<PAGE>
Annual Report o August 31, 1998
[Logo]
Premium
Liquid Reserves
MONEY MARKETS
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INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
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<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
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Portfolio Environment and Outlook 2
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Fund Facts 3
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Fund Performance 4
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CITIFUNDS PREMIUM LIQUID RESERVES
Statement of Assets and Liabilities 5
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Statement of Operations 6
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Statement of Changes in Net Assets 7
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Financial Highlights 8
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Notes to Financial Statements 9
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Independent Auditors' Report 12
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CASH RESERVES PORTFOLIO
Portfolio of Investments 13
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Statement of Assets and Liabilities 15
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Statement of Operations 15
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Statement of Changes in Net Assets 16
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Financial Highlights 16
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Notes to Financial Statements 17
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Independent Auditors' Report 19
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 12-month period ended August 31, 1998 saw a continuation of the positive
economic and market conditions that have prevailed over the past three years.
Late in the period, however, heightened volatility caused the stock market to
retrace some of its gains.
Such volatility suggests that money market securities may once again be
poised to demonstrate their true value as relatively safer investments where
investors seek to protect their principal and earn interest. In our view,
CitiFundsSM Premium Liquid Reserves can play a valuable role in investors'
diversified investment portfolios.
As you have probably heard, Citicorp announced its intention to merge with
The Travelers Group. The merger is expected to occur on or about October 8,
1998. As necessary, we will provide you with information that specifically
affects the fund.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 21, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
YIELDS ON MONEY MARKET INSTRUMENTS ENDED THE 12-MONTH REPORTING PERIOD LOWER
THAN WHERE THEY BEGAN, reflecting the general trend of short-term interest
rates. That decline was interrupted, however, during the first quarter of 1998,
which saw an increase in short-term interest rates amid uncertainty over the
economic effects of the financial crisis in Asia. When evidence emerged early in
the year that U.S. economic growth was stronger than most analysts expected,
interest rates rose in anticipation of a move by the Federal Reserve Board to a
more restrictive monetary policy.
Such a move never took place, however, because of the absence of inflationary
pressures. During the second and third quarters of 1998, it became clearer that
the Asian crisis would, in fact, negatively affect U.S. corporate earnings and
dampen U.S. economic growth. In effect, lower demand for U.S. goods from
overseas markets and improved competitive positions for Asian companies
constrained sales and earnings of U.S. companies. As a result, fixed-income
investors became more confident that the Federal Reserve would maintain
short-term interest rates at current levels, and money market yields settled
back to their previous lows.
IN THIS ECONOMIC ENVIRONMENT, WE MAINTAINED AN AVERAGE MATURITY BETWEEN 70
AND 90 DAYS for most of the period, which we consider relatively long for this
portfolio. This position enabled us to capture the higher yields of longer-dated
securities when short-term interest rates declined. In fact, the portfolio
contained securities with maturities of as much as one year. These long
maturities were balanced by securities with maturities measured in days or
weeks. Combined, they helped us achieve our targeted average maturity while
enabling us to capture the higher yields of longer-dated instruments.
We also attempted to enhance the portfolio's yield by investing in those
sectors of the short-term money markets that, in our opinion, provided the most
attractive values. We found those values in Yankee CDs, which are certificates
of deposit issued by U.S. branches of foreign banks.
Yankee CDs offered higher yields than U.S. Treasury bills of comparable
maturities. That's because the U.S. government's success in balancing its budget
has required less borrowing, reducing the supply of U.S. Treasury bills. Yet,
demand for U.S. Treasury bills remains high. The combination of lower supply and
high demand caused yields of U.S. Treasury bills to fall faster than other types
of money market securities.
WE BELIEVE MONEY MARKET YIELDS ARE LIKELY TO REMAIN NEAR CURRENT LEVELS FOR
THE REMAINDER OF THE YEAR. If economic growth continues to moderate in the
fourth quarter of 1998, as we expect, the Federal Reserve Board will have little
reason to raise short-term interest rates, which they might otherwise do to
forestall a reacceleration of inflation. In our opinion, the opposite is the
more likely scenario: if the economy continues to slow, the Federal Reserve
Board may eventually reduce short-term interest rates modestly in order to
provide an economic stimulus.
In the meantime, we will continue to manage the Portfolio's average maturity
and sector concentrations according to our near-term outlook for interest rates
and the U.S. economy. In our view, this approach will help CitiFunds Premium
Liquid Reserves earn competitive returns commensurate with preservation of
capital, regardless of the fluctuations of the stock and bond markets.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with liquidity and as high a level of current income
as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
CASH RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
COMMENCEMENT OF OPERATIONS BENCHMARKS
May 3, 1990 o Lipper Taxable Money
Funds Average
NET ASSETS AS OF 8/31/98 o IBC 1st Tier Taxable Money
$611.3 million Funds Average
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE MAY 3, 1990
ALL PERIODS ENDED AUGUST 31, 1998 YEAR YEARS* INCEPTION*
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CitiFunds Premium Liquid Reserves 5.48% 5.08% 5.09%
Lipper Taxable Money Funds Average 4.93% 4.62% 4.68%+
* Average Annual Total Return
+ From 5/31/90
7-DAY YIELDS
Annualized Current 5.31%
Effective 5.45%
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.
IMPORTANT TAX INFORMATION - For the fiscal year ended August 31, 1998, the Fund
paid $0.05348 per share to shareholders from net investment income. For such
period 1.5% of dividends paid were derived from interest earned from U.S.
Government and U.S. Government agency obligations.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS PREMIUM LIQUID RESERVES VS. IBC 1ST
TIER TAXABLE MONEY FUNDS AVERAGE
As illustrated CitiFunds Premium Liquid Reserves generally provided a higher
annualized seven-day yield to that of a comparable IBC Money Fund Average, as
published in IBC Money Fund Report(TM), for the one year period.
CitiFunds IBC 1st
Premium Tier Taxable
Liquid Money Funds
Reserves Average
- ----------------------------------------------
9/2/97 5.37% 4.95%
9/9/97 5.36% 4.92%
9/16/97 5.37% 4.94%
9/23/97 5.34% 4.93%
9/30/97 5.39% 4.95%
10/7/97 5.35% 4.92%
10/14/97 5.32% 4.90%
10/21/97 5.36% 4.92%
10/28/97 5.39% 4.93%
11/4/97 5.40% 4.95%
11/11/97 5.38% 4.93%
11/18/97 5.37% 4.95%
11/25/97 5.37% 4.96%
12/2/97 5.41% 5.00%
12/9/97 5.35% 5.00%
12/16/97 5.39% 5.03%
12/23/97 5.45% 5.06%
12/30/97 5.36% 5.07%
1/6/98 5.51% 5.12%
1/13/98 5.34% 5.03%
1/20/98 5.35% 5.02%
1/27/98 5.33% 4.99%
2/3/98 5.37% 4.99%
2/10/98 5.30% 4.96%
2/17/98 5.34% 4.95%
2/24/98 5.33% 4.94%
3/3/98 5.37% 4.96%
3/10/98 5.30% 4.93%
3/17/98 5.32% 4.92%
3/24/98 5.29% 4.92%
3/31/98 5.34% 4.93%
4/7/98 5.32% 4.92%
4/14/98 5.32% 4.92%
4/21/98 5.29% 4.92%
4/28/98 5.28% 4.90%
5/5/98 5.27% 4.90%
5/12/98 5.23% 4.90%
5/19/98 5.33% 4.92%
5/26/98 5.28% 4.90%
6/2/98 5.35% 4.92%
6/9/98 5.28% 4.91%
6/16/98 5.32% 4.92%
6/23/98 5.29% 4.91%
6/30/98 5.34% 4.94%
7/7/98 5.42% 4.91%
7/14/98 5.28% 4.91%
7/21/98 5.30% 4.91%
7/28/98 5.30% 4.92%
8/4/98 5.33% 4.92%
8/11/98 5.28% 4.91%
8/18/98 5.31% 4.92%
8/25/98 5.29% 4.91%
9/1/98 5.32% 4.92%
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
================================================================================
ASSETS:
Investment in Cash Reserves Portfolio, at value (Note 1A) $612,564,042
Receivable for shares of beneficial interest sold 140,062
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Total assets 612,704,104
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LIABILITIES:
Payable for shares of beneficial interest repurchased 57
Dividends payable 1,184,636
Payable to affiliate-Shareholder Servicing Agents' fees (Note 3B) 51,921
Accrued expenses and other liabilities 197,891
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Total liabilities 1,434,505
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NET ASSETS for 611,269,599 shares of beneficial interest
outstanding $611,269,599
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $611,269,599
================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
STATEMENT OF OPERATIONS
================================================================================
FOR THE YEAR ENDED AUGUST 31, 1998
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INVESTMENT INCOME (Note 1B):
Income from Cash Reserves Portfolio $29,653,522
Allocated expenses from Cash Reserves Portfolio (516,061)
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$29,137,461
EXPENSES:
Administrative fees (Note 3A) 1,790,447
Shareholder Servicing Agents' fees (Note 3B) 511,556
Distribution fees (Note 4) 511,556
Registration fees 43,259
Custody and fund accounting fees 20,216
Shareholder reports 17,153
Transfer agent fees 14,975
Legal fees 14,344
Audit fees 10,400
Trustees' fees 7,129
Miscellaneous 15,481
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Total expenses 2,956,516
Less aggregate amount waived or assumed by
Administrator and Distributor (Notes 3A and 4) (1,407,168)
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Net expenses 1,549,348
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Net investment income $27,588,113
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See notes to financial statements
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
---------------------------------
1998 1997
================================================================================
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
to shareholders (Note 2) $ 27,588,113 $ 19,203,730
================================================================================
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
AT NET ASSET VALUE OF $1.00 PER SHARE
(Note 5):
Proceeds from sale of shares $3,151,376,399 $2,343,549,929
Net asset value of shares issued to
shareholders from reinvestment of dividends 13,821,096 10,795,608
Cost of shares repurchased (2,941,837,920) (2,346,738,058)
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NET INCREASE IN NET ASSETS 223,359,575 7,607,479
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NET ASSETS:
Beginning of period 387,910,024 380,302,545
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End of period $ 611,269,599 $ 387,910,024
================================================================================
See notes to financial statements
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00000 $ 1.00000 $ 1.00000 $ 1.00000 $ 1.00000
Net investment income 0.05348 0.05240 0.05322 0.05465 0.03432
Less dividends from net investment income (0.05348) (0.05240) (0.05322) (0.05465) (0.03432)
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00000 $ 1.00000 $ 1.00000 $ 1.00000 $ 1.00000
=================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $ 611,270 $ 387,910 $ 380,303 $ 423,992 $ 238,732
Ratio of expenses to average net assets+ 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets+ 5.39% 5.25% 5.35% 5.47% 3.47%
Total return 5.48% 5.37% 5.45% 5.60% 3.49%
Note: If agents of the Fund and agents of Cash Reserves Portfolio had not waived all or a portion of their fees
during the periods indicated, the net investment income per share and the ratios would have been as follows:
Net investment income per share $ 0.04950 $ 0.04833 $ 0.04911 $ 0.05047 $ 0.02962
RATIOS:
Expenses to average net assets+ 0.80% 0.81% 0.82% 0.83% 0.88%
Net investment income to average net assets+ 4.99% 4.84% 4.93% 5.04% 2.99%
=================================================================================================================
+ Includes the Fund's share of Cash Reserves Portfolio's allocated expenses.
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Premium Liquid Reserves (the
"Fund") is a separate diversified series of CitiFunds Premium Trust (the
"Trust"), a Massachusetts business trust. Effective January 2, 1998 Premium
Liquid Reserves changed its name to CitiFunds Premium Liquid Reserves. The Trust
also changed its name from Landmark Premium Funds to CitiFunds Premium Trust.
The Trust is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company. The Fund invests all of its
investable assets in Cash Reserves Portfolio (the "Portfolio"), a management
investment company for which Citibank, N.A. ("Citibank") serves as Investment
Adviser. CFBDS, Inc. ("CFBDS", formerly the Landmark Funds Broker-Dealer
Services, Inc.) acts as the Trust's Administrator and Distributor. Citibank also
serves as Sub-Administrator and makes Fund shares available to customers as
Shareholder Servicing Agent. Citibank is a wholly-owned subsidiary of Citicorp.
Citicorp recently announced its intention to merge with The Travelers Group. The
merger is expected to occur on or about October 8, 1998.
The Trust seeks to achieve the Fund's investment objective to provide
liquidity and as high a level of current income as is consistent with the
preservation of capital by investing all of its investable assets in the
Portfolio, an open-end, diversified management investment company having the
same investment objective as the Fund. The value of such investment reflects the
Fund's proportionate interest (7.0% at August 31, 1998) in the net assets of the
Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. INVESTMENT VALUATION Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
B. INVESTMENT INCOME The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.
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. Accordingly, no provision
for federal income or excise tax is necessary.
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. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 3:00
p.m., Eastern time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an 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 Trust's Administrative Services Plan, the
aggregate of the fees paid to the Administrator from the Fund under such Plan
and of the fees paid to the Shareholder Servicing Agents from the Fund may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. For the year ended August 31, 1998,
Management agreed to voluntarily limit Fund expenses to 0.40%.
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 accrued daily and paid monthly at an annual rate of 0.35% of the Fund's
average daily net assets. The Administrative fees amounted to $1,790,447 of
which $895,612 was voluntarily waived for the year ended August 31, 1998.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Fund from the Administrator or its affiliates. Certain of the
officers and a Trustee of the Fund are officers and a director of the
Administrator or its affiliates.
B. SHAREHOLDER SERVICING 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, which may not exceed, on an annualized basis, an amount equal to
0.10% of the average daily net assets of the Fund represented by shares owned
during the period for which payment has been made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agents fees amounted to $511,556, for the year ended August 31, 1998.
4. 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 reimburses the Distributor for expenses incurred or anticipated, in
connection with the sale of shares of the Fund, at an annual rate not to exceed
of 0.10% of the Fund's average daily net assets. Distribution fees amounted to
$511,556 for the year ended August 31, 1998 The Distributor has voluntarily
agreed to assume all distribution expenses through August 31, 1998.
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).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $1,639,804,415 and $1,445,171,796, respectively, for
the year ended August 31, 1998.
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES OF CITIFUNDS PREMIUM TRUST (THE TRUST) AND THE SHAREHOLDERS OF
CITIFUNDS PREMIUM LIQUID RESERVES:
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
CitiFunds Premium Liquid Reserves (the "Fund"), a series of CitiFunds Premium
Trust, at August 31, 1998 and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at August 31, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1998
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ----------------------------------------------------------------------------
ASSET BACKED - 11.0%
- ----------------------------------------------------------------------------
Sigma Finance Corp.*
5.64% due 8/27/99 $197,000 $ 196,990,868
Steers*
5.641% due 10/15/98 160,000 160,000,000
5.652% due 11/10/98 191,000 190,992,928
5.648% due 3/25/99 78,069 78,069,058
Strategic Money Market
Trust Receipts*
5.656% due 3/05/99 213,000 213,000,000
Strats Trust*
5.663% due 12/15/98 130,000 130,000,000
--------------
969,052,854
--------------
BANK NOTES - 4.8%
- ----------------------------------------------------------------------------
Bank of New York
5.50% due 2/17/99 100,000 99,968,885
First Union Bank
5.49% due 9/01/99 75,000 75,000,000
FCC National Bank
5.68% due 6/03/99 50,000 49,974,737
5.86% due 10/02/98 100,000 99,995,126
Nationsbank
5.57% due 6/25/99 100,000 99,960,129
--------------
424,898,877
--------------
CERTIFICATES OF DEPOSIT (DOMESTIC) - 1.8%
- ----------------------------------------------------------------------------
Chase Manhattan Bank
5.74% due 5/10/99 57,000 56,977,486
Morgan Guaranty Trust Co.
5.55% due 2/02/99 100,000 100,000,000
--------------
156,977,486
--------------
CERTIFICATES OF DEPOSIT (EURO) - 1.1%
- ----------------------------------------------------------------------------
Barclays Bank
5.58% due 12/29/98 100,000 100,003,242
--------------
CERTIFICATES OF DEPOSIT (YANKEE) - 32.4%
- ----------------------------------------------------------------------------
ABN Amro Bank
5.62% due 4/14/9 75,000 74,977,837
Bank of Nova Scotia
5.65% due 3/29/99 38,000 37,969,974
5.59% due 8/24/99 25,000 24,997,654
Bank of Tokyo Mitsubishi
5.73% due 9/08/98 400,000 400,000,000
Barclays Bank
5.82% due 10/05/98 125,000 124,994,431
5.53% due 2/23/99 100,000 99,972,398
5.70% due 3/30/99 100,000 99,966,931
Bayeriche Landesbank
5.70% due 1/07/99 60,000 59,991,936
5.65% due 7/23/99 50,000 49,954,213
Credit Agricole Indosuez
5.74% due 4/26/99 75,000 74,961,397
Credit Communal de Belgique
5.62% due 3/19/99 45,000 44,975,420
Credit Suisse First Boston
5.69% due 7/06/99 100,000 100,000,000
Deutsche Bank
5.62% due 2/26/99 100,000 99,976,622
5.65% due 3/02/99 100,000 99,976,103
5.65% due 8/06/99 100,000 99,951,040
Rabobank Nederland
5.60% due 3/17/99 50,000 49,986,831
5.71% due 6/11/99 100,000 99,962,179
5.69% due 6/30/99 75,000 74,990,829
5.64% due 7/30/99 103,000 102,979,080
Societe Generale Bank
5.75% due 4/06/99 150,000 149,960,148
5.76% due 4/16/99 75,000 74,982,134
Societe Generale Bank*
5.563% due 5/20/99 175,800 175,714,046
Svenska Handelsbanken
5.75% due 5/04/99 57,000 56,981,681
5.76% due 5/25/99 75,000 74,968,617
5.74% due 6/01/99 77,000 76,960,883
Swiss Bank Corp.
5.715% due 6/14/99 100,000 99,969,983
Toronto Dominion Bank
5.71% due 6/15/99 100,000 99,969,868
5.71% due 6/23/99 85,000 84,973,674
5.54% due 8/18/99 135,000 134,898,090
--------------
2,849,963,999
--------------
COMMERCIAL PAPER - 5.0%
- ----------------------------------------------------------------------------
Aspen Funding Corp.
5.88% due 9/01/98 140,000 140,000,000
General Electric Capital Corp.
5.92% due 9/01/98 100,000 100,000,000
5.44% due 9/09/98 40,000 39,951,645
J. P. Morgan & Co., Inc.
5.376% due 12/11/98 25,000 24,622,933
Newport Funding Corp.
5.875% due 9/01/98 140,000 140,000,000
--------------
444,574,578
--------------
CORPORATE NOTES - 23.0%
- ----------------------------------------------------------------------------
Associates Corp. of North America*
5.61% due 1/04/99 200,000 199,959,365
5.53% due 6/29/99 150,000 149,903,404
Bank One, Wisconsin*
5.65% due 10/23/98 100,000 99,988,872
Bear Stearns*
5.62% due 6/04/99 225,000 225,000,000
Credit Suisse*
5.63% due 10/07/98 200,000 200,000,000
5.63% due 11/09/98 125,000 125,000,000
J. P. Morgan & Co., Inc.*
5.57% due 7/07/99 210,000 209,896,991
Key Bank National Association*
5.555% due 9/28/98 200,000 199,989,284
5.585% due 5/12/99 88,000 87,956,661
Merrill Lynch & Co., Inc.*
5.76% due 10/05/98 100,000 100,013,442
PNC Bank National Association*
5.60% due 10/02/98 230,000 229,986,663
Royal Bank of Canada*
5.54% due 2/16/99 200,000 199,937,000
--------------
2,027,631,682
--------------
MEDIUM TERM NOTES - 7.7%
- ----------------------------------------------------------------------------
Abbey National Treasury Services
5.54% due 1/20/99 125,000 124,991,658
5.525% due 1/26/99 100,000 99,982,606
5.476% due 6/15/99 100,000 99,914,519
5.58% due 8/25/99 100,000 99,961,541
Norwest Financial Inc.
5.55% due 8/31/99 100,000 99,971,291
Sigma Finance Corp.
5.94% due 11/17/98 150,000 150,000,000
--------------
674,821,615
--------------
PROMISSORY NOTES - 4.0%
- ----------------------------------------------------------------------------
Goldman Sachs Group*
5.699% due 11/13/98 350,000 350,000,000
--------------
TIME DEPOSITS - 6.1%
- ----------------------------------------------------------------------------
Dresdner Bank
6.00% due 9/01/98 135,084 135,084,000
Harris Trust & Savings Bank
5.938% due 9/01/98 150,000 150,000,000
ING Bank
5.938% due 9/01/98 75,000 75,000,000
Norddeutsche Landesbank
6.00% due 9/01/98 76,200 76,200,000
Westdeutsche Landesbank
5.938% due 9/01/98 100,000 100,000,000
--------------
536,284,000
--------------
REPURCHASE AGREEMENTS - 2.8%
- ----------------------------------------------------------------------------
First Union Bank
Repurchase Agreement
5.83% due 9/01/98
(collateralized by $48,468,000
Federal National Mortgage
Association, Zero coupon due
12/14/98, valued at
$48,475,849; $41,929,000,
6.96% due 4/02/07, valued at
$41,935,790; $46,763,000, 5.50%
due 2/25/00, valued at
$46,770,573; $10,517,000, 6.65%
due 11/14/07, valued at
$10,518,703; $47,285,000
Federal Home Loan Mortgage
Association, 5.98% due
6/18/08, valued at $47,292,658;
$31,716,000, 6.28% due 8/19/05,
valued at $31,721,136; and
$23,322,000, 6.51% due 8/18/808,
valued at $23,325,777) 250,000,000
--------------
TOTAL INVESTMENTS AT AMORTIZED COST 99.7% 8,784,208,333
OTHER ASSETS, LESS LIABILITIES 0.3 21,701,283
----- --------------
NET ASSETS 100.0% $8,805,909,616
===== ==============
* Variable interest rate - subject to periodic change.
See notes to financial statements
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
================================================================================
ASSETS:
Investments at value (Note 1A) $8,784,208,333
Interest receivable 97,556,173
- --------------------------------------------------------------------------------
Total assets 8,881,764,506
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investment purchased 75,000,000
Payable to affiliate-Investment Advisory fee (Note 2A) 635,623
Accrued expenses and other liabilities 219,267
- --------------------------------------------------------------------------------
Total liabilities 75,854,890
- --------------------------------------------------------------------------------
NET ASSETS $8,805,909,616
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $8,805,909,616
- --------------------------------------------------------------------------------
CASH RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
================================================================================
INTEREST INCOME (Note 1B): $513,556,789
EXPENSES:
Investment advisory fees (Note 2A) $13,394,307
Administrative fees (Note 2B) 4,464,769
Custody and fund accounting fees 1,969,190
Audit fees 39,700
Trustees' fees 37,966
Legal fees 31,427
Miscellaneous 112,193
- --------------------------------------------------------------------------------
Total expenses 20,049,552
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A, and 2B) (11,119,870)
Less fees paid indirectly (Note 1E) (797)
- --------------------------------------------------------------------------------
Net expenses 8,928,885
- --------------------------------------------------------------------------------
Net investment income $504,627,904
================================================================================
See notes to financial statements
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------
1998 1997
=========================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
<S> <C> <C>
Net investment income $ 504,627,904 $ 339,604,126
- -----------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 30,335,511,897 33,685,999,190
Value of withdrawals (29,691,630,125) (30,810,390,668)
- -----------------------------------------------------------------------------------------
Net increase in net assets from
capital transactions 643,881,772 2,875,608,522
- -----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,148,509,676 3,215,212,648
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 7,657,399,940 4,442,187,292
- -----------------------------------------------------------------------------------------
End of period $ 8,805,909,616 $ 7,657,399,940
=========================================================================================
</TABLE>
CASH RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C> <C> <C> <C>
Net assets (000's omitted) $8,805,910 $7,657,400 $4,442,187 $4,765,406 $2,147,361
Ratio of expenses to average net assets 0.10% 0.10% 0.10% 0.10% 0.11%
Ratio of net investment income
to average net assets 5.65% 5.57% 5.64% 5.88% 3.87%
Note: If agents of the Portfolio had not voluntarily waived a portion of their fees for the periods indicated,
the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.22% 0.23% 0.23% 0.23% 0.24%
Net investment income to
average net assets 5.53% 5.44% 5.50% 5.75% 3.74%
================================================================================================================
</TABLE>
See notes to financial statements
<PAGE>
CASH RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES Cash Reserves Portfolio (the "Portfolio") is
registered under the U.S. Investment Company Act of 1940, as amended, as a
no-load, diversified, open-end management investment company which was organized
as a trust under the laws of the State of New York. The Declaration of Trust
permits the Trustees to issue beneficial interests in the Portfolio. Signature
Financial Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's
Administrator and Citibank, N.A. ("Citibank") acts as the Investment Adviser.
Citibank is a wholly-owned subsidiary of Citicorp. Citicorp announced its
intention to merge with The Travelers Group. The merger is expected to occur on
or about October 8, 1998.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
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.
This method involves valuing a portfolio security at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium. The
Portfolio's use of amortized cost is subject to the Portfolio's compliance with
certain conditions as specified under Rule 2a-7 of the U.S. Investment Company
Act of 1940.
B. INTEREST INCOME AND EXPENSES Interest income consists of interest accrued
and discount earned (including both original issue and market discount) on the
investments of the Portfolio, accrued ratably to the date of maturity, plus or
minus net realized gain or loss, if any, on investments. Expenses of the
Portfolio are accrued daily. The Portfolio bears all costs of its operations
other than expenses specifically assumed by Citibank and SFG.
C. U.S. FEDERAL INCOME TAXES The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. REPURCHASE AGREEMENTS It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Portfolio to
monitor, on a daily basis, the market value of the repurchase agreement's
underlying investments to ensure the existence of a proper level of collateral.
E. FEES PAID INDIRECTLY The Portfolio's custodian bank calculates its fees
based on the Portfolio's average daily net assets. The fees are 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 Portfolio. 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. INVESTMENT ADVISORY FEES AND ADMINISTRATIVE FEES
A. INVESTMENT ADVISORY FEE - The Investment advisory fees paid to Citibank,
as compensation for overall investment management services, amounted to
$13,394,307, of which $6,655,101 was voluntarily waived for the year ended
August 31, 1998. The investment advisory fees are computed at an annual rate of
0.15% of the Portfolio's average daily net assets.
B. 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, are computed at
the annual rate of 0.05% of the Portfolio's average daily net assets. The
Administrative fees amounted to $4,464,769, all of which were voluntarily waived
for the year ended August 31, 1998. The Portfolio pays no compensation directly
to any Trustee or to any officer who is affiliated with the Administrator, all
of whom receive remuneration for their services to the Portfolio from the
Administrator or its affiliates. Certain of the officers and a Trustee of the
Portfolio are officers and a director of the Administrator or its affiliates.
3. INVESTMENT TRANSACTIONS Purchases, maturities and sales of money market
instruments aggregated $346,656,360,128 and $345,459,284,002, respectively, for
the year ended August 31, 1998.
4. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1998, the commitment fee allocated to the Portfolio was $29,660.
Since the line of credit was established, there have been no borrowings.
<PAGE>
CASH RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND THE INVESTORS OF CASH RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of Cash Reserves Portfolio (the
"Portfolio") as at August 31, 1998 and the related statements of operations and
of changes in net assets and the financial highlights for the periods indicated.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned at
August 31, 1998 by correspondence with the custodian, provide a reasonable basis
for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Portfolio as at August 31, 1998, the
results of its operations and the changes in its net assets and the financial
highlights for the periods indicated in accordance with U.S. generally accepted
accounting principles.
PricewaterhouseCoopers
Chartered Accountants
Toronto, Ontario
October 6, 1998
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
(OF CASH RESERVES PORTFOLIO)
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
PricewaterhouseCoopers LLP
160 Federal 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
o CitiFunds International Growth 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 California 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
PREMIUM MONEY MARKETS
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium U.S. Treasury Reserves
INSTITUTIONAL MONEY MARKETS
o CitiFunds Institutional Liquid Reserves
o CitiFunds Institutional U.S. Treasury Reserves
o CitiFunds Institutional Tax Free Reserves
o CitiFunds Institutional Cash 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.
*Purchase orders will be accepted beginning
November 2, 1998
For more information contact your Service Agent or call
1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as
distributor.
(c)1998 Citicorp [recycle symbol Printed on recycled paper CFS/PLR/898
<PAGE>
Annual Report o August 31, 1998
CITIFUNDS(SM)
Premium
U.S. Treasury Reserves
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
MONEY MARKETS
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
- --------------------------------------------------------------------------------
Portfolio Environment and Outlook 2
- --------------------------------------------------------------------------------
Fund Facts 3
- --------------------------------------------------------------------------------
Fund Performance 4
- --------------------------------------------------------------------------------
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
Statement of Assets and Liabilities 5
- --------------------------------------------------------------------------------
Statement of Operations 5
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets 6
- --------------------------------------------------------------------------------
Financial Highlights 6
- --------------------------------------------------------------------------------
Notes to Financial Statements 7
- --------------------------------------------------------------------------------
Independent Auditors' Report 10
- --------------------------------------------------------------------------------
U.S. TREASURY RESERVES PORTFOLIO
Portfolio of Investments 11
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities 12
- --------------------------------------------------------------------------------
Statement of Operations 12
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets 13
- --------------------------------------------------------------------------------
Financial Highlights 13
- --------------------------------------------------------------------------------
Notes to Financial Statements 14
- --------------------------------------------------------------------------------
Independent Auditors' Report 16
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 12-month period ended August 31, 1998 saw a continuation of the positive
economic and market conditions that have prevailed over the past three years.
Late in the period, however, heightened volatility caused the stock market to
retrace some of its gains.
Such volatility suggests that money market securities may once again be
poised to demonstrate their true value as relatively safer investments where
investors seek to protect their principal and earn interest. In our view,
CitiFunds(SM) Premium U.S. Treasury Reserves can play a valuable role in
investors' diversified investment portfolios.
As you have probably heard, Citicorp announced its intention to merge with
The Travelers Group. The merger is expected to occur on or about October 8,
1998. As necessary, we will provide you with information that specifically
affects the fund.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 21, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
YIELDS ON SHORT-TERM U.S. TREASURY SECURITIES ENDED THE 12-MONTH REPORTING
PERIOD LOWER THAN WHERE THEY BEGAN, reflecting the general trend of short-term
interest rates. That decline was interrupted, however, during the first quarter
of 1998, which saw an increase in short-term interest rates amid uncertainty
over the economic effects of the financial crisis in Asia. When evidence emerged
early in the year that U.S. economic growth was stronger than most analysts
expected, interest rates rose in anticipation of a move by the Federal Reserve
Board to a more restrictive monetary policy.
Such a move never took place, however, because of the absence of inflationary
pressures. During the second and third quarters of 1998, it became clearer that
the Asian crisis would, in fact, negatively affect U.S. corporate earnings and
dampen U.S. economic growth. In effect, lower demand for U.S. goods from
overseas markets and improved competitive positions for Asian companies
constrained sales and earnings of U.S. companies. As a result, fixed-income
investors became more confident that the Federal Reserve would maintain
short-term interest rates at current levels, and yields on U.S. Treasury bills
settled back to their previous lows.
IN THIS ECONOMIC ENVIRONMENT, WE MAINTAINED AN AVERAGE MATURITY NEAR THE
PORTFOLIO'S 60-DAY MAXIMUM for most of the period. This position enabled us to
capture modestly higher yields as short-term interest rates declined.
We also attempted to enhance the portfolio's yield by anticipating changes in
the supply of and demand for AAA-rated direct obligations of the U.S. Treasury.
For example, there were times over the past year when instability overseas
caused surges in demand from foreign investors. These overseas investors turned
to the unparalleled credit quality of U.S. Treasury securities to protect their
assets from the economic and political problems affecting their native
countries. Such surges of demand tend to drive yields lower, giving us an
opportunity to sell securities at relatively attractive prices. We then
reinvested those funds in U.S. Treasury securities when demand abated and yields
were incrementally higher.
WE BELIEVE YIELDS OF SHORT-TERM U.S. TREASURY SECURITIES ARE LIKELY TO REMAIN
NEAR CURRENT LEVELS FOR THE REMAINDER OF THE YEAR. If economic growth continues
to moderate in the fourth quarter of 1998, as we expect, the Federal Reserve
Board will have little reason to raise short-term interest rates, which they
might otherwise do to forestall a re-acceleration of inflation. In our opinion,
the opposite is the more likely scenario: if the economy continues to slow, the
Federal Reserve Board may eventually reduce short-term interest rates modestly
in order to provide an economic stimulus.
In the meantime, we will continue to manage the Portfolio according to the
market's supply-and-demand influences and our near-term outlook for interest
rates and the U.S. economy. In our view, this approach will help CitiFunds
Premium U.S. Treasury Reserves earn competitive returns commensurate with
preservation of capital, regardless of the fluctuations of the stock and bond
markets.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide liquidity and as high a level of current income from U.S. Government
obligations as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
U.S. TREASURY RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
BENCHMARK
COMMENCEMENT OF OPERATIONS o Lipper S&P AAA rated U.S. Treasury
March 1, 1991 Money Funds Average
NET ASSETS AS OF 8/31/98
$325.7 million
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE MARCH 1, 1991
ALL PERIODS ENDING AUGUST 31, 1998 YEAR YEARS* INCEPTION*
- -------------------------------------------------------------------------------
CitiFunds Premium U.S. Treasury Reserves 4.91% 4.60% 4.38%
Lipper S&P AAA rated U.S. Treasury Money
Funds Average 4.91% 4.51% 4.19%(+)
* Average Annual Total Return
(+) From 2/28/91
7-DAY YIELDS
Annualized Current 4.66%
Effective 4.76%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during the 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.
IMPORTANT TAX INFORMATION -- For the Fiscal year ended August 31, 1998 the Fund
paid $0.04802 per share to shareholders from net investment income. For such
period, 100% of income dividends paid were derived from interest earned from
U.S. Treasury Bills, Notes and Bonds.
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns
would have been lower.
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investment in U.S. Treasury Reserves Portfolio, at value
(Note 1) $326,374,357
Receivable for shares of beneficial interest sold 50,000
- --------------------------------------------------------------------------------
Total assets 326,424,357
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 536,620
Payable to affiliate -- Shareholder Servicing Agents' fees
(Note 3B) 28,132
Accrued expenses and other liabilities 121,721
- --------------------------------------------------------------------------------
Total liabilities 686,473
- --------------------------------------------------------------------------------
NET ASSETS for 325,737,884 shares of beneficial interest
outstanding $325,737,884
-------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $325,737,884
-------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- --------------------------------------------------------------------------------
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1A):
Income from U.S. Treasury Reserves Portfolio $14,546,173
Allocated expenses from U.S. Treasury Reserves
Portfolio (277,396)
- --------------------------------------------------------------------------------
$14,268,777
EXPENSES:
Administrative fees (Note 3A) 967,413
Shareholder Servicing Agents' fees (Note 3B) 276,404
Distribution fees (Note 4) 276,404
Registration fees 25,835
Custody and fund accounting fees 21,044
Shareholder reports 15,497
Transfer agent fees 14,500
Audit fees 11,000
Trustees fees 5,923
Legal fees 1,247
Miscellaneous 21,858
- --------------------------------------------------------------------------------
Total expenses 1,637,125
Less aggregate amounts waived by Administrator and
Distributor (Notes 3A and 4) (667,923)
- --------------------------------------------------------------------------------
Net expenses 969,202
- --------------------------------------------------------------------------------
Net investment income $13,299,575
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------
1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
to shareholders (Note 2) $ 13,299,575 $ 11,157,027
- -------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT NET ASSET VALUE OF $1.00 PER
SHARE (Note 5):
Proceeds from sale of shares $ 629,448,550 $ 693,918,717
Net asset value of shares issued to shareholders from
reinvestment of dividends 8,429,748 8,023,990
Cost of shares repurchased (551,581,566) (697,772,839)
- -------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 86,296,732 4,169,868
- -------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 239,441,152 235,271,284
- -------------------------------------------------------------------------------------
End of period $ 325,737,884 $ 239,441,152
- -------------------------------------------------------------------------------------
</TABLE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.04802 0.04794 0.04851 0.04999 0.03087
Less dividends from net
investment income (0.04802) (0.04794) (0.04851) (0.04999) (0.03087)
- ------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
- ------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $325,738 $239,441 $235,271 $317,312 $252,458
Ratio of expenses to
average net assets(+) 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income
to average net assets(+) 4.81% 4.80% 4.88% 5.02% 3.09%
Total return 4.91% 4.90% 4.96% 5.12% 3.13%
Note: If Agents of the Fund and agents of U.S. Treasury Reserves Portfolio had not waived
all or a portion of their fees during the periods indicated, the net investment income per
share and the ratios would have been as follows:
Net investment income per share $0.04433 $0.04414 $0.04463 $0.04601 $0.02667
RATIOS:
Expenses to average net assets(+) 0.82% 0.83% 0.85% 0.84% 0.87%
Net investment income to average
net assets(+) 4.44% 4.42% 4.49% 4.62% 2.67%
- ------------------------------------------------------------------------------------------
(+) Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated expenses.
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Premium U.S. Treasury Reserves (the
"Fund") is a diversified separate series of CitiFunds Premium Trust (the
"Trust"), a Massachusetts business trust. Effective January 2, 1998 Landmark
Premium U.S. Treasury Reserves changed its name to CitiFunds Premium U.S.
Treasury Reserves. The Trust also changed its name from Landmark Premium Trust
to CitiFunds Premium Trust. The Trust is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
invests all of its investable assets in U.S. Treasury Reserves Portfolio (the
"Portfolio"), a management investment company for which Citibank, N.A.
("Citibank") serves as Investment Adviser. CFBDS, Inc. ("CFBDS"), (formerly
Landmark Funds Broker-Dealer Services, Inc.) acts as the Trust's Administrator
and Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers through various Shareholder Servicing Agents. Citibank is
a wholly-owned subsidiary of Citicorp. Citicorp announced its intention to merge
with The Travelers Group. The merger is expected to occur on or about October 8,
1998.
The Trust seeks to achieve the Fund's investment objective of providing
shareholders with liquidity and as high a level of current income from U.S.
Government obligations as is consistent with preservation of capital by
investing all of its investable assets in the Portfolio, an open-end,
diversified management investment company having the same investment objective
as the Fund. The value of such investment reflects the Fund's proportionate
interest (35.8% at August 31, 1998) in the net assets of the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
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. Investment Income The Fund earns income, net of Portfolio expenses, daily
on its investment in the Portfolio.
B. 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. Accordingly, no provision
for federal income or excise tax is necessary.
C. 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 where allocations of direct expenses to
each Fund can otherwise be made fairly. Expenses directly attributable to a Fund
are charged to that Fund.
D. Other All the net investment income of the Portfolio is allocated pro
rata, based on respective ownership interests, among the Fund and other
investors in the Portfolio at the time of such determination.
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. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an 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 Trust's Administrative Services Plan, the
aggregate of the fee paid to the Administrator from the Fund and of the fees
paid to the Shareholder Servicing Agents from the Fund under such plan may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. For the year ended August 31, 1998,
Management agreed to voluntarily limit Fund expenses to 0.45%.
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 accrued daily and paid monthly at the annual rate of 0.35% of the
Fund's average daily net assets. The Administrative fees amounted to $967,413,
of which $391,519 was voluntarily waived for the year ended August 31, 1998.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or to 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 Fees The Trust, on behalf of the Fund, entered
into shareholder servicing agreements with each Shareholder Servicing Agent
pursuant to which the 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
0.10% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agent fees amounted to $276,404 for the year ended August 31, 1998.
4. DISTRIBUTION FEES The Trust adopted a Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, in which the Fund
reimburses the Distributor for expenses incurred or anticipated in connection
with the sale of shares of the Fund, limited to an annual rate of 0.10% of the
average daily net assets of the Fund. The Distribution fees amounted to
$276,404, for the year ended August 31, 1998. The Distributor has voluntarily
agreed to assume all distribution expenses through August 31, 1998.
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 ($0.00001 par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $511,710,807 and $439,307,746, respectively, for the
year ended August 31, 1998.
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF
CITIFUNDS PREMIUM U.S. TREASURY RESERVES:
We have audited the accompanying statement of assets and liabilities of
CitiFunds Premium U.S. Treasury Reserves, a separate series of CitiFunds Premium
Trust (the "Trust") (a Massachusetts business trust), as of August 31, 1998, the
related statement of operations for the year then ended, the statement of
changes in net assets in the years ended August 31, 1998 and 1997, and the
financial highlights for each of the years in the five-year period ended August
31, 1998. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of CitiFunds Premium
U.S. Treasury Reserves at August 31, 1998, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1998
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -----------------------------------------------------------------------------
U.S. TREASURY BILLS -- 74.3%
- -----------------------------------------------------------------------------
United States Treasury Bill, due 9/03/98 $ 19,901 $ 19,895,477
United States Treasury Bill, due 9/10/98 19,118 19,093,859
United States Treasury Bill, due 9/15/98 19,000 18,959,287
United States Treasury Bill, due 9/24/98 91,432 91,144,581
United States Treasury Bill, due 10/01/98 90,040 89,667,648
United States Treasury Bill, due 10/08/98 34,082 33,909,213
United States Treasury Bill, due 10/22/98 67,321 66,848,477
United States Treasury Bill, due 10/29/98 119,779 118,830,012
United States Treasury Bill, due 11/19/98 102,410 101,303,683
United States Treasury Bill, due 12/31/98 119,706 117,740,347
------------
677,392,584
------------
- -----------------------------------------------------------------------------
U.S. TREASURY NOTES -- 25.2%
- -----------------------------------------------------------------------------
United States Treasury Note, 6.00% due 9/30/98 $139,342 $139,413,944
United States Treasury Note, 5.63% due 11/30/98 65,000 65,047,670
United States Treasury Note, 5.75% due 12/31/98 25,000 25,047,851
-----------
229,509,465
-----------
TOTAL INVESTMENTS, AT AMORTIZED COST 99.5% 906,902,049
OTHER ASSETS, LESS LIABILITIES 0.5 4,942,546
--------------------------
NET ASSETS 100.0% $911,844,595
==========================
See notes to financial statements
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- -------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $906,902,049
Cash 784
Receivable for investment sold 25,646,772
Interest receivable 4,692,955
- -------------------------------------------------------------------------------
Total assets 937,242,560
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for investment purchased 25,293,945
Payable to affiliate -- Investment Advisory fees (Note 2A) 58,487
Accrued expenses and other liabilities 45,533
- -------------------------------------------------------------------------------
Total liabilities 25,397,965
- -------------------------------------------------------------------------------
NET ASSETS $911,844,595
- -------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $911,844,595
- -------------------------------------------------------------------------------
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $45,072,683
EXPENSES:
Investment Advisory fees (Note 2A) $1,289,761
Administrative fees (Note 2B) 429,920
Custody and fund accounting fees 210,699
Auditing fees 20,100
Trustee fees 11,547
Legal fees 4,049
Miscellaneous 35,489
- -------------------------------------------------------------------------------
Total expenses 2,001,565
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A and 2B) (1,141,331)
Less fees paid indirectly (Note 1D) (994)
- -------------------------------------------------------------------------------
Net expenses 859,240
- -------------------------------------------------------------------------------
Net investment income $44,213,443
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
---------------------------------
1998 1997
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 44,213,443 $ 43,903,935
- -------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 1,935,301,975 1,742,310,476
Value of withdrawals (1,975,581,019) (1,646,108,001)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital transactions (40,279,044) 96,202,475
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 3,934,399 140,106,410
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 907,910,196 767,803,786
- -------------------------------------------------------------------------------
End of period $ 911,844,595 $ 907,910,196
- -------------------------------------------------------------------------------
U.S. TREASURY RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $911,845 $907,910 $767,804 $832,258 $726,569
Ratio of expenses to average net assets 0.10% 0.10% 0.10% 0.10% 0.12%
Ratio of net investment income to
average net assets 5.14% 5.15% 5.20% 5.36% 3.43%
Note: If the agents of the Portfolio had not voluntarily waived 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 ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.23% 0.24% 0.25% 0.25% 0.26%
Net investment income to average net
assets 5.01% 5.01% 5.05% 5.21% 3.30%
- --------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES U.S. Treasury Reserves Portfolio (the
"Portfolio") is registered under the Investment Company Act of 1940, as amended,
as a no-load, diversified, open-end management investment company which was
organized as a trust under the laws of the State of New York. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio. The
Investment Adviser of the Portfolio is Citibank N.A. ("Citibank"). Signature
Financial Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's
Administrator.
Citibank is a wholly-owned subsidiary of Citicorp. Citicorp announced its
intention to merge with The Travelers Group. The merger is expected to occur on
or about October 8, 1998.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
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 Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.
B. Investment Income and Expenses Investment income consists of interest
accrued and discount earned (including both original issue and market discount),
adjusted for amortization of premium, on the investments of the Portfolio,
accrued ratably to the date of maturity, plus or minus net realized gain or
loss, if any, on investments. Expenses of the Portfolio are accrued daily.
C. Federal Income Taxes The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.
D. Fees Paid Indirectly The Portfolio's custodian bank calculates its fees
based on the Portfolio'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 Portfolio. This amount is shown as a reduction of expenses on the Statement
of Operations.
E. Other Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.
2. INVESTMENT ADVISORY FEES AND ADMINISTRATIVE FEES
A. Investment Advisory Fee The Investment advisory fees paid to Citibank, as
compensation for overall investment management services, amounted to $1,289,761,
of which $711,411 was voluntarily waived for the year ended August 31, 1998.
The investment advisory fee is computed at an annual rate of 0.15% of the
Portfolio's average daily net assets.
B. 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 accrued daily
and paid monthly at the annual rate of 0.05% of the Portfolio's average daily
net assets. The Administrative fees amounted to $429,920, all of which was
voluntarily waived for the year ended August 31, 1998. The Portfolio 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
Portfolio from the Administrator or its affiliates. Certain of the officers and
a Trustee of the Portfolio are officers and a director of the Administrator or
its affiliates.
3. INVESTMENT TRANSACTIONS Purchases, maturities and sales of U.S. Treasury
obligations, aggregated $7,644,183,016 and $7,672,254,966 respectively, for the
year ended August 31, 1998.
4. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1998, the commitment fee allocated to the Portfolio was $2,987. Since
the line of credit was established, there have been no borrowings.
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS OF U.S. TREASURY RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of U.S. Treasury Reserves Portfolio (a
New York Trust) as of August 31, 1998, the related statement of operations for
the year then ended, the statement of changes in net assets for the years ended
August 31, 1998 and 1997, and the financial highlights for each of the years in
the five-year period ended August 31, 1998. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on the financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1998, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of U.S. Treasury
Reserves Portfolio at August 31, 1998, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
(OF U.S. TREASURY RESERVES PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth 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 California 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
PREMIUM MONEY MARKETS
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium U.S. Treasury Reserves
INSTITUTIONAL MONEY MARKETS
o CitiFunds Institutional Liquid Reserves
o CitiFunds Institutional U.S. Treasury Reserves
o CitiFunds Institutional Tax Free Reserves
o CitiFunds Institutional Cash 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.
*Purchase orders will be accepted beginning November 2, 1998.
For more information contact your Service Agent
or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc.
as distributor.
(C)1998 Citicorp [recycle symbol] Printed on recycled paper CFA/PUS/898
