<PAGE>
Semi-Annual Report o April 30, 1998
[LOGO]
International
Growth & Income
Portfolio
INTERNATIONAL STOCKS
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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
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 3
................................................................................
Portfolio Highlights 4
................................................................................
Fund Performance 5
................................................................................
CITIFUNDS INTERNATIONAL GROWTH & INCOME PORTFOLIO
Statement of Assets and Liabilities 6
................................................................................
Statement of Operations 7
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Statement of Changes in Net Assets 8
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Financial Highlights 9
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Notes to Financial Statements 10
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INTERNATIONAL PORTFOLIO
Portfolio of Investments 13
................................................................................
Statement of Assets and Liabilities 15
................................................................................
Statement of Operations 15
................................................................................
Statement of Changes in Net Assets 16
................................................................................
Financial Highlights 16
................................................................................
Notes to Financial Statements 17
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
This semi-annual report covers the period from March 2, 1998 (Commencement of
Operations), through April 30, 1998, for the CitiFundsSM International Growth &
Income Portfolio. Inside, we discuss the market conditions the Portfolio's
Subadviser, Hotchkis and Wiley, faced, the strategies it employed and its
outlook for the future.
Overall, the past several months were positive for international stocks.
After worldwide setbacks in the aftermath of the Asian financial crisis during
the fourth quarter of 1997, most international stock markets rebounded during
the first four months of 1998. We are pleased to report that CitiFunds
International Growth & Income Portfolio participated in a portion of the
international stock markets' gains since it began operations on March 2, 1998.
As you have probably heard, Citicorp recently announced its intention to
merge with The Travelers Group. The completion of the merger is subject to the
satisfaction of certain conditions. As necessary, we will provide you with
information that specifically affects the Fund.
On behalf of the Board of Trustees, we want to thank you for your
participation and confidence in the CitiFunds family of funds.
/s/ Philip W. Coolidge
Philip W. Coolidge
President
May 16, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
While some international stock markets have performed quite well over the
past few months, others have languished. The subadviser believes that this mixed
performance is a continuation of the trends of the past several years, in which
markets located in different regions of the world have produced widely divergent
rates of return.
Most notably, European stocks have performed quite well. In fact, many of the
stock markets of continental Europe have outperformed even the United States'
S&P 500 Index over the past several years. That's because many European
companies appear to be benefitting from their efforts to improve productivity,
boost profits and enhance shareholder value. European companies are streamlining
their operations in anticipation of the debut of the European Monetary Union and
a single European currency, the Euro. Companies that have become accustomed to
dominating their national markets will soon compete in a larger continental
market.
In contrast, the Japanese stock market has continued to perform poorly.
Japan's economy remained mired in recession as its financial system continued to
struggle with serious structural problems. Although there are signs that
much-needed reforms are now underway, the process of change has been extremely
slow.
The emerging markets of Southeast Asia have also been in crisis over the past
several months. These markets were hard-hit by currency devaluations during the
summer of 1997. Despite relatively sound economic conditions in the Americas,
the emerging markets of Latin America also declined because of a "spill-over"
effect from the Asian crisis.
The Portfolio focused on investments in Europe, and tended to avoid the Asian
markets. In fact, as of April 30, 1998, more than 70% of the Portfolio's assets
were invested in European companies. In addition, it is important to note that
the Portfolio had little direct exposure to the emerging markets of Southeast
Asia and Latin America. Instead, the subadviser's management team preferred
investments in companies located in the world's developed markets.
More specifically, the Portfolio's managers found attractive investments in
Europe's mid-capitalization stocks--generally in the $3 billion to $5 billion
range --that have not yet participated in the market rally to the extent that
their larger counterparts have. Because these mid-cap stocks are selling at
lower valuations than many larger companies, the management team believes they
have the potential to appreciate significantly as investors look for new
opportunities over the coming months. Many of the mid-cap companies added to the
portfolio since the Fund began operation on March 2, 1998, were found in the
Swiss, German and U.K. markets.
The portfolio received good returns from a number of companies in the
financial services industry, including banks and insurance firms. These
companies were attractively valued when they were purchased, and have since
appreciated significantly. In addition, certain European automobile suppliers
and telecommunications companies contributed substantially to the portfolio's
performance. As a result, the management team has taken profits in some of
stocks that reached their pre-determined target prices.
The subadviser remains optimistic about the future of international stocks,
but recognizes that some areas of the world will produce better returns than
others. The subadviser believes that Europe remains one of the world's most
promising stock markets. Companies throughout Europe should continue to benefit
from their efforts to become more competitive and profitable, as well as from
the opportunities soon to be afforded by a single, pan-European marketplace.
At the same time, the subadviser will continue to favor companies that pay
above-average dividends. In the subadviser's view, dividends may help limit
price declines in falling markets. In addition, the subadviser believes that
above-average dividend yields may be a sign that a stock is priced below its
true value.
The management team's strategy going forward is to buy dividend-paying stocks
that they believe are priced well below their true worth. To find such
companies, the managers analyze underlying business and industry trends. That
analysis generally leads to a list of companies that meet three key criteria:
high dividend payments, future earnings potential and financial strength. The
management team then analyzes the companies on that list, including personal
meetings with senior management. In our view, this disciplined investment
approach should enable shareholders to participate in the growth and income
opportunities of overseas markets.
FUND FACTS
FUND OBJECTIVE
Current income and long-term growth of income accompanied by growth of capital.
INVESTMENT MANAGER DIVIDENDS
Citibank, N.A. Paid semi-annually, if any
PORTFOLIO SUBADVISER CAPITAL GAINS
Hotchkis and Wiley Distributed annually, if any
COMMENCEMENT OF OPERATIONS BENCHMARKS
March 2, 1998 o MSCI EAFE Index
NET ASSETS AS OF 4/30/98 o Lipper International Equity Funds
$20.1 million Average
<PAGE>
PORTFOLIO HIGHLIGHTS
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INDUSTRIES AS A % OF THE PORTFOLIO AS OF APRIL 30, 1998 (Unaudited)
INDUSTRY % OF COMMON STOCKS
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Food & Beverages 12.7%
Banking 12.4%
Conglomerates 10.1%
Industrial Machinery 7.5%
Insurance 5.6%
Construction Materials 4.6%
Miscellaneous 4.4%
Financial Services 4.3%
Electrical Utilities 3.6%
Paper 3.3%
Gas Exploration 3.1%
Chemicals 2.7%
Electronics 2.6%
Steel 2.5%
Household Appliances 2.3%
Mining 1.8%
Real Estate 1.7%
Tobacco 1.6%
Toys, Amusement & Sporting Goods 1.6%
Non-Ferrous Metals 1.5%
Business Services 1.4%
Investment Companies 1.4%
Retail Trade 1.1%
Drugs & Healthcare 1.1%
Apparel & Textiles 1.0%
Automobiles 1.0%
Agricultural Machinery 0.7%
Telephone 0.6%
Leisure 0.6%
Air Travel 0.4%
Broadcasting 0.4%
Containers & Glass 0.2%
Household Appliances 0.2%
PORTFOLIO COMPOSITION AS OF APRIL 30, 1998 (Unaudited)
United Kindgom 25%
Japan 11%
Switzerland 10%
France 10%
Hong Kong 7%
Netherlands 7%
Germany 5%
Other 25%
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
FOR THE PERIOD MARCH 2, 1998 TO APRIL 30, 1998 3/2/98
(Unaudited) (INCEPTION)*
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CitiFunds International Growth & Income Portfolio 6.40%
Lipper International Equity Funds Average 6.55%+
MSCI EAFE Index 3.94%+
*Not Annualized
+From 2/28/98
Growth of a $10,000 Investment
A $10,000 investment in the Fund made on inception date would have grown to
$10,640 (as of 4/30/98). The graph shows how the Fund compares to its benchmarks
over the same period.
CitiFunds Lipper International
International International S&P 500 Barra
Growth & Income Equity Funds Value Index
Portfolio Average (unmanaged)
3/2/98 $10,000.00 $10,000.00 $10,000.00
3/31/98 10,500.00 10,511.00 10,310.00
4/30/98 10,640.00 10,655.00 10,393.51
The graph assumes all dividends and distributions from the Fund are reinvested
at Net Asset Value.
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures are provided in accordance with SEC guidelines for comparative
purposes for prospective investors and reflects certain voluntary fee waivers
which may be terminated at anytime. If the waivers were not in place, the fund's
returns would have been lower.
<PAGE>
CitiFunds International Growth & Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (Unaudited)
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ASSETS:
Investment in International Portfolio, at value (Note 1A) $19,526,856
Receivable for shares of beneficial interest sold 544,787
Other assets 4,548
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Total assets 20,076,191
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LIABILITIES:
Accrued expenses and other liabilities 14,504
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NET ASSETS for 1,885,640 shares of beneficial interest outstanding $20,061,687
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NET ASSETS CONSIST OF:
Paid-in capital $19,350,581
Unrealized appreciation 638,278
Accumulated net realized gain 26,213
Undistributed net investment income 46,615
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Total $20,061,687
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NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE OF BENEFICIAL INTEREST $10.64
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See notes to financial statements
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<TABLE>
CITIFUNDS INTERNATIONAL GROWTH & INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998 (Unaudited)
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INVESTMENT INCOME (Note 1B):
Dividend Income from International Portfolio
(net of foreign withholding tax of ($17,424)) $77,272
Interest Income from International Portfolio 1,795
Foreign Tax reclaims 4,552
Allocated Expenses from International Portfolio (20,405)
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$ 63,214
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EXPENSES:
Distribution fees (Note 3) 5,537
Management fees (Note 2) 5,537
Audit fees 2,725
Shareholder reports 2,000
Registration fees 1,686
Transfer agent fees 1,000
Legal fees 1,000
Custody and Fund Accounting fees 1,000
Trustees fees 870
Miscellaneous fees 781
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Total expenses 22,136
Less aggregate amount waived by the Manager (Note 2) (5,537)
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Net expenses 16,599
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Net investment income 46,615
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NET REALIZED AND UNREALIZED GAIN FROM
INTERNATIONAL PORTFOLIO:
Net realized gain 26,213
Net change in unrealized appreciation 638,278
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Net realized and unrealized gain from International Portfolio 664,491
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Net Increase in Net Assets Resulting from Operations $711,106
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See notes to financial statements
</TABLE>
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH & INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
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INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 46,615
Net realized gain 26,213
Net change in unrealized appreciation 638,278
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Net increase in net assets resulting from operations 711,106
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TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST (NOTE 5):
Net proceeds from sale of shares 20,034,295
Net asset value of shares issued to shareholders
from reinvestment of distributions --
Cost of shares repurchased (683,714)
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Net increase in net assets from transactions
in shares of beneficial interest 19,350,581
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NET INCREASE IN NET ASSETS 20,061,687
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NET ASSETS:
Beginning of period --
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End of period (including undistributed
net investment income of $46,615) $20,061,687
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See notes to financial statements
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
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Net Asset Value, beginning of period $10.00
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Income From Operations:
Net investment income 0.025
Net realized and unrealized gain (loss) on investments 0.615
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Total from operations 0.64
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Less Distributions From:
Net investment income --
Net realized gain on investments --
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Total distributions --
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Net Asset Value, end of period $10.64
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $20,062
Ratio of expenses to average net assets (A) 1.65%*
Ratio of net investment income to average net assets 2.10%*
Total return 6.40%+
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees, the net investment income (loss) per share and the
ratios would have been as follows:
Net investment income (loss) per share 0.018
RATIOS:
Expenses to average net assets (A) 1.90%*
Net investment income to average net assets 1.85%*
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* Annualized.
(A)Includes the Fund's share of International Portfolio allocated expenses for
the period indicated.
+ Not Annualized.
See notes to financial statements
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds International Growth & Income Fund
(the "Fund") is a separate diversified series of CitiFunds International Trust
(the "Trust"), a Massachusetts business trust. The Fund commenced operations on
March 2, 1998. The Trust is registered under the Investment Company Act of 1940,
as amended, as an open-end, management investment company. The Fund currently
invests all of its investable assets in International Portfolio (the
"Portfolio"), a management investment company for which Citibank, N.A.
("Citibank") serves as Investment Manager. CFBDS, Inc. ("CFBDS") acts as the
Fund's Sub-Administrator and Distributor.
The Trust seeks to achieve the Fund's investment objective of current income
and long-term growth of income by investing all of its investable assets in the
Portfolio, an open-end, diversified management investment company having the
same investment objective and policies and substantially the same investment
restrictions as the Fund. The value of such investment reflects the Fund's
proportionate interest (7.30% at April 30, 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 applicable to regulated investment companies and to
distribute to shareholders all of its taxable income, including any net realized
gain on investment transactions. Accordingly, no provision for federal income or
excise tax is necessary.
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 or series are allocated in proportion to the
average net assets of each fund, except when allocations of direct expenses to
each fund can otherwise be made fairly. Expenses directly attributable to a fund
are charged to that fund. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
E. Distributions Distributions to shareholders are recorded on ex-dividend
date. The amount and character of income and net realized gains to be
distributed are determined in accordance with income tax rules and regulations,
which may differ from generally accepted accounting principles. These
differences are attributable to permanent book and tax accounting differences.
Reclassifications are made to the Fund's capital accounts to reflect income and
net realized gains available for distribution (or available capital loss
carryovers) under income tax rules and regulations.
F. Other All the net investment income, realized and unrealized gain and loss
of the Portfolio is allocated pro rata, based on respective ownership interests,
among the Fund and the other investors in the Portfolio at the time of such
determination. Investment transactions are accounted for on the trade date
basis. Realized gains and losses are determined on the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's
business affairs, and has a Management Agreement with the Fund. Citibank also
provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs such
duties and receives such compensation from Citibank as from time to time is
agreed to by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of
Citicorp. Citicorp recently announced its intentions to merge with The Travelers
Group. Completion of the merger is subject to the satisfaction of certain
conditions.
The management fees paid to Citibank are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.25% of the Fund's average
daily net assets. The management fee amounted to $5,537, all of which was
voluntarily waived for the period March 2, 1998 (Commencement of Operations) to
April 30, 1998.
The Trust pays no compensation directly to any Trustee or any other officer
who is affiliated with the Sub-Administrator, all of whom receive remuneration
for their services to the Trust from the Sub-Administrator or its affiliates.
3. DISTRIBUTION FEES The Fund has adopted a Service Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, in which the Fund pays
fees for distributions, sales and marketing and shareholder services at an
annual rate not to exceed 0.25% of the Fund's average daily net assets. The
Distribution fees amounted to $5,537 for the period March 2, 1998 (Commencement
of Operations) to April 30, 1998.
4. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio for the period March 2, 1998 (Commencement of Operations) to April
30, 1998 aggregated $19,489,613 and $685,910, respectively.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest (without par value). Transactions in shares of beneficial interest were
as follows:
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FOR THE PERIOD MARCH 2, 1998 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
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Shares sold 1,950,491
Shares issued to shareholders from reinvestment of distributions --
Shares repurchased (64,851)
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Net increase 1,885,640
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<PAGE>
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS April 30, 1998
(Unaudited)
ISSUER SHARES VALUE
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COMMON STOCKS--98.2%
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AUSTRIA -- 0.8%
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Bohler-Uddeholm 31,283 $ 2,306,615
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AUSTRALIA -- 2.8%
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Australia & New Zealand Banking Group 658,440 4,596,592
Pioneer International, Ltd. 641,253 1,831,968
Quantas Airways 736,479 1,124,062
------------
7,552,622
------------
CANADA -- 3.9%
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Canadian Imperial Bank of Commerce 74,481 2,648,595
Imasco, Ltd. 97,661 3,677,783
Noranda, Inc. 194,180 4,005,951
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10,332,329
------------
FINLAND -- 3.0%
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Metra AB 104,655 2,632,419
The Rauma Group Oy 71,693 1,342,615
UPM-Kymmene Oy 136,958 4,111,305
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8,086,339
------------
FRANCE -- 9.5%
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Elf Aquitaine 27,480 3,607,007
La Farge 4,646 426,650
La Farge Coppee 55,760 5,268,953
Pernod-Ricard 51,516 3,556,669
SEITA 111,821 5,022,737
Societe Generale 25,055 5,218,576
Usinor Sacilor 149,563 2,239,340
------------
25,339,932
------------
GERMANY -- 4.6%
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Commerzbank AG 115,367 4,448,690
Draegerwerk AG 124,818 2,879,533
Dyckerhoff AG 10,781 3,712,718
Vossloh AG 21,227 1,383,945
------------
12,424,886
------------
GREAT BRITAIN -- 24.6%
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Abbey National 230,727 4,334,072
Allied Domecq PLC 451,470 4,644,318
BTR PLC 1,197,982 3,982,680
B.A.T. Industries 456,388 4,305,576
Coats Viyella 1,714,716 2,667,430
Commercial Union 280,488 5,250,036
Cookson Group 1,050,730 4,719,037
Elementis 411,878 1,047,201
Hanson 770,119 4,544,047
Hillsdown Holdings 1,618,438 4,845,817
Hyder 221,420 3,562,951
Lex Service 366,400 3,707,907
Mckenchnie 264,175 2,200,589
National Westminister Bank 83,836 1,678,582
Powergen 273,236 3,692,897
Safeway 501,006 2,987,586
Tate & Lyle 277,800 2,230,445
Tomkins 913,067 5,376,049
------------
65,777,220
------------
HONG KONG -- 7.0%
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Clp Holdings, Ltd. 545,500 2,619,752
Dao Heng Bank Group, Ltd. 867,000 2,563,168
Dickson Concepts International, Ltd. 612,833 846,542
HSBC Holdings 62,716 1,789,341
Hang Lung Development Co. 1,602,635 2,089,674
Hong Kong Telecommunications 850,200 1,591,518
New World Development Co. 873,790 2,487,357
South China Morning Post 1,577,486 946,980
Swire Pacific 736,000 3,677,150
------------
18,611,482
------------
IRELAND -- 3.1%
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Greencore Group 612,240 3,738,663
Jefferson Smurfit Group 1,243,360 4,625,387
------------
8,364,050
------------
ITALY -- 1.7%
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Eni Spa 664,100 4,459,576
------------
JAPAN -- 10.9%
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Koito Manufacturing Co. 405,000 2,081,004
Kyocera Corp. 79,700 4,179,523
MOS Food Services 194,000 2,470,077
NSK, Ltd. 536,000 1,927,883
Nichicon Corp. 255,000 2,774,671
Nintendo Co. 45,900 4,210,564
Promise Co. 76,000 3,859,151
Sekisui Chemical Co. 219,000 1,203,060
Sony Corp. 24,100 2,004,995
Suzuki Motor Corp. 304,000 2,614,115
Yodogawa Steel Works 456,000 1,929,575
------------
29,254,618
------------
MALAYSIA -- 0.8%
- --------------------------------------------------------------------------------
Genting Berhad 458,600 1,524,568
Malaysian International Shipping Berhad 316,000 550,670
------------
2,075,238
------------
NETHERLANDS -- 7.4%
- --------------------------------------------------------------------------------
ABN Amro Holdings NV 149,597 3,643,469
Akzo Nobel NV 23,337 4,748,036
Hollandsche Beton Groep 101,730 2,120,109
ING Groep NV 82,133 5,338,381
Koninklijke PTT 74,956 3,873,772
------------
19,723,767
------------
NEW ZEALAND -- 0.4%
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Fletcher Challenge Building 608,789 1,230,984
------------
NORWAY -- 1.9%
- --------------------------------------------------------------------------------
Kvaerner ASA 40,737 1,808,336
Nycomed Amersham 101,706 3,300,836
------------
5,109,172
------------
SINGAPORE -- 0.4%
- --------------------------------------------------------------------------------
Fraser & Neave, Ltd. 225,000 1,009,479
------------
SPAIN -- 2.2%
- --------------------------------------------------------------------------------
Banco Santander SA 113,270 5,987,023
------------
Sweden -- 2.5%
- --------------------------------------------------------------------------------
Electrolux AB 45,130 4,197,055
Gettinge Industries 109,745 2,438,148
------------
6,635,203
------------
SWITZERLAND -- 9.9%
- --------------------------------------------------------------------------------
Forbo Holdings 8,564 4,394,722
Nestle SA 2,463 4,776,628
Saurer AG 3,500 3,533,822
Schweizerische Rueckversicherungs-Gesellschaft 2,317 5,111,143
Schweizerische Industrie-Gesellschaft Holding AG 7,048 5,861,982
Sulzer AG 3,764 2,696,634
------------
26,374,931
------------
UNITED STATES -- 0.8%
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Jardine Matheson 492,000 2,076,240
------------
WARRANTS -- 0.0%
- --------------------------------------------------------------------------------
Bolton Properties* Exp. 9/15/01 23,750 1,464
------------
TOTAL COMMON STOCKS 262,733,170
------------
SHORT-TERM OBLIGATIONS -- 2.3%
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State Street Repurchase Agreement 5.00% due 5/01/98
proceeds at maturity $6,192,860 (collateralized
by $6,170,000 U.S. Treasury Note 5.625% due
11/30/99, valued at $6,316,538) 6,192,000
------------
TOTAL INVESTMENTS (Identified Cost $226,173,839) 100.5% 268,925,170
OTHER ASSETS, LESS LIABILITIES (0.5) (1,436,005)
----- ------------
NET ASSETS 100.0% $267,489,165
===== ============
* Non income producing
See notes to financial statements
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $226,173,839) $268,925,170
Foreign currency, at value (Cost $428,131) 424,078
Cash 382
Dividends and interest receivable 1,269,765
Receivable for investments sold 350,810
- --------------------------------------------------------------------------------
Total assets 270,970,205
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 3,067,271
Payable to affiliates--Management fees (Note 2) 173,906
Accrued expenses and other liabilities 239,863
- --------------------------------------------------------------------------------
Total liabilities 3,481,040
- --------------------------------------------------------------------------------
NET ASSETS $267,489,165
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REPRESENTED BY:
Paid-in capital for beneficial interests $267,489,165
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<TABLE>
INTERNATIONAL PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 1, 1997 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998 (Unaudited)
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<S> <C> <C>
INVESTMENT INCOME: (Note 1B)
Dividend income (net of foreign withholding tax of $449,557) $2,840,752
Interest income 175,511
- ----------------------------------------------------------------------------------------------
Total investment income $ 3,016,263
- ----------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 995,465
Custody and Fund Accounting fees 178,672
Audit fees 17,300
Legal fees 10,730
Trustees fees 2,602
Miscellaneous 2,232
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Total expenses 1,207,001
- ----------------------------------------------------------------------------------------------
Net investment income 1,809,262
- ----------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions (2,435,338)
Net realized gain (loss) on foreign exchange currency transactions (8,067)
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Net realized gain (loss) (2,443,405)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 42,747,278
Less: unrealized appreciation from contributed assets 12,088,710
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Unrealized appreciation of investments 30,658,568
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) of investments 28,215,163
- ----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $30,024,425
- ----------------------------------------------------------------------------------------------
See notes to financial statements
</TABLE>
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD NOVEMBER 1, 1997 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 1,809,262
Net realized gain on investment transactions (2,443,405)
Unrealized appreciation of investments 30,658,568
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 30,024,425
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 564,751,446
Value of withdrawals (327,286,706)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions 237,464,740
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS: 267,489,165
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- --------------------------------------------------------------------------------
End of period $267,489,165
- --------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR THE PERIOD NOVEMBER 1, 1997 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $267,489
Ratio of expenses to average net assets 0.97%*
Ratio of net investment income to average net assets 1.45%*
Portfolio turnover 19%
- --------------------------------------------------------------------------------
* Annualized
See notes to financial statements
<PAGE>
INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES International Portfolio (the "Portfolio"), a
separate series of The Asset Allocation Portfolios (the "Portfolio Trust"), is
registered under the Investment Company Act of 1940, as amended, as a
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
Manager of the Portfolio is Citibank, N.A. ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's Sub-Administrator. On
November 1, 1997 (Commencement of Operations) the CitiSelect Folio 200,
CitiSelect Folio 300, CitiSelect Folio 400 and CitiSelect Folio 500 each
transferred a portion of their investable assets in the amount of $13,468,512,
$45,037,659, $115,488,801 and $69,902,939 including $657,730, $2,460,410,
$6,297,679 and $2,672,891, respectively, of unrealized appreciation to the
Portfolio in exchange for an interest in the Portfolio.
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. Investment Security Valuations Equity securities are valued at the last
sale price on the exchange on which they are primarily traded, or at the quoted
bid price for securities in which there were no sales during the day, or for
unlisted securities not reported on the NASDAQ system. Securities listed on a
foreign exchange are valued at the last quoted sale price available. Bonds,
foreign bonds and other fixed income securities (other than short-term
obligations maturing in sixty days or less) are valued on the basis of
valuations furnished by a pricing service, the use of which has been approved by
the Board of Trustees. In making such valuations, the pricing service utilizes
both dealer-supplied valuations and electronic data processing techniques which
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data, without exclusive reliance
upon quoted prices or exchanges or over-the-counter prices. Short-term
obligations maturing in sixty days or less are valued at amortized cost which
constitutes fair value as determined by the Trustees. Portfolio securities for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or under guidelines established by the Trustees.
Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days on which the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the time when the Portfolio's
net asset value is calculated, such securities may be valued at fair value in
accordance with procedures established by and under the general supervision of
the Trustees.
B. Income Interest income consists of interest accrued and discount earned,
adjusted for amortization of premium or discount on debt securities when
required for U.S. federal income tax purposes. Gain and loss from principal
paydowns are recorded as interest income. Dividend income and other
distributions from investments are recorded on the ex-dividend date. Dividend
and interest income is recorded net of foreign taxes withheld. Reclaims of
recoverable foreign taxes are the responsibility of the qualified investors.
C. Foreign Currency Translation The accounting records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange to determine the value of investments,
assets and liabilities. Purchases and sales of securities, as well as income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Portfolio does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuation arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Translations of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income and expenses recorded and the
amount actually received or paid.
D. Forward Foreign Currency Contracts The Portfolio may enter into forward
foreign currency contracts ("contracts") in connection with planned purchases or
sales of securities, to hedge the U.S. dollar value of portfolio securities
denominated in a particular currency. The Portfolio could be exposed to risks if
the counter-parties to the contracts are unable to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar. The forward foreign currency exchange contracts are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized gains or
losses until the contract settlement date.
E. U.S. Federal Taxes The Portfolio is considered a partnership under the
U.S. Internal Revenue Code. Accordingly, no provision for federal income or
excise tax is necessary.
F. Expenses The Portfolio bears all costs of its operations other than
expenses specifically assumed by Citibank and SFG. Expenses incurred by the
Portfolio Trust with respect to any two or more portfolios or series are
allocated in proportion to the average net assets of each portfolio, except when
allocations of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that portfolio.
G. Other Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis.
2. MANAGEMENT FEES Citibank is responsible for overall management of the
Portfolio's business affairs, and has a separate Management Agreement with the
Portfolio. Citibank also provides certain administrative services to the
Portfolio. These administrative services include providing general office
facilities and supervising the overall administration of the Portfolio. SFG acts
as Sub-Administrator and performs such duties and receives such compensation
from Citibank as from time to time are agreed to by Citibank and SFG.
Citibank has delegated the daily management of the Portfolio to Hotchkis and
Wiley (the "Subadviser"). Citibank is a wholly-owned subsidiary of Citicorp.
Citicorp recently announced its intention to merge with The Travelers Group.
Completion of the merger is subject to the satisfaction of certain conditions.
The management fee paid to Citibank, amounted to $458,183 for the period
November 1, 1997 (Commencement of Operations) to April 30, 1998. Management fees
are computed at the annual rate of 0.80% of the Portfolio's average daily net
assets less the aggregate amount (if any) payable by the Portfolio Trust
pursuant to the Sub-management Agreement with the Subadviser. The Portfolio pays
the Subadviser the following fees, which are accrued daily and payable monthly
and are at the annual rates equal to a percentage of the aggregate assets of the
Portfolio allocated to the Subadviser: 0.60% on first $10 million, 0.55% on next
$40 million, 0.45% on next $100 million, 0.35% on next $150 million, 0.30% on
remaining assets.
The management fees paid to the Subadviser amounted to $537,282 for the
period ended April 30, 1998.
3. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other
than short-term obligations, aggregated $46,022,137 and $46,351,760,
respectively, for the period November 1, 1997 (Commencement of Operations) to
April 30, 1998.
4. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at April 30, 1998, as
computed on a federal income tax basis, are as follows:
Aggregate cost $226,173,839
- --------------------------------------------------------------------------------
Gross unrealized appreciation $ 55,646,091
Gross unrealized depreciation (12,894,760)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 42,751,331
- --------------------------------------------------------------------------------
5. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
ongoing agreement with a bank which allows the Funds collectively to borrow up
to $60 million for temporary or emergency purposes. Interest on the 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 period
November 1, 1997 (Commencement of Operations) to April 30, 1998, the commitment
fee allocated to the Portfolio was $242. Since the line of credit was
established, there have been no borrowings.
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
C. Oscar Morong Jr.
E. Kirby Warren
William S. Woods, Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Sub-Administrator and Distributor
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor,
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Price Waterhouse 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
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
This report is prepared for the information of shareholders. It is
authorized for distribution to prospective investors only when
preceded or accompanied by an effective prospectus.
For more information contact your Service Agent or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [LOGO] Printed on recycled paper CFS/IGI/498
