<PAGE>
Semi-Annual Report o June 30, 1998
[logo]
International Equity
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
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Portfolio Environment and Outlook 2
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Fund Facts 3
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Portfolio Highlights 4
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Fund Performance 5
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CITIFUNDS INTERNATIONAL EQUITY PORTFOLIO
Statement of Assets and Liabilities 6
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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
INTERNATIONAL EQUITY PORTFOLIO
Portfolio of Investments 13
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Statement of Assets and Liabilities 18
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Statement of Operations 18
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Statement of Changes in Net Assets 19
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Financial Highlights 19
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Notes to Financial Statements 20
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
This semi-annual report covers the period from January 1, 1998, through June 30,
1998, for the CitiFunds(SM) International Equity Portfolio. Inside, the
CitiFunds' investment adviser, Citibank, N.A., discusses the market conditions
it faced, the strategies it employed and its outlook for the future.
The past six months saw starkly contrasting conditions in international stock
markets. Positive economic developments in Europe drove stock prices there
higher, while recessionary conditions in Asia precipitated further market
declines in that region. As the report inside discusses, the CitiFunds
International Equity Portfolio participated in Europe's gains while benefitting
from reduced exposure to Asian markets.
Among the highlights of the reporting period, your Fund has changed its name
to CitiFunds International Equity Portfolio. In addition, as you have probably
heard, Citicorp recently announced its intention to merge with The Travelers
Group. The completion of the merger is subject to the satisfaction of certain
conditions. As necessary, we will provide you with information that specifically
affects the fund.
On behalf of the Board of Trustees, we want to thank you for your continued
participation and confidence in the CitiFunds family of funds.
/s/ Philip Coolidge
-------------------------
Philip W. Coolidge
President
July 16, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
INTERNATIONAL STOCK MARKETS PROVIDED WIDELY DIVERGENT RETURNS over the past
six months, reflecting the stark differences in economic conditions prevailing
in different regions of the world.
Most notably, the stock markets of continental Europe have performed well,
with most outperforming even the United States' S&P 500 index during the first
half of 1998. That's because European companies appear to be benefitting from
their efforts to improve productivity, boost profits and enhance shareholder
value. European businesses 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
are increasingly competing in a regional market. In addition, declining interest
rates have caused an increasing number of European investors to shift their
savings from bonds and bank accounts to stocks. Surging demand for a limited
number of stocks has helped drive prices higher.
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 so far has been
slow.
The emerging markets of Southeast Asia have been in crisis. Severe financial
problems caused by last year's currency devaluations prompted investors to shift
their assets away from Asia in droves, creating downward pressure on stock
prices. In addition, weakness in Japan's economy caused the yen to decline in
value, making Japanese exports less expensive, which effectively increased
competitive pressures on exporters in other Asian countries. Investors' negative
perceptions of the region were reinforced by political instability in Indonesia,
where President Suharto resigned in the face of civil unrest.
THE PORTFOLIO FOCUSED ON INVESTMENTS IN EUROPE in this environment, with
emphasis on stocks in France, Italy, Spain and other central European countries.
That's because these countries have benefited most as various European
currencies and interest rates converge in anticipation of monetary union.
Conversely, the portfolio had lower-than-average exposure to stock markets in
Japan and Southeast Asia because of poor economic conditions there.
Within Europe, we favored domestic companies over exporters and other
businesses with a substantial international presence. Industries such as
financial services, retailers and food producers have benefited from strong
economic conditions at home, and have largely avoided the effects of weak
economies overseas. We have also enjoyed good performance from our investments
in European mobile telephone companies, which have experienced particularly
rapid growth within the region.
WE ARE OPTIMISTIC ABOUT THE FUTURE OF INTERNATIONAL STOCKS, but we recognize
that some areas of the world will produce better returns than others. For
example, we believe 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 European marketplace.
At the same time, we are looking carefully for opportunities to invest in
high-quality Japanese and Asian companies selling at attractive prices. More
specifically, we are hopeful that recent banking-system reforms and economic
support from the international community will help some of Japan's strongest and
best-managed financial services companies recover from their problems of the
past several years. Similarly, we are taking a cautiously optimistic approach to
Southeast Asia, where we are looking for promising growth companies in the more
developed markets of Singapore and Hong Kong.
Regardless of which areas of the world do best over the foreseeable future,
we intend to continue to employ a disciplined investment approach designed to
uncover opportunities and reduce the risks of international investing. In our
view, the combination of strategic asset allocation among the world's regions
and intensive company research within individual markets should help the
portfolio provide competitive returns in the months ahead.
<PAGE>
FUND FACTS
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.
INVESTMENT ADVISER DIVIDENDS
INTERNATIONAL EQUITY PORTFOLIO Paid semi-annually, if any
Citibank, N.A.
CAPITAL GAINS
COMMENCEMENT OF OPERATIONS Distributed semi-annually, if any
March 1, 1991
BENCHMARKS
NET ASSETS AS OF 6/30/98 o Lipper International Equity Funds
$20.0 million Average
o Morgan Stanley Capital
International Europe-Australia-Far
East (MSCI EAFE) Index
<PAGE>
PORTFOLIO HIGHLIGHTS
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TOP TEN EQUITY HOLDINGS AS OF JUNE 30, 1998 (Unaudited) %
COMPANY, INDUSTRY OF NET ASSETS
Royal Dutch Petroleum, Energy Sources 1.7%
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Nippon Telegraph & Telephone Co., Telephone Utilities 1.7%
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Novartis AG, Pharmaceuticals and Health 1.6%
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Glaxo Welcome, Pharmaceuticals and Health 1.4%
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United Bank of Switzerland AG, Banking 1.3%
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British Petroleum Co., Energy Sources 1.2%
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British Telecommunications PLC., Telephone Utilities 1.2%
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Smithkline Beecham PLC., Real Estate 1.2%
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Nestle SA, Food and Household Products 1.1%
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SAP-- Preferred, Data Processing and Reproduction 1.1%
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PORTFOLIO DIVERSIFICATION AS OF JUNE 30, 1998 (Unaudited)
Asian Pacific Basin 1%
Pacific Basin 2%
South America 1%
Japan 21%
Europe 75%
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE
ALL PERIODS ENDED JUNE 30, 1998 SIX ONE FIVE 3/1/91
(Unaudited) MONTHS** YEAR YEARS* INCEPTION*
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<S> <C> <C> <C> <C>
CitiFunds International Equity Portfolio 16.16% 10.93% 9.48% 7.53%
Lipper International Equity Funds Average 15.49% 8.18% 12.22% 9.91%+
MSCI EAFE Index 16.08% 6.38% 10.34% 8.00%+
*Average Annual Total Return
**Not Annualized
+Since 2/28/91
<CAPTION>
<S> <C>
Income Dividends Per Share $0.009
Capital Gain Distribution $0.563
</TABLE>
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$17,030 (as of 6/30/98). The graph shows how the Fund compares to its benchmarks
over the same period.
CitiFunds Lipper International MSCI
Date International Equity Fund Equity Funds Avg. EAFE Index
3/1/91 $10,000 $10,000 $10,000
3/31/91 $ 9,420 $ 9,708 $ 9,401
4/30/91 $ 9,740 $ 9,831 $ 9,496
5/31/91 $ 9,740 $ 9,942 $ 9,596
6/30/91 $ 9,760 $ 9,451 $ 8,890
7/31/91 $ 9,800 $ 9,828 $ 9,330
8/31/91 $ 9,910 $ 9,748 $ 9,142
9/30/91 $10,150 $10,022 $ 9,660
10/31/91 $10,200 $10,081 $ 9,800
11/30/91 $ 9,860 $ 9,745 $ 9,345
12/31/91 $10,161 $10,203 $ 9,834
1/31/92 $10,411 $10,281 $ 9,629
2/29/92 $10,602 $10,282 $ 9,290
3/31/92 $10,090 $ 9,927 $ 8,682
4/30/92 $10,361 $10,143 $ 8,728
5/31/92 $10,933 $10,648 $ 9,318
6/30/92 $10,622 $10,356 $ 8,882
7/31/92 $10,171 $ 9,971 $ 8,661
8/31/92 $10,221 $10,072 $ 9,210
9/30/92 $ 9,910 $ 9,864 $ 9,034
10/31/92 $ 9,749 $ 9,595 $ 8,566
11/30/92 $ 9,900 $ 9,632 $ 8,651
12/31/92 $10,013 $ 9,741 $ 8,701
1/31/93 $10,013 $ 9,792 $ 8,706
2/28/93 $ 9,973 $10,039 $ 8,974
3/31/93 $10,536 $10,603 $ 9,762
4/30/93 $10,797 $11,148 $10,693
5/31/93 $11,089 $11,401 $10,924
6/30/93 $10,827 $11,172 $10,756
7/31/93 $10,797 $11,506 $11,134
8/31/93 $11,390 $12,241 $11,738
9/30/93 $11,501 $12,215 $11,476
10/31/93 $12,044 $12,790 $11,832
11/30/93 $11,813 $12,382 $10,800
12/31/93 $12,999 $13,608 $11,582
1/31/94 $13,632 $14,400 $12,564
2/28/94 $13,089 $14,075 $12,532
3/31/94 $12,144 $13,423 $11,994
4/30/94 $12,144 $13,749 $12,506
5/31/94 $12,084 $13,713 $12,437
6/30/94 $11,903 $13,558 $12,616
7/31/94 $12,185 $13,934 $12,740
8/31/94 $12,748 $14,346 $13,045
9/30/94 $12,456 $13,992 $12,636
10/31/94 $12,345 $14,258 $13,060
11/30/94 $11,973 $13,558 $12,435
12/31/94 $11,509 $13,418 $12,516
1/31/95 $10,654 $12,738 $12,038
2/28/95 $10,915 $12,756 $12,006
3/31/95 $11,771 $13,162 $12,759
4/30/95 $12,052 $13,590 $13,243
5/31/95 $12,243 $13,703 $13,088
6/30/95 $12,666 $13,703 $12,861
7/31/95 $13,330 $14,439 $13,665
8/31/95 $13,360 $14,169 $13,147
9/30/95 $13,642 $14,379 $13,408
10/31/95 $13,481 $14,206 $13,051
11/30/95 $13,340 $14,351 $13,418
12/31/95 $13,590 $14,787 $13,961
1/31/96 $13,782 $15,123 $14,021
2/29/96 $13,631 $15,180 $14,072
3/31/96 $13,994 $15,437 $14,374
4/30/96 $14,449 $15,917 $14,795
5/31/96 $14,327 $15,869 $14,526
6/30/96 $14,368 $15,974 $14,612
7/31/96 $13,693 $15,380 $14,188
8/31/96 $13,553 $15,551 $14,222
9/30/96 $13,800 $15,884 $14,603
10/31/96 $13,628 $15,771 $14,457
11/30/96 $14,035 $16,440 $15,036
12/31/96 $13,942 $16,491 $14,846
1/31/97 $13,410 $16,437 $14,329
2/28/97 $13,599 $16,669 $14,567
3/31/97 $13,694 $16,706 $14,624
4/30/97 $13,765 $16,739 $14,705
5/31/97 $14,498 $17,727 $15,665
6/30/97 $15,353 $18,548 $16,533
7/31/97 $15,734 $19,054 $16,804
8/31/97 $14,673 $17,671 $15,552
9/30/97 $15,818 $18,761 $16,426
10/31/97 $14,601 $17,346 $15,168
11/30/97 $14,530 $17,185 $15,016
12/31/97 $14,661 $17,328 $15,151
1/31/98 $15,329 $17,735 $15,848
2/28/98 $16,099 $18,906 $16,869
3/31/98 $16,677 $19,872 $17,392
4/30/98 $16,805 $20,144 $17,533
5/31/98 $16,779 $20,164 $17,452
6/30/98 $17,030 $20,009 $17,588
The graph assumes all dividends and distributions are reinvested at Net Asset
Value.
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures are provided in accordance with SEC guidelines for comparative
purposes for prospective investors.
<PAGE>
CITIFUNDS INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
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JUNE 30, 1998 (Unaudited)
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ASSETS:
Investment in International Equity Portfolio, at value (Note 1A) $19,916,535
Receivable for shares of beneficial interest 16,761
Other assets 46,458
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Total assets 19,979,754
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LIABILITIES:
Payable to affiliates--Shareholder servicing agents' fees (Note 2B) 3,977
Accrued expenses and other liabilities 7,951
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Total liabilities 11,928
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NET ASSETS for 1,574,327 shares of beneficial interest outstanding $19,967,826
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NET ASSETS CONSIST OF:
Paid-in capital $16,722,678
Unrealized appreciation on investments and foreign
currency transactions 2,101,583
Accumulated net realized gain on investments 1,108,061
Undistributed net investment income 35,504
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Total $19,967,826
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NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE OF BENEFICIAL INTEREST $12.68
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See notes to financial statements
<PAGE>
CITIFUNDS INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
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INVESTMENT INCOME (Note 1B):
Dividend Income from International Equity Portfolio $ 172,303
Interest Income from International Equity Portfolio 1,318
Foreign Taxes Reclaimed 25,879
Allocated Expenses from International Equity Portfolio (92,554)
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$ 106,946
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EXPENSES:
Administrative fees (Note 2A) 27,796
Shareholder Servicing Agents' fees (Note 2B) 23,166
Distribution fees (Note 3) 9,266
Expense fees (Note 6) 9,272
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Total expenses 69,500
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Net investment income 37,446
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NET REALIZED AND UNREALIZED GAIN FROM
INTERNATIONAL EQUITY PORTFOLIO:
Net realized gain 1,140,894
Net change in unrealized appreciation 1,512,147
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Net realized and unrealized gain from
International Equity Portfolio 2,653,041
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,690,487
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See notes to financial statements
<PAGE>
CITIFUNDS INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(Unaudited) 1997
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INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 37,446 $ 7,699
Net realized gain 1,140,894 1,836,248
Net change in unrealized appreciation 1,512,147 (547,538)
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Net increase in net assets resulting
from operations 2,690,487 1,296,409
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DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (13,534) (39,505)
Net realized gain (846,630) (1,553,863)
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Decrease in net assets from distributions
to shareholders (860,164) (1,593,368)
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TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5):
Net proceeds from sale of shares 1,703,082 4,764,326
Net asset value of shares issued to shareholders from
reinvestment of dividends 852,207 1,239,732
Cost of shares repurchased (2,751,071) (19,962,458)
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Net decrease in net assets resulting from
transactions in shares of beneficial interest (195,782) (13,958,400)
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NET INCREASE (DECREASE) IN NET ASSETS 1,634,541 (14,255,359)
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NET ASSETS:
Beginning of period 18,333,285 32,588,644
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End of period (including undistributed net investment income
of $35,504 and $11,592) $19,967,826 $ 18,333,285
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See notes to financial statements
<PAGE>
CITIFUNDS INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994# 1993#
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<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period $ 11.42 $ 11.79 $ 13.46 $ 11.44 $ 12.93 $ 9.96
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Income From Operations:
Net investment income (loss) 0.024 0.004* 0.028* 0.013* 0.001* (0.003)*
Net realized and unrealized
gain (loss) 1.808 0.592* 0.314* 2.055* (1.483)* 2.973*
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Total from operations 1.832 0.596 0.342 2.068 (1.482) 2.970
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Less Distributions From:
Net investment income (0.009) (0.025) (0.021) (0.048) (0.001) --
In excess of net investment
income -- -- -- -- (0.007) --
Net realized gain on
investments (0.563) (0.941) (1.991) -- -- --
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Total from distributions (0.572) (0.966) (2.012) (0.048) (0.008) --
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Net Asset Value, end of period $ 12.68 $ 11.42 $ 11.79 $ ~13.46 $ 11.44 $ 12.93
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $19,968 $18,333 $32,589 $32,159 $28,848 $28,088
Ratio of expenses to average
net assets 1.75%(A)+ 1.75%(A) 1.75%(A) 1.75%(A) 1.75%(A) 1.75%
Ratio of net investment income
(loss) to average net assets 0.40%+ 0.03% 0.18% 0.10% 0.00% (0.02)%
Portfolio turnover (B) -- -- -- -- 5% 36%
Total return 16.16%** 5.15% 2.59% 18.08% (11.46)% 29.82%
Note: If Agents of the Fund for the periods indicated had not voluntarily waived a portion of their fees and
expenses had been limited to that required by certain state securities laws for the years ended December 31,
1993 and 1992, the net investment income (loss) per share and the ratios would have been as follows:
Net investment income (loss)
per share $0.024 $(0.004)* $(0.002)* $0.013* $(0.018)* $(0.116)*
RATIOS:
Expenses to average net assets 1.80%(A)+ 1.82%(A) 1.94%(A) 1.75%(A) 1.90%(A) 2.50%
Net investment income (loss) to
average net assets 0.35%+ (0.04)% (0.01)% 0.10% (0.15)% (0.77)%
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+ Annualized
** Not Annualized
* The per share amounts were computed using a monthly average number of shares outstanding during the period.
(A)Includes the Fund's share of International Equity Portfolio allocated expenses for the periods subsequent to
May 1, 1994.
(B)Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making
investments directly in securities. The portfolio turnover rate for the period since the Fund transferred
all of its investable assets to the Portfolio is shown in the Portfolio's financial statements which
are included elsewhere in this report.
#On May 1, 1994, the Fund began investing all of its investable assets in International Equity Portfolio.
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds International Equity Portfolio
(formerly Landmark International Equity Fund) (the "Fund") is a separate
diversified series of CitiFunds International Trust (the "Trust"), a
Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end, management
investment company. The Fund invests all of its investable assets in
International EquityPortfolio (the "Portfolio"), a management investment company
for which Citibank, N.A. ("Citibank") serves as Investment Adviser. CFBDS, Inc.
("CFBDS", formerly Landmark Funds Broker-Dealer Services, Inc.) acts as the
Fund's Administrator and Distributor. Citibank also serves as Sub-Administrator
and makes Fund shares available to customers as Shareholder Servicing Agent.
Citibank is a wholly-owned subsidiary of Citicorp. Citicorp recently announced
its intention to merge with The Travelers Group. Completion of the merger is
subject to the satisfaction of certain conditions.
The Trust seeks to achieve the Fund's investment objective of long-term
growth of capital 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
(approximately 53.2% at June 30, 1998) in the net assets of 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 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 Valuations 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. Accounting for Investments The Fund earns income, net of Portfolio
expenses, daily based on its investment in the Portfolio. All the net investment
income, realized and unrealized gain or 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. Additionally, each
fund reclaims its pro rata portion of recoverable foreign taxes on dividends
received by 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, including any net realized
gain on investment transactions. Accordingly, no provision for federal income or
excise tax is required.
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. For the year ended December
31, 1997, the Fund reclassified $43,398 to undistributed net investment income,
$298,611 to accumulated gain on investments and $342,009 from paid-in-capital.
2. ADMINISTRATIVE SERVICES PLAN The Fund has adopted an Administrative Services
Plan (the "Administrative Services Plan") which provides that the Fund may
obtain the services of an Administrator, and one or more Shareholder Servicing
Agents and other Servicing Agents, and may enter into agreements providing for
the payment of fees for such services. Under the Administrative Services Plan,
the aggregate of the fee paid to the Administrator by the Fund, the fees paid to
the Shareholder Servicing Agents by the Fund and the Basic Distribution Fee paid
by the fund to the Distributor under the Distribution Plan may not exceed 0.65%
of the Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, the administrative services fees paid to the Administrator, as
compensation for overall administrative services, including general office
facilities, may not exceed an annual rate of 0.30% of the Fund's average daily
net assets. The Administrative fees amounted to $27,796 for the six months ended
June 30, 1998. Citibank acts as Sub-Administrator and performs such duties and
receives such compensation from CFBDS as from time to time is agreed to by CFBDS
and Citibank. The Fund pays no compensation directly to any Trustee or any
officer who is affiliated with the Administrator, all of whom receive
remuneration for their services to the Fund from the Administrator or its
affiliates. Certain officers and a Trustee of the Fund are officers and
directors of the Administrator or its affiliates.
B. Shareholder Servicing Agents' Fees The Fund has 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, which may not
exceed, on an annualized basis, an amount equal to 0.25% of the average daily
net assets of the Fund represented by shares owned during the period for which
payment is being made by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. The Shareholder Servicing Agents' fees,
computed at an annual rate of 0.25%, amounted to $23,166 for the six months
ended June 30, 1998.
3. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund reimburses the Distributor for expenses incurred or anticipated, in
connection with the sale of shares of the Fund, at an annual rate not to exceed
0.10% of the Fund's average daily net assets for distribution of the Fund's
shares. The Distribution fees amounted to $9,266 for the six months ended June
30, 1998. The Distributor may also receive an additional fee from the Fund at an
annual rate not to exceed 0.05% of the Fund's average daily net assets in
anticipation of, or as reimbursement for, advertising expenses incurred by the
Distributor in connection with the sale of shares of the Fund. The additional
fee has not been assessed through June 30, 1998. The Distributor has voluntarily
agreed to waive this fee through June 30, 1998.
4. INVESTMENT TRANSACTIONS Increase and decrease in the Fund's investment in the
Portfolio for the six months ended June 30, 1998 aggregated $1,399,886 and
$2,558,218, 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 (par value $0.00001). Transactions in shares of beneficial interest
were as follows:
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(Unaudited) 1997
- --------------------------------------------------------------------------------
Shares sold 134,261 406,371
Shares issued to shareholders from
reinvestment of dividends 68,782 108,405
Shares repurchased (234,281) (1,672,672)
- --------------------------------------------------------------------------------
Net increase (decrease) (31,238) (1,157,896)
- --------------------------------------------------------------------------------
6. EXPENSE FEES CFBDS has entered into an expense agreement with the Fund. CFBDS
had agreed to pay all of the ordinary operating expenses (excluding interest,
taxes, brokerage commissions, litigation costs or other extraordinary costs or
expenses) of the Fund, other than fees paid under the Administrative Services
Agreement, Distribution Agreement and Shareholder Servicing Agreements and other
than amortization of expenses related to the organization of the Fund. The
Agreement may be terminated by either party upon not less than 30 days nor more
than 60 days written notice.
The Fund has agreed to pay to CFBDS an expense fee, on an annual basis,
accrued daily and paid monthly; provided, however, that such fee shall not
exceed the amount such that immediately after any such payment the aggregate
ordinary operating expenses of the Fund, including expenses allocated from the
Portfolio less expenses waived by the Administrator, would on an annual basis
exceed an agreed upon rate, currently 1.75% of average daily net assets.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1998 (Unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS AND RIGHTS--95.3%
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY RECEIPTS/ADR'S--1.9%
- --------------------------------------------------------------------------------
Magyar Olaj-Es Gazipari
Integrated Oil 7,400 $ 199,800
Matav RT
Telecommunications 7,200 211,950
Lukoil Co.
Energy Sources 3,300 108,900
Telecom Argentina SA
Telecommunications 6,700 199,744
-----------
720,394
-----------
AUSTRALIA--1.7%
- --------------------------------------------------------------------------------
Australia & New Zealand Bank
Banking 14,794 102,303
Broken Hill Proprietary
Energy Sources 10,500 88,969
C.S.R. Ltd.
Building Materials 21,400 61,904
Centaur Mining & Exploration Ltd.*
Gold Mines 57,000 19,814
Mayne Nickless
Multi-lndustry 11,119 59,013
News Corp.
Business & Public
Services 20,095 164,407
North Ltd.
Non-Ferrous Metals 21,500 44,309
Pacific Dunlop Ltd.
Multi-lndustry 31,000 50,225
Woodside Petroleum
Co. Ltd.
Energy Sources 12,500 62,540
- --------------------------------------------------------------------------------
653,484
-----------
BRAZIL--1.1%
- --------------------------------------------------------------------------------
Light Servicos de Electricid
Electrical & Gas Utilities 612,000 187,852
Telecommunicacoes de Sao
Paolo Celular--
Preferred B
Telecommunications 674,698 56,004
Telecommunicacoes de Sao
Paolo S/A--Preferred
Telecommunications 674,698 158,677
Telecommunicacoes Sao
Paolo--Preferred Rights
Telecommunications 31,709 507
-----------
403,040
-----------
FINLAND--1.2%
- --------------------------------------------------------------------------------
Nokia AB
Telephone Utilities 4,451 327,670
UPM Kymmene Corp.
Forest Products & Paper 4,979 137,169
----- -----------
464,839
-----------
FRANCE--12.3%
- --------------------------------------------------------------------------------
AXA-UAP
Insurance 2,106 236,876
Accor French
Leisure & Tourism 1,007 281,827
Alcatel Alsthom
Electrical & Electronics 1,063 216,444
BNP
Banking 1,769 144,547
Carrefour
Retailing 329 208,152
Casino (Etabl
Economiques du)
Retailing 1,834 146,460
France Telecom SA
Telephone Utilities 4,587 316,387
Groupe Danone
Food & Household
Products 1,049 289,244
Lafarge
Building Materials 1,566 161,892
L'oreal
Pharmaceuticals & Health 263 146,297
Paribas
Banking 1,408 150,682
Peugeot SA
Automobiles 1,689 363,184
Pinault-Printemps
Retailing 373 312,186
Rhone Poulenc
Pharmaceuticals & Health 2,989 168,591
Schneider SA
Machinery & Engineering 1,901 151,591
Societe Generale
Banking 1,849 384,436
Societe Nationale
Elf Aquitaine
Energy Sources 1,706 239,856
Suez Lyonnaise des Eaux
Business & Public Services 1,166 191,900
Total SA--Class B
Energy Sources 1,461 189,944
Vivendi
Electrical & Gas Utilities 1,470 313,904
----- -----------
4,614,400
-----------
GERMANY--10.1%
- --------------------------------------------------------------------------------
Adidas-Salomon AG
Household Appliances 748 130,442
Allianz AG
Insurance 1,174 391,561
Allianz AG--Preferred
Insurance 66 21,830
Basf AG
Chemicals 3,384 160,902
Bayer AG
Chemicals 3,474 179,917
Bayerische Vereinsbank
Banking 3,482 295,404
Continental AG
Industrial Components 4,439 139,561
Daimler Benz
Automobiles 2,763 271,941
Daimler Benz--Rights
Automobiles 2,500 2,772
Deutsche Bank AG
Banking 1,560 132,000
Deutsche Telekom
Telephone Utilities 6,844 187,470
Dresdner Bank AG
Banking 2,653 143,429
Lufthansa
Airlines 6,050 152,470
Mann AG
Machinery & Engineering 358 139,750
Mannesmann AG
Machinery & Engineering 2,720 279,775
Muenchener
Rueckversicherungs AG
Insurance 547 271,764
Preussag
Multi-Industry 486 174,086
SAP--Preferred
Data Processing &
Reproduction 587 398,722
Siemens AG
Automobiles 1,702 103,955
Veba AG
Electrical & Gas Utilities 2,958 199,037
-----------
3,776,788
HONG KONG--0.5%
- --------------------------------------------------------------------------------
CLP Holdings
Energy Sources 20,000 91,121
Hutchinson Whampoa Ltd.
Multi-Industry 17,000 89,739
-----------
180,860
ITALY--4.8%
- --------------------------------------------------------------------------------
Assicurazioni Generali Spa
Insurance 8,996 292,652
Banca Commerciale Italiana
Banking 24,196 144,761
Credito Italiano
Banking 23,302 122,035
Ente Nazionale
Idrocarburi
Energy Sources 40,062 262,683
IMI
Banking 8,345 131,510
Instituto Bancario Sao Paulo
Banking 9,092 131,255
Rinascente
Retailing 14,636 145,804
Telecom Italia
Telephone Utilities 32,800 241,558
Telecom Italia Mobile
Telephone Utilities 50,369 308,153
- --------------------------------------------------------------------------------
1,780,411
-----------
JAPAN--19.4%
- --------------------------------------------------------------------------------
Aoyama Trading Co.
Retailing 6,200 153,352
Asahi Chemical Industry
Co. Ltd.
Chemicals 48,000 173,573
Bank of Tokyo Mitsubishi
Banking 18,050 191,766
Citizen Watch Co. Ltd.
Household Appliances 32,000 264,989
DDI Corp.
Telephone Utilities 64 223,563
Dai-Ichi Kangyo Bank
Banking 16,000 94,308
Dai Nippon Printing
Multi-Industry 8,000 128,155
Daiwa Securities Co. Ltd.
Financial Services 60,000 259,058
Fuji Photo Film Co. Ltd.
Household Appliances 2,000 69,863
Fujitsu Ltd.
Data Processing &
Reproduction 26,000 274,535
Honda Motor Co. Ltd.
Automobiles 9,000 321,545
Ines Corp.
Business & Public
Services 19,000 130,542
Japan Tobacco
Beverages & Tobacco 44 298,807
Kawasaki Steel Corp.
Steel 89,000 160,917
Mitsubishi Heavy Industries
Machinery & Engineering 51,000 193,274
Mitsubishi Trust & Banking
Banking 16,000 136,429
Mitsui Mining & Smelting Co.
Non-Ferrous Metals 24,000 99,978
Nippon Oil Co. Ltd.
Energy Sources 35,000 113,401
Nippon Paper Industries
Forest Products & Paper 39,000 163,029
Nippon Telegraph &
Telephone Co.
Telephone Utilities 76 632,097
Nomura Securities Ltd.
Financial Services 17,000 198,561
Osaka Gas Co. Ltd.
Electrical & Gas Utilities 79,000 203,399
Osaka Sanso
Chemicals 45,000 92,753
Ryohin Keikaku Co. Ltd.
Food & Household
Products 3,600 346,279
Sakura Bank Ltd.
Banking 56,000 145,802
Sankyo Co. Ltd.
Pharmaceuticals & Health 11,000 251,392
Shin-Etsu Chemical Co. Ltd.
Chemicals 13,800 239,531
Sony Corp.
Household Appliances 4,000 345,701
Sumitomo Bank Ltd.
Banking 34,000 331,959
Sumitomo Electric Industries
Industrial Components 21,000 213,083
TDK Corp.
Automobiles 4,000 296,522
Tokio Marine & Fire Insurance
Insurance 28,000 288,768
Toyota Motor Corp.
Automobiles 9,000 233,673
-----------
7,270,604
-----------
MEXICO--0.1%
- --------------------------------------------------------------------------------
Grupo Carso
Multi-Industry 3,200 13,463
-----------
NETHERLANDS--4.8%
- --------------------------------------------------------------------------------
ABN AMRO Holdings NV
Banking 4,532 106,124
Akzo Nobel NV
Chemicals 792 176,186
Elsevier NV
Business & Public Services 9,776 147,644
ING Groep NV
Financial Services 4,075 267,023
Philips Electronics NV
Household Appliances 2,171 182,630
Royal Dutch Petroleum
Energy Sources 11,444 635,043
Unilever NA
Food & Household
Products 3,580 284,250
-----------
1,798,900
PORTUGAL--1.2%
- --------------------------------------------------------------------------------
Banco Commercial Portuguese
Banking 5,895 167,493
Cimpor Cimentos De
Portugal S.G.P.S
Building Materials 3,386 119,042
Jeronimo Martins
Food & Household
Products 3,658 175,846
-----------
462,381
SPAIN--4.6%
- --------------------------------------------------------------------------------
Argentaria Corp Bancariade
Espana
Banking 5,952 133,517
Banco Bilbao Vizcaya SA
Banking 5,212 267,482
Banco Santandar SA
Banking 10,422 266,752
Compania Telefonica
Nacional Espana
Telephone Utilities 6,348 293,494
Endesa (Emp. Nac. De
Electricidad)
Electric & Gas Utilities 4,290 93,857
Grupo Acciona
Building & Construction 661 157,243
Repsol SA
Energy Sources 2,371 130,649
Urbis SA*
Building & Construction 18,245 254,609
Viscofan Envoltura
Miscellaneous Materials 3,060 142,474
-----------
1,740,077
-----------
SWEDEN--2.4%
- --------------------------------------------------------------------------------
ABB AB
Machinery & Engineering 9,142 129,519
A B Volvo
Automobiles 4,253 126,641
Astra AB--Class A
Pharmaceuticals & Health 8,574 175,221
Ericsson LM--Class B
Electrical & Electronics 10,541 307,930
Skandia Forsikring AB
Insurance 11,547 165,040
-----------
904,351
-----------
SWITZERLAND--7.2%
- --------------------------------------------------------------------------------
Credit Suisse Group
Banking 1,371 305,562
Nestle SA
Food & Household
Products 200 428,713
Novartis AG
Pharmaceuticals & Health 353 588,372
Roche Holdings AGM
Pharmaceuticals & Health 33 324,596
Schweiz Ruckverischerungs
Insurance 109 276,117
United Bank of
Switzerland AG
Banking 1,316 490,143
Zurich Versicherungs
Insurance 411 262,727
-----------
2,676,230
-----------
THAILAND--0.3%
- --------------------------------------------------------------------------------
Bangkok Bank Public
Co. Ltd.
Banking 116,600 120,192
UNITED KINGDOM--21.7%
- --------------------------------------------------------------------------------
Abbey National PLC
Banking 11,857 210,845
Allied Irish Banks
Banking 12,677 184,151
Barclays Bank PLC
Banking 10,325 297,901
Bass PLC
Beverage & Tobacco 9,880 185,257
B.A.T. Industries PLC
Multi-Industry 14,289 143,150
BG PLC
Electrical & Gas Utilities 22,716 131,424
British Aerospace PLC
Airlines 16,881 129,375
British Petroleum Co.
Energy Sources 32,020 467,274
British
Telecommunications PLC
Telephone Utilities 36,591 452,110
Cable & Wireless PLC
Telephone Utilities 14,020 170,419
Cadbury Schweppes
Food & Household
Products 8,780 135,971
Centrica PLC.*
Electrical & Gas Utilities 61,149 103,377
CRH PLC
Building Materials 19,483 276,512
Diageo PLC
Beverage & Tobacco 25,158 298,245
GKN
Machinery & Engineering 14,068 179,341
General Electric Co. PLC
Electrical & Electronics 21,715 187,270
Glaxo Wellcome
Pharmaceuticals & Health 17,834 535,696
Granada Group PLC
Business & Public
Services 13,065 240,397
Great Universal Stores
Retailing 13,484 177,862
Guardian Royal Exchange
Insurance 21,416 125,512
Hong Kong & Shanghai
Bank Corp. Holdings
Banking 12,824 325,680
Imi PLC
Machinery & Engineering 14,839 91,921
Imperial Chemical Industries
Chemicals 7,385 118,622
Kingfisher PLC
Retailing 11,130 179,333
Ladbroke Group PLC
Leisure & Tourism 23,736 130,389
Lloyds TSB Group PLC
Banking 28,227 395,190
National Power
Electrical & Gas Utilities 13,179 124,108
Orange PLC.*
Telephone Utilities 26,642 282,474
Prudential Corp. PLC
Insurance 14,163 186,701
Royal Bank of Scotland
Group
Banking 12,554 217,999
Royal & Sun Alliance
Insurance 10,864 112,375
Scottish Power
Electrical & Gas Utilities 14,613 128,096
SmithKline Beecham Plc
Real Estate 35,803 437,293
Unilever Plc
Food & Household
Products 16,879 179,807
Vodafone
Telephone Utilities 27,478 348,917
Zeneca
Pharmaceuticals & Health 5,280 226,748
-----------
8,117,742
-----------
TOTAL COMMON STOCKS 35,698,156
TOTAL INVESTMENTS
(Identified Cost
$32,357,836) 95.3% 35,698,156
OTHER ASSETS
LESS LIABILITIES 4.7 1,771,088
----- -----------
NET ASSETS 100.0% $37,469,244
===== ===========
* Non income producing securities.
See notes to financial statements
<PAGE>
Forward contracts which were open at June 30, 1998 are as follows:
<TABLE>
<CAPTION>
UNREALIZED
MARKET AGGREGATE DELIVERY DATE APPRECIATION
CURRENCY COUNTRY VALUE FACE VALUE OF CONTRACTS (DEPRECIATION)
-------- ------- ----- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Lira (Sell) ...... Italy $115,040 $114,338 July-1998 $(702)
Pound (Buy) ...... Great Britain 69,805 69,568 July-1998 237
-----
$(465)
=====
</TABLE>
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $32,357,836) $35,698,156
Foreign currency, at value (Cost, $223,239) 219,562
Cash 1,569,863
Receivable for investments sold 329,604
Receivable for forward contracts 237
Dividends and interest receivable 64,776
- --------------------------------------------------------------------------------
Total assets 37,882,198
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 371,735
Payable to affiliates--Investment advisory fees (Note 2) 29,927
Payable for forward contracts 702
Other liabilities 10,590
- --------------------------------------------------------------------------------
Total liabilities 412,954
- --------------------------------------------------------------------------------
NET ASSETS $37,469,244
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $37,469,244
- --------------------------------------------------------------------------------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $87,627) $ 324,271
Interest 2,573
- --------------------------------------------------------------------------------
Total investment income $ 326,844
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 173,525
Administrative fees (Note 3) 8,676
- --------------------------------------------------------------------------------
Total expenses 182,201
Less aggregate amount waived by the Administrator
(Note 3) (8,676)
- --------------------------------------------------------------------------------
Net expenses 173,525
- --------------------------------------------------------------------------------
Net investment income 153,319
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 2,131,344
Net realized gain on foreign exchange currencies
transactions 9,802
- --------------------------------------------------------------------------------
Net realized gain 2,141,146
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments--
Beginning of period 454,843
End of period 3,341,664 2,886,821
- --------------------------------------------------------------------------------
Translation of other assets and liabilities denominated
in foreign currencies--net 2,013
- --------------------------------------------------------------------------------
Net change in unrealized appreciation 2,888,834
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 5,029,980
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,183,299
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1998 YEAR ENDED
(Unaudited) DECEMBER 31, 1997
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income $ 153,319 $ 257,502
Net realized gain on investments and foreign
exchange transactions 2,141,146 3,143,416
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency exchange 2,888,834 (968,584)
- ------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 5,183,299 2,432,334
- ------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 3,074,024 7,972,770
Value of withdrawals (4,558,399) (25,691,025)
- ------------------------------------------------------------------------------
Net decrease in net assets from capital
transactions (1,484,375) (17,718,255)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS: 3,698,924 (15,285,921)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 33,770,320 49,056,241
- ------------------------------------------------------------------------------
End of period $37,469,244 $33,770,320
- ------------------------------------------------------------------------------
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
MAY 1, 1994
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED DECEMBER 31, OF OPERATIONS) TO
JUNE 30, 1998 ----------------------- DECEMBER 31,
(Unaudited) 1997 1996 1995 1994
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $37,469 $33,770 $49,056 $40,114 $32,153
Ratio of expenses to average
net assets 1.00%* 1.00% 1.11% 1.20% 1.22%*
Ratio of net investment income to
average net assets 0.88%* 0.58% 0.65% 0.59% 0.60%*
Portfolio turnover 54% 99% 109% 51% 25%
Note: If the Agents of the Portfolio had not voluntarily waived a portion of
their fees for the periods indicated, the ratios would have been as follows:
Expenses to average
net assets 1.05%* 1.06% 1.13% N/A N/A
Net investment income to
average net assets 0.83%* 0.52% 0.63% N/A N/A
- --------------------------------------------------------------------------------
* Annualized
See notes to financial statements
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES International Equity Portfolio (the
"Portfolio"), a separate series of The Premium 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
Adviser of the Portfolio is Citibank N.A. ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's Administrator.
Citibank is a wholly owned subsidiary of Citicorp. Citicorp recently announced
its intention to merge with The Travelers Group. Completion of its merger is
subject to the satisfaction of certain conditions.
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 following significant accounting policies consistently followed by the
Portfolio are as follows:
A. Investment Security Valuations Equity securities in the portfolio 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 and other fixed income securities (other than short-term
obligations maturing in sixty days or less) in the portfolio are valued on the
basis of valuations furnished by a pricing service approved by the Board of
Trustees, the use of which has been approved by the 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 at the direction of 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 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 of fund valuation, such securities will be valued at fair
value in accordance with procedures established by and under the general
supervision of the Trustees.
B. 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, and income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Translation of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income, expenses and foreign taxes
withheld recorded and the actual amount received or paid.
C. Forward Foreign Currency Exchange Contracts The Portfolio may enter into
forward foreign currency exchange contracts ("contracts") in connection with
planned purchases or sales of securities or 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. 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.
D. Accounting For Investments Securities transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date.
Dividend income is recorded net of foreign taxes withheld where recovery of such
taxes is not assured. Interest income is accrued daily.
E. U.S. Federal Income And Other Taxes The Portfolio is considered a
partnership under the U.S. Internal Revenue Code. Accordingly, no provision for
federal income taxes is necessary. The Portfolio may be subject to taxes imposed
by countries in which it invests. Such taxes are generally based on income
and/or capital gains earned or repatriated.Taxes are accrued and applied to net
investment income and net realized gains as such income and/or gains are earned.
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. 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 agreements.
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.
2. INVESTMENT ADVISORY FEES
The investment advisory fees paid to Citibank, as compensation for overall
investment management services, amounted to $173,525 for the six months ended
June 30, 1998. The investment advisory fees are computed at the annual rate of
1.00% of the Portfolio's average daily net assets.
3. ADMINISTRATIVE FEES
Under the terms of an Administrative Services Agreement, the administrative
services fees paid to the Administrator, as compensation for overall
administrative services including general office facilities, is computed at an
annual rate of 0.05% of the Portfolio's average daily net assets. The
administrative fees amounted to $8,676, all of which was voluntarily waived for
the six months ended June 30, 1998. The Portfolio pays no compensation directly
to any Trustee or any officer who is affiliated with the Administrator, all of
whom receive remuneration for their services to the Portfolio from the
Administrator or its affiliates. Certain officers and a Trustee of the Portfolio
are officers and directors of the Administrator or its affiliates.
4. PURCHASES AND SALES OF INVESTMENTS
For the six months ended June 30, 1998, purchases and sales of investment
securities, other than short-term investments, aggregated $18,117,716 and
$19,417,336, respectively.
5. FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/(depreciation) in value of the investment
securities owned at June 30, 1998 as computed on a federal income tax basis, are
as follows:
Aggregate cost $32,357,836
- --------------------------------------------------------------------------------
Gross unrealized appreciation $ 5,956,633
Gross unrealized depreciation (2,616,313)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 3,340,320
- --------------------------------------------------------------------------------
6. EXPENSE FEES
SFG has entered into an expense agreement with the Portfolio. SFG has agreed to
pay all of the ordinary operating expenses (excluding interest, taxes, brokerage
commissions, litigation costs or other extraordinary costs or expenses) of the
Portfolio, other than fees paid under the Advisory Agreement, and Administrative
Services Agreement. The Agreement may be terminated by either party upon not
less than 30 days nor more than 60 days written notice.
The Portfolio has agreed to pay SFG an expense fee, on an annual basis,
accrued daily and paid monthly; provided, however, that such fee shall not
exceed the amount such that immediately after any such payment the aggregate
expenses of the Portfolio less expenses waived by the Administrator would on an
annual basis exceed an agreed upon rate, which as of July 1, 1996 is 1.00% of
average daily net assets.
7. FINANCIAL INSTRUMENTS
The Portfolio may trade financial instruments with off-balance sheet risk in the
normal course of its investing activities and to assist in managing exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include forward foreign currency exchange contracts.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when related and offsetting transactions are considered. No such instruments
were held at June 30, 1998.
8. LINE OF CREDIT
The Portfolio, along with the 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 six months ended
June 30, 1998, the commitment fee allocated to the Portfolio was $73. 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. OscarMorong Jr.
E.Kirby Warren
William S. Woods Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street,Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
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/IE/698
<PAGE>
Semi-Annual Report o June 30, 1998
[Logo]
Emerging Asian Markets
Equity Portfolio
INTERNATIONAL STOCKS
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Portfolio Highlights 4
- --------------------------------------------------------------------------------
Fund Performance 5
- --------------------------------------------------------------------------------
CITIFUNDS EMERGING ASIAN MARKETS EQUITY PORTFOLIO
Statement of Assets and Liabilities 6
- --------------------------------------------------------------------------------
Statement of Operations 6
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets 7
- --------------------------------------------------------------------------------
Financial Highlights 8
- --------------------------------------------------------------------------------
Notes to Financial Statements 9
- --------------------------------------------------------------------------------
EMERGING ASIAN MARKETS EQUITY 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 January 1, 1998, through June 30,
1998, for the CitiFunds(SM) Emerging Asian Markets Equity Portfolio. Inside, the
CitiFund's investment adviser, Citibank, N.A., discusses the market conditions
it faced, the strategies it employed and its outlook for the future.
The past six months were very difficult for most Asian economies and
financial markets. Despite signs of strength early in the year, Asian stock
markets continued to fall sharply in the wake of last year's currency
devaluations. As the report inside discusses, The CitiFunds Emerging Asian
Markets Equity Portfolio was defensively positioned in this difficult
environment.
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 for your continued
participation and confidence in the CitiFunds family of funds.
/s/ Philip W. Coolidge
Philip W. Coolidge
President
July 16, 1998
NOTE: On August 7, 1998 the Fund's Board of Trustees approved the liquidation of
the Fund. Shareholders will soon receive additional information concerning
this decision.
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
The Asian stock markets declined sharply amid heightened volatility during the
last six months. The severe financial problems caused by last year's currency
devaluations prompted investors to shift their assets away from Asia in droves,
creating renewed downward pressure on stock prices. In addition, weakness in
Japan's economy caused the yen to decline in value, making Japanese exports less
expensive, which effectively increased competitive pressures on exporters in
other Asian countries. Investors' negative perceptions of the region were
reinforced by political instability in Indonesia, where President Suharto
resigned in the face of civil unrest.
How did the Asian markets get into such an unfavorable position? Although the
situation and its causes are complex, the primary culprit appears to have been
an excess of investment capital from domestic and overseas sources. Earlier this
decade, many investors believed (rightly so, in our opinion) that Asian
economies and companies would rank among the fastest growing in the world
because of the region's large population and rapidly improving standards of
living. Eager to participate in potential gains, investors committed capital
faster than the economy could absorb it. As a result, excess capital financed
ventures such as factories and office buildings for which there was no current
need. These facilities were built to satisfy future demand expected to result
from the region's continued growth.
Unfortunately, the region's economies failed to deliver that growth over the
short term. Recessionary conditions in Japan and China's emergence as a global
trading partner caused weakness in Southeast Asian exports. Faced with the
possibility that corporate earnings might not grow as quickly as expected,
investors rushed to take their capital out of the region. In this way, the
"speculative bubble" burst, causing borrowers to default on their loans,
companies to declare bankruptcy and financial markets to decline.
THE FUND MAINTAINED A DEFENSIVE POSTURE IN THIS ENVIRONMENT, keeping
approximately 10% of its assets in cash instruments, which helped protect the
Fund from the brunt of the markets' declines. The Fund's defensive stance was
also reflected in its equity investments. We favored companies that we believed
would be relatively immune to the region's problems, such as Asian commodities
producers that earn their revenues in U.S. dollars from foreign markets. We also
shifted assets to producers of basic consumer items such as food and electricity
because people need these types of goods regardless of the economic environment.
Within the consumer goods sector, we focused on well-known companies with little
debt and high-quality earnings. We avoided companies in industries affected most
by the region's problems, including banks and real estate-related businesses.
IN OUR VIEW, THE FINANCIAL MARKETS HAVE PRICED IN MANY OF THE NEGATIVES.
Speculative excesses appear to have been wrung out of the region's economies,
much of the bad news has already been incorporated into stock prices and we are
seeing progress toward solving the fundamental financial problems that allowed
recent events to occur. Some of those solutions include restructuring corporate
debt, closing weak banks and businesses, reducing tariffs, breaking up
inefficient monopolies and cutting costs. With that said, however, we do not
expect to see significant signs of economic recovery until sometime in the year
2000. That's because financial and regulatory reforms will take time to
implement.
<PAGE>
FUND FACTS
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.
INVESTMENT ADVISER DIVIDENDS
EMERGING ASIAN MARKETS Paid semi-annually, if any
EQUITY PORTFOLIO,
Citibank, N.A. CAPITAL GAINS
Distributed annually, if any
COMMENCEMENT OF OPERATIONS
August 23, 1995 BENCHMARKS
o Lipper Pacific (Ex-Japan) Funds Average
NET ASSETS AS OF 6/30/98 o MSCI EMF Far East Index (excluding Korea)
$1.1 million
PORTFOLIO HIGHLIGHTS
- -------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS AS OF JUNE 30, 1998 (Unaudited)
COMPANY, INDUSTRY % OF NET ASSETS
Telekom Malaysia, Utilities 9.1%
- -------------------------------------------------------------------------------
Tenaga Nasional Berhad, Utilities 6.0%
- -------------------------------------------------------------------------------
Philippine Long Distance Telephone, Telecommunications 4.5%
- -------------------------------------------------------------------------------
Ptt Exploration & Products, Energy 4.0%
- -------------------------------------------------------------------------------
Kuala Lumpur Kepong Berhad, Plantations 3.5%
- -------------------------------------------------------------------------------
Manila Electric, Utilities 3.3%
- -------------------------------------------------------------------------------
Ayala Land Inc., Property 3.3%
- -------------------------------------------------------------------------------
Malaysian International Shipping, Transport 3.0%
- -------------------------------------------------------------------------------
Resorts World Berhad, Leisure & Tourism 2.6%
- -------------------------------------------------------------------------------
Rothmans Pall Mall, Consumer 2.5%
- -------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION AS OF JUNE 30, 1998 (Unaudited)
Philippines 17%
Malaysia 53%
Thailand 21%
Indonesia 9%
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
SINCE
ALL PERIODS ENDED JUNE 30, 1998 SIX ONE 8/23/95
(Unaudited) MONTHS** YEAR INCEPTION*
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CitiFunds Emerging Asian Markets Equity Portfolio (37.43)% (75.61)% (40.27)%
Lipper Pacific (Ex-Japan) Funds Average (23.69)% (53.18)% (20.17)%+
MSCI EMF Far East Index (excluding Korea) (31.53)% (76.55)% (41.98)%+
* Average Annual Total Return.
** Not Annualized
+ From 8/31/95
</TABLE>
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have decreased to
$2,296 (as of 6/30/98). The graph shows how the fund compares to its benchmarks
for the same period.
CITIFUNDS MSCI EMF LIPPER PACIFIC
DATE EMERGING ASIA /FAR EAST (EX-JAPAN) AVG.
- ---------------------------------------------------------------------
$10,000
8/31/95 $ 9,870 $10,000 $10,000
9/30/95 $ 9,600 $ 9,808 $10,024
10/31/95 $ 9,380 $ 9,436 $ 9,846
11/30/95 $ 9,200 $ 9,175 $ 9,625
12/31/95 $10,026 $ 9,791 $10,024
1/31/96 $10,949 $10,496 $10,825
2/29/96 $10,838 $10,516 $10,908
3/31/96 $11,109 $10,731 $10,840
4/30/96 $11,590 $11,255 $11,157
5/31/96 $11,410 $11,087 $11,079
6/30/96 $11,029 $10,920 $10,876
7/31/96 $10,016 $ 9,917 $10,146
8/31/96 $10,337 $10,301 $10,424
9/30/96 $10,548 $10,492 $10,536
10/31/96 $ 9,926 $ 9,998 $10,374
11/30/96 $10,407 $10,526 $10,898
12/31/96 $10,167 $10,443 $10,976
1/31/97 $10,608 $10,673 $11,133
2/28/97 $10,758 $10,760 $11,225
3/31/97 $10,207 $10,212 $10,686
4/30/97 $ 9,204 $ 9,184 $10,497
5/31/97 $ 9,485 $ 9,327 $11,146
6/30/97 $ 9,415 $ 9,122 $11,456
7/31/97 $ 8,552 $ 8,432 $11,578
8/31/97 $ 5,765 $ 5,634 $ 9,795
9/30/97 $ 5,735 $ 5,522 $ 9,744
10/31/97 $ 4,853 $ 4,353 $ 7,632
11/30/97 $ 4,051 $ 3,559 $ 7,206
12/31/97 $ 3,670 $ 3,124 $ 6,990
1/31/98 $ 3,399 $ 2,905 $ 6,371
2/28/98 $ 4,001 $ 4,006 $ 7,435
3/31/98 $ 3,950 $ 3,963 $ 7,335
4/30/98 $ 3,489 $ 3,427 $ 6,863
5/31/98 $ 2,868 $ 2,757 $ 6,020
6/30/98 $ 2,296 $ 2,139 $ 5,353
The graph assumes all dividends and distributions are reinvested at Net Asset
Value.
Notes: All Fund performance numbers represent past performance, and are no
guarantee of future results. The Fund's share price and investment return will
fluctuate, so that the value of an investor's shares, when redeemed, may be
worth more or less than their original cost. Total returns include change in
share price and reinvestment of dividends and distributions, if any. Total
return figures are provided in accordance with SEC guidelines for comparative
purposes for prospective investors. Returns reflect certain voluntary fee
waivers. If the waivers were not in place, the Fund's return would have been
lower.
<PAGE>
CITIFUNDS EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investment in Emerging Asian Markets Equity
Portfolio, at value (Note 1A) $ 1,124,813
Other assets 67
- -------------------------------------------------------------------------------
Total assets 1,124,880
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest
repurchased 4,425 Payable to
affiliates-Shareholder Servicing Agents'
fee (Note 2B) 247
Accrued expenses andother liabilities 695
- -------------------------------------------------------------------------------
Total liabilities 5,367
- -------------------------------------------------------------------------------
NET ASSETS for 489,262 shares of beneficial interest outstanding $ 1,119,513
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $ 6,604,065
Unrealized depreciation on investments and foreig
currency translations (847,404)
Accumulated net investment loss (42,018)
Accumulated net realized loss on investments (4,595,130)
- -------------------------------------------------------------------------------
Total $ 1,119,513
- -------------------------------------------------------------------------------
NET ASSET VALUE OFFERING PRICE AND REDEMPTION PRICE
PER SHARE OF BENEFICIAL INTEREST $2.29
- -------------------------------------------------------------------------------
<PAGE>
CITIFUNDS EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Dividend and Interest Income from
Emerging Asian Markets
Equity Portfolio $ 1,741
Allocated Expenses from Emerging
Asian Markets Equity Portfolio (7,943)
- -------------------------------------------------------------------------------
$ (6,202)
- -------------------------------------------------------------------------------
EXPENSES:
Administrative fees (Note 2A) 2,383
Shareholder Servicing Agents' fees (Note 2B) 1,986
Distribution fees (Note 3) 795
Expense fees (Note 6) 1,588
- -------------------------------------------------------------------------------
Net expenses 6,752
- -------------------------------------------------------------------------------
Net investment loss (12,954)
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS FROM EMERGING ASIAN
MARKETS EQUITY PORTFOLIO:
Net realized loss (1,475,536)
Net change in unrealized appreciation 809,139
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss) from
Emerging Asian Markets Equity Portfolio (666,397)
- -------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (679,351)
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
CITIFUNDS EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1998 DECEMBER 31,
(Unaudited) 1997
- ---------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
<S> <C> <C>
Net investment loss $ (12,954) $ (27,842)
Net realized loss (1,475,536) (2,194,588)
Net change in unrealized appreciation (depreciation) 809,139 (2,510,458)
- ---------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (679,351) (4,732,888)
- ---------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 5):
Net proceeds from sale of shares 244,350 180,599
Cost of shares repurchased (127,539) (4,350,476)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
transactions in shares of beneficial interest 116,811 (4,169,877)
- ---------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (562,540) (8,902,765)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,682,053 10,584,818
- ---------------------------------------------------------------------------------------------
End of period (including undistributed net investment loss of
$(42,108), and ($29,064) respectively) $ 1,119,513 $ 1,682,053
- ---------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS EMERGING ASIAN MARKETS EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AUGUST 23, 1995
(COMMENCEMENT
SIX MONTHS OF
ENDED YEAR ENDED DECEMBER 31, OPERATIONS) TO
JUNE 30, 1998 ---------------------------------- DECEMBER 31,
(Unaudited) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 3.66 $ 10.14 $ 10.00 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (loss) (0.023) (0.056) 0.010(+) 0.026
Net realized and unrealized gain (loss) (1.347) (6.424) 0.130(+)(++) --
- ---------------------------------------------------------------------------------------------------------------------
Total from operations (1.37) (6.48) 0.140 0.026
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions:
From net investment income -- -- -- (0.026)
- ---------------------------------------------------------------------------------------------------------------------
Total from distributions -- -- -- (0.026)
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 2.29 $ 3.66 $ 10.14 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 1,120 $ 1,682 $ 10,585 $ 5,969
Ratio of expenses to average net assets(A) 1.85%* 1.95%# 1.01% 0%
Ratio of net investment income (loss) to
average net assets (1.63)%* (0.40)% 0.16% 1.50%*
Total return (37.43)%** (63.91)% 1.40% 0.26%**
Note: If Agents of the Fund and Portfolio for the periods indicated had not voluntarily waived a portion of their fees
and had the expense fees agreement been in effect the entire period, the net investment income (loss) per share and the
ratios would have been as follows:
Net investment loss per share $ (0.026) $ (0.067) $ (0.024)(+) $ (0.046)
RATIOS:
Expenses to average net assets(A) 1.90%* 2.03% 1.85% 1.85%*
Net investment loss to
average net assets (1.68)%* (0.48)% (0.68)% (0.35)%*
- ---------------------------------------------------------------------------------------------------------------------
* Annualized.
** Not Annualized.
# Ratio of expenses to average net assets excluding interest expense would be 1.85%.
+ The per share amounts were computed using a monthly average number of shares outstanding during the period.
++ The amount shown for a share outstanding does not correspond with the aggregate net realized and unrealized gain
(loss) on investments for the period ended due to the timing of sales of Fund shares in relation to fluctuating market
values of the investments in the Fund.
(A) Includes the Fund's share of Emerging Asian Markets Equity Portfolio allocated expenses for the periods indicated.
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS EMERGING ASIAN MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Emerging Asian Markets Equity
Portfolio (formerly Landmark Emerging Asian Markets Equity Fund) (the "Fund") is
a separate diversified series of CitiFunds International Trust (the "Trust"), a
Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end, management
investment company. The Fund invests all of its investable assets in Emerging
Asian Markets Equity Portfolio (the "Portfolio"), a management investment
company for which Citibank, N.A. ("Citibank") serves as Investment Adviser.
CFBDS, Inc. ("CFBDS", formerly Landmark Funds Broker-Dealer Services, Inc.) acts
as the Fund's Administrator and Distributor. Citibank also serves as
Sub-Administrator and makes Fund shares available to customers as Shareholder
Servicing Agent. Citibank is a wholly-owned subsidiary of Citicorp. Citicorp
recently announced its intention to merge with The Travelers Group. Completion
of the merger is subject to the satisfaction of certain conditions.
The Trust seeks to achieve the Fund's investment objective of long-term growth
of capital 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
(approximately 66% at June 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 Valuations 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. Accounting For Investments The Fund earns income, net of Portfolio expenses,
daily based on its investment in the Portfolio. All the net investment income,
realized and unrealized gain or 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. Additionally, each Fund
reclaims its pro rata portion of recoverable foreign taxes or dividends received
by 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, including any net realized
gain on investment transactions. Accordingly, no provision for federal income or
excise tax is required. At December 31, 1997, the Fund, for federal income tax
purposes, had a capital loss carryover of $2,187,244 of which $660,370 will
expire on December 31, 2004 and $1,526,874 will expire on December 31, 2005.
Such capital loss carryover will reduce the Fund's taxable income arising from
future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax.
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. For the year ended December 31, 1997, the Fund
reclassified $5,935 to accumulated net investment loss, $63,566 to accumulated
net realized loss on investments and $69,501 from paid-in-capital.
2. ADMINISTRATIVE SERVICES Plan The Fund has adopted an Administrative Services
Plan (the "Administrative Services Plan") which provides that the Fund may
obtain the services of an Administrator, and one or more Shareholder Servicing
Agents and other Servicing Agents, and may enter into agreements providing for
the payment of fees for such services. Under the Administrative Services Plan,
the aggregate of the fees paid to the Administrator by the Fund, the fees paid
to the Shareholder Servicing Agents by the Fund and the Basic Distribution Fee
paid by the fund to the Distributor under the Distribution Plan may not exceed
0.65% of the Fund's average daily net assets on an annualized basis for the
Fund's then-current fiscal year.
A. Administrative Fees Under the terms of an Administrative Services Agreement,
the administrative services fees paid to the Administrator, as compensation for
overall administrative services, including general office facilities, may not
exceed an annual rate of 0.30% of the Fund's average daily net assets. The
Administrative fees amounted to $2,383 for the six months ended June 30, 1998.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Fund from the Administrator or its affiliates. Certain officers
and a Trustee of the Fund are officers and directors of the Administrator or its
affiliates.
B. Shareholder Servicing Agents' Fees The Fund has 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, which may not
exceed, on an annualized basis, an amount equal to 0.25% of the average daily
net assets of the Fund represented by shares owned during the period for which
payment is being made by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. The Shareholder Servicing Agents' fees,
computed at an annual rate of 0.25%, amounted to $1,986, for the six months
ended June 30, 1998.
3. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund compensates the Distributor at an annual rate not to exceed 0.10% of the
Fund's average daily net assets for distribution of the Fund's shares. The
Distribution fees amounted to $795, for the six months ended June 30, 1998. The
Distributor may also receive an additional fee from the Fund at an annual rate
not to exceed 0.05% of the Fund's average daily net assets in anticipation of,
or as reimbursement for, advertising expenses incurred by the Distributor in
connection with the sale of shares of the Fund. The additional fee has not been
assessed through June 30, 1998. The Distributor has voluntarily agreed to waive
this fee through June 30, 1998.
4. INVESTMENT TRANSACTIONS Increase and decrease in the Fund's investment in the
Portfolio for the six months ended June 30, 1998 aggregated $242,666 and
$123,809, 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 (par value $0.00001). Transactions in shares of beneficial interest
were as follows:
SIX MONTHS
ENDED
JUNE 30, 1998 YEAR ENDED
(Unaudited) DECEMBER 31, 1997
- ------------------------------------------------------------------
Shares sold 68,279 23,139
Shares repurchased (38,173) (607,588)
- ------------------------------------------------------------------
Net increase (decrease) 30,106 (584,449)
- ------------------------------------------------------------------
6. EXPENSE FEES CFBDS has entered into an expense agreement with the Fund. CFBDS
had agreed to pay all of the ordinary operating expenses (excluding interest,
taxes, brokerage commissions, litigation costs or other extraordinary costs or
expenses) of the Fund, other than fees paid under the Administrative Services
Agreement, Distribution Agreement and Shareholder Servicing Agreements and other
than amortization of expenses related to the organization of the Fund. The
Agreement may be terminated by either party upon not less than 30 days nor more
than 60 days written notice.
The Fund has agreed to pay to CFBDS an expense fee, commencing July 1, 1996, on
an annual basis, accrued daily and paid monthly; provided, however, that such
fee shall not exceed the amount such that immediately after any such payment the
aggregate ordinary operating expenses of the Fund, including expenses allocated
from the Portfolio less expenses waived by the Administrator and Distributor
would, on an annual basis exceed an agreed upon rate, currently 1.85% of average
daily net assets.
7. SUBSEQUENT EVENT On August 7, 1998 The Board of Trustees of the Fund approved
the liquidation of the Fund.
<PAGE>
Emerging Asian Markets Equity Portfolio
PORTFOLIO OF INVESTMENTS June 30, 1998
(Unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------
COMMON STOCK AND WARRANTS--87.7%
- --------------------------------------------------------------------------
INDONESIA-7.4%
- --------------------------------------------------------------------------
Pt Bimanatra Citra
Multi-Industry 262,000 $ 4,918
Pt Daya Guna Samudera
Consumer 66,000 40,546
Pt Gudang Garam
Consumer 40,000 23,754
Pt Indosat
Telecommunications 24,000 28,177
Pt Tambang Timah
Building Materials 49,000 22,160
Pt Telecomunikasion
Telecommunications 29,000 8,264
----------
127,819
----------
MALAYSIA-46.7%
- --------------------------------------------------------------------------
Berjaya Group Berhad
Multi-Industry 20,000 2,458
Berjaya Sports
Leisure & Tourism 17,000 25,191
Commerce Asset
Holdings Berhad
Banking 78,000 29,131
Genting Berhad
Leisure & Tourism 19,000 34,335
Hume Industries Berhad
Building Materials 13,000 9,773
IOI Corp.
Plantations 42,000 20,948
KFC Holdings Berhad
Consumer 21,000 11,132
Kuala Lumpur Kepong Berhad
Plantations 37,000 59,731
Magnum Corp. Berhad
Leisure & Tourism 50,000 18,553
Malayan Banking Berhad
Banking 37,000 37,265
Malayan Resource Corp.
Multi-Industry 74,000 18,722
Malaysia Mining Corp.
Construction/Engineering 59,000 18,765
Malayan Bank
Banking 14,000 14,100
Malaysian International Shipping
Transport 35,000 51,021
Petronas Gas Berhad
Utilities 13,000 24,119
Public Bank Berhad
Banking 29,000 8,735
RHB Capital Berhad
Banking 41,000 16,696
Rashid Hussein Berhad
Banking 25,000 12,288
Resorts World Berhad
Leisure & Tourism 40,000 43,949
Rothmans Pall Mall
Consumer 6,300 43,642
Selangor Properties
Properties 9,000 3,686
Sime Darby Berhad
Multi-Industry 14,000 9,648
Star Publications Malaysia
Media 22,000 18,447
Technology Resources
Industries Berhad
Telecommunications 14,000 9,614
Telekom Malaysia
Utilities 93,000 156,858
Tenaga Nasional Berhad
Utilities 85,000 102,403
----------
801,210
----------
PHILIPPINES-15.2%
- --------------------------------------------------------------------------
Ayala Land Inc.
Property 196,070 56,423
DMCI Holdings Inc.
Construction 5,000 158
Filinvest Land
Property 36,000 1,519
Ionics Circuit Inc.
Manufacturing 45,700 14,521
Manila Electric
Utilities 21,590 56,952
Metro Bank & Trust Co.
Banking 1,500 8,813
Philippine Long Distance
Telephone
Telecommunications 3,370 76,775
SM Prime Holdings
Property 179,000 28,331
San Miguel Corp.
Consumer 13,600 17,938
----------
261,430
----------
THAILAND-18.4%
- --------------------------------------------------------------------------
Advanced Information Services
Telecommunications 800 3,185
Advanced Information Services*
Telecommunications 8,200 34,976
Bangkok Bank Co. Ltd.
Banking 24,100 29,697
Bangkok Expressway
Construction 1,000 385
Bec World
Construction 7,000 26,706
Co-Generation Public Co.
Utilities 14,900 6,002
Co-Generation Public Co.*
Utilities 98,600 39,720
Electricity General
Utilities 6,600 10,244
Grammy Entertainment
Media 9,000 20,900
Industrial Financing Corp.
of Thailand
Banking 13,100 2,701
National Petrochemical
Petrochemicals 1,500 418
Ptt Exploration & Products
Energy 9,000 68,246
Phatra Thanakit Co.
Finance 37,500 3,377
Siam Makro
Consumer 28,500 39,171
Siam Cement Co.
Building Materials 1,600 7,735
Thai Airways International
Transportation 7,200 5,972
Thai Farmers Bank
Banking 17,400 15,359
Thai Farmers
Bank-Warrants* 2,837 168
----------
314,962
----------
TOTAL COMMON STOCK
(Identified Cost $2,602,810) $1,505,421
----------
TOTAL INVESTMENTS 87.7% 1,505,421
OTHER ASSETS
LESS LIABILITIES 12.3 211,097
----- ----------
NET ASSETS 100.0% $1,716,518
----- ----------
* Non income producing securities
See notes to financial statements
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) (Identified Cost, $2,602,810) $1,505,421
Receivable for investments sold 15,976
Cash 174,593
Receivable for foreign currency sold 11,589
Foreign currency, at value (Cost, $19,913) 20,010
Dividends receivable 2,693
- --------------------------------------------------------------------------------
Total assets 1,730,282
- --------------------------------------------------------------------------------
LIABILITIES:
Payable to affiliates--Investment advisory fees (Note 2) 1,511
Payable for currency purchased 11,616
Accrued expenses and other liabilities 637
- --------------------------------------------------------------------------------
Total liabilities 13,764
- --------------------------------------------------------------------------------
NET ASSETS $1,716,518
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $1,716,518
- --------------------------------------------------------------------------------
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $2,552) $ 64
Interest 2,637
- --------------------------------------------------------------------------------
Total investment income $ 2,701
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 12,366
Administrative fees (Note 3) 618
- --------------------------------------------------------------------------------
Total expenses 12,984
Less aggregate amount waived by the Administrator
(Note 3) (618)
Net expenses 12,366
- --------------------------------------------------------------------------------
Net investment loss (9,665)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investment transactions (2,242,108)
Net realized loss on foreign currency exchange
transactions (72,346)
- --------------------------------------------------------------------------------
Net realized loss (2,314,454)
- --------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments--
Beginning of period (2,398,027)
End of period (1,097,292) 1,300,735
- --------------------------------------------------------------------------------
Translation of other assets and liabilities denominated
in foreign currencies--net 544
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,301,279
- --------------------------------------------------------------------------------
Net realized and unrealized loss on investments (1,013,175)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,022,840)
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(Unaudited) 1997
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss) $ (9,665) $ 33,784
Net realized loss on investments and foreign
exchange transactions (2,314,454) (3,015,565)
Net change in unrealized appreciation (depreciation)
of investments and foreign currency exchange 1,301,279 (3,247,601)
- --------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (1,022,840) (6,229,382)
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 280,099 2,061,677
Value of withdrawals (212,925) (4,552,871)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets from
capital transactions 67,174 (2,491,194)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS: (955,666) (8,720,576)
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,672,184 11,392,760
- --------------------------------------------------------------------------------
End of period $1,716,518 $2,672,184
- --------------------------------------------------------------------------------
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AUGUST 23, 1995
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ----------------------- DECEMBER 31,
(Unaudited) 1997 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $ 1,717 $ 2,672 $ 11,393 $5,963
Ratio of expenses to average net assets 1.00%* 1.12%+ 0.56% 0%
Ratio of net investment income (loss)
to average net assets (0.78)%* 0.40% 0.60% 1.53%*
Portfolio turnover 83% 72% 73% 0%
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 1.05%* 1.20% 1.06% 1.05%*
Net investment income (loss)
to average net assets (0.83)%* 0.32% 0.10% 0.48%*
- ------------------------------------------------------------------------------------------------
* Annualized.
+ Ratio of expenses to average net assets excluding interest expense would be 1.00%.
</TABLE>
See notes to financial statements
<PAGE>
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES Emerging Asian Markets Equity Portfolio (the
"Portfolio"), a separate series of The Premium 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
Adviser of the Portfolio is Citibank N.A. ("Citibank"). Signature Financial
Group (Grand Cayman), Ltd. ("SFG") acts as the Fund's Administrator. 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 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 following significant accounting policies consistently followed by the
Portfolio are as follows:
A. Investment Security Valuations Equity securities in the portfolio 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 and other fixed income securities (other than short-term
obligations maturing in sixty days or less) in the portfolio are valued on the
basis of valuations furnished by a pricing service, the use of which has been
approved by the 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, since such valuations and techniques are believed to
reflect more accurately the fair value of such securities. 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 at the direction of 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 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 of fund valuation, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.
B. 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, and income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Translation of foreign currency
includes net exchange gains and losses, disposition of foreign currency and the
difference between the amount of investment income and foreign taxes withholding
recorded and the actual amount received or paid.
C. Forward Foreign Currency Exchange Contracts The Portfolio may enter into
forward foreign currency exchange contracts ("contracts") in connection with
planned purchases or sales of securities or 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. 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.
D. Accounting For Investments Securities transactions are accounted for on
the trade date. Realized gains and losses on security transactions are
determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date.
Dividend income is recorded net of foreign taxes withheld where recovery of such
taxes is not assured. Reclaim of recoverable foreign taxes are the
responsibility of the qualified investors. Interest income is accrued daily.
Interest expense is related to expenses incurred on cash overdrafts.
E. U.S. Federal Income and Other Taxes The Portfolio is considered a
partnership under the U.S. Internal Revenue Code. Accordingly, no provision for
federal income taxes is necessary. The Portfolio may be subject to taxes imposed
by countries in which it invests. Such taxes are generally based on income
and/or capital gains earned or repatriated. Taxes are accrued and applied to net
investment income and net realized gains as such income and/or gains are earned.
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. 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 agreements.
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.
2. INVESTMENT ADVISORY FEES The investment advisory fees paid to Citibank, as
compensation for overall investment management services, amounted to $12,366 for
the six months ended June 30, 1998. The investment advisory fees are computed at
the annual rate of 1.00% of the Portfolio's average daily net assets.
3. ADMINISTRATIVE FEES Under the terms of an Administrative Services Agreement,
the administrative services fees paid to the Administrator, as compensation for
overall administrative services including general office facilities, is computed
at an annual rate of 0.05% of the Portfolio's average daily net assets. The
administrative fees amounted to $618, all of which was voluntarily waived, for
the six months ended June 30, 1998. The Portfolio pays no compensation directly
to any Trustee or any officer who is affiliated with the Administrator, all of
whom receive remuneration for their services to the Portfolio from the
Administrator or its affiliates. Certain officers and a Trustee of the Portfolio
are officers and directors of the Administrator or its affiliates.
4. PURCHASES AND SALES OF INVESTMENTS For the six months ended June 30, 1998,
purchases and sales of investment securities, other than short-term investments,
aggregated $2,033,079 and $1,920,094, respectively.
5. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized
appreciation/(depreciation) in value of the investment securities owned at June
30, 1998, as computed on a federal income tax basis, are as follows:
- -------------------------------------------------------------------------------
Aggregate cost $ 2,602,810
- -------------------------------------------------------------------------------
Gross unrealized appreciation $ 14,910
Gross unrealized depreciation (1,112,299)
- -------------------------------------------------------------------------------
Net unrealized depreciation $(1,097,389)
- -------------------------------------------------------------------------------
6. EXPENSE FEES SFG has entered into an expense agreement with the Portfolio.
SFG has agreed to pay all of the ordinary operating expenses (excluding
interest, taxes, brokerage commissions, litigation costs or other extraordinary
costs or expenses) of the Portfolio, other than fees paid under the Advisory
Agreement and Administrative Services Agreement. The Agreement may be terminated
by either party upon not less than 30 days nor more than 60 days written notice.
The Portfolio has agreed to pay SFG an expense fee, on an annual basis,
accrued daily and paid monthly; provided, however, that such fee shall not
exceed the amount such that immediately after any such payment the aggregate
expenses of the Portfolio less expenses waived by the Administrator would, on an
annual basis, exceed an agreed upon rate, currently 1.00% of average daily net
assets.
7. FINANCIAL INSTRUMENTS The Portfolio may trade financial instruments with
off-balance sheet risk in the normal course of its investing activities and to
assist in managing exposure to market risks such as interest rates and foreign
currency exchange rates. These financial instruments include forward foreign
currency exchange contracts.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments and
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when related and offsetting transactions are considered. No such instruments
were held on June 30, 1998.
8. LINE OF CREDIT The Portfolio, along with the 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 six
months ended June 30, 1998. The commitment fee allocated to the Portfolio was
$7. Since the line of credit was established, there have been no borrowings.
9. SUBSEQUENT EVENT On August 7, 1998 the Board of Trustees of the Portfolio,
approved the liquidation of the Portfolio.
<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 Administrator and Distributor
INVESTMENT ADVISER
(OF EMERGING ASIAN MARKETS
EQUITY PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
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 [Recycle symbol] Printed on recycled paper CFS/EMA/698
