $10,652 $10,553 $10,448
1/31/89 $10,785 $10,704 $10,664
2/28/89 $10,624 $10,610 $10,542
3/31/89 $10,660 $10,594 $10,517
4/30/89 $10,971 $10,864 $10,766
5/31/89 $11,229 $11,071 $10,990
6/30/89 $11,372 $11,217 $11,139
7/31/89 $11,520 $11,334 $11,291
8/31/89 $11,348 $11,223 $11,180
9/30/89 $11,213 $11,172 $11,147
10/31/89 $11,372 $11,268 $11,283
11/30/89 $11,575 $11,441 $11,481
12/31/89 $11,688 $11,533 $11,575
1/31/90 $11,560 $11,411 $11,520
2/28/90 $11,611 $11,508 $11,623
3/31/90 $11,614 $11,479 $11,627
4/30/90 $11,431 $11,336 $11,542
5/31/90 $11,740 $11,627 $11,794
6/30/90 $11,902 $11,764 $11,898
7/31/90 $12,166 $11,983 $12,074
8/31/90 $11,877 $11,736 $11,898
9/30/90 $11,810 $11,688 $11,905
10/31/90 $11,969 $11,804 $12,121
11/30/90 $12,355 $12,073 $12,365
12/31/90 $12,381 $12,113 $12,419
1/31/91 $12,589 $12,277 $12,585
2/28/91 $12,572 $12,345 $12,695
3/31/91 $12,571 $12,391 $12,699
4/30/91 $12,767 $12,584 $12,869
5/31/91 $12,877 $12,682 $12,983
6/30/91 $12,865 $12,669 $12,970
7/31/91 $13,056 $12,875 $13,128
8/31/91 $13,245 $13,060 $13,301
9/30/91 $13,456 $13,256 $13,474
10/31/91 $13,597 $13,383 $13,596
11/30/91 $13,610 $13,402 $13,634
12/31/91 $13,909 $13,678 $13,926
1/31/92 $13,860 $13,603 $13,958
2/29/92 $13,895 $13,653 $13,962
3/31/92 $13,853 $13,697 $13,968
4/30/92 $13,942 $13,842 $14,092
5/31/92 $14,176 $14,044 $14,258
6/30/92 $14,463 $14,335 $14,497
7/31/92 $14,960 $14,859 $14,932
8/31/92 $14,744 $14,634 $14,786
9/30/92 $14,794 $14,678 $14,883
10/31/92 $14,527 $14,434 $14,736
11/30/92 $14,858 $14,787 $15,000
12/31/92 $15,002 $14,977 $15,154
1/31/93 $15,239 $15,161 $15,330
2/28/93 $15,823 $15,761 $15,884
3/31/93 $15,693 $15,601 $15,716
4/30/93 $15,812 $15,772 $15,875
5/31/93 $15,848 $15,883 $15,964
6/30/93 $16,110 $16,149 $16,231
7/31/93 $16,116 $16,145 $16,252
8/31/93 $16,393 $16,497 $16,590
9/30/93 $16,582 $16,680 $16,779
10/31/93 $16,611 $16,711 $16,811
11/30/93 $16,461 $16,524 $16,663
12/31/93 $16,806 $16,871 $17,015
1/31/94 $16,970 $17,050 $17,209
2/28/94 $16,551 $16,622 $16,763
3/31/94 $15,801 $15,874 $16,081
4/30/94 $15,830 $15,890 $16,217
5/31/94 $15,964 $16,046 $16,358
6/30/94 $15,770 $15,933 $16,263
7/31/94 $16,085 $16,214 $16,561
8/31/94 $16,160 $16,267 $16,612
9/30/94 $15,843 $15,955 $16,368
10/31/94 $15,540 $15,607 $16,077
11/30/94 $15,191 $15,183 $15,786
12/31/94 $15,551 $15,603 $16,133
1/31/95 $15,983 $16,043 $16,595
2/28/95 $16,449 $16,560 $17,077
3/31/95 $16,636 $16,701 $17,274
4/30/95 $16,650 $16,721 $17,295
5/31/95 $17,280 $17,259 $17,846
6/30/95 $17,042 $17,028 $17,691
7/31/95 $17,122 $17,133 $17,859
8/31/95 $17,347 $17,327 $18,086
9/30/95 $17,395 $17,417 $18,200
10/31/95 $17,781 $17,699 $18,464
11/30/95 $18,170 $18,039 $18,770
12/31/95 $18,333 $18,225 $18,950
1/31/96 $18,415 $18,307 $19,094
2/29/96 $18,185 $18,153 $18,965
3/31/96 $17,906 $17,853 $18,722
4/30/96 $17,823 $17,778 $18,669
5/31/96 $17,856 $17,777 $18,662
6/30/96 $18,057 $17,965 $18,865
7/31/96 $18,222 $18,136 $19,035
8/31/96 $18,167 $18,092 $19,031
9/30/96 $18,485 $18,373 $19,298
10/31/96 $18,652 $18,556 $19,516
11/30/96 $18,990 $18,890 $19,873
12/31/96 $18,885 $18,794 $19,790
1/31/97 $18,916 $18,788 $19,827
2/28/97 $19,102 $18,958 $20,010
3/31/97 $18,855 $18,713 $19,743
4/30/97 $19,009 $18,876 $19,909
5/31/97 $19,338 $19,157 $20,210
6/30/97 $19,563 $19,351 $20,426
7/31/97 $20,160 $19,941 $20,992
8/31/97 $19,908 $19,709 $20,795
9/30/97 $20,136 $19,934 $21,042
10/31/97 $20,277 $20,052 $21,177
11/30/97 $20,381 $20,162 $21,302
12/31/97 $20,700 $20,483 $21,613
1/31/98 $20,951 $20,681 $21,835
2/28/98 $20,910 $20,673 $21,842
3/31/98 $20,925 $20,677 $21,862
4/30/98 $20,802 $20,514 $21,763
5/31/98 $21,213 $20,883 $22,107
6/30/98 $21,292 $20,962 $22,193
The graph assumes all dividends and distributions are reinvested at Net Asset
Value.
Notes: All Fund performance numbers represent past perfomance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures are provided in accordance with SEC guidelines for comparative
purposes for prospective investors. Total returns reflect certain voluntary
fee waivers which may be terminated. If the waivers were not in place, total
returns would be lower.
<PAGE>
CitiFunds New York Tax Free Income Portfolio
PORTFOLIO OF INVESTMENTS June 30, 1998
(Unaudited)
PRINCIPAL
MOODY'S AMOUNT
BOND (000'S
RATING ISSUER OMITTED) VALUE
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MUNICIPAL BONDS -- 93.8%
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GENERAL OBLIGATION BONDS -- 12.3%
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Aaa Nassau County, NY,
Series I, 5.00% due 10/01/08 $ 1,410 $1,463,101
Aaa Nassau County, NY,
Series Y, 5.00% due 3/01/11 3,650 3,703,253
A3 New York City, NY,
Series B, 6.375% due 8/15/05 205 232,318
A3 New York City, NY,
Series F, 7.65% due 2/01/06 2,700 3,053,079
A3 New York City, NY,
Series F, 7.65% due 2/01/06 300 334,455
A3 New York City, NY,
Series F, 6.20% due 8/15/06 6,500 7,200,570
Aaa New York City, NY,
Series F, 8.40% due 11/15/06 1,825 2,098,823
Aaa New York City, NY,
Series F, 8.40% due 11/15/06 175 198,767
A3 New York City, NY,
Series B, 6.376% due 8/15/11 1,295 1,417,598
A3 New York City, NY,
Series A, 6.25% due 8/01/12 3,200 3,506,688
Aaa Puerto Rico Commonwealth,
6.50% due 7/01/10 1,800 2,124,756
---------
25,333,408
---------
HEALTHCARE -- 6.5%
- --------------------------------------------------------------------------
Aaa New York State Dormitory
Authority, Hospital,
5.10% due 2/15/12 5,000 5,054,700
Aaa New York State Dormitory
Authority, Presbyterian,
5.50% due 2/01/10 4,835 5,211,260
Aaa New York State Dormitory
Authority, Rochester,
5.25% due 7/01/13 1,000 1,027,440
Aaa New York State Dormitory
Authority, St. Josephs,
5.25% due 7/01/18 2,000 2,009,080
---------
13,302,480
---------
HOUSING REVENUE -- 8.8%
- --------------------------------------------------------------------------
Aaa New York State Housing
Finance Agency, ETM,
7.90% due 11/01/06 5,750 6,844,168
Aa New York State Mortgage
Agency Revenue, AMT,
7.25% due 10/01/07 6,075 6,517,381
Aa New York State Mortgage
Agency Revenue, AMT,
5.35% due 10/01/18 3,200 3,197,568
Aa New York State Mortgage
Agency Revenue, AMT,
7.75% due 10/01/23 1,470 1,585,910
---------
18,145,027
---------
POWER REVENUE -- 9.8%
- --------------------------------------------------------------------------
Aaa Long Island Power Authority,
NY, 5.125% due 12/01/22 12,420 12,242,021
Puerto Rico Electric Power
Authority, Series DD,
5.00% due 7/01/11 3,750 3,847,462
Baa1 Puerto Rico Electric Power
Authority, Series U,
6.00% due 7/01/14 2,750 2,975,830
Baa1 Puerto Rico Electric Power
Authority, Series Z,
5.25% due 7/01/21 1,000 1,004,540
---------
20,069,853
---------
SALES TAX REVENUE -- 4.4%
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Aa3 New York City Transitional,
NY, Series A, 4.90% due 8/15/10 2,000 2,026,500
Aa3 New York City Transitional,
NY, Series A, 5.00% due 8/15/14 1,720 1,712,105
Aa3 New York City Transitional,
NY, Series A, 5.00% due 8/15/16 2,300 2,262,004
Aa3 New York City Transitional,
NY, Series A, 5.125% due 8/15/21 3,000 2,966,010
---------
8,966,619
---------
STATE AGENCIES -- 17.8%
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Aaa New York State Dormitory
Authority, City University,
5.75% due 7/01/18 3,000 3,302,640
Aaa New York State Dormitory
Authority, City University,
5.00% due 7/01/20 2,000 1,958,260
Baa1 New York State Dormitory
Authority, Court Facilities,
5.25% due 5/15/21 1,000 989,480
A3 New York State Dormitory
Authority, Mental Health
Services, 6.50% due 2/15/11 1,610 1,862,883
A3 New York State Dormitory
Authority, Mental Health
Services, 5.00% due 2/15/11 1,485 1,492,158
A3 New York State Dormitory
Authority, Mental Health
Services, 5.50% due 8/15/17 3,000 3,090,960
Aaa New York State Dormitory
Authority, New York
University, 5.75% due 7/01/11 1,000 1,100,960
A3 New York State Dormitory
Authority, State University,
5.25% due 5/15/13 2,030 2,112,601
Aaa New York State Dormitory
Authority, State University,
5.00% due 5/15/20 4,680 4,582,375
A3 New York State Dormitory
Authority, State University,
5.40% due 5/15/23 1,690 1,701,745
A3 New York State Local
Government Assistance,
Series A, 5.375% due 4/01/12 2,475 2,571,030
A3 New York State Local
Government Assistance, Series
A, 5.25% due 4/01/19 4,000 4,009,760
A3 New York State Local
Government Assistance, Series
E, 6.00% due 4/01/14 2,000 2,246,080
Baa1 New York State Urban
Development Revenue,
Correctional Cap,
5.50% due 1/01/09 1,000 1,066,940
Baa1 New York State Urban
Development Revenue, State
Facilities, 5.50% due 4/01/07 3,000 3,197,340
Baa1 New York State Urban
Development Revenue, Youth
Facilities, 5.875% due 4/01/09 1,245 1,339,794
---------
36,625,006
---------
TRANSPORTATION REVENUE -- 23.7%
- --------------------------------------------------------------------------
Baa1 Metropolitan Transportation
Authority, NY, Series A,
5.25% due 7/01/07 2,000 2,090,780
Baa1 Metropolitan Transportation
Authority, NY, 5.50% due 7/01/12 2,380 2,481,126
Aaa Metropolitan Transportation
Authority, NY, Series Q,
5.125% due 7/01/13 2,555 2,580,678
Baa1 Metropolitan Transportation
Authority, NY, 5.75% due 7/01/13 1,000 1,094,930
Baa1 Metropolitan Transportation
Authority, NY, Series O,
5.75% due 7/01/13 3,000 3,284,790
Aaa Metropolitan Transportation
Authority, NY, Series A, FSA,
5.125% due 7/01/17 2,300 2,304,255
Baa1 Metropolitan Transportation
Authority, NY, Series 8,
5.25% due 7/01/17 3,000 2,992,620
Baa1 Metropolitan Transportation
Authority, NY, Series 1997A,
5.625% due 7/01/25 1,940 2,032,402
Aaa New York State Thruway
Authority, Series A,
5.50% due 4/01/07 3,740 4,039,200
Aaa New York State Thruway
Authority, Series B,
5.25% due 4/01/14 3,000 3,086,160
Aa3 New York State Thruway
Authority, Series E,
5.00% due 1/01/16 10,045 9,939,929
Baa1 New York State Thruway
Authority, Local Highway,
6.00% due 4/01/07 6,750 7,419,600
Baa1 New York State Thruway
Authority, Local Highway,
5.25% due 4/01/10 2,900 2,982,534
Aaa Puerto Rico Commonwealth
Highway Authority,
5.50% due 7/01/13 1,125 1,219,613
Aaa Puerto Rico Commonwealth
Highway Authority,
5.50% due 7/01/15 1,000 1,081,840
---------
48,630,457
---------
WATER AND SEWER REVENUE -- 5.2%
- --------------------------------------------------------------------------
Aa New York State Environmental
Facilities, 7.00% due 6/15/12 3,360 3,696,516
Aa New York State Environmental
Facilities, 7.50% due 6/15/12 3,000 3,254,430
A1 New York State Environmental
Facilities, 7.125% due 7/01/12 2,100 2,253,069
A1 New York State Environmental
Facilities, 5.00% due 7/15/12 1,460 1,479,257
---------
10,683,272
---------
OTHER REVENUE -- 5.3%
- --------------------------------------------------------------------------
Aaa Municipal Assistance Corp.,
Series B, Zero Coupon
due 7/15/11 500 267,225
Aaa Municipal Assistance Corp.,
Series B, Zero Coupon
due 1/15/12 400 205,964
Aaa Municipal Assistance Corp.,
Series B, Zero Coupon
due 1/15/13 800 389,440
Aaa Municipal Assistance Corp.,
Series B, Zero Coupon
due 1/15/14 1,405 645,991
N/R New York City Industrial
Development Agency,
7.00% due 5/01/08 800 876,984
A2 New York State, 5.25% due 3/01/15 3,115 3,157,922
Aaa New York State Medical Care
Facilities, 6.90% due 8/15/34 1,000 1,166,370
N/R Port Authority of New York
and New Jersey, Special
Obligation, 6.75% due 10/01/19 3,850 4,266,224
---------
10,976,120
---------
TOTAL MUNICIPAL BONDS
(Identified Cost $184,940,433) 192,732,242
---------
VARIABLE RATE DEMAND NOTES*
AT AMORTIZED COST -- 4.3%
- --------------------------------------------------------------------------
VMIG1 Metropolitan Transit Authority,
4.00% due 1/01/18 200 200,000
VMIG1 Puerto Rico Infrastructure,
3.95% due 1/01/22 3,000 3,000,000
VMIG1 Long Island Power Authority,
3.75% due 5/01/33 1,000 1,000,000
VMIG1 New York State Medical Care
Facilities, 4.05% due 8/15/22 1,400 1,400,000
VMIG1 New York State Thruway Authority,
4.05% due 1/01/27 2,900 2,900,000
VMIG1 Puerto Rico Commonwealth Highway
Authority, 3.00% due 7/01/28 400 400,000
---------
TOTAL VARIABLE RATE DEMAND NOTES AT
AMORTIZED COST 8,900,000
---------
TOTAL INVESTMENTS
(Identified Cost $193,840,433) 98.1% 201,632,242
OTHER ASSETS, LESS LIABILITIES 1.9 3,939,044
----- ------------
NET ASSETS 100.0% $205,571,286
----- ------------
* Variable rate demand notes have a demand feature under which the Fund
could tender them back to the issuer on no more than 7 day's notice.
AMT -- Subject to Alternative Minimum Tax
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
- -----------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (Identified Cost,
$193,840,433) $201,632,242
Cash 96,399
Interest receivable 3,231,410
Receivable for shares of beneficial interest sold 12,697,111
- ------------------------------------------------------------------
Total assets 217,657,162
- ------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 11,410,085
Payable for shares of beneficial interest repurchased 513,946
Payable to Affiliate -- Management fees (Note 2) 71,264
Accrued expenses and other liabilities 90,581
- ------------------------------------------------------------------
Total liabilities 12,085,876
- ------------------------------------------------------------------
NET ASSETS for 17,922,573 shares of beneficial
interest outstanding $205,571,286
- ------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $202,874,108
Accumulated net realized loss on investments (5,027,103)
Unrealized appreciation of investments 7,791,809
Undistributed net investment loss (67,528)
- ------------------------------------------------------------------
Total $205,571,286
- -----------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE OF BENEFICIAL INTEREST $11.47
- -----------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
- ---------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest $3,176,709
EXPENSES:
Management fees (Note 2) $ 440,308
Distribution fees (Note 3) 146,769
Custodian fees 22,500
Auditing fees 17,100
Trustee fees 9,943
Shareholder reports 7,503
Transfer agent fees 7,500
Legal fees 6,744
Miscellaneous 5,019
- ---------------------------------------------------------------------
Total expenses 663,386
Less aggregate amounts waived by Manager
(Note 2) (193,777)
- ---------------------------------------------------------------------
Net expenses 469,609
- ---------------------------------------------------------------------
Net investment income 2,707,100
- ---------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investment transactions 85,606
Net change in unrealized appreciation 904,998
- ---------------------------------------------------------------------
Net realized and unrealized gain on
investments 990,604
- ---------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $3,697,704
- ---------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(Unaudited) 1997
-----------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 2,707,100 $ 4,134,575
Net realized gain on investment
transactions 85,606 480,852
Net change in unrealized appreciation
of investments 904,998 2,520,074
- ------------------------------------------------------------------
Net increase in net assets resulting
from operations 3,697,704 7,135,501
- ------------------------------------------------------------------
DIVIDENDS DECLARED TO SHAREHOLDERS
from:
Net investment income (2,862,688) (4,078,021)
- ------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST (Note 5):
Net proceeds from sale of shares 145,980,168 2,418,539
Net asset value of shares issued to
shareholders from reinvestment of
dividends 2,826,919 3,999,235
Cost of shares repurchased (20,048,450) (15,679,627)
- ------------------------------------------------------------------
Net increase (decrease) in net assets
from transactions in shares of
beneficial interest 128,758,637 (9,261,853)
- ------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 129,593,653 (6,204,373)
- ------------------------------------------------------------------
NET ASSETS:
Beginning of period 75,977,633 82,182,006
- ------------------------------------------------------------------
End of period (including
undistributed net investment income
(loss) of $(67,528) and $88,060,
respectively) $205,571,286 $75,977,633
- ------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NEW YORK TAX FREE INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOUR MONTHS
SIX MONTHS ENDED
ENDED DECEMBER
JUNE 30, YEAR ENDED DECEMBER 31, 31, YEAR ENDED
1998 ------------------------------------------ 1993 AUGUST 31,
(Unaudited) 1997 1996 1995 1994 (NOTE 1D) 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of
period $ 11.42 $ 10.98 $ 11.25 $ 10.09 $ 11.54 $ 11.44 $ 10.82
- ------------------------------------------------------------------------------------------------------
Income From
Operations:
Net investment
income 0.256 0.594 0.585 0.607 0.566 0.210 0.567
Net realized and
unrealized gain
(loss) on
investments 0.067 0.431 (0.267) 1.153 (1.415) 0.076 0.610
- ------------------------------------------------------------------------------------------------------
Total from
operations 0.323 1.025 0.318 1.760 (0.849) 0.286 1.177
- ------------------------------------------------------------------------------------------------------
Less Dividends
From:
Net investment
income (0.273) (0.585) (0.588) (0.600) (0.601) (0.186) (0.557)
- ------------------------------------------------------------------------------------------------------
Net Asset Value,
end of period $ 11.47 $ 11.42 $ 10.98 $ 11.25 $ 10.09 $ 11.54 $ 11.44
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period
(000's omitted) $ 205,572 $ 75,978 $ 82,182 $ 90,264 $ 86,399 $ 120,824 $ 111,583
Ratio of expenses
to average net
assets 0.80%* 0.80% 0.80% 0.80% 0.80% 0.80%* 0.80%
Ratio of net
investment income
to average net
assets 4.61%* 5.31% 5.34% 5.62% 5.52% 4.84%* 5.11%
Portfolio turnover 6% 16% 47% 98% 150% 46% 149%
Total return 2.86%** 9.62% 3.01% 17.89% (7.47)% 2.52%** 11.19%
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 ended after
December 31, 1994, the net investment income per share and the ratios would have been as follows:
Net investment
income per share $0.238 $0.540 $0.534 $0.555 $0.508 $0.191 $0.515
RATIOS:
Expenses to average
net assets 1.13% * 1.28% 1.27% 1.27% 1.27% 1.23% * 1.27%
Net investment
income to average
net assets 4.28% * 4.83% 4.87% 5.15% 5.05% 4.40% * 4.64%
- ------------------------------------------------------------------------------------------------------
* Annualized
** Not Annualized
</TABLE>
See notes to financial statements
<PAGE>
CitiFunds New York Tax Free Income Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds New York Tax Free Income
Portfolio (formerly Landmark New York Tax Free Income Fund) (the 'Fund') is a
separate non-diversified series of CitiFunds Tax Free Income Trust (the
'Trust'), a Massachusetts business trust. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Investment Manager of the Fund is Citibank, N.A.
('Citibank'). CFBDS, Inc. ('CFBDS') (formerly Landmark Funds Broker Dealer
Services, Inc.) acts as the Fund's Sub-Administrator and Distributor.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are in
conformity with generally accepted accounting principles and are as follows:
A. Investment Security Valuations Debt securities (other than short-term
obligations maturing in 60 days or less) are valued on the basis of valuations
furnished by a pricing service which takes into account appropriate factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, and other market data, without
exclusive reliance upon quoted prices or exchange or over-the-counter prices,
since such valuations are believed to reflect more accurately the fair value
of the securities. Short-term obligations (maturing in 60 days or less) are
valued at amortized cost, which approximates market value. Securities, if any,
for which there are no such valuations or quotations are valued at fair value
as determined in good faith by or under guidelines established by the
Trustees.
B. Income Interest income is determined on the basis of interest accrued and
discount earned, adjusted for amortization of premium or discount on long-term
debt securities when required for federal income tax purposes.
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 taxable income, including any net
realized gain on investment transactions. Accordingly, no provision for
federal income or excise tax is necessary. Dividends by the Fund from net
interest received on tax-exempt municipal bonds 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. At December 31, 1997, the Fund, for federal income tax
purposes, had a capital loss carryover of $5,112,709 which will expire on
December 31, 2002. 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 or excise tax.
D. Change in Fiscal Year End Effective September 1, 1993, the Fund changed
its fiscal year end from August 31 to December 31.
E. Distributions The Fund distinguishes between distributions on a tax basis
and a financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified
as distributions in excess of net investment income or accumulated net
realized gains.
F. Other Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis. Distributions to shareholders and shares issuable
to shareholders electing to receive distributions in shares are recorded on
the ex-dividend date.
G. Fees Paid Indirectly The Fund's custodian bank calculates its fee 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.
H. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust
with respect to any two or more funds or series are allocated in proportion to
the average net assets of each fund, except when allocations of direct
expenses to each fund can otherwise be made fairly. Expenses directly
attributable to a fund are charged to that fund.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Fund's business affairs, and has a Management Agreement with the Fund.
Citibank also provides certain administrative services to the Fund. These
administrative services include providing general office facilities and
supervising the overall administration of the Fund. CFBDS acts as
Sub-Administrator and performs such duties and receives such compensation from
Citibank as from time to time is agreed to by Citibank and CFBDS. Citibank is
a wholly-owned subsidiary of Citicorp. Citicorp recently announced its
intentions to merge with The Travelers Group. Completion of the merger is
subject to the satisfaction of certain conditions.
The management fees paid to Citibank, are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.75% of the Funds'
average daily net assets. The management fee amounted to $440,308 of which
$193,777 was voluntarily waived for the six months ended June 30, 1998. The
Trust pays no compensation directly to any Trustee or any other officer who is
affiliated with the Sub-Administrator, all of whom receive remuneration for
their services to the Trust from the Sub-Administrator or its affiliates.
3. DISTRIBUTION FEES The Fund has adopted a Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, in which the Fund
pays fees for distribution, sales and marketing and shareholder services at an
annual rate not to exceed 0.25% of the Fund's average daily net assets. The
Distribution fees amounted to $146,769 for the six months ended June 30, 1998.
4. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments,
other than U.S. Government securities and short-term obligations, aggregated
$123,373,803 and $6,314,692, respectively.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional Shares of Beneficial
Interest (without par value). Transactions in shares of beneficial interest
were as follows:
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(Unaudited) 1997
- -------------------------------------------------------------
Shares sold 12,782,188 216,390
Shares issued to shareholders
from reinvestment of dividends 247,318 360,022
Shares repurchased (1,758,329) (1,411,411)
- -------------------------------------------------------------
Net increase (decrease) 11,271,177 (834,999)
- -------------------------------------------------------------
6. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized
appreciation (depreciation) in value of the investment securities owned at
June 30, 1998, as computed on a federal income tax basis, are as follows:
Aggregate cost $193,840,433
- -------------------------------------------------------------------
Gross unrealized appreciation $7,833,691
Gross unrealized depreciation (41,882)
- -------------------------------------------------------------------
Net unrealized appreciation $7,791,809
- -------------------------------------------------------------------
7. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
ongoing agreement with a bank which allows the Funds collectively to borrow up
to $60 million for temporary or emergency purposes. Interest on borrowings, if
any, is charged to the specific fund executing the borrowing at the base rate
of the bank. In addition, the committed portion of the line of credit requires
a quarterly payment of a commitment fee based on the average daily unused
portion of the line of credit. For six months ended June 30, 1998, the
commitment fee allocated to the Fund was $321. Since the line of credit was
established there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Elliott J. Berv
Mark T. Finn
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Walter E. Robb, III
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Sub-Administrator and Distributor
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is
authorized for distribution to prospective investors only when
preceded or accompanied by an effective prospectus.
For more information contact your Service Agent or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [LOGO] Printed on recycled paper CFS/NYT/698
<PAGE>
Semi-Annual Report o June 30, 1998
[LOGO]
National Tax Free
Income Portfolio
[Graphic Omitted]
BONDS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
Letter to Our Shareholders 1
..............................................................................
Portfolio Environment and Outlook 2
..............................................................................
Fund Facts 4
..............................................................................
Portfolio Highlights 4
..............................................................................
Fund Performance 5
..............................................................................
Portfolio of Investments 6
..............................................................................
Statement of Assets and Liabilities 10
..............................................................................
Statement of Operations 11
..............................................................................
Statement of Changes in Net Assets 12
..............................................................................
Financial Highlights 13
..............................................................................
Notes to Financial Statements 14
..............................................................................
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
This semi-annual report covers the period from January 1, 1998, through June
30, 1998, for the CitiFundsSM National Tax Free Income Portfolio. Inside, the
CitiFunds' investment manager, Citibank, N.A., discusses the market conditions
it faced, the strategies it employed and its outlook for the future.
Overall, the past six months were quite positive for the tax-exempt bond
market. Moderate economic growth, low inflation and an unchanged monetary
policy helped municipal bonds produce attractive total rates of return for the
six-month period. We are pleased to report that CitiFunds National Tax Free
Income Portfolio participated in this market's gains.
Among the highlights of the reporting period, your fund has changed its name
to CitiFunds(SM) National Tax Free Income Portfolio. In addition, as you have
probably heard, Citicorp recently announced its intention to merge with The
Travelers Group. The completion of the merger is subject to the satisfaction of
certain conditions. As necessary, we will provide you with information that
specifically affects the fund.
On behalf of the Board of Trustees, we want to thank you for your continued
participation and confidence in the CitiFunds family of funds.
/s/ Philip W. Coolidge
Philip W. Coolidge
President
July 16, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
DESPITE STRONGER-THAN-EXPECTED U.S. ECONOMIC GROWTH, inflation remained low
during the first six months of 1998. Even reports of record-high employment
levels and robust consumer consumption failed to ignite inflationary
pressures. In addition, fears that economic growth was too strong were
tempered by widespread expectations that the financial crisis in Asia would
soon constrain growth. The potentially moderating effects of the Asian crisis
apparently convinced the Federal Reserve Board not to raise short-term
interest rates in an attempt to forestall an acceleration of inflation.
This combination of economic influences produced excellent market
conditions for fixed-income securities, including both taxable and tax-exempt
bonds. However, the performance of the taxable bond market was generally
stronger than the municipal bond market over the past six months. That's
primarily because positive supply-and-demand influences in some sectors of the
taxable bond market did not apply to tax-exempt bonds. The federal
government's progress toward a balanced budget has reduced the government's
need to finance its operations by issuing U.S. Treasury securities. While the
supply of U.S. Treasury securities was shrinking, investor demand was growing,
especially from overseas investors, causing prices of those taxable securities
to rise.
In contrast, the supply of tax-exempt securities grew over the past six
months while demand remained relatively steady. Municipalities took advantage
of the low interest-rate environment to finance a variety of new projects and
refinance existing ones. In fact, tax-exempt bond issuance during the first
six months of 1998 was more than 50% higher than in the first half of 1997.
When supply grows and investors have many bonds to choose from, issuers must
keep their yields relatively high to make their securities more attractive to
investors seeking high levels of tax-free income. As a result, prices of
tax-exempt securities did not rise as much as comparable taxable securities.
THE PORTFOLIO SOUGHT TO MAINTAIN HIGH TAX-EXEMPT YIELDS COMMENSURATE WITH
ITS RISK PROFILE in this environment. Accordingly, we maintained a well
diversified portfolio containing tax-exempt securities with a variety of
maturities. Within that portfolio, we found the best values in bonds with
maturities of 10 to 15 years.
When allocating the portfolio's assets among municipal bond issuers
nationwide, we attempted to maximize exposure to those securities providing
the best relative values. This led us to a relatively high concentration of
municipal bonds issued within New York State. New York bonds were attractive
because they offered relatively high yields at a time when the state's credit
quality was rising and issuance was high.
The portfolio's average credit quality remained high over the past six
months. As of June 30, 1998, approximately 90% of the portfolio's investments
were rated A or higher by Standard & Poor's or Moody's.
WE BELIEVE THAT MUNICIPAL BONDS REPRESENT ATTRACTIVE VALUES under current
market conditions, and we are optimistic about the market's prospects over the
second half of 1998. As of June 30, the average AAA-rated or Aaa-rated 30-year
tax-exempt bond provided about 87% of the yield of 30-year U.S. Treasury
bonds. Historically, that relationship averages around 83%. We expect municipal
bondholders to benefit from potential capital appreciation when municipal bond
yields return to their historical relationship with taxable bond yields. This
may occur during the second half of 1998 if the supply of new tax-exempt
securities moderates to more normal levels.
In addition, we believe that U.S. economic growth will slow during the
second half of this year in response to falling demand for goods and services
from Asia. Slower economic growth usually means low inflation, which is good
for bonds. Therefore, we expect an economic slow-down to help municipal bond
prices move higher over the next six months.
Of course, no matter what the future brings, we will continue to monitor
the economy and bond markets, making every effort to generate high levels of
current income exempt from federal income taxes and to preserve the value of
our shareholders' investment.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To generate high levels of current income exempt from federal income taxes+ and
to preserve the value of its shareholders investment. The Fund invests primarily
in municipal obligations that pay interest that is exempt from federal income
taxes.
INVESTMENT MANAGER DIVIDENDS
Citibank, N.A. Paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
August 17, 1995 Distributed semi-annually, if
any
NET ASSETS AS OF 6/30/98 BENCHMARKS
$33.5 million o Lipper General Municipal
Bond Funds Average
o Lehman Municipal 4 Years Plus
Bond Index
+ A portion of the income may be subject to the Federal Alternative Minimum
Tax.
Consult your personal tax advisor.
PORTFOLIO HIGHLIGHTS
PORTFOLIO DIVERSIFICATION AS OF JUNE 30, 1998 (Unaudited)
General Obligation Bonds 25%
State Agencies 15%
Healthcare 13%
Transportation Revenue 13%
Housing Revenue 9%
Other Revenue 8%
Education 7%
*Short-Term 4%
Water/Sewer Revenue 4%
Power Revenue 2%
*Includes cash and net other assets.
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
SIX ONE 8/17/95
MONTHS** YEAR (INCEPTION)*
ALL PERIODS ENDING JUNE 30, 1998 (Unaudited)
- -----------------------------------------------------------------------------
CitiFunds National Tax Free Income
Portfolio 4.72% 12.19% 9.43%
Lipper General Municipal Bond Funds
Average 2.26% 8.39% 6.11%+
Lehman Municipal 4 Years Plus Bond
Index 2.78% 9.17% 7.85%+
* Average Annual Total Return
** Not Annualized
+ From 8/31/95
30-Day SEC Yield 4.68%
Income Dividends Per Share $0.270
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund
made on inception date would have
grown to $12,954 (as of 6/30/98).
The graph shows how this compares
to its benchmark over the same
period.
CitiFunds
National Lipper Lehman Muni
Tax Free General 4 Years Plus
Date Index Return Income Fund Muni Bond Bond Index
---- ----- ------ ----------- --------- ----------
8/17/95 100 $10,000
8/31/95 101.9 1.90% $10,190 $10,000 $10,000
9/30/95 102.4759 0.57% $10,248 $10,059 $10,065
10/31/95 104.5629 2.04% $10,456 $10,215 $10,223
11/30/95 106.3632 1.72% $10,636 $10,412 $10,405
12/31/95 107.4327 1.01% $10,743 $10,529 $10,513
1/31/96 108.4014 0.90% $10,840 $10,580 $10,593
2/29/96 107.1191 -1.18% $10,712 $10,497 $10,514
3/31/96 104.9137 -2.06% $10,491 $10,329 $10,366
4/30/96 104.345 -0.54% $10,434 $10,280 $10,332
5/31/96 103.9777 -0.35% $10,398 $10,284 $10,326
6/30/96 105.4935 1.46% $10,549 $10,381 $10,444
7/31/96 106.6977 1.14% $10,670 $10,472 $10,544
8/31/96 106.4277 -0.25% $10,643 $10,466 $10,539
9/30/96 108.1719 1.64% $10,817 $10,617 $10,696
10/31/96 109.3921 1.13% $10,939 $10,732 $10,824
11/30/96 111.5782 2.00% $11,158 $10,920 $11,034
12/31/96 110.9914 -0.53% $11,099 $10,873 $10,981
1/31/97 111.2611 0.24% $11,126 $10,873 $10,998
2/28/97 112.2821 0.92% $11,228 $10,968 $11,106
3/31/97 110.7078 -1.40% $11,071 $10,825 $10,945
4/30/97 111.853 1.03% $11,185 $10,914 $11,042
5/31/97 113.548 1.52% $11,355 $11,070 $11,219
6/30/97 115.4647 1.69% $11,546 $11,194 $11,346
7/31/97 119.7097 3.68% $11,971 $11,530 $11,687
8/31/97 118.3258 -1.16% $11,833 $11,394 $11,564
9/30/97 120.159 1.55% $12,016 $11,254 $11,710
10/31/97 120.7773 0.51% $12,078 $11,324 $11,788
11/30/97 121.3945 0.51% $12,139 $11,389 $11,862
12/31/97 123.7024 1.90% $12,370 $11,570 $12,051
1/31/98 125.5706 1.51% $12,557 $11,679 $12,183
2/28/98 125.5105 -0.05% $12,551 $11,672 $12,183
3/31/98 126.367 0.68% $12,637 $11,674 $12,192
4/30/98 126.0789 -0.23% $12,608 $11,602 $12,129
5/31/98 128.5568 1.97% $12,856 $11,790 $12,337
6/30/98 129.5399 0.76% $12,954 $11,829 $12,386
The graph assumes all dividends and distributions are reinvested at Net Asset
Value.
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures are provided in accordance with SEC guidelines for comparative
purposes for prospective investors. Total returns reflect certain voluntary
fee waivers which may be terminated. If the waivers were not in place, total
returns would be lower.
<PAGE>
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS June 30, 1998
(Unaudited)
PRINCIPAL
MOODY'S AMOUNT
BOND (000'S
RATING ISSUER OMITTED) VALUE
- --------------------------------------------------------------------------
MUNICIPAL BONDS -- 95.9%
- --------------------------------------------------------------------------
CERTIFICATES OF PARTICIPATION -- 1.6%
- --------------------------------------------------------------------------
Aaa Cleveland, Ohio, Cleveland
Stadium Project,
6.00% due 11/15/08 $ 400 $ 449,068
Aaa Riverside County, California,
Asset Leasing Corp.,
5.70% due 6/01/16 75 81,045
---------
530,113
---------
GENERAL OBLIGATION BONDS -- 24.7%
- --------------------------------------------------------------------------
Aaa California State, AMT,
4.95% due 12/01/08 1,000 1,011,250
Aa3 Colorado Springs, Colorado,
5.00% due 9/01/06 250 255,943
Aaa Detroit, Michigan,
5.00% due 4/01/11 505 511,035
Aaa Hawaii State, 5.50% due 10/01/10 860 925,652
Aaa Massachusetts State Construction
Loan, 5.625% due 8/01/13 50 52,741
Aa Metro, Oregon, Open Spaces
Program, Series A,
5.50% due 9/01/10 50 52,620
A3 New York, New York,
5.125% due 8/01/10 2,500 2,550,425
Baa1 New York, New York,
6.25% due 8/01/12 50 54,792
Baa1 New York, New York,
6.25% due 8/01/17 185 198,635
Baa1 New York, New York,
6.25% due 8/01/17 15 16,405
Aaa Niagara County, New York,
5.375% due 8/15/19 425 442,812
Aa2 Onondaga County, New York,
5.85% due 5/01/14 465 496,104
Aaa Port Olympia, Washington,
AMT, 5.10% due 12/01/10 350 354,711
Aaa Puerto Rico Commonwealth,
6.50% due 7/01/10 200 236,084
Aaa San Anselmo, California,
5.60% due 8/01/11 50 53,448
Aaa St. Louis County, Missouri,
5.00% due 2/01/12 750 768,383
Aaa Union City, New Jersey,
5.20% due 9/01/12 160 168,330
Aaa Walnut County, California,
Unified School Districts,
7.00% due 8/01/08 50 60,190
Aa1 Winston Salem, North
Carolina, 5.40% due 6/01/11 50 52,978
---------
8,262,538
---------
EDUCATION -- 7.0%
- --------------------------------------------------------------------------
Aaa Dade County, Florida,
Educational Facilities
Authority Revenue,
6.00% due 4/01/08 220 246,800
Aaa Fallbrook, California, High
School District,
5.375% due 9/01/14 555 587,923
Aaa Galt Schools Joint Power
Authority of California,
Revenue, 5.75% due 11/01/16 205 220,098
Aaa Maricopa County, Arizona,
School District No. 3,
6.50% due 7/01/10 90 105,599
Aaa Pleasanton, California,
School District,
5.60% due 8/01/11 50 53,919
Aaa Pomona, California University
School District,
5.90% due 2/01/10 1,000 1,119,090
---------
2,333,429
---------
HEALTHCARE -- 13.1%
- --------------------------------------------------------------------------
Baa Colorado Health Facilities
Authority Revenue,
4.85% due 1/01/06 285 286,776
Aa2 Colorado Health Facilities
Authority Revenue,
5.375% due 12/01/11 500 520,115
Aaa Kalamazoo, Michigan, Hospital
Financial Authority Revenue,
5.50% due Aaa 5/05/12 350 366,573
Aaa Lancaster County,
Pennsylvania, Housing
Authority, 6.30% due 7/01/05 300 323,811
Aaa Medford, Oregon, Hospital
Facilities Authority Revenue,
5.25% due 8/15/11 2,120 2,198,631
Aaa Philadelphia, Pennsylvania,
Hospitals Revenue,
5.50% due 5/15/08 160 170,446
Aaa Tampa, Florida, 5.50% due 11/15/14 160 169,210
Aaa Washington State Health Care
Facilities Authority Revenue,
5.50% due 11/15/12 350 367,392
---------
4,402,954
---------
HOUSING -- 8.9%
- --------------------------------------------------------------------------
Aaa Massachusetts State Housing
Finance Agency,
5.05% due 6/01/10 500 503,630
Aaa Nebraska Investment Finance
Authority, AMT,
5.85% due 9/01/28 200 206,780
Aaa Texas State Department of
Housing, 5.25% due 9/01/13 175 180,220
Aaa Texas State Department of
Housing, 5.80% due 9/01/29 300 308,673
Aaa Utah State Housing Financial
Agency, 5.40% due 7/01/16 835 842,131
Aa1 Virginia State Housing
Development Authority,
5.95% due 5/01/16 400 423,080
Aa2 Wyoming Community Development
Authority, AMT,
5.85% due 6/01/28 500 517,290
---------
2,981,804
---------
POWER REVENUE -- 2.3%
- --------------------------------------------------------------------------
Aa2 Colorado Springs, Colorado,
Utilities Revenue,
6.35% due 11/15/01 250 267,950
A1 New York State Energy
Research and Development
Authority, AMT,
7.50% due 7/01/25 60 62,516
Aaa Sikeston, Missouri,
Electrical Revenue,
6.00% due 6/01/14 155 174,580
Aaa Washington State Public Power
Supply, 5.70% due 7/01/08 250 271,088
---------
776,134
---------
STATE AGENCIES -- 14.5%
- --------------------------------------------------------------------------
Aa3 California State Public Works
Board, 5.25% due 10/01/11 2,500 2,588,150
A2 California State Public Works
Board Lease, 5.25% due 11/01/11 500 520,080
Aaa New York State Dormitory
Authority, 5.50% due 2/01/10 165 177,840
A3 New York State Dormitory
Authority, 5.00% due 8/15/11 415 417,000
Baa1 New York State Dormitory
Authority, 5.50% due 5/15/23 100 101,754
Baa1 New York State Urban
Development Corp.,
5.50% due 1/01/09 1,000 1,066,940
---------
4,871,764
---------
SALES TAX REVENUE -- 3.0%
- --------------------------------------------------------------------------
Aa3 New York, New York City
Transitional, 5.00% due 8/15/14 455 452,912
Aaa Palm Beach County, Florida,
Criminal Justice,
5.75% due 6/01/13 500 552,340
---------
1,005,252
---------
TRANSPORTATION REVENUE -- 13.4%
- --------------------------------------------------------------------------
Aaa Arapahoe County, Colorado,
Capital Improvement,
7.00% due 8/31/26 150 178,533
Aaa Hawaii State Harbor Import
Revenue, AMT,
6.50% due 7/01/12 560 602,430
Aaa Indiana Transit,
5.25% due 12/01/15 1,000 1,018,400
Baa3 Kenton County, Kentucky,
Airport Board,
6.125% due 2/01/22 1,075 1,105,197
Baa1 Metropolitan Transit
Authority, New York,
5.00% due 7/01/05 250 256,955
Aaa Metropolitan Transit
Authority, New York,
5.625% due 7/01/25 60 62,858
Baa1 New York State Highway
Authority Service,
6.00% due 4/01/07 750 824,400
Aaa Puerto Rico Commonwealth
Highway, Series Y,
6.25% due 7/01/05 75 83,939
Aa3 Triborough Bridge and Tunnel
Authority, New York,
6.00% due 1/01/12 320 356,387
---------
4,489,099
---------
WATER AND SEWER REVENUE -- 3.6%
- --------------------------------------------------------------------------
Aaa Bexar, Texas, Metropolitan
Water Distribution,
6.00% due 5/01/15 50 54,112
Aaa New York State Environmental,
5.05% due 1/15/13 220 222,893
Aaa New York State Environmental,
5.10% due 7/15/14 740 749,701
Aaa Santa Margarita/Dana Point
Authority of California
Revenue, 5.50% due 8/01/10 160 172,176
---------
1,198,882
---------
MISCELLANEOUS -- 3.8%
- --------------------------------------------------------------------------
Aa2 Lower Neches Valley
Authority, Texas, Oil
Refining Project,
6.35% due 4/01/26 1,000 1,089,260
NR Port Authority New York and
New Jersey Special
Obligation, AMT,
6.75% due 10/01/19 150 166,216
---------
1,255,476
---------
TOTAL MUNICIPAL BONDS
(Identified Cost $31,683,752) 32,107,445
---------
<PAGE>
VARIABLE RATE DEMAND NOTES*
AT AMORTIZED COST -- 8.1%
- --------------------------------------------------------------------------
VMIG1 New York City Transitional,
New York, 3.85% due 8/15/21 1,400 1,400,000
VMIG1 New York State Medicare
Facilities, 4.05% due 8/15/22 1,300 1,300,000
---------
TOTAL VARIABLE RATE DEMAND NOTES AT
AMORTIZED COST 2,700,000
---------
TOTAL INVESTMENTS
(Identified Cost $34,383,752) 104.0% 34,807,445
OTHER ASSETS, LESS LIABILITIES (4.0) (1,330,078)
----- -----------
NET ASSETS 100.0% $33,477,367
----- -----------
* Variable rate demand notes have a demand feature under which the Fund
could tender them back to the issuer on no more than 7 day's notice.
AMT -- Subject to Alternative Minimum Tax
See notes to financial statements
<PAGE>
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
- -------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (Identified Cost,
$34,383,752) $34,807,445
Cash 173,787
Receivable for shares of beneficial interest sold 4,314,431
Interest receivable 492,571
- -------------------------------------------------------------------
Total assets 39,788,234
- -------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 5,745,478
Payable for shares of beneficial interest repurchased 540,817
Dividends payable 24,572
- -------------------------------------------------------------------
Total liabilities 6,310,867
- -------------------------------------------------------------------
NET ASSETS for 2,999,537 shares of beneficial interest
outstanding $33,477,367
- -------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $33,024,582
Unrealized appreciation of investments 423,693
Accumulated net realized gain on investments 8,523
Undistributed net investment income 20,569
- -------------------------------------------------------------------
Total $33,477,367
- -------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE OF BENEFICIAL INTEREST $11.16
- -------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
- -----------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Interest $ 248,854
EXPENSES:
Management fees (Note 2) $ 39,060
Custody and Fund Accounting fees 29,195
Distribution fees (Note 3) 13,020
Audit fees 11,000
Shareholder reports 8,530
Legal fees 6,552
Transfer agent fees 6,000
Trustees fees 4,572
Miscellaneous 2,452
- -----------------------------------------------------------------------
Total expenses 120,381
Less aggregate amounts waived by the Manager
and Distributor (Notes 2 and 3) (52,080)
Less fees paid indirectly (Note 1E) (291)
Expenses assumed by the Sub-Administrator
(Note 7) (68,010)
- -----------------------------------------------------------------------
Net expenses --
- -----------------------------------------------------------------------
Net investment income $ 248,854
- -----------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investment transactions 7,630
Net change in unrealized appreciation 288,472
- -----------------------------------------------------------------------
Net realized and unrealized gain on
investments 296,102
- -----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 544,956
- -----------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(Unaudited) 1997
- ---------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 248,854 $ 105,890
Net realized gain on investment
transactions 7,630 18,441
Net change in unrealized
appreciation of investments 288,472 81,360
- ---------------------------------------------------------------
Net increase in net assets
resulting from operations 544,956 205,691
- ---------------------------------------------------------------
DIVIDENDS DECLARED TO SHAREHOLDERS
FROM:
Net investment income (231,223) (105,043)
- ---------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (Note 5):
Net proceeds from sale of shares 33,176,519 191,319
Net asset value of shares issued to
shareholders from reinvestment of
dividends 206,637 104,749
Cost of shares repurchased (2,136,165) (540,375)
- ---------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in shares
of beneficial interest 31,246,991 (244,307)
- ---------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS 31,560,724 (143,659)
- ---------------------------------------------------------------
NET ASSETS:
Beginning of period 1,916,643 2,060,302
- ---------------------------------------------------------------
End of period (including
undistributed net investment
income of $20,569 and $2,938,
respectively) $33,477,367 $1,916,643
- ---------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
AUGUST 17, 1995
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED OF OPERATIONS)
JUNE 30, DECEMBER 31, TO
1998 -------------------- DECEMBER 31,
(Unaudited) 1997 1996 1995
- --------------------------------------------------------------------------------
Net Asset Value, beginning
of period $ 10.92 $ 10.34 $ 10.55 $ 10.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.277 0.564 0.562 0.187
Net realized and unrealized
gain (loss) on investments 0.233 0.586 (0.232) 0.551
- --------------------------------------------------------------------------------
Total from operations 0.510 1.150 0.330 0.738
- --------------------------------------------------------------------------------
Less Dividends From:
Net investment income (0.270) (0.570) (0.540) (0.188)
- --------------------------------------------------------------------------------
Net Asset Value, end of
period $ 11.16 $ 10.92 $ 10.34 $ 10.55
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $ 33,477 $ 1,917 $ 2,060 $ 1,306
Ratio of expenses to average
net assets(A) 0.01% 0.14% 0% 0%
Ratio of expenses to average
net assets after fees paid
indirectly(A) 0% 0% 0% 0%
Ratio of net investment
income to average net
assets 4.78%* 5.45% 5.42% 5.20%*
Portfolio turnover 13% 55% 52% 0%
Total return 4.72%** 11.45% 3.31% 7.43%**
Note: If Agents of the Fund had not voluntarily agreed to waive all of their
fees for the period, the expenses were not reduced for fees paid indirectly, the
Sub-administrator had not voluntarily assumed expenses and had expenses been
limited to that required by certain state securities law in 1995, the net
investment income per share and the ratios would have been as follows:
Net investment income (loss)
per share $ 0.143 $ (0.229) $ (0.291) $ 0.098
RATIOS:
Expenses to average net
assets 2.31%* 7.66% 8.23% 2.50%*
Net investment income (loss)
to average net assets 2.47%* (2.21)% (2.81)% 2.70%*
- --------------------------------------------------------------------------------
* Annualized
** Not annualized
(A) The expense ratios for the year ended December 31, 1995 and the periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting 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 December
31, 1995 have not been adjusted to reflect this change.
See notes to financial statements
<PAGE>
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES The CitiFunds National Tax Free Income
Portfolio (formerly Landmark National Tax Free Income Fund) (the 'Fund') is a
separate non-diversified series of CitiFunds Tax Free Income Trust (the
'Trust'), a Massachusetts business trust. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Investment Manager of the Fund is Citibank, N.A.
('Citibank'). CFBDS, Inc ('CFBDS') (formerly Landmark Funds Broker-Dealer
Services, Inc.) acts as the Fund's Sub-Administrator and Distributor.
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 in
conformity with generally accepted accounting principles and are as follows:
A. Investment Security Valuations Debt securities (other than short-term
obligations maturing in 60 days or less) are valued on the basis of valuations
furnished by a pricing service which takes into account appropriate factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, and other market data, without
exclusive reliance upon quoted prices or exchange or over-the-counter prices,
since such valuations are believed to reflect more accurately the fair value
of the securities. Short-term obligations (maturing in 60 days or less) are
valued at amortized cost, which approximates market value. Securities, if any,
for which there are no such valuations or quotations are valued at fair value
as determined in good faith by or under guidelines established by the
Trustees.
B. Income Interest income is determined on the basis of interest accrued and
discount earned, adjusted for amortization of premium or discount on long-term
debt securities when required for federal income tax purposes.
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 taxable income, including any net
realized gain on investment transactions. Accordingly, no provision for
federal income or excise tax is necessary. Dividends by the Fund from net
interest received on tax-exempt municipal bonds 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. Distributions The Fund distinguishes between distributions on a tax basis
and a financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of income
between the financial statements and tax earnings and profits which result in
temporary over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
E. Fees Paid Indirectly The Fund's custodian bank calculates its fee 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 expense on the Statement of
Operations.
F. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust
with respect to any two or more funds or series are allocated in proportion to
the average net assets of each fund, except when allocations of direct
expenses to each fund can otherwise be made fairly. Expenses directly
attributable to a fund are charged to that fund.
G. Other Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis. Distributions to shareholders and shares issuable
to shareholders electing to receive distributions in shares are recorded on
the ex-dividend date.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Fund's business affairs, and has a Management Agreement with the Fund.
Citibank also provides certain administrative services to the Fund. These
administrative services include providing general office facilities and
supervising the overall administration of the Fund. CFBDS acts as
Sub-Administrator and performs such duties and receives such compensation from
Citibank as from time to time is agreed to by Citibank and CFBDS. Citibank is
a wholly-owned subsidiary of Citicorp. Citicorp recently announced its
intentions to merge with The Travelers Group. Completion of the merger is
subject to the satisfaction of certain conditions.
The management fees paid to Citibank, are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.75% of the Funds'
average daily net assets. The management fee amounted to $39,060 all of which
was voluntarily waived for the six months ended June 30, 1998. The Trust pays
no compensation directly to any Trustee or any other officer who is affiliated
with the Sub-Administrator, all of whom receive remuneration for their
services to the Trust from the Sub-Administrator or its affiliates.
3. DISTRIBUTION FEES The Fund has adopted a Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, in which the Fund
pays fees for distribution, sales and marketing and shareholder services at an
annual rate not to exceed 0.25% of the Fund's average daily net assets. The
Distribution fees amounted to $13,020 all of which was voluntarily waived for
the six months ended June 30, 1998.
4. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments,
other than U.S. Government securities and short-term obligations, aggregated
$31,430,805 and $1,442,817, respectively.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional Shares of Beneficial
Interest (without par value). Transactions in shares of beneficial interest
were as follows:
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER
1998 31,
(Unaudited) 1997
- -------------------------------------------------------------------
Shares sold 2,998,228 18,203
Shares issued to shareholders from
reinvestment of dividends 18,642 9,940
Shares repurchased (192,890) (51,804)
- -------------------------------------------------------------------
Net increase (decrease) 2,823,980 (23,661)
- -------------------------------------------------------------------
6. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized
appreciation (depreciation) in value of the investment securities owned at
June 30, 1998, as computed on a federal income tax basis, are as follows:
Aggregate cost $34,383,752
- -------------------------------------------------------------------
Gross unrealized appreciation $ 434,365
Gross unrealized depreciation (10,672)
- -------------------------------------------------------------------
Net unrealized appreciation $ 423,693
- -------------------------------------------------------------------
7. ASSUMPTION OF EXPENSES CFBDS has voluntarily agreed to pay the unwaived
expenses of the Fund for the six months ended June 30, 1998 which amounted to
$68,010.
8. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
ongoing agreement with a bank which allows the Funds collectively to borrow up
to $60 million for temporary or emergency purposes. Interest on borrowings, if
any, is charged to the specific fund executing the borrowing at the base rate
of the bank. The line of credit requires a quarterly payment of a commitment
fee based on the average daily unused portion of the line of credit. For the
six months ended June 30, 1998, the commitment fee allocated to the Fund was
$4. Since the line of credit was established there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
C. Oscar Morong, Jr., Chairman
Philip W. Coolidge*, President
Elliott J. Berv
Mark T. Finn
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Walter E. Robb, III
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Sub-Administrator and Distributor
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is
authorized for distribution to prospective investors only when
preceded or accompanied by an effective prospectus.
For more information contact your Service Agent or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [LOGO] Printed on recycled paper CFS/NAT/698
