Semi-Annual Report o June 30, 1999
CitiFundsTM
International Growth
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 GROWTH 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 11
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INTERNATIONAL EQUITY PORTFOLIO
Portfolio of Investments 15
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Statement of Assets and Liabilities 19
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Statement of Operations 19
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Statement of Changes in Net Assets 20
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Financial Highlights 20
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Notes to Financial Statements 21
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear CitiFunds Shareholder:
This semi-annual report covers the period from January 1, 1999 through June
30, 1999 for the CitiFundsSM International Growth Portfolio. Inside, the
CitiFunds' investment manager, Citibank, N.A., discusses the market conditions
it faced, the strategies it employed and its outlook for the future.
The past six months have generally been good for international stock markets.
After years of underperformance, Japanese stocks surged upward amid renewed
economic optimism. Southeast Asian equities also rose strongly as investment
capital began to flow back into the emerging markets after the financial crisis
of the past two years. Finally, most European stock markets (with the exception
of Italy) rose only modestly, despite a weakening Euro. Latin America also
provided very strong returns after currency and credit concerns abated.
Many of these regional trends are direct opposites of the results produced
during the second half of 1998. The manager believes that such dramatic change
in regional stock market performance results in short-term market volatility.
That's one of the primary reasons investors are generally advised to maintain a
long-term perspective that is measured in years not weeks or months. The manager
believes that CitiFunds International Growth Portfolio can play a valuable role
in such a long-term investment portfolio.
Thank you for your continued confidence and participation.
Sincerely,
/s/Philip Coolidge
- ------------------
Philip W. Coolidge
President
July 23, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE FIRST SIX MONTHS OF 1999 SAW AN IMPROVEMENT IN MOST OVERSEAS ECONOMIES.
Lower short-term interest rates adopted by central banks worldwide seem to have
helped many nations prevent further economic deterioration. This was especially
evident in Southeast Asia, Latin America and Eastern Europe, which had
previously borne the brunt of the global currency and credit crisis. While these
emerging markets are a long way from being considered healthy, management
believes that the worst seems to be behind them. Japan also appears to have
turned the corner after years of recessionary conditions, primarily a result of
sweeping financial reforms and corporate restructuring. While economic growth
was moderate in the industrialized economies of Western Europe during the war in
Kosovo, stimulating monetary policy has helped the overall trend there remain
positive.
THESE ECONOMIC CONDITIONS PRODUCED COMPETITIVE RESULTS DURING THE REPORTING
PERIOD FOR THE STOCKS IN WHICH CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO INVESTS.
A gradual return of capital to previously illiquid markets led to higher stock
prices in Japan and most emerging markets. In Europe, a decline in the value of
the newly introduced currency, the Euro, contributed to relative weakness in
some major stock markets. Others, such as the United Kingdom, performed
relatively well in an environment of declining interest rates.
During the first half of the reporting period, however, the international
stock markets' advance was remarkably narrow, led by a relatively small number
of large-cap growth and technology companies. With almost one-third of the world
in recession, investors favored large companies with predictable earnings.
DURING THE SECOND HALF OF THE REPORTING PERIOD, INVESTOR SENTIMENT SHIFTED
DRAMATICALLY, CAUSING A CHANGE IN LEADERSHIP WITHIN INTERNATIONAL STOCK MARKETS.
When evidence emerged that economies worldwide were stronger than many analysts
expected, investors turned to stocks that tend to do well in an economic
expansion. As a result, stock prices that had languished for several years began
to show signs of renewed strength. Cyclical companies, such as energy and
commodities producers, saw their stock prices rise. Value-oriented companies,
which generally sell at low prices relative to earnings, began to outperform
growth companies for the first time in several years. Small cap stocks began a
long-awaited recovery.
The reporting period began with an emphasis on Japanese stocks, reflecting
management's belief that the Japanese economy was poised for a potential
turn-around. At the same time, the Portfolio's exposure to European companies
was reduced. This decision was an outgrowth of the investment team's industry
and stock selection strategies, however, and did not necessarily reflect a
negative view of European companies. Within Europe, holdings in the Portfolio
focused on individual stock markets such as the United Kingdom, where stocks of
cyclical and value-oriented companies seemed attractive. On the other hand, the
team shifted assets away from industries and economic sectors that they believed
might suffer during the shift from growth to value, including pharmaceutical,
insurance and telephone companies.
2
<PAGE>
Looking forward, the Portfolio's management is optimistic regarding the
growth potential of stock markets worldwide. In continental Europe, they believe
that stronger economic growth should resume in the second half of the year as
the Euro strengthens, exports increase, corporate productivity improves and
consumer spending rises. In Japan, current market conditions are viewed by the
manager as improved, but not recovered. If Japanese companies can cut costs and
improve productivity, the Portfolio's management believes that their stocks
should rise. Finally, they regard the emerging markets of Southeast Asia, Latin
America and Eastern Europe positively. Also, despite strong market gains so far
this year, the managers have continued to identify individual companies that are
attractive values.
FUND FACTS
FUND OBJECTIVE
Long-term capital growth; dividend income, if any, is incidental to this
investment objective.
INVESTMENT MANAGER,
INTERNATIONAL EQUITY PORTFOLIO
Citibank, N.A.
COMMENCEMENT OF OPERATIONS
March 1, 1991
NET ASSETS AS OF 6/30/99
Class A shares $20.4 million
Class B shares $163,674
DIVIDENDS
Paid semi-annually, if any
CAPITAL GAINS
Distributed semi-annually, if any
BENCHMARKS
o Lipper International Growth Funds
Average
o Morgan Stanley Capital
International Europe, Australasia,
Far East (MSCI EAFE(R)) Index*
o The Morgan Stanley Capital International Europe, Australasia and Far East
(MSCIEAFE)Index is an unmanaged capitalization index representing the
industry composition and a sampling of small, medium, and large
capitalization companies from the aforementioned global markets.
3
<PAGE>
PORTFOLIO HIGHLIGHTS
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TOP TEN EQUITY HOLDINGS AS OF JUNE 30, 1999 (Unaudited)
COMPANY, INDUSTRY % OF NET ASSETS
Nippon Telegraph & Telephone Co., Telephone Utilities 4.4%
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British Telecommunications Plc., Telephone Utilities 3.6%
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Ericsson LM-Class B, Electronics 2.3%
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Novartis AG, Pharmaceuticals & Health 2.1%
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Roche Holdings AGM, Pharmaceuticals & Health 2.0%
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Bank of Tokyo Mitsubishi, Banking 2.0%
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Vodafone, Telephone Utilities 1.9%
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Lloyds TSB Group Plc., Banking 1.8%
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Mannesmann AG, Telecommunications 1.8%
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SmithKline Beecham Plc., Pharmaceuticals & Health 1.7%
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PORTFOLIO DIVERSIFICATION AS OF JUNE 30, 1999 (Unaudited)
Europe 68%
Pacific Basin 1%
South America 1%
Japan 25%
Short Term 4%
Asian Pacific Basin 1%
* Includes cash and net other assets
4
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE
SIX ONE FIVE 3/2/91
ALL PERIODS ENDED JUNE 30, 1999 (Unaudited) MONTHS** YEAR YEARS* INCEPTION*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiFunds International Growth Portfolio
(Class A) without sales charge 2.30% 3.58% 8.19% 7.05%
Lipper International Growth Funds Average 7.38% 4.83% 8.89% 9.26%+
MSCI EAFE Index 4.11% 7.92% 8.52% 7.99%+
CitiFunds International Growth Portfolio
(Class A) with maximum sales charge of 5.00% (2.81)% (1.59)% 7.08% (6.39)%
Citifunds International Growth Portfolio
(Class B) without deferred sales charge -- -- -- (0.16)%#**
Lipper International Growth Funds Average -- -- -- 7.38%++**
MSCI EAFE Index -- -- -- 4.11%++**
CitiFunds International Growth Portfolio (Class B)
with a maximum deferred sales charge of 5.00% -- -- -- (5.15)%#**
</TABLE>
* Average Annual Total Return
** Not Annualized
+ From 2/28/91
++ From 12/31/98
# Commencement of Operations 1/4/99
GROWTH OF A $10,000 INVESTMENT
A $10,000 investment in the Fund made on inception date would have grown to
$16,759 with sales charge (as of 6/30/99). The graph shows how the Fund compares
to its benchmarks over the same period.
[The following table represents a line chart in the printed piece.]
CitiFunds
International
Lipper International MSCI EAFE Index Equity - Without
Equity Funds Average (Unmanaged) Sales Charge
- -------------------------------------------------------------------------------
3/1/91 10000 10000 10000
3/31/91 9708 9401 8949
4/30/91 9831 9495.95 9253
5/31/91 9942 9595.66 9253
6/30/91 9451 8890.38 9272
7/31/91 9828 9329.56 9310
8/31/91 9748 9142.04 9414.5
9/30/91 10022 9660.39 9642.5
10/31/91 10081 9799.5 9690
11/30/91 9745 9344.8 9367
12/31/91 10203 9833.54 9652.66
1/31/92 10281 9629 9890.88
2/29/92 10282 9290.06 10071.93
3/31/92 9927 8681.56 9585.96
4/30/92 10143 8728.44 9843.24
5/31/92 10648 9318.48 10386.38
6/30/92 10356 8882.38 10090.99
7/31/92 9971 8661.21 9662.19
8/31/92 10072 9210.33 9709.83
9/30/92 9864 9034.41 9414.44
10/31/92 9595 8565.52 9261.98
11/30/92 9632 8651.18 9404.91
12/31/92 9741 8701.36 9512.37
1/31/93 9792 8705.71 9512.37
2/28/93 10039 8973.84 9474.17
3/31/93 10603 9761.75 10009
4/30/93 11148 10693.02 10257.32
5/31/93 11401 10923.99 10534.28
6/30/93 11172 10755.76 10285.97
7/31/93 11506 11134.36 10257.32
8/31/93 12241 11737.84 10820.8
9/30/93 12215 11476.09 10925.86
10/31/93 12790 11831.85 11441.59
11/30/93 12382 10800.11 11221.92
12/31/93 13608 11582.04 12348.89
1/31/94 14400 12564.19 12950.58
2/28/94 14075 12531.53 12434.85
3/31/94 13423 11993.92 11537.09
4/30/94 13749 12506.06 11537.09
5/31/94 13713 12437.28 11479.79
6/30/94 13558 12616.38 11307.88
7/31/94 13934 12740.02 11575.29
8/31/94 14346 13044.5 12110.13
9/30/94 13992 12636.47 11833.16
10/31/94 14258 13059.79 11728.1
11/30/94 13558 12435.01 11374.73
12/31/94 13418 12515.84 10933.56
1/31/95 12738 12037.74 10121.19
2/28/95 12756 12006.44 10369.68
3/31/95 13162 12759.24 11182.05
4/30/95 13590 13242.82 11449.65
5/31/95 13703 13087.88 11631.24
6/30/95 13703 12861.46 12032.65
7/31/95 14439 13665.3 12663.43
8/31/95 14169 13147.38 12692.1
9/30/95 14379 13407.7 12959.71
10/31/95 14206 13051.06 12806.79
11/30/95 14351 13417.79 12672.99
12/31/95 14787 13961.21 12910.77
1/31/96 15123 14021.24 13093.02
2/29/96 15180 14071.72 12949.14
3/31/96 15437 14374.26 13294.45
4/30/96 15917 14795.43 13726.09
5/31/96 15869 14526.15 13610.98
6/30/96 15974 14611.86 13649.14
7/31/96 15380 14188.11 13007.9
8/31/96 15551 14222.16 12875.58
9/30/96 15884 14603.32 13109.69
10/31/96 15771 14457.28 12946.83
11/30/96 16440 15035.58 13333.61
12/31/96 16491 14846.13 13245.22
1/31/97 16437 14329.48 12739.68
2/28/97 16669 14567.35 12919.43
3/31/97 16706 14624.16 13009.3
4/30/97 16739 14704.6 13076.71
5/31/97 17727 15664.81 13773.23
6/30/97 18548 16532.64 14584.99
7/31/97 19054 16803.77 14947.63
8/31/97 17671 15551.89 13939.04
9/30/97 18761 16425.91 15026.96
10/31/97 17346 15167.68 13871.04
11/30/97 17185 15016.01 13803.05
12/31/97 17328 15151.15 13927.98
1/31/98 17735 15848.1 14562.18
2/28/98 18906 16868.72 15293.94
3/31/98 19872 17391.65 15842.77
4/30/98 20144 17532.52 15964.73
5/31/98 20164 17451.87 15940.34
6/30/98 20009 17588 16178.64
7/31/98 20299 17770.91 16421.06
8/31/98 17400 15572.65 14366.83
9/30/98 16772 15099.24 13907.5
10/31/98 18016 16677.11 15017.55
11/30/98 18947 17535.99 15668.27
12/31/98 19529 18232.16 16381.73
1/31/99 19681 18182.94 16407.74
2/28/99 19161 17753.82 15913.68
3/31/99 19830 18499.48 16368.73
4/30/99 20740 19252.41 16732.77
5/31/99 19888 18264.76 15926.68
6/30/99 20934 18980.74 16758.57
The graph includes the intial sales charge on the Fund (no comparable charge
exists for the other indices) and assumes all dividends and distributions from
the Fund are invested 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 "with sales charge" are provided in accordance with SEC
guidelines for comparative purposes for prospective investors and reflect
certain voluntary fee waivers which may be terminated at any time. If the
waivers were not in place, the Fund's returns would have been lower. The maximum
sales charge of 5.00% went into effect on January 4, 1999. Investors may not
invest directly in an index.
5
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (unaudited)
================================================================================
ASSETS:
Investment in International Equity Portfolio, at value
(Note 1A) $20,546,133
Receivable for shares of beneficial interest 49,951
Other assets 40,958
- --------------------------------------------------------------------------------
Total assets 20,637,042
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 16,219
Payable to affiliates--Shareholder Servicing Agents' fees
(Note 3) 4,180
Accrued expenses and other liabilities 8,621
- --------------------------------------------------------------------------------
Total liabilities 29,020
- --------------------------------------------------------------------------------
NET ASSETS $20,608,022
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $17,420,118
Unrealized appreciation 2,582,747
Accumulated net realized gain 625,653
Accumulated net investment loss (20,496)
- --------------------------------------------------------------------------------
Total $20,608,022
================================================================================
COMPUTATION OF:
CLASS A SHARES:
Net Asset Value per share ($20,444,348/1,602,088 shares
outstanding) $12.76
Offering price per share ($12.76 / 0.95) 13.43*
================================================================================
CLASS B SHARES:
Net Asset Value per share and offering price
($163,674/12,868 shares outstanding) $12.72**
================================================================================
*Based upon single purchases of less than $25,000.
**Redemption price per share is equal to net asset value less an applicable
contingent deferred sales charge.
See notes to financial statements
6
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
=============================================================================================
<S> <C> <C>
INVESTMENT INCOME (Note 1B):
Dividend Income from International Equity Portfolio $163,009
Interest Income from International Equity Portfolio 884
Foreign Taxes Reclaimed 16,101
Allocated Expenses from International Equity Portfolio (103,650)
- ---------------------------------------------------------------------------------------------
$ 76,344
- ---------------------------------------------------------------------------------------------
EXPENSES:
Administrative fees (Note 2) 31,280
Shareholder Servicing Agents' fees Class A (Note 3) 25,818
Shareholder Servicing Agents' fees Class B (Note 3) 60
Service fees Class A (Note 4) 10,427
Service fees Class B (Note 4) 390
Expense fees (Note 7) 20,530
- ---------------------------------------------------------------------------------------------
Total expenses 88,505
- ---------------------------------------------------------------------------------------------
Less aggregate amount waived by the Shareholders
Servicing Agent and the Distributor (Note 3 and Note 4) (10,487)
- ---------------------------------------------------------------------------------------------
Net expenses 78,018
- ---------------------------------------------------------------------------------------------
Net investment loss (1,674)
- ---------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN FROM
INTERNATIONAL EQUITY PORTFOLIO:
Net realized gain 530,122
Unrealized depreciation (47,655)
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain from
International Equity Portfolio 482,467
- ---------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $480,793
=============================================================================================
</TABLE>
See notes to financial statements
7
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
===============================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
<S> <C> <C>
Net investment loss $ (1,674) $ (33,633)
Net realized gain 530,122 743,282
Unrealized appreciation (depreciation) (47,655) 2,040,966
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 480,793 2,750,615
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income Class A -- (11,592)
Net realized gain Class A (205,434) (1,235,787)
Net realized gain Class B (1,552) --
In excess of net income Class A -- (2,006)
- -----------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (206,986) (1,249,385)
- -----------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 5):
CLASS A
Net proceeds from sale of shares 1,727,246 7,942,093
Net asset value of shares issued to shareholders from
reinvestment of dividends 204,715 1,239,930
Cost of shares repurchased (2,890,042) (7,884,305)
- -----------------------------------------------------------------------------------------------
Total Class A (958,081) 1,297,718
- -----------------------------------------------------------------------------------------------
CLASS B*
Net proceeds from sale of shares 158,664 --
Net asset value of shares issued to shareholders from
reinvestment of distributions 1,521 --
Cost of shares repurchased (122) --
- -----------------------------------------------------------------------------------------------
Total Class B 160,063 --
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
transactions in shares of beneficial interest (798,018) 1,297,718
- -----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (524,211) 2,798,948
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 21,132,233 18,333,285
- -----------------------------------------------------------------------------------------------
End of period (including overdistributed net investment
loss of $(20,496) and $(18,822), respectively) $20,608,022 $21,132,233
===============================================================================================
</TABLE>
*January 4, 1999 (Commencement of Operations) to June 30, 1999.
See notes to financial statements
8
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 ------------------------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994#
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period $ 12.60 $ 11.42 $ 11.79 $ 13.46 $ 11.44 $ 12.93
- -----------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (loss) (0.013) (0.009) 0.004 +0.028 +0.013 +0.001+
Net realized and unrealized
gain (loss) 0.303 1.996 0.592+ 0.314+ 2.055+ (1.483)+
- -----------------------------------------------------------------------------------------------------------------------------------
Total from operations 0.290 1.987 0.596 0.342 2.068 (1.482)
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.008) (0.025) (0.021) (0.048) (0.001)
In excess of net investment
income -- (0.001) -- -- -- (0.007)
Net realized gain on
investments (0.130) (0.798) (0.941) (1.991) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total from distributions (0.130) (0.807) (0.966) (2.012) (0.048) (0.008)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.76 $ 12.60 $ 11.42 $ 11.79 $ 13.46 $ 11.44
===================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $20,444 $21,132 $18,333 $32,589 $32,159 $28,848
Ratio of expenses to average
net assets (A) 1.75%* 1.75% 1.75% 1.75% 1.75% 1.75%
Ratio of net investment income
(loss) to average net assets (0.20)% *(0.17)% 0.03% 0.18% 0.10% 0.00%
Portfolio turnover (B) -- -- -- -- -- 5%
Total return (C) 2.30%** 17.62% 5.15% 2.59% 18.08% (11.46)%
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees and expenses, the net investment income (loss) per share
and the ratios would have been as follows:
Net investment income (loss)
per share $(0.032) $(0.011) $(0.004) $(0.002) $0.013+ $(0.018)+
RATIOS:
Expenses to average net assets (A 1.90%* 1.80% 1.82% 1.94% 1.75% 1.90%
Net investment income (loss) to
average net assets (0.35)%* (0.22)% (0.04)% (0.01)% 0.10% (0.15)%
===================================================================================================================================
</TABLE>
* 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.
(C) Total return does not include the maximum sales charge of 5.00% effective
January 4, 1999.
# On May 1, 1994, the Fund began investing all of its investable assets in
International Equity Portfolio.
See notes to financial statements
9
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
CLASS B
---------------
JANUARY 4, 1999
COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 1999
(Unaudited)
================================================================================
Net Asset Value, beginning of period $12.87
- --------------------------------------------------------------------------------
Income From Operations:
Net investment loss (0.012)
Net realized and unrealized loss on investments (0.008)
- --------------------------------------------------------------------------------
Total from operations (0.020)
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income
Net realized gain on investments (0.130)
- --------------------------------------------------------------------------------
Total distributions (0.130)
- --------------------------------------------------------------------------------
Net Asset Value, end of period $12.72
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $164
Ratio of expenses to average net assets (A) 2.50%*
Ratio of net investment loss to average net assets (0.95)%*
Total return (0.16)%**
Note: If Agents of the Fund for the periods indicated had not voluntarily waived
a portion of their fees and expenses, the net investment loss per share and the
ratios would have been as follows:
Net investment loss per share $(0.017)
RATIO
Expenses to average net assets (A) 2.65%*
Net investment loss to average net assets (1.10)%*
================================================================================
* Annualized
** Not Annualized
(A) Includes the Fund's share of International Equity Portfolio allocated
expenses for the periods indicated.
See notes to financial statements
10
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds International Growth Portfolio (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 Equity Portfolio (the "Portfolio"), a management investment
company for which Citibank, N.A. ("Citibank") serves as Investment Adviser. The
value of such investment reflects the Fund's proportionate interest
(approximately 59.3% at June 30, 1999) in the net assets of the Portfolio.
CFBDS, Inc. ("CFBDS"), 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, which in turn, is a wholly-owned subsidiary of Citigroup Inc.
Citigroup Inc. was formed as a result of the merger of Citicorp and Travelers
Group, Inc. which was completed on October 8, 1998.
The Fund offers Class A shares and Class B shares. The Fund commenced its
public offering of Class B shares on January 4, 1999. Class A shares have a
front-end, or initial, sales charge effective January 4, 1999. This sales charge
may be reduced or eliminated in certain circumstances. Class B shares have no
front end sales charge, pay a higher ongoing distribution fee than Class A and
are subject to a deferred sales charge if sold within five years of purchase.
Class B shares automatically convert into Class A shares after eight years.
Expenses of the Fund are borne pro-rata by the holders of each class of shares,
except that each class bears expenses unique to that class (including the Rule
12b-1 service and distribution fees applicable to such class), and votes as a
class only with respect to its own Rule 12b-1 plan. Shares of each class would
receive their pro-rata share of the net assets of the Fund, if the Fund were
liquidated. Class A shares have a lower expense ratio than Class B shares.
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. INVESTMENT INCOME 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 own-
11
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
ership 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
carryoverszz) under income tax rules and regulations.
2. 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 $31,280 for the six months ended June 30, 1999.
Citibank acts as Sub-Administrator and performs such duties and receives certain
compensation from CFBDS from time to time as 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.
3. 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, 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%, for
Class A and 0.15%
12
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
for Class B, amounted to $25,818 for Class A. The Shareholder Servicing Agents'
fees for Class B amounted to $60, all of which was voluntarily waived for the
six months ended June 30, 1999.
4. SERVICE FEES The Fund maintains separate Service Plans for Class A and Class
B shares, which have been adopted in accordance with Rule 12b-1 under the 1940
Act. Under the Class A Service Plan, the Fund may pay monthly fees at an annual
rate not exceed 0.25% of the average daily net assets represented by Class A
shares of the Fund. The Service fees for Class A shares amounted to $10,427, all
of which was voluntary waived for the six months ended June 30, 1999. Under the
Class B Service Plan, the fund may pay a combined monthly distribution and
service fee at an annual rate not to exceed 1.00% of the average daily net
assets represented by Class B shares of the Fund. The Service fees for Class B
shares amounted to $390 for the period ended June 30, 1999. These fees may be
used to make payments to the distributor for distribution services and to others
as compensation for the sale of shares of the applicable class of the Fund, for
advertising, marketing or other promotional activity, and for preparation,
printing and distribution of prospectuses, statements of additional information
and reports for recipients other than regulators and existing shareholders. The
Fund may also make payments to the Distributor and others for providing personal
service of the maintenance of shareholder accounts.
5. INVESTMENT TRANSACTIONS Increase and decrease in the Fund's investment in the
Portfolio for the six months ended June 30, 1999 aggregated $1,680,549 and
$2,678,284, respectively.
6. 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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(Unaudited) 1998
==============================================================================================
<S> <C> <C>
CLASS A:
Shares sold 137,042 640,142
Shares issued to shareholders from reinvestment of dividends 16,018 100,100
Shares repurchased (227,482) (669,297)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) (74,422) 70,945
==============================================================================================
CLASS B:*
Shares sold 12,759 --
Shares issued to shareholders from reinvestment of dividends 119 --
Shares repurchased (10) --
- ----------------------------------------------------------------------------------------------
Net increase 12,868 --
==============================================================================================
</TABLE>
* January 4, 1999 (Commencement of Operations) to June 30, 1999.
13
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. EXPENSE FEES CFBDS has entered into an expense agreement with the Fund. CFBDS
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 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 Class A and 2.50% of Class B
average daily net assets.
14
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS June 30, 1999
(Unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK
AND PREFERRED RIGHTS--95.9%
AMERICAN DEPOSITORY RECEIPTS/
ADR's--1.6%
- --------------------------------------------------------------------------------
Magyar Olaj -Es Gazipari
Energy Sources 7,400 $ 177,600
Matav RT
Telecommunications 7,200 198,000
Telecom Argentina SA
Telecommunications 6,700 179,225
-----------
554,825
-----------
AUSTRALIA--1.3%
- --------------------------------------------------------------------------------
Australia & New Zealand Bank
Banking 6,895 50,634
Brambles Industrial Ltd.
Business Services 1,394 36,676
Colonial Ltd.
Banking 12,357 43,702
Fosters Brewing
Beverage & Tobacco 6,426 18,088
Lend Lease Corp.
Real Estate 5,201 71,317
News Corp.
Broadcasting 8,465 72,130
North Ltd.
Non-Ferrous Metals1 3,344 26,992
Publishing & Broadcasting Ltd.
Broadcasting 7,486 49,338
Telestra Corp.
Telecommunications 7,664 43,859
Woodside Petroleum Co. Ltd.
Energy Sources 7,316 49,475
-----------
462,211
-----------
FINLAND--2.2%
- --------------------------------------------------------------------------------
Nokia AB
Electrical & Electronics 6,232 546,062
Sonera Yhtyma
Telecommunications 9,365 204,663
-----------
750,725
-----------
FRANCE--12.0%
- --------------------------------------------------------------------------------
AXA-UAP
Insurance 4,496 548,285
Bouygues
Homebuilders 601 158,788
Bouygues-Preferred Rights
Homebuilders 601 1,599
Canal Plus
Broadcasting 637 178,675
Cap Gemini
Business & Public Services 2,500 392,754
Carrefour
Retailing 2,880 423,061
Cie de St. Gobain
Containers & Glass 834 132,828
Groupe Danone
Food & Household Products 752 193,800
France Telecom
Telephone Utilities 5,106 385,553
Lafarge
Building Materials 1,536 145,988
L'Oreal
Pharmaceuticals & Health 730 493,277
Pinault-Printemps
Retailing 1,523 261,245
Sanofi
Pharmaceuticals & Health 6,068 257,401
Vivendi
Business & Public Services 7,032 569,404
-----------
4,142,658
-----------
GERMANY--10.3%
- --------------------------------------------------------------------------------
Allianz AG
Insurance 1,647 456,711
Basf AG
Chemicals 2,872 126,862
Bayer AG
Chemicals 3,015 125,564
Deutsche Bank AG
Banking 177 10,793
Deutsche Telekom AG
Telephone Utilities 10,884 456,645
Man AG
Telecommunications 4,208 143,582
Mannesmann AG
Telecommunications 4,059 605,457
Metro AG
Retailing 2,590 160,728
Preussag AG
Multi-Industry 5,280 283,575
RWE AG
Electrical & Gas Utilities 5,579 258,167
SAP AG -Preferred Rights
Data Processing &
Reproduction 1,224 488,932
15
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(Continued) June 30, 1999
(Unaudited)
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
Siemens AG
Electrical Equipment 3,214 $ 247,824
Veba AG
Electrical & Gas Utilities 3,768 221,402
-----------
3,586,242
-----------
HONG KONG--0.7%
- --------------------------------------------------------------------------------
CLP Holdings
Electrical & Gas Utilities 20,000 97,182
Hutchinson Whampoa
Multi-Industry 17,000 153,926
-----------
251,108
-----------
ITALY--2.6%
- --------------------------------------------------------------------------------
Assicurazioni Generali Spa
Insurance 12,376 428,662
Mediaset
Broadcasting 20,231 179,771
Tecnost Spa
Electronics 13,939 34,342
Telecom Italia Mobile Spa
Telecommunications 41,106 245,346
-----------
888,121
-----------
JAPAN--24.5%
- --------------------------------------------------------------------------------
Advantest
Electronics 1,000 109,945
Alps Electric Co.
Electronics 2,000 46,871
Asahi Breweries
Food & Household
Products 5,000 62,247
Bank of Tokyo Mitsubishi
Banking 49,000 697,917
Bridgestone Corp.
Industrial Components 9,000 272,299
Canon Inc.
Photography 9,000 258,907
Denso Corp.
Auto Parts 9,000 183,021
East Japan Railway
Railroads & Equipment 41 220,303
Ebara Corp.
Machinery &
Engineering 3,000 35,687
Fanuc
Electronics 3,000 161,197
Fujitsu Ltd.
Data Processing &
Reproduction 20,000 402,579
Hankyu Corp.
Railroads & Equipment 9,000 35,711
Hirose Electric
Electronics 1,000 103,827
Honda Motor Co. Ltd.
Automobiles 10,000 424,072
Hoya Corp.
Pharmaceuticals & Health 1,000 56,460
Ito Yokado Co.
Retailing 4,000 267,835
Japan Air Lines Co.
Air Travel 19,000 62,825
Jusco Co.
Retailing 3,000 54,559
Kao Corp.
Food & Household
Products 7,000 196,743
Kawasaki Heavy Industries
Machinery &
Engineering 15,000 40,671
Kinki Nippon Railway
Railroads & Equipment 17,000 83,616
Minebea Co.
Machinery & Engineering 4,000 44,639
Murata Manufacturing Co.
Electronics 3,000 197,404
NGK Insulators
Electrical & Electronics 4,000 41,795
Nankai Electrical Railway
Railroads & Equipment 6,000 27,825
Nippon Express Co.
Trucking & Freight 11,000 65,925
Nippon Telegraph &
Telephone Co.
Telephone Utilities 132 1,538,563
Odakyu Electrical Railway
Railroads & Equipment 8,000 26,784
Osaka Gas Co. Ltd.
Electrical & Gas Utilities 26,000 88,336
Rohm Co.
Electronics 1,000 156,650
Sankyo Co. Ltd.
Pharmaceuticals & Health 5,000 126,064
Secom Co.
Business Services 1,000 104,158
16
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(Continued) June 30, 1999
ISSUER/INDUSTRY SHARES VALUE
- --------------------------------------------------------------------------------
77th Bank
Banking 4,000 $ 35,050
SMC Corp.
Machinery & Engineering 1,000 112,011
Shizuoka Bank
Banking 8,000 79,755
Sony Corp.
Household Appliances 3,000 323,634
Sumitomo Chemical
Chemicals 17,000 77,995
Sumitomo Marine & Fire
Insurance 7,000 42,242
Taisho Pharmacy Co.
Pharmaceuticals & Health 4,000 132,264
Takeda Chemical Industry
Pharmaceuticals & Health 9,000 417,376
Tobu Railway Co.
Railroads & Equipment 9,000 25,519
Tokyo Electronic Power
Electric & Gas Utilities 14,000 295,693
Tokyo Electronics
Electronics 2,000 135,736
Tokyo Marine &
Fire Insurance
Insurance 16,000 173,927
Toyoda Automobile
Machinery & Engineering 3,000 50,963
Toyota Motor Corp.
Automobiles 9,000 284,947
Uni Charm Corp.
Food & Household
Products 1,000 43,399
Yamato Transportation
Trucking & Freight 4,000 69,769
-----------
8,495,715
-----------
NETHERLANDS--2.6%
- --------------------------------------------------------------------------------
Ahold NV
Retailing 5,989 206,204
ING Groep NV
Financial Services 3,812 206,304
Philips Electronics
Household Appliances 1,729 170,481
Unilever NV
Food & Household
Products 4,771 321,404
-----------
904,393
-----------
SINGAPORE--0.7%
- --------------------------------------------------------------------------------
Overseas Chinese Bank
Banking 10,000 83,431
Singapore Press Holding
Publishing 6,000 102,233
Singapore Telecomm
Telecommunications 27,000 46,322
-----------
231,986
-----------
SPAIN--3.3%
- --------------------------------------------------------------------------------
BCO Bilbao Vizcaya
Banking 17,863 257,981
BCO Central Hispano
Banking 45,314 471,791
Banco Popular
Banking 2,398 172,421
Grupo Dragados
Homebuilders 12,018 140,860
Tabacalera
Beverage & Tobacco 5,911 119,430
-----------
1,162,483
-----------
SWEDEN--3.7%
- --------------------------------------------------------------------------------
ABB
Business & Public Services 1,721 161,173
Ericsson LM--Class B
Electronics 24,887 798,882
Securitas
Business & Public Services 11,446 171,238
Svenska Cellulosa
Paper 5,797 150,234
-----------
1,281,527
-----------
SWITZERLAND--5.3%
- --------------------------------------------------------------------------------
Adecco
Business & Public Services 310 166,054
Novartis AG
Pharmaceuticals & Health 493 719,639
Roche Holdings AGM
Pharmaceuticals & Health 69 709,035
Zurich Versicherungs
Insurance 416 236,476
-----------
1,831,204
-----------
THAILAND--.0%
- --------------------------------------------------------------------------------
Bangkok Bank Public Co. Ltd.
Banking 600 1,310
-----------
17
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(Continued) June 30, 1999
UNITED KINGDOM--25.1%
- --------------------------------------------------------------------------------
Astrazeneca
Pharmaceuticals
& Health 10,011 387,080
Allied Irish Banks
Banking 11,341 150,161
Bass
Leisure & Tourism 7,942 115,171
British Airways
Air Travel 16,520 114,054
British American Tobacco
Beverage & Tobacco 14,598 137,715
British Aerospace Plc
Aerospace & Military
Technology 23,931 155,789
British Telecommunications Plc
Telephone Utilities 74,954 1,254,713
Cable & Wireless
Telecommunications 29,060 370,569
Carlton Communications
Leisure & Tourism 14,878 123,355
Diageo Plc
Beverage & Tobacco 23,821 250,256
GKN
Machinery & Engineering 11,209 191,347
General Electric Co. Plc
Electrical & Electronics 54,906 557,786
Glaxo Wellcome
Pharmaceuticals & Health 18,285 508,127
Granada Group Plc
Business & Public Services 7,654 141,759
Hanson
Construction Materials 17,323 155,641
Hong Kong & Shanghai
Bank Corp. Holdings
Banking 6,653 235,743
Imperial Chemical Industries
Chemicals 19,164 189,248
Lloyds TSB Group Plc
Banking 46,448 630,736
Misys
Business & Public Services 17,624 150,845
National Grid Co.
Electrical & Gas Utilities 26,335 183,477
Pearson
Broadcasting 7,316 148,646
Prudential Corp. Plc
Insurance 19,319 284,722
Reuters Group
Business & Public Services 15,963 209,974
Rio Tinto
Non-Ferrous Metals 7,414 124,226
Smiths Industries
Machinery & Engineering 8,739 115,984
SmithKline Beecham Plc
Pharmaceuticals & Health 44,914 584,065
TI Group
Multi-Industry 21,940 147,323
Unilever Plc
Food & Household
Products 29,622 262,874
Vodafone
Telephone Utilities 33,241 653,904
Williams
Electrical Equipment 26,830 177,198
-----------
8,712,488
-----------
TOTAL INVESTMENTS
(Identified Cost
$29,021,937) 95.9% 33,256,996
OTHER ASSETS
LESS LIABILITIES 4.1 1,418,451
----- -----------
NET ASSETS 100.0% $34,675,447
===== ===========
Note: The Portfolio has the following industries over 10%: Pharmaceuticals &
Health 12%; Telephone Utilities 12%.
See notes to financial Statements
18
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
================================================================================
ASSETS:
Investments at value (Note 1A) (Identified Cost, $29,021,937) $33,256,996
Foreign currency, at value (Cost, $1,499,294) 1,496,355
Receivable for investments sold 901,355
Dividends and interest receivable 60,253
- --------------------------------------------------------------------------------
Total assets 35,714,959
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,001,627
Payable to affiliates--Investment Advisory fees (Note 2) 28,443
Other liabilities 9,442
- --------------------------------------------------------------------------------
Total liabilities 1,039,512
- --------------------------------------------------------------------------------
NET ASSETS $34,675,447
================================================================================
REPRESENTED BY:
Paid-in capital for beneficial interests $34,675,447
================================================================================
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $53,499) $ 276,812
Interest 1,516
- --------------------------------------------------------------------------------
Total investment income $ 278,328
- --------------------------------------------------------------------------------
EXPENSES:
Investment Advisory fees (Note 2) 176,916
Administrative fees (Note 3) 8,847
- --------------------------------------------------------------------------------
Total expenses 185,763
Less aggregate amount waived by the Administrator (Note 3) (8,847)
- --------------------------------------------------------------------------------
Net expenses 176,916
- --------------------------------------------------------------------------------
Net investment income 101,412
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 988,132
Net realized loss on foreign currencies transactions (93,881)
- --------------------------------------------------------------------------------
Net realized gain 894,251
- --------------------------------------------------------------------------------
Unrealized depreciation of investments-- (70,841)
Translation of other assets and liabilities denominated
in foreign currencies--net (6,511)
- --------------------------------------------------------------------------------
Total unrealized depreciation of investments (77,352)
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments 816,899
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $918,311
================================================================================
See notes to financial statements
19
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(Unaudited) 1998
================================================================================
INCREASE (DECREASE) IN NET ASSETS FROM:
Net investment income $ 101,412 $ 150,293
Net realized gain on investments
and foreign exchange transactions 894,251 1,481,410
Unrealized appreciation (depreciation)
of investments and foreign
exchange transactions (77,352) 3,855,741
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 918,311 5,487,444
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 2,214,511 9,800,225
Value of withdrawals (5,696,932) (11,818,432)
- --------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions (3,482,421) (2,018,207)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS: (2,564,110) 3,469,237
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 37,239,557 33,770,320
- --------------------------------------------------------------------------------
End of period $34,675,447 $37,239,557
================================================================================
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 1, 1994
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED DECEMBER 31, OF OPERATIONS) TO
JUNE 30, 1999 --------------------------------------------------- DECEMBER 31,
(Unaudited) 1998 1997 1996 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
end of period
(000's omitted) $34,675 $37,240 $33,770 $49,056 $40,114 $32,153
Ratio of expenses
to average
net assets 1.00%* 1.00% 1.00% 1.11% 1.20% 1.22%*
Ratio of net investment
income to
average net assets 0.57%* 0.42% 0.58% 0.65% 0.59% 0.60%*
Portfolio turnover 35% 118% 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%* 1.05% 1.06% 1.13% N/A N/A
Net investment income
to average net assets 0.52%* 0.37% 0.52% 0.63% N/A N/A
===============================================================================================================
</TABLE>
*Annualized
See notes to financial statements
20
<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, which in turn is a
wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as a result
of the merger of Citicorp and Travelers Group, Inc., which was completed on
October 8, 1998.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The 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. 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
21
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $176,916
for the six months ended June 30, 1999. The investment advisory fees are
computed at the annual rate of 1.00% of the Portfolio's average daily net
assets.
22
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $8,847, all of which was voluntarily waived for
the six months ended June 30, 1999. 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, 1999,
purchases and sales of investment securities, other than short-term investments,
aggregated $12,477,071 and $15,863,336, respectively.
5. FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized appreciation
(depreciation) in value of the investment securities owned at June 30, 1999 as
computed on a federal income tax basis, are as follows:
Aggregate cost $30,521,231
================================================================================
Gross unrealized appreciation $ 5,220,896
Gross unrealized depreciation (988,776)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 4,232,120
================================================================================
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.
23
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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, 1999.
8. LINE OF CREDIT The Portfolio, along with the other Portfolios in the
CitiFunds Family, entered into an ongoing agreement with a bank which allows the
Funds collectively to borrow up to $75 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, 1999,
the commitment fee allocated to the Portfolio was $46. Since the line of credit
was established, there have been no borrowings.
24
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, PRESIDENT
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
Heath B. McLendon**
C. OscarMorong Jr.
E.Kirby Warren
William S. Woods Jr.
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
**AFFILIATED PERSON OF Investment Adviser
INVESTMENT ADVISER
(of International Equity Portfolio)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street,Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California 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)1999 Citicorp [logo] Printed on recycled paper CFS/IG/699
