CITIFUNDS(R)
---------
Premium
Liquid
Reserves
ANNUAL REPORT
AUGUST 31, 2000
CitiFunds
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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 16
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Statement of Operations 16
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Statement of Changes in Net Assets 17
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Financial Highlights 17
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Notes to Financial Statements 18
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Independent Auditors' Report 20
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
Robust economic growth, inflation concerns and rising interest rates helped
produce higher yields for most money market instruments during the reporting
period. This trend toward higher interest rates persisted through the summer of
2000, when evidence began to appear that the Federal Reserve Board's (the "Fed")
restrictive monetary policies may have had a moderating effect on U.S. economic
growth.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage Cash Reserves Portfolio, the portfolio in which the Fund
invests all of its investable assets, with the goal of achieving its investment
objective: providing liquidity and as high a level of current income as is
consistent with the preservation of capital.
This report reviews the Portfolio's investment activities and performance
during the twelve months ended August 31, 2000, and provides a summary of
Citibank's perspective on and outlook for the money market securities
marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
----------------------
Philip W. Coolidge
President
September 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
MONEY MARKET SECURITIES PROVIDED COMPETITIVE RETURNS AND A RELATIVELY SAFE
HARBOR FOR MANY INVESTORS DURING THE REPORTING PERIOD. These benefits were
particularly valuable during the second half of the period, when heightened
volatility in the stock market and rising interest rates produced flat or
negative returns for some investment classes, including stocks and longer-term
bonds.
The U.S. economy during most of the reporting period was characterized by
strong growth, rising prices for some important commodities, including oil, and
the lowest levels of unemployment in recent memory. During the first half of the
reporting period, these economic forces were complemented by a rapidly rising
stock market, especially within market sectors expected to benefit from strong
demand for technology and telecommunications services.
BECAUSE THIS COMBINATION OF POSITIVE ECONOMIC FORCES HAS HISTORICALLY LED
TO HIGHER RATES OF INFLATION, THE FED CONTINUED TO MOVE TOWARD A MORE
RESTRICTIVE MONETARY POLICY DURING THE PERIOD. In fact, the Fed raised
short-term interest rates four times during the reporting period, for a total
increase of 1.25%, in an effort to relieve inflationary pressures that might
threaten to derail U.S. economic prosperity.
IN THIS ENVIRONMENT, MANAGEMENT MAINTAINED A RELATIVELY SHORT AVERAGE
MATURITY from the start of the reporting period into the first quarter of 2000.
This maturity strategy was designed to keep assets available for higher-yielding
securities if interest rates rose. Subsequently, management began to gradually
extend the Fund's average maturity to take advantage of higher yielding
opportunities among money market instruments with moderately longer maturities.
WHEN IT BECAME APPARENT TO THE MANAGERS IN FEBRUARY THAT MOST INVESTORS
EXPECTED THE FED TO RAISE INTEREST RATES AGGRESSIVELY, MANAGEMENT MORE
AGGRESSIVELY EXTENDED THE PORTFOLIO'S AVERAGE MATURITY TO BETWEEN 80 AND 89 DAYS
IN ORDER TO LOCK IN PREVAILING YIELDS for as long as practical. Management
generally maintained a long average maturity for the remainder of the reporting
period.
From a security selection perspective, management has sought to maintain a
well-diversified asset mix. As of August 31, 2000, approximately 30.2% of the
Fund's assets was invested in Yankee CDs, which are U.S. dollar-denominated
certificates of deposit issued by foreign banks on management's approved credit
list. In addition, about 2.2% of the Fund's assets was invested in short-term
securities issued by U.S. government agencies. Because U.S. Treasury bill yields
have been relatively unattractive over the past year very few of these
securities are currently held in the Portfolio.
AS FOR THE FORESEEABLE FUTURE, MANAGEMENT EXPECTS THE FED WILL NOT MAKE
POLICY DECISIONS UNTIL AFTER THE NOVEMBER PRESIDENTIAL ELECTION. Recent economic
statistics indicate that the Fed's previous rate hikes may have been effective
in slowing the rate of economic growth and forestalling an acceleration of
inflation. In addition, management believes that recent labor strikes and U.S.
census-related layoffs may keep inflationary pressures in check. Consequently,
the managers expect that money market yields may eventually begin to decline
from current levels. Of course, management will adjust its strategies as
economic and market conditions change.
2
<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 Market
Funds Average
NET ASSETS AS OF 8/31/00 o iMoneyNet, Inc. (formerly
$997.8 million IBC Financial Data) 1st Tier Taxable
Money Market Funds Average
* Lipper Funds Average and iMoneyNet, Inc. Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
ONE FIVE TEN
ALL PERIODS ENDED AUGUST 31, 2000 YEAR YEARS* YEARS*
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CitiFunds Premium Liquid Reserves 5.80% 5.41% 5.05%+
Lipper Taxable Money Market Funds Average 5.32% 4.94% 4.66%
iMoneyNet, Inc.
(formerly IBC Financial Data) 1st Tier
Taxable Money Market Funds Average 5.42% 5.06% 4.68%+
* Average Annual Total Return
+ From 4/30/90
7-DAY YIELDS
Annualized Current 6.30%
Effective 6.50%
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, 2000, the Fund
paid $0.05653 per share to shareholders from net investment income. For such
period 1.4% 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. iMONEYNET,
INC. (FORMERLY IBC FINANCIAL DATA) 1ST TIER TAXABLE MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds Premium Liquid Reserves generally provided a higher
annualized seven-day yield to that of a comparable iMoneyNet, Inc. Money Market
Funds Average, as published in iMoneyNet, Inc. Money Market Funds Report(TM),
for the one year period. [Table below represents line chart in its printed
piece]
[The data below is representative of a chart in the printed piece]
CitiFunds Premium iMoneyNet, Inc. 1st Tier Taxable
Liquid Reserves Money Market Funds Average
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4.86 4.48
9/7/99 5 4.58
9/14/99 5 4.6
9/21/99 5.05 4.63
9/28/99 5.06 4.65
10/5/99 5.1 4.67
10/12/99 5.07 4.7
10/19/99 5.11 4.73
10/26/99 5.12 4.76
11/2/99 5.21 4.8
11/9/99 5.2 4.8
11/16/99 5.26 4.86
11/23/99 5.33 4.91
11/30/99 5.4 4.97
12/7/99 5.38 5
12/14/99 5.39 5.06
12/21/99 5.42 5.12
12/28/99 5.4 5.15
1/4/00 5.28 5.05
1/11/00 5.4 5.15
1/18/00 5.42 5.13
1/25/00 5.41 5.1
2/1/00 5.42 5.11
2/8/00 5.41 5.12
2/15/00 5.46 5.16
2/22/00 5.48 5.16
2/29/00 5.51 5.19
3/7/00 5.53 5.18
3/14/00 5.54 5.2
3/21/00 5.57 5.23
3/28/00 5.67 5.29
4/4/00 5.68 5.35
4/11/00 5.68 5.35
4/18/00 5.72 5.37
4/25/00 5.71 5.39
5/2/00 5.77 5.39
5/9/00 5.76 5.42
5/16/00 5.84 5.48
5/23/00 6 5.61
5/30/00 6.07 5.69
6/6/00 6.11 5.73
6/13/00 6.12 5.78
6/20/00 6.17 5.81
6/27/00 6.19 5.85
7/4/00 6.32 5.91
7/11/00 6.23 5.87
7/18/00 6.23 5.89
7/25/00 6.25 5.9
8/1/00 6.27 5.91
8/8/00 6.22 5.9
8/15/00 6.25 5.92
8/22/00 6.25 5.9
8/29/00 6.29 5.91
Note: Although money market funds seek to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the Fund.
Mutual Fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Yields and total returns
will fluctuate and past performance is no guarantee of future results. Total
return figures include reinvestment of dividends. Returns and yields reflect
certain voluntary fee waivers. If the waivers were not in place, the Fund's
returns and yields would have been lower.
4
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
================================================================================
ASSETS:
Investment in Cash Reserves Portfolio, at value (Note 1A) $ 999,929,645
Receivables for shares of beneficial interest sold 1,982,195
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Total assets 1,001,911,840
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LIABILITIES:
Dividends payable 2,846,487
Payable for shares of beneficial interest repurchased 875,700
Payable to affiliate-Shareholder servicing agents' fees (Note 3B) 89,074
Accrued expenses and other liabilities 272,300
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Total liabilities 4,083,561
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NET ASSETS for 997,828,279 shares of beneficial interest
outstanding $ 997,828,279
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 997,828,279
================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
5
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
================================================================================
INVESTMENT INCOME (Note 1B):
Income from Cash Reserves Portfolio $58,966,466
Allocated expenses from Cash Reserves Portfolio (969,547)
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$57,996,919
EXPENSES:
Administrative fees (Note 3A) 3,387,235
Shareholder Servicing Agents' fees (Note 3B) 967,782
Distribution fees (Note 4) 967,782
Registration fees 55,171
Legal fees 24,162
Custody and fund accounting fees 19,534
Shareholder reports 17,948
Trustees' fees 17,846
Transfer agent fees 12,382
Audit fees 11,230
Miscellaneous 4,580
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Total expenses 5,485,652
Less aggregate amount waived or assumed by
Administrator and Distributor (Notes 3A and 4) 2,586,740)
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Net expenses 2,898,912
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Net investment income $55,098,007
================================================================================
See notes to financial statements
6
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
----------------------------------
2000 1999
===============================================================================
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
to shareholders (Note 2) $ 55,098,007 $ 37,972,067
===============================================================================
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares 4,499,800,089 4,282,425,929
Net asset value of shares issued to
shareholders from reinvestment of
dividends 26,023,223 17,030,134
Cost of shares repurchased (4,323,319,287) (4,115,401,408)
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NET INCREASE IN NET ASSETS 202,504,025 184,054,655
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NET ASSETS:
Beginning of period 795,324,254 611,269,599
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End of period $ 997,828,279 $ 795,324,254
===============================================================================
See notes to financial statements
7
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
=======================================================================================================
<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 0.05653 0.04836 0.05348 0.05240 0.05322
Less dividends from net
investment income (0.05653) (0.04836) (0.05348) (0.05240) (0.05322)
-------------------------------------------------------------------------------------------------------
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) $997,828 $795,324 $611,270 $387,910 $380,303
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+ 5.69% 4.84% 5.39% 5.25% 5.35%
Total return. 5.80% 4.94% 5.48% 5.37% 5.45%
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 $0.05274 $0.04457 $0.04950 $0.04833 $0.04911
RATIOS:
Expenses to average net assets+ 0.79% 0.79% 0.80% 0.81% 0.82%
Net investment income to
average net assets+ 5.30% 4.45% 4.99% 4.84% 4.93%
=======================================================================================================
+ Includes the Fund's share of Cash Reserves Portfolio's allocated expenses.
See notes to financial statements.
</TABLE>
8
<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. 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. The value of such investment
reflects the Fund's proportionate interest (7.0% at August 31, 2000) in the net
assets of the Portfolio. CFBDS, Inc. ("CFBDS") acts as the Trust's Administrator
and Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers as Shareholder Servicing Agent.
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 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 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 is
charged against and reduces 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.
9
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 2000,
management agreed to voluntarily limit Fund expenses to 0.40%, inclusive of
Portfolio allocated expenses.
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 $3,387,235 of
which $1,618,958 was voluntarily waived for the year ended August 31, 2000.
Citibank acts as Sub-Administrator and performs certain duties and receives
compensation from CFBDS from time to time as agreed to by CFBDS and Citibank.
Citibank is a wholly-owned subsidiary of Citigroup Inc.
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 periodically receives fees from the Fund, which may
not exceed, on an annualized basis, an amount equal to 0.10% of the average
daily net assets of the Fund. Shareholder Servicing Agent fees amounted to
$967,782 for the year ended August 31, 2000.
10
<PAGE>
CITIFUNDS PREMIUM LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS
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, 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 $967,782 all of
which was voluntarily waived for the year ended August 31, 2000. The Distributor
voluntarily agreed to assume all distribution expenses through August 31, 2000.
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 $2,996,573,821 and $2,852,528,512, respectively, for
the year ended August 31, 2000.
11
<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, 2000 and the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated in conformity with accounting principles generally accepted in the
United States of America. 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 auditing standards generally accepted in
the United States of America 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, 2000 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 12, 2000
12
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 2000
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
------------------------------------------------------------------------
ASSET BACKED -- 9.1%
------------------------------------------------------------------------
Lincs-Ser,*
6.63% due 7/07/01 $100,000 $ 99,991,260
Restructured Asset Securities,*
6.64% due 6/22/01 65,000 65,000,000
Steers,
6.86% due 10/02/00 365,000 365,028,521
Strategic Money Market Trust Receipts,*
6.78% due 9/13/00 350,000 350,001,796
6.64% due 12/13/00 320,000 320,000,000
Strats Trust,
6.65% due 8/20/01 100,000 100,000,000
---------------
1,300,021,577
---------------
BANK NOTES -- 3.9%
------------------------------------------------------------------------
BankAmerica,
6.46% due 11/09/00 100,000 100,000,000
6.48% due 11/20/00 50,000 50,000,000
6.90% due 12/13/00 100,000 100,000,000
6.93% due 1/16/01 100,000 100,000,000
6.98% due 3/30/01 110,000 110,000,000
7.18% due 6/14/01 100,000 100,000,000
---------------
560,000,000
---------------
CERTIFICATES OF DEPOSIT (EURO) -- 9.3%
------------------------------------------------------------------------
Bayerische Hypo,
6.52% due 12/28/00 173,000 172,905,328
Commerzbank,
6.88% due 4/30/01 110,000 109,986,240
Credit Agricole
Indosuez,
7.00% due 7/09/01 100,000 100,000,000
6.89% due 8/24/01 100,000 99,976,832
Credit Suisse First
Boston, 6.78% due 10/02/00 100,000 100,007,905
Landesbank Hessen Thuringen,
7.01% due 11/24/00 57,000 57,001,521
Merrill Lynch & Co. Inc.,
6.67% due 3/02/01 500,000 499,950,137
Morgan Stanley Dean Witter Discover,
6.69% due 3/16/01 200,000 200,000,000
---------------
1,339,827,963
---------------
CERTIFICATES OF DEPOSIT (YANKEE) -- 30.2%
------------------------------------------------------------------------
Abbey National
Treasury Services,*
6.46% due 12/28/00 89,000 88,988,273
6.51% due 12/28/00 100,000 00,018,313
6.92% due 4/24/01 200,000 200,000,000
7.09% due 5/03/01 150,000 150,009,486
Bank Austria,
5.93% due 9/07/00 100,000 99,999,214
6.71% due 2/12/01 135,000 134,976,984
Bank of Nova Scotia,
6.71% due 2/05/01 150,000 149,975,518
6.74% due 2/16/0 140,000 40,007,427
Bayerische Landesbank,
5.86% due 9/27/00 94,000 93,995,838
6.77% due 2/22/01 62,000 62,000,199
6.55% due 6/04/01 135,000 134,954,653
Bear Stearns Cos. Inc.,
6.75% due 2/20/01 250,000 250,000,000
Branch Bank & Trust,
6.68% due 2/16/01 300,000 299,946,364
Commerzbank,
6.67% due 3/01/01 100,000 99,976,469
6.80% due 4/17/01 80,175 80,189,255
7.17% due 6/28/01 150,000 149,959,226
7.15% due 6/29/01 125,000 125,106,330
6.88% due 8/10/01 100,000 99,977,738
Credit Suisse
First Boston,
6.75% due 3/05/01 250,000 249,974,796
Deutsche Bank,
6.20% due 10/18/00 100,000 99,993,862
6.45% due 1/08/01 100,000 99,983,197
6.89% due 8/20/01 167,000 166,954,111
Dexia Bank,
6.98% due 7/18/0 155,000 55,006,000
Dresdner Bank,
7.12% due 6/18/01 100,000 99,984,982
Giro Funding
U.S. Corp.,
6.54% due 2/21/01 103,727 100,467,033
Nord Deutsche Landesbank,
6.28% due 9/01/00 50,000 50,000,000
Rabobank Nederland,
6.13% due 10/31/00 50,000 49,489,583
6.47% due 1/18/01 100,000 99,981,895
6.52% due 1/25/01 140,000 139,973,389
6.85% due 4/06/01 100,000 99,983,095
7.18% due 6/13/0 150,000 49,987,090
13
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 2000
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (YANKEE) -- (CONT'D)
------------------------------------------------------------------------
Societe Generale,
6.56% due 1/16/01 108,000 $ 107,980,750
6.80% due 4/10/0 150,000 49,994,258
6.81% due 4/17/0 150,000 50,008,132
6.75% due 4/18/01 110,000 109,979,522
Toronto Dominion
Bank,
6.71% due 2/07/0 190,000 89,990,686
UBS AG Stamford,
5.93% due 10/02/00 50,000 49,980,604
6.24% due 12/06/00 50,000 49,990,603
6.23% due 12/07/00 120,000 119,980,247
---------------
4,349,765,122
---------------
COMMERCIAL PAPER -- 30.8%
------------------------------------------------------------------------
ABN-Amro Bank,
6.03% due 10/10/00 100,000 99,346,750
Associates Corp.
North America,
6.66% due 9/01/00 200,000 200,000,000
Associates First
Capital Corp.,
6.66% due 9/01/00 110,000 110,000,000
BankAmerica Corp.,
6.18% due 11/22/00 100,000 98,592,333
Brahms Funding Corp.,
6.64% due 9/22/00 105,000 104,593,178
6.61% due 10/25/00 350,000 346,529,750
British Telecommunications Plc.,
6.68% due 11/08/00 97,500 96,269,767
6.69% due 11/08/00 50,000 49,368,167
6.18% due 11/17/00 100,000 98,678,166
6.30% due 12/15/00 60,000 58,897,500
6.32% due 12/18/00 50,000 49,052,000
Cregem North
America Inc.,
5.99% due 10/10/00 100,000 99,351,083
Den Danske Bank,
6.03% due 10/10/00 50,000 49,673,375
Four Winds
Funding Corp.,
6.52% due 9/11/00 147,550 147,282,771
6.52% due 9/15/00 100,000 99,746,444
General Electric
Capital Corp.,
6.52% due 2/02/01 150,000 145,816,333
Goldman Sachs Corp.,
6.81% due 9/14/00 300,000 300,000,000
International Nederland,
6.18% due 11/17/00 100,000 98,678,167
6.39% due 12/26/00 100,000 97,941,000
Lone Star,
6.52% due 9/14/00 252,845 252,249,691
Moat Funding,
6.56% due 10/06/00 275,000 273,246,111
Morgan Stanley Dean Witter Discover,
6.68% due 11/24/00 350,000 350,000,000
Moriarty Ltd.,
6.10% due 9/06/00 100,000 99,915,278
6.67% due 11/22/00 50,000 49,240,361
6.77% due 11/22/00 50,000 49,229,542
6.54% due 2/16/01 200,000 193,896,000
6.55% due 2/28/01 150,000 145,087,500
Santander Financial,
6.65% due 12/13/00 100,000 98,097,361
Sigma Finance Corp.,
6.77% due 11/20/00 90,000 88,647,000
6.20% due 11/21/00 75,000 73,954,593
6.55% due 2/08/01 38,000 36,893,778
6.87% due 4/09/01 100,000 100,000,000
Surrey Funding Corp.,
6.53% due 9/18/00 271,000 270,164,981
---------------
4,430,438,980
---------------
MEDIUM TERM NOTES -- 2.6%
------------------------------------------------------------------------
Abbey National
Treasury Services,
6.19% due 10/18/00 100,000 99,992,635
E.I. Du Pont
de Nemours & Co.,
6.69% due 3/13/01 53,000 53,000,000
Credit Suisse
First Boston,
6.66% due 5/10/01 225,000 224,984,527
---------------
377,977,162
---------------
TIME DEPOSITS -- 10.8%
------------------------------------------------------------------------
Barclays Bank Plc.,
6.63% due 9/01/00 394,171 394,171,000
Branch Bank & Trust,
6.63% due 9/01/00 200,000 200,000,000
Harris Trust &Savings,
6.66% due 9/01/00 242,218 242,218,000
Key Bank National Association,
6.63% due 9/01/00 150,000 150,000,000
Societe Generale,
6.66% due 9/01/00 66,000 66,000,000
Suntrust Grand
Cayman,
6.63% due 9/01/00 500,000 500,000,000
---------------
1,552,389,000
---------------
14
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS
August 31, 2000
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
------------------------------------------------------------------------
UNITED STATES GOVERNMENT AGENCY -- 1.5%
------------------------------------------------------------------------
Federal Home
Loan Bank,
5.97% due 12/01/00 $100,000 $ 99,964,445
Federal Home Loan
Bank Consumer
Discount Notes,
6.45% due 7/09/01 100,000 94,427,917
Federal Home
Loan Mortgage
Discount Notes,
6.84% due 7/25/01 20,000 19,995,054
---------------
214,387,416
---------------
UNITED STATES TREASURY BILLS -- 0.7%
------------------------------------------------------------------------
United States Treasury Bills,
5.21% due 11/09/00 15,000 14,850,213
5.28% due 11/09/00 30,000 29,696,400
5.62% due 11/09/00 60,000 59,389,062
-----------
103,935,675
-----------
TOTAL INVESTMENTS,
AT AMORTIZED COST 98.9% 14,228,742,895
OTHER ASSETS,
LESS LIABILITIES 1.1 163,597,739
----- --------------
NET ASSETS 100.0% $14,392,340,634
===== ===============
* Variable interest rate -- subject to periodic change.
See notes to financial statements
15
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
================================================================================
ASSETS:
Investments at value (Note 1A) $14,228,742,895
Cash 278
Interest receivable 164,714,620
--------------------------------------------------------------------------------
Total assets 14,393,457,793
--------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliate--Investment Advisory fee (Note 2A) 875,881
Accrued expenses and other liabilities 241,278
--------------------------------------------------------------------------------
Total liabilities 1,117,159
--------------------------------------------------------------------------------
NET ASSETS $14,392,340,634
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $14,392,340,634
================================================================================
CASH RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
================================================================================
INTEREST INCOME (Note 1B) $897,863,487
EXPENSES:
Investment Advisory fees (Note 2A) $ 22,344,495
Administrative fees (Note 2B) 7,448,165
Custody and fund accounting fees 3,354,601
Trustees' fees 75,590
Audit fees 40,770
Legal fees 32,452
Other 49,563
--------------------------------------------------------------------------------
Total expenses 33,345,636
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A, and 2B) (18,433,019)
Less fees paid indirectly (Note 1F) (8,375)
--------------------------------------------------------------------------------
Net expenses 14,904,242
--------------------------------------------------------------------------------
Net investment income $882,959,245
================================================================================
See notes to financial statements
16
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
--------------------------------------
2000 1999
================================================================================
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 882,959,245 $ 628,439,104
--------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 58,289,540,600 47,581,662,450
Value of withdrawals (59,709,503,859) (42,086,666,522)
--------------------------------------------------------------------------------
Net increase (decrease) in net assets from
capital transactions (1,419,963,259) 5,494,995,928
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (537,004,014) 6,123,435,032
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 14,929,344,648 8,805,909,616
--------------------------------------------------------------------------------
End of period $14,392,340,634 $14,929,344,648
================================================================================
CASH RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
===============================================================================================================
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets (000's omitted) $14,392,341 $14,929,345 $8,805,910 $7,657,400 $4,442,187
Ratio of expenses to average
net assets 0.10% 0.10% 0.10% 0.10% 0.10%
Ratio of net investment income
to average net assets 5.93% 5.13% 5.65% 5.57% 5.64%
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% 0.22% 0.22% 0.23% 0.23%
Net investment income to
average net assets 5.81% 5.01% 5.53% 5.44% 5.50%
================================================================================================================
</TABLE>
See notes to financial statements
17
<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 Citigroup Inc.
The preparation of financial statements in accordance with United States of
America 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, in accordance with Rule 2a-7 of the Investment Company Act of
1940, as amended (1940 Act). 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. OTHER Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.
F. FEES PAID INDIRECTLY The Portfolio's custodian 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 mea-
18
<PAGE>
CASH RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
sure 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.
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
$22,344,495 of which $10,984,854 was voluntarily waived for the year ended
August 31, 2000. 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, is computed at
the annual rate of 0.05% of the Portfolio's average daily net assets. The
Administrative fees amounted to $7,448,165, all of which were voluntarily waived
for the year ended August 31, 2000. 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 $470,947,921,224 and $471,853,812,341, respectively, for
the year ended August 31, 2000.
4. LINE OF CREDIT The Portfolio, along with other funds in the fund family,
entered into an agreement with a bank which allows the funds collectively to
borrow up to $75 million for temporary or emergency purposes. Interest on
borrowings, if any, is charged to the specific fund executing the borrowing at
the base rate of the bank. The line of credit requires a quarterly payment of a
commitment fee based on the average daily unused portion of the line of credit.
For the year ended August 31, 2000, the commitment fee allocated to the
Portfolio was $43,206. Since the line of credit was established, there have been
no borrowings.
19
<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, 2000 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 of these financial statements in accordance with
auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the 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, 2000 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, 2000, the
results of its operations and the changes in its net assets and the financial
highlights for the periods indicated in accordance with accounting principles
generally accepted in the United States of America.
PricewaterhouseCoopers LLP
Chartered Accountants
Toronto, Ontario
October 12, 2000
20
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.***
SECRETARY
Robert Frenkel**
TREASURER
Linwood Downs*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
**AFFILIATED PERSON OF INVESTMENT ADVISER
***TRUSTEE EMERITUS
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
CitiFiduciary Trust Company
125 Broad Street, New York, NY 10004
SUB-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>
This report is prepared for the information of shareholders of CitiFunds Premium
Liquid Reserves. It is authorized for distribution to prospective investors only
when preceded or accompanied by an effective prospectus of CitiFunds Premium
Liquid Reserves.
(C)2000 Citicorp (recycle logo) Printed on recycled paper CFA/PLR/800
<PAGE>
CITIFUNDS(R)
------------
Premium U.S. Treasury Reserves
ANNUAL REPORT
AUGUST 31, 2000
CitiFunds
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
--------------------------------------------------------------------------------
<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 6
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 7
--------------------------------------------------------------------------------
Financial Highlights 8
--------------------------------------------------------------------------------
Notes to Financial Statements 9
--------------------------------------------------------------------------------
Independent Auditors' Report 12
--------------------------------------------------------------------------------
U.S. TREASURY RESERVES PORTFOLIO
Portfolio of Investments 13
--------------------------------------------------------------------------------
Statement of Assets and Liabilities 14
--------------------------------------------------------------------------------
Statement of Operations 15
--------------------------------------------------------------------------------
Statement of Changes in Net Assets 16
--------------------------------------------------------------------------------
Financial Highlights 17
--------------------------------------------------------------------------------
Notes to Financial Statements 18
--------------------------------------------------------------------------------
Independent Auditors' Report 20
--------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
Robust economic growth, inflation concerns and rising interest rates helped
produce generally higher yields for most money market instruments, including
U.S. Treasury bills, during the reporting period. A closer look suggests that
most of the improvement in U.S. Treasury bill yields took place during the first
eight months of the period. Between May and August, Treasury bill yields
actually declined modestly, primarily in response to evidence that the Federal
Reserve Board's (the "Fed") restrictive monetary policies were having a
moderating effect on U.S. economic growth.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage U.S. Treasury Reserves Portfolio, the portfolio in which the
Fund invests all of its investable assets, with the goal of achieving its
investment objectives: providing liquidity and as high a level of current income
from U.S. government obligations as is consistent with the preservation of
capital.
This report reviews the Fund's investment activities and performance during
the twelve months ended August 31, 2000, and provides a summary of Citibank's
perspective on and outlook for the money market securities marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
----------------------
Philip W. Coolidge
President
September 15, 2000
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK U.S.
TREASURY BILLS PROVIDED POSITIVE RETURNS AND A SAFE HARBOR FOR MANY
INVESTORS DURING THE REPORTING PERIOD. These benefits were particularly valuable
during the second half of the period, when heightened volatility in the stock
market and rising interest rates produced flat or negative returns for some
investment classes, including stocks and longer-term bonds. This market
volatility, which included a sharp correction in formerly high-flying technology
stocks, helped create a flight to quality among many investors.
This increase in demand for high-quality money market securities, combined
with early signs of slower economic growth and an absence of new-issue Cash
Management bills, caused U.S. Treasury bill yields to decline between May and
August 2000. As a result, U.S. Treasury bill yields ended the reporting period
at relatively low levels compared to other taxable money market instruments.
The U.S. economy during most of the reporting period was characterized by
strong growth, rising prices for some important commodities, including oil, and
the lowest levels of unemployment in recent memory. During the first half of the
reporting period, these positive economic conditions were enhanced by a rapidly
rising stock market, especially within market sectors expected to benefit from
strong demand for technology and telecommunications services.
BECAUSE THIS COMBINATION OF POSITIVE ECONOMIC FORCES HAS HISTORICALLY LED
TO HIGHER RATES OF INFLATION, THE FED CONTINUED TO MOVE TOWARD A MORE
RESTRICTIVE MONETARY POLICY DURING THE PERIOD. In fact, the Fed raised
short-term interest rates four times during the reporting period, for a total
increase of 1.25%, in an effort to relieve inflationary pressures that might
threaten to derail U.S. economic prosperity.
IN THIS ENVIRONMENT, MANAGEMENT MAINTAINED A RELATIVELY SHORT AVERAGE
MATURITY from the start of the reporting period through the second quarter of
2000. This strategy was designed to keep assets available for higher yielding
securities should interest rates rise. When it became apparent that Treasury
bill yields had peaked, management then extended the Fund's average maturity in
order to lock in prevailing yields for as long as practical. Management
subsequently reduced the Portfolio's average maturity in anticipation of the
issuance of Cash Management bills, scheduled for late August. As of August 31,
2000, the Portfolio's average maturity was 50 days, which is somewhat shorter
than the Portfolio's maximum average maturity of 60 days.
AS FOR THE FORESEEABLE FUTURE, MANAGEMENT EXPECTS THAT THE FED MOST LIKELY
WILL NOT MAKE POLICY DECISIONS UNTIL AFTER THE NOVEMBER PRESIDENTIAL ELECTION.
Recent economic statistics indicate that the Fed's previous rate hikes may have
been effective in slowing the rate of economic growth and forestalling an
acceleration of inflation. Consequently, management expects that short-term bond
yields will eventually begin to decline from current levels. Management is
prepared to extend the Fund's average maturity if and when this occurs. Of
course, management will adjust its strategies if economic and market conditions
change.
2
<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
COMMENCEMENT OF OPERATIONS BENCHMARK*
March 1, 1991 o Lipper S&P AAA rated U.S.
Treasury Money Market
Funds Average
o iMoneyNet, Inc.
(formerly IBC Financial Data)
NET ASSETS AS OF 8/31/00 100% U.S. Treasury Rated Money
$340.4 million Market Funds Average
* The Lipper Funds Average and iMoneyNet, Inc. Funds Average reflect the
performance (excluding sales charges) of mutual funds with similar
objectives.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
Since
March 1,
One Five 1991
All Periods Ending August 31, 2000 Year Years* Inception*
===============================================================================
CitiFunds Premium U.S. Treasury Reserves 5.17% 4.84% 4.45%
Lipper S&P AAA rated U.S. Treasury
Money Market Funds Average 5.13% 4.78% 4.35%+
iMoneyNet, Inc. (formerly IBC Financial Data)
100% U.S. Treasury Rated Money Market
Funds Average 4.94% 4.64% 4.33%+
*Average Annual Total Return
+From 2/28/91
7-Day Yields
Annualized Current 5.63%
Effective 5.79%
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, 2000 the Fund
paid $0.05049 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: Although money market funds seek to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the Fund.
Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Yields and total returns
will fluctuate and past performance is no guarantee of future results. Total
return figures include reinvestment of dividends. Returns and yields reflect
certain voluntary fee waivers. If the waivers were not in place, the Fund's
returns and yields would have been lower.
4
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000
================================================================================
ASSETS:
Investment in U.S. Treasury Reserves Portfolio, at value (Note 1) $341,652,067
--------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 953,534
Payable for shares of beneficial interest repurchased 115,000
Payable to affiliate--Shareholder servicing agents'fees (Note 3B) 27,893
Accrued expenses and other liabilities 122,439
--------------------------------------------------------------------------------
Total liabilities 1,218,866
--------------------------------------------------------------------------------
NET ASSETS For 340,433,201 shares of beneficial interest
outstanding $340,433,201
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $340,433,201
================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
5
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
STATEMENT OF OPERATIONS
For the Year Ended August 31, 2000
================================================================================
INVESTMENT INCOME (Note 1A):
Income from U.S. Treasury Reserves Portfolio $16,441,361
Allocated expenses from U.S. Treasury Reserves
Portfolio (296,466)
--------------------------------------------------------------------------------
$16,144,895
EXPENSES:
Administrative fees (Note 3A) 1,032,472
Shareholder Servicing Agents' fees (Note 3B) 294,992
Distribution fees (Note 4) 294,992
Registration fees 28,480
Legal fees 20,733
Custody and fund accounting fees 20,356
Audit fees 17,492
Transfer agent fees 12,000
Shareholder Reports 11,887
Trustees' fees 6,670
Miscellaneous 22,573
--------------------------------------------------------------------------------
Total expenses 1,762,647
Less aggregate amounts waived by
Administrator and Distributor (Notes 3A and 4) (726,798)
--------------------------------------------------------------------------------
Net expenses 1,035,849
--------------------------------------------------------------------------------
Net investment income $15,109,046
================================================================================
See notes to financial statements
6
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended August 31,
-------------------------
2000 1999
================================================================================
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as
dividends to shareholders (Note 2) $ 15,109,046 $ 11,207,763
================================================================================
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares 862,592,924 570,585,556
Net asset value of shares issued to shareholders
from reinvestment of dividends 5,637,088 6,647,364
Cost of shares repurchased (765,316,679) (665,450,936)
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 102,913,333 (88,218,016)
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 237,519,868 325,737,884
--------------------------------------------------------------------------------
End of period $ 340,433,201 $ 237,519,868
================================================================================
See notes to financial statements
7
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
=======================================================================================================
<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 0.05049 0.04195 0.04802 0.04794 0.04851
Less dividends from net
investment income (0.05049) (0.04195) (0.04802) (0.04794) (0.04851)
-------------------------------------------------------------------------------------------------------
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) $340,433 $237,520 $325,738 $239,441 $235,271
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+ 5.12% 4.21% 4.81% 4.80% 4.88%
Total return 5.17% 4.28% 4.91% 4.90% 4.96%
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 $0.04678 $0.03836 $0.04433 $0.04414 $0.04463
RATIOS:
Expenses to average net assets+ 0.83% 0.81% 0.82% 0.83% 0.85%
Net investment income to
average net assets+ 4.74% 3.85% 4.44% 4.42% 4.49%
=======================================================================================================
</TABLE>
+Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated
expenses.
See notes to financial statements
8
<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. 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"), an open-end, diversified management investment
company for which Citibank, N.A. ("Citibank") serves as Investment Adviser. The
value of such investment reflects the Fund's proportionate interest (25.8% at
August 31, 2000) in the net assets of the Portfolio. CFBDS, Inc. ("CFBDS"), acts
as the Trust"s Administrator and Distributor. Citibank also serves as
Sub-Administrator and makes shares available to customers through various
Shareholder Servicing Agents. Citibank is a wholly-owned subsidiary of Citigroup
Inc.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America 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 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 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.
9
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative
Services Plan which provides that the Trust, on behalf of the 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, 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, 2000, 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 $1,032,472,
of which $431,806 was voluntarily waived for the year ended August 31, 2000.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or 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 AGENT 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 $294,992 for the year ended August 31, 2000.
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
$294,992, all of which was voluntarily waived for the year ended August 31,
2000. The Distributor has voluntarily agreed to assume all distribution expenses
through August 31, 2000.
10
<PAGE>
CITIFUNDS PREMIUM U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS
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 $1,230,447,024 and $1,142,873,255, respectively, for
the year ended August 31, 2000.
11
<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, 2000, the
related statement of operations for the year then ended, the statement of
changes in net assets for the years ended August 31, 2000 and 1999, and the
financial highlights for each of the years in the five-year period ended August
31, 2000. 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
audit.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, 2000, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 4, 2000
12
<PAGE>
U.S TREASURY RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 2000
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
-------------------------------------------------------------------------------
U.S. TREASURY BILLS -- 100.0%
-------------------------------------------------------------------------------
United States Treasury Bill,
due 9/14/00 $80,000 $ 79,836,561
due 9/21/00 96,601 96,292,622
due 9/28/00 222,426 221,438,693
due 10/05/00 197,894 196,795,914
due 10/26/00 262,430 260,028,976
due 11/02/00 113,078 111,898,507
due 11/09/00 239,856 237,061,552
due 11/30/00 123,346 121,478,030
--------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 100.0% 1,324,830,855
OTHER ASSETS,
LESS LIABILITIES 0.0 (142,567)
------- --------------
NET ASSETS 100.0% $1,324,688,288
======= ==============
See notes to financial statements
13
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
================================================================================
ASSETS:
Investments, at amortized cost (Note 1A) $1,324,830,855
Cash 292
--------------------------------------------------------------------------------
Total asset 1,324,831,147
--------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliate - Investment advisory fees (Note 2A) 89,641
Accrued expenses and other liabilities 53,218
--------------------------------------------------------------------------------
Total liabilities 142,859
--------------------------------------------------------------------------------
NET ASSETS $1,324,688,288
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $1,324,688,288
================================================================================
See notes to financial statements
14
<PAGE>
U.S. TREASURY RESERVES POrtfolio
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
================================================================================
INVESTMENT INCOME (Note 1B) $68,115,709
EXPENSES:
Investment Advisory fees (Note 2A) $ 1,855,394
Administrative fees (Note 2B) 618,465
Custody and fund accounting fees 284,473
Legal fees 32,160
Audit fees 21,500
Trustees' fees 15,733
Miscellaneous 24,986
--------------------------------------------------------------------------------
Total expenses 2,852,711
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A and 2B) (1,615,405)
Less fees paid indirectly (Note 1D) (21)
--------------------------------------------------------------------------------
Net expenses 1,237,285
--------------------------------------------------------------------------------
Net investment income $66,878,424
================================================================================
See notes to financial statements
15
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
---------------------------------------
2000 1999
================================================================================
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 66,878,424 $ 40,398,488
--------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 4,524,590,945 3,426,724,559
Value of withdrawals (4,455,407,592) (3,190,341,131)
--------------------------------------------------------------------------------
Net increase in net assets from capital
transactions 69,183,353 236,383,428
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 136,061,777 276,781,916
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,188,626,511 911,844,595
--------------------------------------------------------------------------------
End of period $ 1,324,688,288 $ 1,188,626,511
================================================================================
See notes to financial statements.
16
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $1,324,688 $1,188,627 $911,845 $907,910 $767,804
Ratio of expenses to
average net assets 0.10% 0.10% 0.10% 0.10% 0.10%
Ratio of net investment income
to average net assets 5.41% 4.55% 5.14% 5.15% 5.20%
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, the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.23% 0.23% 0.23% 0.24% 0.25%
Net investment income to
average net assets 5.28% 4.42% 5.01% 5.01% 5.05%
=================================================================================================
</TABLE>
See notes to financial statements
17
<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.
CFBDS, Inc ("CFBDS"), acts as the Portfolio's Administrator. Citibank N.A.
("Citibank") acts as the Investment Adviser. Citibank is a wholly-owned
subsidiary of Citigroup Inc.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America 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 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
$1,855,394 of which $996,940 was voluntarily waived for the year ended August
31, 2000. The investment advisory fee is computed at an annual rate of 0.15% of
the Portfolio's average daily net assets.
18
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 $618,465, all of which was
contractually waived for the year ended August 31, 2000. The contractual fee
waivers terminate on December 31, 2000. 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 $9,785,486,816 and $9,712,033,716, respectively, for the
year ended August 31, 2000.
4. LINE OF CREDIT The Portfolio, along with other funds in the fund family,
entered into an agreement with a bank which allows the funds collectively to
borrow up to $75 million for temporary or emergency purposes. Interest on
borrowings, if any, is charged to the specific fund executing the borrowing at
the base rate of the bank. The line of credit requires a quarterly payment of a
commitment fee based on the average daily unused portion of the line of credit.
For the year ended August 31, 2000, the commitment fee allocated to the
Portfolio was $3,755. Since the line of credit was established, there have been
no borrowings.
19
<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, 2000, the related statement of operations for
the year then ended, the statement of changes in net assets for the years ended
August 31, 2000 and 1999, and the financial highlights for each of the years in
the five-year period ended August 31, 2000. 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 auditing standards generally
accepted in the United States of America. 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, 2000, by correspondence with the
custodian. 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, 2000, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 4, 2000
20
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Mark T. Finn
Riley C. Gilley
William S. Woods, Jr.***
SECRETARY
Robert Frenkel**
TREASURER
Linwood Downs*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
**AFFILIATED PERSON OF INVESTMENT ADVISER
***TRUSTEE EMERITUS
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
CitiFiduciary Trust Company
125 Broad Street, New York, NY10004
SUB-TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
200 Berkeley Street, Boston, MA 02116
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
================================================================================
This report is prepared for the information of shareholders of CitiFunds Premium
U.S. Treasury Reserves. It is authorized for distribution to prospective
investors only when preceded or accompanied by an effective prospectus of
CitiFunds Premium U.S. Treasury Reserves.
(C)2000 Citicorp (recycle logo) Printed on recycled paper CFA/PUS/800
