<PAGE>
Annual Report August 31, 1998
[LOGO]
Institutional
Liquid Reserves
[Graphic Omitted]
MONEY MARKETS
-----------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
-----------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
...............................................................................
Portfolio Environment and Outlook 2
...............................................................................
Fund Facts 3
...............................................................................
Fund Performance 4
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
Statement of Assets and Liabilities 5
...............................................................................
Statement of Operations 6
...............................................................................
Statement of Changes in Net Assets 7
...............................................................................
Financial Highlights 8
...............................................................................
Notes to Financial Statements 9
...............................................................................
Independent Auditors' Report 12
CASH RESERVES 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
...............................................................................
Independent Auditors' Report 19
...............................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 12-month period ended August 31, 1998 saw a continuation
of the positive economic and market conditions that have
prevailed over the past three years. Late in the period, however,
heightened volatility caused the stock market to retrace some of
its gains.
Such volatility suggests that money market securities may once
again be poised to demonstrate their true value as relatively
safer investments where investors seek to protect their principal
and earn interest. In our view, CitiFundsSM Institutional Liquid
Reserves can play a valuable role in investors' diversified
investment portfolios.
As you have probably heard, Citicorp announced its intention
to merge with The Travelers Group. The merger is expected to
occur on or about October 8, 1998. As necessary, we will provide
you with information that specifically affects the fund.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 21, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
YIELDS ON MONEY MARKET INSTRUMENTS ENDED THE 12-MONTH REPORTING
PERIOD LOWER THAN WHERE THEY BEGAN, reflecting the general trend
of short-term interest rates. That decline was interrupted,
however, during the first quarter of 1998, which saw an increase
in short-term interest rates amid uncertainty over the economic
effects of the financial crisis in Asia. When evidence emerged
early in the year that U.S. economic growth was stronger than
most analysts expected, interest rates rose in anticipation of a
move by the Federal Reserve Board to a more restrictive monetary
policy.
Such a move never took place, however, because of the absence
of inflationary pressures. During the second and third quarters
of 1998, it became clearer that the Asian crisis would, in fact,
negatively affect U.S. corporate earnings and dampen U.S.
economic growth. In effect, lower demand for U.S. goods from
overseas markets and improved competitive positions for Asian
companies constrained sales and earnings of U.S. companies. As a
result, fixed-income investors became more confident that the
Federal Reserve would maintain short-term interest rates at
current levels, and money market yields settled back to their
previous lows.
IN THIS ECONOMIC ENVIRONMENT, WE MAINTAINED AN AVERAGE
MATURITY BETWEEN 70 AND 90 DAYS for most of the period, which we
consider relatively long for this portfolio. This position
enabled us to capture the higher yields of longer-dated
securities when short-term interest rates declined. In fact, the
portfolio contained securities with maturities of as much as one
year. These long maturities were balanced by securities with
maturities measured in days or weeks. Combined, they helped us
achieve our targeted average maturity while enabling us to
capture the higher yields of longer-dated instruments.
We also attempted to enhance the portfolio's yield by
investing in those sectors of the short-term money markets that,
in our opinion, provided the most attractive values. We found
those values in Yankee CDs, which are certificates of deposit
issued by U.S. branches of foreign banks.
Yankee CDs offered higher yields than U.S. Treasury bills of
comparable maturities. That's because the U.S. government's
success in balancing its budget has required less borrowing,
reducing the supply of U.S. Treasury bills. Yet, demand for U.S.
Treasury bills remains high. The combination of lower supply and
high demand caused yields of U.S. Treasury bills to fall faster
than other types of money market securities.
WE BELIEVE MONEY MARKET YIELDS ARE LIKELY TO REMAIN NEAR
CURRENT LEVELS FOR THE REMAINDER OF THE YEAR. If economic growth
continues to moderate in the fourth quarter of 1998, as we
expect, the Federal Reserve Board will have little reason to
raise short-term interest rates, which they might otherwise do to
forestall a reacceleration of inflation. In our opinion, the
opposite is the more likely scenario: if the economy continues to
slow, the Federal Reserve Board may eventually reduce short-term
interest rates modestly in order to provide an economic stimulus.
In the meantime, we will continue to manage the Portfolio's
average maturity and sector concentrations according to our
near-term outlook for interest rates and the U.S. economy. In our
view, this approach will help CitiFunds Institutional Liquid
Reserves earn competitive returns commensurate with preservation
of capital, regardless of the fluctuations of the stock and bond
markets.
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with liquidity and as high a level of
current income as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
CASH RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
COMMENCEMENT OF OPERATIONS BENCHMARKS
October 2, 1992 o Lipper Taxable Institutional Money
Funds Average
NET ASSETS AS OF 8/31/98 o IBC Institutional Taxable Money
$3,380.5 million Funds Average
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE OCTOBER 2, 1992
ALL PERIODS ENDED AUGUST 31, 1998 YEAR YEARS* INCEPTION*
- --------------------------------------------------------------------------------
CitiFunds Institutional Liquid Reserves 5.69% 5.29% 4.96%
Lipper Taxable Institutional Money Funds
Average 5.40% 4.99% 4.28%+
* Average Annual Total Return
+ From 10/31/92
7-DAY YIELDS
Annualized Current 5.51%
Effective 5.66%
The Annualized Current 7-Day Yield reflects the amount of income
generated by the investment during that seven-day period and
assumes that the income is generated each week over a 365 day
period. The yield is shown as a percentage of the investment. The
Effective 7-Day Yield is calculated similarly, but when
annualized the income earned by the investment during that
seven-day period is assumed to be reinvested.
The effective yield is slightly higher than the current yield because of the
compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
IMPORTANT TAX INFORMATION -- For the fiscal year ended August 31, 1998, the Fund
paid $0.05548 per share to shareholders from net investment income. For such
period 1.5% of dividends paid were derived from interest earned from U.S.
Government and U.S. Government agency obligations.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL LIQUID RESERVES
VS. IBC INSTITUTIONAL TAXABLE MONEY FUNDS AVERAGE
As illustrated, CitiFunds Institutional Liquid Reserves generally provided a
higher annualized seven-day yield to that of a comparable IBC Money Fund
Average, as published in IBC Money Fund ReportTM, for the one year period.
IBC Institutional
CitiFunds Taxable Money
Institutional Market Funds
Liquid Reserves Average
9/2/97 5.59% 5.33%
9/9/97 5.56% 5.29%
9/16/97 5.57% 5.30%
9/23/97 5.53% 5.30%
9/30/97 5.58% 5.33%
10/7/97 5.55% 5.30%
10/14/97 5.52% 5.27%
10/21/97 5.56% 5.30%
10/28/97 5.59% 5.31%
11/4/97 5.60% 5.34%
11/11/97 5.58% 5.31%
11/18/97 5.57% 5.32%
11/25/97 5.57% 5.33%
12/2/97 5.61% 5.38%
12/9/97 5.55% 5.35%
12/16/97 5.59% 5.38%
12/23/97 5.65% 5.43%
12/30/97 5.56% 5.41%
1/6/98 5.71% 5.50%
1/13/98 5.54% 5.36%
1/20/98 5.55% 5.36%
1/27/98 5.54% 5.33%
2/3/98 5.57% 5.35%
2/10/98 5.50% 5.30%
2/17/98 5.54% 5.31%
2/24/98 5.53% 5.30%
3/3/98 5.57% 5.33%
3/10/98 5.50% 5.28%
3/17/98 5.52% 5.29%
3/24/98 5.49% 5.28%
3/31/98 5.54% 5.30%
4/7/98 5.52% 5.28%
4/14/98 5.52% 5.28%
4/21/98 5.49% 5.27%
4/28/98 5.49% 5.26%
5/5/98 5.47% 5.26%
5/12/98 5.43% 5.24%
5/19/98 5.53% 5.28%
5/26/98 5.48% 5.26%
6/2/98 5.55% 5.29%
6/9/98 5.48% 5.26%
6/16/98 5.51% 5.28%
6/23/98 5.49% 5.27%
6/30/98 5.55% 5.31%
7/7/98 5.62% 5.29%
7/14/98 5.48% 5.26%
7/21/98 5.50% 5.27%
7/28/98 5.50% 5.28%
8/4/98 5.53% 5.30%
8/11/98 5.48% 5.26%
8/18/98 5.51% 5.28%
8/25/98 5.49% 5.27%
9/1/98 5.52% 5.28%
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investments in Cash Reserves Portfolio, at value (Note 1A) $3,339,716,294
Receivable for shares of beneficial interest sold 50,924,631
- --------------------------------------------------------------------------------
Total assets 3,390,640,925
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 7,288,674
Dividends payable 2,298,426
Accrued expenses and other liabilities 553,099
- --------------------------------------------------------------------------------
Total liabilities 10,140,199
- --------------------------------------------------------------------------------
NET ASSETS for 3,380,500,726 shares of beneficial interest
outstanding $3,380,500,726
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $3,380,500,726
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Income from Cash Reserves Portfolio $174,973,062
Allocated expenses from Cash Reserves Portfolio (3,042,007)
- --------------------------------------------------------------------------------
$171,931,055
EXPENSES:
Administrative fees (Note 3A) 10,620,150
Shareholder Servicing Agents' fees (Note 3B) 3,034,328
Distribution fees (Note 4) 3,034,328
Registration fees 157,014
Trustees' fees 30,213
Shareholder reports 28,378
Custody fund accounting fees 19,974
Transfer agent fees 19,604
Legal fees 11,144
Audit fees 7,800
Miscellaneous 41,072
- --------------------------------------------------------------------------------
Total expenses 17,004,005
Less aggregate amounts waived or assumed by
Administrator, Shareholder Servicing Agents,
and Distributor (Notes 3A, 3B, and 4) (13,957,440)
- --------------------------------------------------------------------------------
Net expenses 3,046,565
- --------------------------------------------------------------------------------
Net investment income $168,884,490
================================================================================
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
----------------------------------
1998 1997
- --------------------------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
Net investment income,
declared as dividends to shareholders
(Note 2) $ 168,884,490 $ 104,215,776
- --------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST AT NET ASSET VALUE OF $1.00
PER SHARE (Note 5):
Proceeds from sale of shares $37,431,763,944 $31,769,047,743
Net asset value of shares issued to
shareholders from reinvestment of
dividends 131,980,079 73,113,066
Cost of shares repurchased (36,150,734,171) (31,131,803,616)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,413,009,852 710,357,193
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,967,490,874 1,257,133,681
- --------------------------------------------------------------------------------
End of period $ 3,380,500,726 $ 1,967,490,874
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.05548 0.05459 0.05521 0.05698 0.03603
Less dividends from net investment income (0.05548) (0.05459) (0.05521) (0.05698) (0.03603)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's
omitted) $3,380,501 $1,967,491 $1,257,134 $1,480,097 $470,041
Ratio of expenses to average net assets+ 0.20% 0.18% 0.20% 0.17% 0.23%
Ratio of net investment income to average
net assets+ 5.57% 5.52% 5.52% 5.70% 3.62%
Total return 5.69% 5.60% 5.66% 5.85% 3.66%
Note: If agents of the Fund and agents of Cash Reserves Portfolio had not waived all or a portion of
their fees during the period indicated, the net investment income per share and the ratios would have
been as follows:
Net investment income per share $0.04948 $0.04844 $0.04921 $0.05050 $0.03094
RATIOS:
Expenses to average net assets+ 0.79% 0.80% 0.80% 0.84% 0.86%
Net investment income to
average net assets+ 4.98% 4.90% 4.92% 5.03% 2.98%
=======================================================================================================
+ Includes the Fund's share of Cash Reserves Portfolio's allocated expenses
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Institutional Liquid Reserves (the
"Fund") is a separate diversified series of CitiFunds Institutional Trust (the
"Trust"), a Massachusetts business trust. Effective January 2, 1998 the Landmark
Institutional Liquid Reserves changed its name to CitiFunds Institutional Liquid
Reserves. The Trust also changed its name from Landmark Institutional Trust to
CitiFunds Institutional Trust. The Trust is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Fund invests all of its investable assets in Cash Reserves Portfolio (the
"Portfolio"), a management investment company for which Citibank, N.A.
("Citibank") serves as Investment Adviser. CFBDS, Inc. ("CFBDS", formerly
Landmark Funds Broker-Dealer Services, Inc.) acts as the Trust's Administrator
and Distributor. Citibank also serves as Sub-Administrator and makes Fund shares
available to customers as Shareholder Servicing Agents. Citibank is a
wholly-owned subsidiary of Citicorp. Citicorp announced its intention to merge
with The Travelers Group. The merger is expected to occur on or about October 8,
1998.
The Trust seeks to achieve the Fund's investment objective to provide
liquidity and as high a level of current income as is consistent with the
preservation of capital by investing all of its investable assets in the
Portfolio, an open-end, diversified management investment company having the
same investment objective as the Fund. The value of such investment reflects the
Fund's proportionate interest (37.9% at August 31, 1998) in the net assets of
the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are as
follows:
A. INVESTMENT VALUATION Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements, which are
included elsewhere in this report.
B. INVESTMENT INCOME The Fund earns income, net of Portfolio expenses, daily
based on its investment in the Portfolio.
C. FEDERAL TAXES The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its taxable income. Accordingly, no provision
for federal income or excise tax is necessary.
D. EXPENSES The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more Funds in the series are allocated in proportion to
the average net assets of each fund, except where allocations of direct expenses
to each fund can otherwise be made fairly. Expenses directly attributable to a
fund are charged to that fund. The Fund's share of the Portfolio's expenses are
charged against and reduce the amount of the Fund's investment in the Portfolio.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 3:00
p.m., Eastern time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services
Plan which provides that the Trust, on behalf of each Fund, may obtain the
services of an Administrator, one or more Shareholder Servicing Agents, and
other Servicing Agents and may enter into agreements providing for the payment
of fees for such services. Under the Trust's Administrative Services Plan, the
aggregate of the fees paid to the Administrator from the Fund under such Plan
and of the fees paid to the Shareholder Servicing Agents from the Fund may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. For the year ended August 31, 1998,
Management agreed to voluntarily limit Fund expenses to 0.20%.
A. ADMINISTRATIVE FEES Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is accrued daily and paid monthly at an annual rate of 0.35% of the Fund's
average daily net assets. The Administrative fees amounted to $10,620,150 of
which $7,888,784 was voluntarily waived for the year ended August 31, 1998.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or to any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Fund from the Administrator or its affiliates. Certain of the
officers and a Trustee of the Fund are officers and a director of the
Administrator or its affiliates.
B. SHAREHOLDER SERVICING AGENTS FEES The Trust, on behalf of the Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives fees from the Fund, which may be paid
periodically, which may not exceed, on an annualized basis, an amount equal to
0.10% of the average daily net assets of the Fund represented by shares owned
during the period for which payment has been made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agents fees amounted to $3,034,328, all of which was voluntarily
waived for the year ended August 31, 1998.
4. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund reimburses the Distributor for expenses incurred or anticipated in
connection with the sale of shares of the Fund, at an annual rate not to exceed
0.10% of the Fund's average daily net assets of the Fund. The Distribution fees
amounted to $3,034,328, all of which was voluntarily waived for the year ended
August 31, 1998. The Distributor has voluntarily agreed to assume all
distribution expenses through August 31, 1998.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest ($0.00001 par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $13,603,257,110 and $12,406,754,144 respectively, for
the year ended August 31, 1998.
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES OF CITIFUNDS INSTITUTIONAL TRUST (THE TRUST) AND
THE SHAREHOLDERS OF CITIFUNDS INSTITUTIONAL LIQUID RESERVES:
In our opinion, the accompanying statement of assets and liabilities, and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of CitiFunds Institutional Liquid Reserves (the "Fund"), a series of
CitiFunds Institutional Trust, at August 31, 1998 and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned at
August 31, 1998 by correspondence with the custodian, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1998
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
ASSET BACKED -- 11.0%
- --------------------------------------------------------------------------------
Sigma Finance Corp.*
5.64% due 8/27/99 $197,000 $ 196,990,868
Steers*
5.641% due 10/15/98 160,000 160,000,000
5.652% due 11/10/98 191,000 190,992,928
5.648% due 3/25/99 78,069 78,069,058
Strategic Money Market
Trust Receipts*
5.656% due 3/05/99 213,000 213,000,000
Strats Trust*
5.663% due 12/15/98 130,000 130,000,000
--------------
969,052,854
--------------
BANK NOTES -- 4.8%
- --------------------------------------------------------------------------------
Bank of New York
5.50% due 2/17/99 100,000 99,968,885
First Union Bank
5.49% due 9/01/99 75,000 75,000,000
FCC National Bank
5.68% due 6/03/99 50,000 49,974,737
5.86% due 10/02/98 100,000 99,995,126
Nationsbank
5.57% due 6/25/99 100,000 99,960,129
--------------
424,898,877
--------------
CERTIFICATES OF DEPOSIT (DOMESTIC) -- 1.8%
- --------------------------------------------------------------------------------
Chase Manhattan Bank
5.74% due 5/10/99 57,000 56,977,486
Morgan Guaranty
Trust Co.
5.55% due 2/02/99 100,000 100,000,000
--------------
156,977,486
--------------
CERTIFICATES OF DEPOSIT (EURO) -- 1.1%
- --------------------------------------------------------------------------------
Barclays Bank
5.58% due 12/29/98 100,000 100,003,242
--------------
CERTIFICATES OF DEPOSIT (YANKEE) -- 32.4%
- --------------------------------------------------------------------------------
ABN Amro Bank
5.62% due 4/14/99 75,000 74,977,837
Bank of Nova Scotia
5.65% due 3/29/99 38,000 37,969,974
5.59% due 8/24/99 25,000 24,997,654
Bank of Tokyo Mitsubishi
5.73% due 9/08/98 400,000 400,000,000
Barclays Bank
5.82% due 10/05/98 125,000 124,994,431
5.53% due 2/23/99 100,000 99,972,398
5.70% due 3/30/99 100,000 99,966,931
Bayeriche Landesbank
5.70% due 1/07/99 60,000 59,991,936
5.65% due 7/23/99 50,000 49,954,213
Credit Agricole Indosuez
5.74% due 4/26/99 75,000 74,961,397
Credit Communal
de Belgique
5.62% due 3/19/99 45,000 44,975,420
Credit Suisse First Boston
5.69% due 7/06/99 100,000 100,000,000
Deutsche Bank
5.62% due 2/26/99 100,000 99,976,622
5.65% due 3/02/99 100,000 99,976,103
5.65% due 8/06/99 100,000 99,951,040
Rabobank Nederland
5.60% due 3/17/99 50,000 49,986,831
5.71% due 6/11/99 100,000 99,962,179
5.69% due 6/30/99 75,000 74,990,829
5.64% due 7/30/99 103,000 102,979,080
Societe Generale Bank
5.75% due 4/06/99 150,000 149,960,148
5.76% due 4/16/99 75,000 74,982,134
Societe Generale Bank*
5.563% due 5/20/99 175,800 175,714,046
Svenska Handelsbanken
5.75% due 5/04/99 57,000 56,981,681
5.76% due 5/25/99 75,000 74,968,617
5.74% due 6/01/99 77,000 76,960,883
Swiss Bank Corp.
5.715% due 6/14/99 100,000 99,969,983
Toronto Dominion Bank
5.71% due 6/15/99 100,000 99,969,868
5.71% due 6/23/99 85,000 84,973,674
5.54% due 8/18/99 135,000 134,898,090
--------------
2,849,963,999
--------------
COMMERCIAL PAPER -- 5.0%
- --------------------------------------------------------------------------------
Aspen Funding Corp.
5.88% due 9/01/98 140,000 140,000,000
General Electric Capital Corp.
5.92% due 9/01/98 100,000 100,000,000
5.44% due 9/09/98 40,000 39,951,645
J. P. Morgan & Co., Inc.
5.376% due 12/11/98 25,000 24,622,933
Newport Funding Corp.
5.875% due 9/01/98 140,000 140,000,000
--------------
444,574,578
--------------
CORPORATE NOTES -- 23.0%
- --------------------------------------------------------------------------------
Associates Corp. of
North America*
5.61% due 1/04/99 200,000 199,959,365
5.53% due 6/29/99 150,000 149,903,404
Bank One, Wisconsin*
5.65% due 10/23/98 100,000 99,988,872
Bear Stearns*
5.62% due 6/04/99 225,000 225,000,000
Credit Suisse*
5.63% due 10/07/98 200,000 200,000,000
5.63% due 11/09/98 125,000 125,000,000
J. P. Morgan & Co., Inc.*
5.57% due 7/07/99 210,000 209,896,991
Key Bank National
Association*
5.555% due 9/28/98 200,000 199,989,284
5.585% due 5/12/99 88,000 87,956,661
Merrill Lynch & Co., Inc.*
5.76% due 10/05/98 100,000 100,013,442
PNC Bank National
Association*
5.60% due 10/02/98 230,000 229,986,663
Royal Bank of Canada*
5.54% due 2/16/99 200,000 199,937,000
--------------
2,027,631,682
--------------
MEDIUM TERM NOTES -- 7.7%
- --------------------------------------------------------------------------------
Abbey National Treasury
Services
5.54% due 1/20/99 125,000 124,991,658
5.525% due 1/26/99 100,000 99,982,606
5.476% due 6/15/99 100,000 99,914,519
5.58% due 8/25/99 100,000 99,961,541
Norwest Financial Inc.
5.55% due 8/31/99 100,000 99,971,291
Sigma Finance Corp.
5.94% due 11/17/98 150,000 150,000,000
--------------
674,821,615
--------------
PROMISSORY NOTES -- 4.0%
- ------------------------------------------------------------------------------
Goldman Sachs Group*
5.699% due 11/13/98 $350,000 $ 350,000,000
--------------
TIME DEPOSITS -- 6.1%
- --------------------------------------------------------------------------------
Dresdner Bank
6.00% due 9/01/98 135,084 135,084,000
Harris Trust &
Savings Bank
5.938% due 9/01/98 150,000 150,000,000
ING Bank
5.938% due 9/01/98 75,000 75,000,000
Norddeutsche Landesbank
6.00% due 9/01/98 76,200 76,200,000
Westdeutsche Landesbank
5.938% due 9/01/98 100,000 100,000,000
--------------
536,284,000
--------------
REPURCHASE AGREEMENTS -- 2.8%
- --------------------------------------------------------------------------------
First Union Bank
Repurchase Agreement
5.83% due 9/01/98
(collateralized by $48,468,000 Federal National Mortgage
Association, Zero coupon due 12/14/98, valued at $48,475,849;
$41,929,000, 6.96% due 4/02/07, valued at $41,935,790;
$46,763,000, 5.50% due 2/25/00, valued at $46,770,573;
$10,517,000, 6.65% due 11/14/07, valued at $10,518,703;
$47,285,000 Federal Home Loan Mortgage Association, 5.98% due
6/18/08, valued at $47,292,658; $31,716,000, 6.28% due
8/19/05, valued at $31,721,136; and $23,322,000, 6.51% due
8/18/808, valued at
$23,325,777) 250,000,000
--------------
TOTAL INVESTMENTS AT
AMORTIZED COST 99.7% 8,784,208,333
OTHER ASSETS,
LESS LIABILITIES 0.3 21,701,283
----- --------------
NET ASSETS 100.0% $8,805,909,616
===== ==============
* Variable interest rate - subject to periodic change.
See notes to financial statements
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) $8,784,208,333
Interest receivable 97,556,173
- --------------------------------------------------------------------------------
Total assets 8,881,764,506
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investment purchased 75,000,000
Payable to affiliate--Investment Advisory fee (Note 2A) 635,623
Accrued expenses and other liabilities 219,267
- --------------------------------------------------------------------------------
Total liabilities 75,854,890
- --------------------------------------------------------------------------------
NET ASSETS $8,805,909,616
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $8,805,909,616
================================================================================
CASH RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
INTEREST INCOME (Note 1B): $513,556,789
EXPENSES:
Investment advisory fees (Note 2A) $13,394,307
Administrative fees (Note 2B) 4,464,769
Custody and fund accounting fees 1,969,190
Audit fees 39,700
Trustees' fees 37,966
Legal fees 31,427
Miscellaneous 112,193
- --------------------------------------------------------------------------------
Total expenses 20,049,552
Less aggregate amounts waived by Investment
Adviser and Administrator (Notes 2A, and 2B) (11,119,870)
Less fees paid indirectly (Note 1E) (797)
- --------------------------------------------------------------------------------
Net expenses 8,928,885
- --------------------------------------------------------------------------------
Net investment income $504,627,904
================================================================================
See notes to financial statements
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
--------------------------------------
1998 1997
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 504,627,904 $ 339,604,126
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 30,335,511,897 33,685,999,190
Value of withdrawals (29,691,630,125) (30,810,390,668)
- --------------------------------------------------------------------------------
Net increase in net assets from
capital transactions 643,881,772 2,875,608,522
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,148,509,676 3,215,212,648
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 7,657,399,940 4,442,187,292
- --------------------------------------------------------------------------------
End of period $ 8,805,909,616 $ 7,657,399,940
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CASH RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets (000's omitted) $8,805,910 $7,657,400 $4,442,187 $4,765,406 $2,147,361
Ratio of expenses to average net assets 0.10% 0.10% 0.10% 0.10% 0.11%
Ratio of net investment income
to average net assets 5.65% 5.57% 5.64% 5.88% 3.87%
Note: If agents of the Portfolio had not voluntarily waived a portion of their fees for the periods indicated,
the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.22% 0.23% 0.23% 0.23% 0.24%
Net investment income to
average net assets 5.53% 5.44% 5.50% 5.75% 3.74%
===============================================================================================================
</TABLE>
See notes to financial statements
<PAGE>
CASH RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES Cash Reserves Portfolio (the "Portfolio") is
registered under the U.S. Investment Company Act of 1940, as amended, as a
no-load, diversified, open-end management investment company which was organized
as a trust under the laws of the State of New York. The Declaration of Trust
permits the Trustees to issue beneficial interests in the Portfolio. Signature
Financial Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's
Administrator and Citibank, N.A. ("Citibank") acts as the Investment Adviser.
Citibank is a wholly-owned subsidiary of Citicorp. Citicorp announced its
intention to merge with The Travelers Group. The merger is expected to occur on
or about October 8, 1998.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. VALUATION OF INVESTMENTS Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
This method involves valuing a portfolio security at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium. The
Portfolio's use of amortized cost is subject to the Portfolio's compliance with
certain conditions as specified under Rule 2a-7 of the U.S. Investment Company
Act of 1940.
B. INTEREST INCOME AND EXPENSES Interest income consists of interest accrued
and discount earned (including both original issue and market discount) on the
investments of the Portfolio, accrued ratably to the date of maturity, plus or
minus net realized gain or loss, if any, on investments. Expenses of the
Portfolio are accrued daily. The Portfolio bears all costs of its operations
other than expenses specifically assumed by Citibank and SFG.
C. U.S. FEDERAL INCOME TAXES The Portfolio is considered a partnership under
the U.S. Internal Revenue Code. Accordingly, no provision for federal income
taxes is necessary.
D. REPURCHASE AGREEMENTS It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Portfolio to
monitor, on a daily basis, the market value of the repurchase agreement's
underlying investments to ensure the existence of a proper level of collateral.
E. FEES PAID INDIRECTLY The Portfolio's custodian bank calculates its fees
based on the Portfolio's average daily net assets. The fees are reduced
according to a fee arrangement, which provides for custody fees to be reduced
based on a formula developed to measure the value of cash deposited with the
custodian by the Portfolio. This amount is shown as a reduction of expenses on
the Statement of Operations.
F. OTHER Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.
2. INVESTMENT ADVISORY FEES AND ADMINISTRATIVE FEES
A. INVESTMENT ADVISORY FEE -- The Investment advisory fees paid to Citibank,
as compensation for overall investment management services, amounted to
$13,394,307, of which $6,655,101 was voluntarily waived for the year ended
August 31, 1998. The investment advisory fees are computed at an annual rate of
0.15% of the Portfolio's average daily net assets.
B. ADMINISTRATIVE FEES -- Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, are computed at
the annual rate of 0.05% of the Portfolio's average daily net assets. The
Administrative fees amounted to $4,464,769, all of which were voluntarily waived
for the year ended August 31, 1998. The Portfolio pays no compensation directly
to any Trustee or to any officer who is affiliated with the Administrator, all
of whom receive remuneration for their services to the Portfolio from the
Administrator or its affiliates. Certain of the officers and a Trustee of the
Portfolio are officers and a director of the Administrator or its affiliates.
3. INVESTMENT TRANSACTIONS Purchases, maturities and sales of money market
instruments aggregated $346,656,360,128 and $345,459,284,002, respectively, for
the year ended August 31, 1998.
4. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1998, the commitment fee allocated to the Portfolio was $29,660.
Since the line of credit was established, there have been no borrowings.
<PAGE>
CASH RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND THE INVESTORS OF CASH RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of Cash Reserves Portfolio (the
"Portfolio") as at August 31, 1998 and the related statements of operations and
of changes in net assets and the financial highlights for the periods indicated.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned at
August 31, 1998 by correspondence with the custodian, provide a reasonable basis
for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Portfolio as at August 31, 1998, the
results of its operations and the changes in its net assets and the financial
highlights for the periods indicated in accordance with U.S. generally accepted
accounting principles.
PricewaterhouseCoopers
Chartered Accountants
Toronto, Ontario
October 6, 1998
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
(OF CASH RESERVES PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio*
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
PREMIUM MONEY MARKETS
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium U.S. Treasury Reserves
INSTITUTIONAL MONEY MARKETS
o CitiFunds Institutional Liquid Reserves
o CitiFunds Institutional U.S. Treasury Reserves
o CitiFunds Institutional Tax Free Reserves
o CitiFunds Institutional Cash Reserves
This report is prepared for the information of shareholders.
It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus.
*Purchase orders will be accepted beginning November 2, 1998.
For more information contact your Service Agent or call
1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1998 Citicorp [Recycle Logo] Printed on recycled paper CFA/INS LI/898
<PAGE>
Annual Report August 31, 1998
[LOGO]
Institutional
U.S. Treasury Reserves
MONEY MARKETS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 3
................................................................................
Fund Performance 4
................................................................................
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
Statement of Assets and Liabilities 5
................................................................................
Statement of Operations 5
...............................................................................
Statement of Changes in Net Assets 6
................................................................................
Financial Highlights 6
................................................................................
Notes to Financial Statements 7
................................................................................
Independent Auditors' Report 10
................................................................................
U.S. TREASURY RESERVES PORTFOLIO
Portfolio of Investments 11
................................................................................
Statement of Assets and Liabilities 12
................................................................................
Statement of Operations 12
................................................................................
Statement of Changes in Net Assets 13
................................................................................
Financial Highlights 13
................................................................................
Notes to Financial Statements 14
................................................................................
Independent Auditors' Report 16
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 12-month period ended August 31, 1998 saw a continuation of the positive
economic and market conditions that have prevailed over the past three years.
Late in the period, however, heightened volatility caused the stock market to
retrace some of its gains.
Such volatility suggests that money market securities may once again be
poised to demonstrate their true value as relatively safer investments where
investors seek to protect their principal and earn interest. In our view,
CitiFunds(SM) Institutional U.S. Treasury Reserves can play a valuable role in
investors' diversified investment portfolios.
As you have probably heard, Citicorp announced its intention to merge with
The Travelers Group. The merger is expected to occur on or about October 8,
1998. As necessary, we will provide you with information that specifically
affects the fund.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 21, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
YIELDS ON SHORT-TERM U.S. TREASURY RESERVES SECURITIES ENDED THE 12-MONTH
REPORTING PERIOD LOWER THAN WHERE THEY BEGAN, reflecting the general trend of
short-term interest rates. That decline was interrupted, however, during the
first quarter of 1998, which saw an increase in short-term interest rates amid
uncertainty over the economic effects of the financial crisis in Asia. When
evidence emerged early in the year that U.S. economic growth was stronger than
most analysts expected, interest rates rose in anticipation of a move by the
Federal Reserve Board to a more restrictive monetary policy.
Such a move never took place, however, because of the absence of inflationary
pressures. During the second and third quarters of 1998, it became clearer that
the Asian crisis would, in fact, negatively affect U.S. corporate earnings and
dampen U.S. economic growth. In effect, lower demand for U.S. goods from
overseas markets and improved competitive positions for Asian companies
constrained sales and earnings of U.S. companies. As a result, fixed-income
investors became more confident that the Federal Reserve would maintain
short-term interest rates at current levels, and yields on U.S. Treasury bills
settled back to their previous lows.
IN THIS ECONOMIC ENVIRONMENT, WE MAINTAINED AN AVERAGE MATURITY NEAR THE
PORTFOLIO'S 60-DAY MAXIMUM for most of the period. This position enabled us to
capture modestly higher yields as short-term interest rates declined.
We also attempted to enhance the portfolio's yield by anticipating changes in
the supply of and demand for AAA-rated direct obligations of the U.S. Treasury.
For example, there were times over the past year when instability overseas
caused surges in demand from foreign investors. These overseas investors turned
to the unparalleled credit quality of U.S. Treasury securities to protect their
assets from the economic and political problems affecting their native
countries. Such surges of demand tend to drive yields lower, giving us an
opportunity to sell securities at relatively attractive prices. We then
reinvested those funds in U.S. Treasury securities when demand abated and yields
were incrementally higher.
WE BELIEVE YIELDS OF SHORT-TERM U.S. TREASURY RESERVES SECURITIES ARE LIKELY TO
REMAIN NEAR CURRENT LEVELS FOR THE REMAINDER OF THE YEAR. If economic growth
continues to moderate in the fourth quarter of 1998, as we expect, the Federal
Reserve Board will have little reason to raise short-term interest rates, which
they might otherwise do to forestall a re-acceleration of inflation. In our
opinion, the opposite is the more likely scenario: if the economy continues to
slow, the Federal Reserve Board may eventually reduce short-term interest rates
modestly in order to provide an economic stimulus.
In the meantime, we will continue to manage the Portfolio according to the
market's supply-and-demand influences and our near-term outlook for interest
rates and the U.S. economy. In our view, this approach will help CitiFunds
Institutional U.S. Treasury Reserves earn competitive returns commensurate with
preservation of capital, regardless of the fluctuations of the stock and bond
markets.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide liquidity and as high a level of current income from U.S. Government
obligations as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
U.S. TREASURY RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
BENCHMARK
COMMENCEMENT OF OPERATIONS o Lipper S&P AAA rated Taxable
October 2, 1992 Institutional U.S. Treasury Money
Funds Average
NET ASSETS AS OF 8/31/98
$264.1 million
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE OCTOBER 2, 1992
ALL PERIODS ENDED AUGUST 31, 1998 YEAR YEARS* INCEPTION*
- -----------------------------------------------------------------------------
CitiFunds Institutional U.S. Treasury
Reserves 5.12% 4.81% 4.53%
Lipper S&P AAA rated Taxable
Institutional U.S. Treasury Money
Funds Average 5.25% 4.83% 4.47%++
* Average Annual Total Return
++ From 9/30/92
7-DAY YIELDS
Annualized Current 4.85%
Effective 4.97%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during the seven day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized the
income earned by the investment during the seven day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
IMPORTANT TAX INFORMATION -- For the fiscal year ended August 31, 1998 the Fund
paid $0.05001 per share to shareholders from net investment income. For such
period, 100% of income dividends paid were derived from interest earned from
U.S. Treasury Bills, Notes and Bonds.
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- -------------------------------------------------------------------------------
ASSETS:
Investment in U.S. Treasury Reserves Portfolio, at value
(Note 1) $264,233,668
Receivable for shares of beneficial interest sold 71,188
- -------------------------------------------------------------------------------
Total assets 264,304,856
- -------------------------------------------------------------------------------
LIABILITIES:
Dividend Payable 111,829
Accrued expenses and other liabilities 57,120
- -------------------------------------------------------------------------------
Total liabilities 168,949
- -------------------------------------------------------------------------------
NET ASSETS for 264,135,907 shares of beneficial interest
outstanding $264,135,907
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $264,135,907
- -------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
===============================================================================
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1A):
Income from U.S. Treasury Reserves Portfolio $13,763,876
Allocated expenses from U.S. Treasury Reserves
Portfolio (262,295)
- --------------------------------------------------------------------------------
$13,501,581
EXPENSES:
Administrative fees (Note 3A) $ 918,190
Shareholder Servicing Agents' fees (Note 3B) 262,340
Distribution fees (Note 4) 262,340
Custody and fund accounting fees 20,818
Shareholder reports 14,661
Transfer agent fees 14,500
Audit fees 11,100
Trustees fees 6,971
Legal fees 3,647
Miscellaneous 22,013
- --------------------------------------------------------------------------------
Total expenses 1,536,580
Less aggregate amounts waived by Administrator,
Shareholder Servicing Agent and Distributor
(Notes 3A, 3B and 4) (1,143,662)
- --------------------------------------------------------------------------------
Net expenses 392,918
- --------------------------------------------------------------------------------
Net investment income $13,108,663
===============================================================================
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------
1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
to shareholders (Note 2): $ 13,108,663 $ 13,975,937
- ----------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT NET
ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares $1,322,758,384 $1,020,244,321
Net asset value of shares issued to shareholders
from reinvestment of dividends 11,341,435 11,873,328
Cost of shares repurchased (1,376,313,848) (939,162,365 )
- ----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (42,214,029) 92,955,284
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 306,349,936 213,394,652
- ----------------------------------------------------------------------------------------------
End of period $ 264,135,907 $ 306,349,936
==============================================================================================
</TABLE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.05001 0.04994 0.05051 0.05200 0.03312
Less dividends from net
investment income (0.05001) (0.04994) (0.05051) (0.05200) (0.03312)
- ----------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $264,136 $306,350 $213,395 $120,731 $150,911
Ratio of expenses to average
net assets+ 0.25% 0.25% 0.25% 0.25% 0.23%
Ratio of net investment income
to average net assets+ 5.00% 5.01% 5.03% 5.23% 3.40%
Total return 5.12% 5.11% 5.17% 5.33% 3.36%
Note: If Agents of the Fund and agents of U.S. Treasury Reserves Portfolio had not waived
all or a portion of their fees during the periods indicated, the net investment income per
share and the ratios would have been as follows:
Net investment income per share $0.04431 $0.04416 $0.04428 $0.04593 $0.02679
RATIOS:
Expenses to average net assets+ 0.82% 0.83% 0.87% 0.85% 0.88%
Net investment income to average
net assets+ 4.43% 4.43% 4.41% 4.62% 2.75%
- ----------------------------------------------------------------------------------------------
+ Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated expenses.
</TABLE>
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Institutional U.S. Treasury
Reserves (the "Fund") is a diversified separate series of CitiFunds
Institutional Trust (the "Trust"), a Massachusetts business trust. Effective
January 2, 1998, Landmark Institutional U.S. Treasury Reserves changed its name
to CitiFunds Institutional U.S. Treasury Reserves. The Trust also changed its
name from Landmark Institutional Trust to CitiFunds Institutional Trust. The
Trust is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund invests all of its investable
assets in U.S. Treasury Reserves Portfolio (the "Portfolio"), a management
investment company for which Citibank, N.A. ("Citibank") serves as Investment
Adviser. CFBDS, Inc. ("CFBDS"), (formerly Landmark Funds Broker-Dealer Services,
Inc.), acts as the Trust's Administrator and Distributor. Citibank also serves
as Sub-Administrator and makes shares available to customers through various
Shareholder Servicing Agents. Citibank is a wholly-owned subsidiary of Citicorp.
Citicorp announced its intention to merge with The Travelers Group. The merger
is expected to occur on or about October 8, 1998.
The Trust seeks to achieve the Fund's investment objective of providing
shareholders with liquidity and as high a level of current income from U.S.
Government obligations as is consistent with preservation of capital by
investing all of its investable assets in the Portfolio, an open-end,
diversified management investment company having the same investment as the
Fund. The value of such investment reflects the Fund's proportionate interest
(29.0% at August 31, 1998) in the net assets of the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The preparation of financial statements in accordance with 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 in
conformity with generally accepted accounting principles and are as follows:
A. Investment Income The Fund earns income, net of Portfolio expenses, daily
on its investment in the Portfolio.
B. Federal Taxes The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its taxable income. Accordingly, no provision
for federal income or excise tax is necessary.
C. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more Funds in a series are allocated in proportion to the
average net assets of each Fund, except where allocations of direct expenses to
each Fund can otherwise be made fairly. Expenses directly attributable to a Fund
are charged to that Fund.
D. Other All the net investment income of the Portfolio is allocated pro
rata, based on respective ownership interests, among the Fund and other
investors in the Portfolio at the time of such determination.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 12:00
noon, Eastern standard time, and all of the net income of the Fund so determined
is declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services
Plan which provides that the Trust, on behalf of each Fund, may obtain the
services of an Administrator, one or more Shareholder Servicing Agents, and
other Servicing Agents and may enter into agreements providing for the payment
of fees for such services. Under the Trust's Administrative Services Plan, the
aggregate of the fee paid to the Administrator from the Fund and of the fees
paid to the Shareholder Servicing Agents from the Fund under such plan may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee from the Fund, as
compensation for overall administrative services and general office facilities,
which is accrued daily and paid monthly at the annual rate of 0.35% of the
Fund's average daily net assets. The Administrative fees amounted to $918,190,
of which $618,982 was voluntarily waived for the year ended August 31, 1998.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or to any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Fund from the Administrator or its affiliates. Certain of the
officers and a Trustee of the Fund are officers and a director of the
Administrator or its affiliates.
B. Shareholder Servicing Fees The Trust, on behalf of the Fund, 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, but may not exceed, on an annualized basis, an amount equal to
0.10% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agent fees amounted to $262,340, all of which was voluntarily waived
for the year ended August 31, 1998.
4. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund reimburses the Distributor for expenses incurred or anticipated in
connection with the sale of shares of the Fund, limited to an annual rate of
0.10% of the average daily net assets of the Fund. The Distribution fees
amounted to $262,340 for the year ended August 31, 1998. The Distributor has
voluntarily agreed to assume all distribution expenses through August 31, 1998.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest ($0.00001 par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $909,660,118 and $965,532,834, respectively, for the
year ended August 31, 1998.
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES:
We have audited the accompanying statement of assets and liabilities of
CitiFunds Institutional U.S. Treasury Reserves, a separate series of CitiFunds
Institutional Trust (the "Trust") (a Massachusetts business trust), as of August
31, 1998, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended August 31, 1998 and 1997,
and the financial highlights for each of the years in the five-year period ended
August 31, 1998. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of CitiFunds
Institutional U.S. Treasury Reserves at August 31, 1998, the results of its
operations, the changes in its net assets, and its financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1998
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------------------
U.S. TREASURY BILLS -- 74.3%
- ------------------------------------------------------------------------------
United States Treasury Bill, due 9/03/98 $ 19,901 $ 19,895,477
United States Treasury Bill, due 9/10/98 19,118 19,093,859
United States Treasury Bill, due 9/15/98 19,000 18,959,287
United States Treasury Bill, due 9/24/98 91,432 91,144,581
United States Treasury Bill, due 10/01/98 90,040 89,667,648
United States Treasury Bill, due 10/08/98 34,082 33,909,213
United States Treasury Bill, due 10/22/98 67,321 66,848,477
United States Treasury Bill, due 10/29/98 119,779 118,830,012
United States Treasury Bill, due 11/19/98 102,410 101,303,683
United States Treasury Bill, due 12/31/98 119,706 117,740,347
------------
677,392,584
------------
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 25.2%
- ------------------------------------------------------------------------------
United States Treasury Note, 6.00% due 9/30/98 $139,342 $139,413,944
United States Treasury Note, 5.63% due 11/30/98 65,000 65,047,670
United States Treasury Note, 5.75% due 12/31/98 25,000 25,047,851
------------
229,509,465
------------
TOTAL INVESTMENTS, AT AMORTIZED COST 99.5% 906,902,049
OTHER ASSETS, LESS LIABILITIES 0.5 4,942,546
------------------------
NET ASSETS 100.0% $911,844,595
========================
See notes to financial statements
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $906,902,049
Cash 784
Receivable for investment sold 25,646,772
Interest receivable 4,692,955
- --------------------------------------------------------------------------------
Total assets 937,242,560
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investment purchased 25,293,945
Payable to affiliate -- Investment Advisory fees (Note 2A) 58,487
Accrued expenses and other liabilities 45,533
- --------------------------------------------------------------------------------
Total liabilities 25,397,965
- --------------------------------------------------------------------------------
NET ASSETS $911,844,595
- --------------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $911,844,595
===============================================================================
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $45,072,683
EXPENSES:
Investment Advisory fees (Note 2A) $1,289,761
Administrative fees (Note 2B) 429,920
Custody and fund accounting fees 210,699
Auditing fees 20,100
Trustee fees 11,547
Legal fees 4,049
Miscellaneous 35,489
- --------------------------------------------------------------------------------
Total expenses 2,001,565
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A and 2B) (1,141,331)
Less fees paid indirectly (Note 1D) (994)
- --------------------------------------------------------------------------------
Net expenses 859,240
- --------------------------------------------------------------------------------
Net investment income $44,213,443
===============================================================================
See notes to financial statements
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------
1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 44,213,443 $ 43,903,935
- --------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 1,935,301,975 1,742,310,476
Value of withdrawals (1,975,581,019) (1,646,108,001)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital
transactions (40,279,044) 96,202,475
- --------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 3,934,399 140,106,410
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 907,910,196 767,803,786
- --------------------------------------------------------------------------------------------
End of period $ 911,844,595 $ 907,910,196
============================================================================================
</TABLE>
U.S. TREASURY RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's
omitted) $911,845 $907,910 $767,804 $832,258 $726,569
Ratio of expenses to average net assets 0.10% 0.10% 0.10% 0.10% 0.12%
Ratio of net investment income to
average net assets 5.14% 5.15% 5.20% 5.36% 3.43%
Note: If the agents of the Portfolio had not voluntarily waived a portion of their fees for the
periods indicated and the expenses were not reduced for fees paid indirectly for the years after
August 31, 1995, the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.23% 0.24% 0.25% 0.25% 0.26%
Net investment income to average net
assets 5.01% 5.01% 5.05% 5.21% 3.30%
================================================================================================
</TABLE>
See notes to financial statements
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES U.S. Treasury Reserves Portfolio (the
"Portfolio") is registered under the Investment Company Act of 1940, as amended,
as a no-load, diversified, open-end management investment company which was
organized as a trust under the laws of the State of New York. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio. The
Investment Adviser of the Portfolio is Citibank N.A. ("Citibank"). Signature
Financial Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's
Administrator.
Citibank is a wholly-owned subsidiary of Citicorp. Citicorp announced its
intention to merge with The Travelers Group. The merger is expected to occur on
or about October 8, 1998.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. Valuation of Investments Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.
B. Investment Income and Expenses Investment income consists of interest
accrued and discount earned (including both original issue and market discount),
adjusted for amortization of premium, on the investments of the Portfolio,
accrued ratably to the date of maturity, plus or minus net realized gain or
loss, if any, on investments. Expenses of the Portfolio are accrued daily.
C. Federal Income Taxes The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.
D. Fees Paid Indirectly The Portfolio's custodian bank calculates its fees
based on the Portfolio's average daily net assets. The fee is reduced according
to a fee arrangement, which provides for custody fees to be reduced based on a
formula developed to measure the value of cash deposited with the custodian by
the Portfolio. This amount is shown as a reduction of expenses on the Statement
of Operations.
E. Other Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.
2. INVESTMENT ADVISORY FEES AND ADMINISTRATIVE FEES
A. Investment Advisory Fee The Investment advisory fees paid to Citibank, as
compensation for overall investment management services, amounted to $1,289,761,
of which $711,411 was voluntarily waived for the year ended August 31, 1998.
The investment advisory fee is computed at an annual rate of 0.15% of the
Portfolio's average daily net assets.
B. Administrative Fees Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is accrued daily
and paid monthly at the annual rate of 0.05% of the Portfolio's average daily
net assets. The Administrative fees amounted to $429,920, all of which was
voluntarily waived for the year ended August 31, 1998. The Portfolio pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the
Portfolio from the Administrator or its affiliates. Certain of the officers and
a Trustee of the Portfolio are officers and a director of the Administrator or
its affiliates.
3. INVESTMENT TRANSACTIONS Purchases, maturities and sales of U.S. Treasury
obligations, aggregated $7,644,183,016 and $7,672,254,966 respectively, for the
year ended August 31, 1998.
4. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1998, the commitment fee allocated to the Portfolio was $2,987. Since
the line of credit was established, there have been no borrowings.
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS OF
U.S. TREASURY RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of U.S. Treasury Reserves Portfolio (a
New York Trust) as of August 31, 1998, the related statement of operations for
the year then ended, the statement of changes in net assets for the years ended
August 31, 1998 and 1997, and the financial highlights for each of the years in
the five-year period ended August 31, 1998. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on the financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1998, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of U.S. Treasury
Reserves Portfolio at August 31, 1998, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
Small Cap Stocks
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
International Stocks
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
Growth with Income
o CitiFunds Balanced Portfolio
Bonds
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio*
o CitiFunds National Tax Free Income Portfolio
Money Markets
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
Premium Money Markets
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium U.S. Treasury Reserves
Institutional Money Markets
o CitiFunds Institutional Liquid Reserves
o CitiFunds Institutional U.S. Treasury Reserves
o CitiFunds Institutional Tax Free Reserves
o CitiFunds Institutional Cash Reserves
This report is prepared for the information of shareholders.
It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus.
*Purchase orders will be accepted beginning November 2, 1998.
For more information contact your Service Agent or call
1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(c) 1998 Citicorp [recycle logo] Printed on recycled paper CFA/INS.US/898
<PAGE>
Annual Report August 31, 1998
[LOGO]
Institutional
Tax Free Reserves
MONEY MARKETS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
................................................................................
Portfolio Environment and Outlook 2
................................................................................
Fund Facts 3
................................................................................
Fund Performance 4
................................................................................
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
Statement of Assets and Liabilities 5
................................................................................
Statement of Operations 5
................................................................................
Statement of Changes in Net Assets 6
................................................................................
Financial Highlights 6
................................................................................
Notes to Financial Statements 7
................................................................................
Independent Auditors' Report 10
................................................................................
TAX FREE RESERVES PORTFOLIO
Portfolio of Investments 11
................................................................................
Statement of Assets and Liabilities 19
................................................................................
Statement of Operations 19
................................................................................
Statement of Changes in Net Assets 20
................................................................................
Financial Highlights 20
................................................................................
Notes to Financial Statements 21
................................................................................
Independent Auditors' Report 23
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 12-month period ended August 31, 1998 saw a continuation of the positive
economic conditions that have prevailed over the past three years. Late in the
period, however, heightened volatility caused the stock market to retrace its
gains for the year.
Such volatility suggests that tax-exempt money market securities may once
again be poised to demonstrate their true value as relatively safer investments
where investors seek to protect their principal and earn interest that is free
from federal income taxes. In our view, CitiFundsSM Institutional Tax Free
Reserves can play a valuable role in investors' diversified investment
portfolios.
As you have probably heard, Citicorp announced its intention to merge with
The Travelers Group. The merger is expected to occur on or about October 8,
1998. As necessary, we will provide you with information that specifically
affects the fund.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 21, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
YIELDS ON MONEY MARKET INSTRUMENTS ENDED THE 12-MONTH REPORTING PERIOD LOWER
THAN WHERE THEY BEGAN, reflecting the general trend of short-term interest
rates. That decline was interrupted, however, during the first quarter of 1998,
which saw an increase in short-term interest rates amid uncertainty over the
economic effects of the financial crisis in Asia. When evidence emerged early in
the year that U.S. economic growth was stronger than most analysts expected,
interest rates rose in anticipation of a move by the Federal Reserve Board to a
more restrictive monetary policy.
Such a move never took place, however, because of the absence of inflationary
pressures. During the second and third quarters of 1998, it became clearer that
the Asian crisis was, in fact, negatively affecting U.S. corporate earnings and
dampening U.S. economic growth. In effect, lower demand for U.S. goods from
overseas markets and improved competitive positions for Asian companies
constrained sales and earnings of U.S. exporters. As a result, fixed-income
investors became more confident that the Federal Reserve would maintain
short-term interest rates at current levels, and money market yields settled
back to their previous lows.
In this economic environment, yields of short-term municipal securities
generally tracked the movements of yields of comparable U.S. Treasury bills.
However, the market also responded to its own unique influences, most notably
changes in the supply of newly issued securities. While issuance of longer-term
municipal securities increased, the short end of the market saw a reduction of
supply relative to one year ago. Favorable economic conditions, attractive rates
in the longer end of the market and improved fiscal operations appear to have
reduced the need for municipalities to finance their operating and capital needs
with short-term debt. As a result, the diminished supply of new municipal notes
that came to market in 1998 was quickly absorbed by tax-exempt money market
funds.
The relative shortage of short-term municipal notes was offset by increased
issuance of tax-exempt variable-rate demand notes (VRDNs), which are securitized
and issued by investment banks. As these "floaters" saturated the market, they
became the most attractive alternative for investors seeking competitive yields
from short-term tax-exempt securities.
AS NOTES IN THE PORTFOLIO MATURED, WE REINVESTED THE PROCEEDS IN VRDNS to
take advantage of their higher yields. As a result, the portfolio's average
maturity declined from about 50 days at the start of the 12-month reporting
period to as low as 35 days. By mid-1998, VRDNs comprised approximately 70% of
the portfolio, with the remainder allocated among conventional notes and
commercial paper. In July, when calls and redemptions of many tax-exempt notes
made more cash available for reinvestment, increased demand for higher yielding
tax-exempt money market securities caused rates to decline further. This reduced
the yield advantage of longer-dated money market securities over shorter term
securities. Accordingly, we found no reason to extend the average maturity of
the portfolio by buying longer-dated notes.
WE BELIEVE SHORT-TERM INTEREST RATES ARE LIKELY TO REMAIN NEAR CURRENT LEVELS
FOR THE REMAINDER OF THE YEAR. If economic growth continues to moderate in the
fourth quarter of 1998, as we expect, the Federal Reserve Board will have little
reason to raise short-term interest rates, which they might otherwise do to
forestall a reacceleration of inflation. In our opinion, the opposite is the
more likely scenario: if the economy continues to slow, the Federal Reserve
Board may eventually reduce short-term interest rates modestly in order to
provide an economic stimulus.
In the meantime, we remain encouraged by the strength of the short-term
municipal securities market. In our analysis, the nation's municipalities are
more fiscally sound than at any other time in recent memory. Even cities and
towns that had persistent financial problems just a few years ago appear to be
economically healthier. If this favorable credit environment continues, it
should help us continue to deliver competitive after-tax returns consistent with
capital preservation to our shareholders.
FUND FACTS
FUND OBJECTIVE
Provide high levels of current income which is exempt from Federal income
taxes,* preservation of capital and liquidity
INVESTMENT ADVISER, DIVIDENDS
TAX FREE RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
May 21, 1997 Distributed annually, if any
NET ASSETS AS OF 8/31/98 BENCHMARKS
$207.3 million o Lipper Institutional Tax Exempt
Money Funds Average
o IBC Institutional Tax Free Funds
Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE MAY 21, 1997
ALL PERIODS ENDED AUGUST 31, 1998 YEAR INCEPTION*
- ----------------------------------------------------------------------------
CitiFunds Institutional Tax Free Reserves 3.49% 3.51%
Lipper Institutional Tax Exempt Money Funds Average 3.31% 3.32%+
* Average Annual Total Return
+ From 5/31/97
7-DAY YIELDS
Annualized Current 3.25%
Effective 3.30%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized the
income earned by the investment during that seven day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
IMPORTANT TAX INFORMATION -- For the fiscal year ended August 31, 1998 the Fund
paid $0.03440 per share to shareholders from net investment income. For such
period, the Fund designated all dividends paid as exempt-interest dividends.
Thus, 100% of these distributions were exempt from Federal income tax. In
addition, 12.7% of the dividends were derived from income earned from certain
government obligations which may be subject to the Federal Alternative Minimum
Tax (AMT).
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL TAX FREE
RESERVES VS. IBC INSTITUTIONAL TAX FREE FUNDS AVERAGE
As illustrated, CitiFunds Institutional Tax Free Reserves provided a similar
annualized seven-day yield to that of a comparable IBC Money Fund Average, as
published in IBC Money Fund ReportTM, for the one year period.
CitiFunds IBC Institutional
Institutional Tax Free
Tax Free Funds
Reserves Average
9/02/97 3.21 3.17
4/11/97 3.49 3.36
1/06/98 3.64 3.52
3/10/98 3.30 3.16
5/12/98 3.62 3.44
7/14/98 3.15 2.95
8/31/98 3.25 3.09
Notes: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns
would have been lower.
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investment in Tax Free Reserves Portfolio, at value (Note 1) $207,725,160
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 15,000
Dividends payable 345,371
Accrued expenses and other liabilities 53,614
- --------------------------------------------------------------------------------
Total liabilities 413,985
- --------------------------------------------------------------------------------
NET ASSETS for 207,307,926 shares of beneficial interest
outstanding $207,311,175
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $207,307,926
Accumulated net realized gain 3,249
- --------------------------------------------------------------------------------
Total $207,311,175
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- -------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1A)
Income from Tax Free Reserves Portfolio $3,802,717
Allocated expenses from Tax Free Reserves Portfolio (155,662)
- -------------------------------------------------------------------------------
$3,647,055
EXPENSES:
Administrative fees (Note 3A) 361,870
Shareholder Servicing Agents' fees (Note 3B) 103,392
Distribution fees (Note 4) 103,392
Registration fees 39,237
Shareholder reports 31,539
Custody and fund accounting fees 18,975
Audit fees 16,900
Transfer agent fees 12,027
Legal fees 6,399
Trustees' fees 5,401
Miscellaneous 4,844
- -------------------------------------------------------------------------------
Total expenses 703,976
Less aggregate amounts waived by Administrator,
Shareholder Servicing Agents, and Distributor
(Notes 3A, 3B and 4) (568,654)
Expenses assumed by the Administrator (Note 7) (33,130)
- -------------------------------------------------------------------------------
Net expenses 102,192
- -------------------------------------------------------------------------------
Net investment income 3,544,863
NET REALIZED GAIN ON INVESTMENTS FROM TAX FREE
RESERVES PORTFOLIO 3,249
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,548,112
===============================================================================
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
MAY 21, 1997
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
AUGUST 31, 1998 AUGUST 31, 1997
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,544,863 $ 547,499
Net realized gain on investments 3,249 --
- -------------------------------------------------------------------------------
Net increase in net assets from operations 3,548,112 547,499
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,544,863) (547,499)
- -------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
AT NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares 426,509,070 129,951,030
Net asset value of shares issued to
shareholders from reinvestment of dividends 1,493,140 305,207
Cost of shares repurchased (280,741,925) (70,208,596)
- -------------------------------------------------------------------------------
Net increase in net assets from transactions
in shares of beneficial interest 147,260,285 60,047,641
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 147,263,534 60,047,641
NET ASSETS:
Beginning of period 60,047,641 --
- -------------------------------------------------------------------------------
End of period $ 207,311,175 $ 60,047,641
===============================================================================
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
MAY 21, 1997
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
AUGUST 31, 1998 AUGUST 31, 1997
- -------------------------------------------------------------------------------
Net Asset Value, beginning of period $ 1.00000 $ 1.00000
Net investment income 0.03440 0.00984
Less dividends from net investment income (0.03440) (0.00984)
- -------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00000 $ 1.00000
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 207,311 $ 60,048
Ratio of expenses to average net assets+ 0.25% 0.25%*
Ratio of net investment income to average net
assets+ 3.43% 3.47%*
Total return 3.49% 0.99%**
Note: If agents of the Fund and agents of Tax Free Reserves Portfolio had not
waived all or a portion of their fees and Administrator had not voluntarily
assumed expenses during the period indicated, the net investment income per
share and the ratios would have been as follows:
Net investment income per share $ 0.02718 $ 0.00729
RATIOS:
Expenses to average net assets+ 0.97% 1.15%*
Net investment income to average net
assets+ 2.71% 2.57%*
===============================================================================
+ Includes the Fund's share of Tax Free Reserves Portfolio's allocated
expenses.
* Annualized
** Not Annualized
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Institutional Tax Free Reserves
(the "Fund") is a separate non-diversified series of CitiFunds Institutional
Trust (the "Trust"), a Massachusetts business trust. The Trust is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. Effective January 2, 1998 Landmark Institutional Tax Free
Reserves changed its name to CitiFunds Institutional Tax Free Reserves. The
Trust also changed its name from Landmark Institutional Trust to CitiFunds
Institutional Trust. The Fund invests all of its investable assets in Tax Free
Reserves Portfolio (the "Portfolio"), a management investment company for which
Citibank, N.A. ("Citibank") serves as Investment Adviser. Citibank is a
wholly-owned subsidiary of Citicorp. Citicorp announced its intention to merge
with The Travelers Group. The merger is expected to occur on or about October 8,
1998.
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.
The Trust seeks to achieve the Fund's investment objective of a high level of
current income which is exempt from federal income taxes, consistent with
preservation of capital and liquidity, by investing all of its investable assets
in the Portfolio, an open-end, non-diversified management investment company
having the same investment objective as the Fund. The value of such investment
reflects the Fund's proportionate interest (approximately 28.7% at August 31,
1998) in the net assets of the Portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The 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 in
conformity with generally accepted accounting principles and are as follows:
A. Investment Income The Fund earns income, net of Portfolio expenses, daily
on its investment in the Portfolio.
B. Federal Taxes The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders all of its net investment income. Accordingly, no
provision for federal income or excise tax is necessary. Dividends paid by the
Fund from net interest received on tax-exempt money market instruments are not
includable by shareholders as gross income for federal income tax purposes
because the Fund intends to meet certain requirements of the Internal Revenue
Code applicable to regulated investment companies which will enable the Fund to
pay exempt-interest dividends. The portion of such interest, if any, earned on
private activity bonds issued after August 7, 1986, may be considered a tax
preference item to shareholders.
C. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 12:00
noon, Eastern standard time, and all of the net income of the Fund so determined
is declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
3. ADMINISTRATIVE SERVICES PLAN The Fund has adopted an Administrative Services
Plan which provides that the Trust, on behalf of each Fund, may obtain the
services of an Administrator, one or more Shareholder Servicing Agents, and
other Servicing Agents, and may enter into agreements providing for the payment
of fees for such services. Under the Trust's Administrative Services Plan, the
aggregate of the fee paid to the Administrator from the Fund and the fees paid
to the Shareholder Servicing Agents from the Fund may not exceed 0.45% of the
Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year. For the year ended August 31, 1998, Management agreed
to voluntarily limit Fund expenses to 0.25%.
A. Administrative Fees Under the terms of an Administrative Services
Agreement, CFBDS is entitled to an administrative fee, as compensation for
overall administrative services and general office facilities, which is computed
at the annual rate of 0.35% of the Fund's average daily net assets.
Administrative fees amounted to $361,870, all of which was voluntarily waived
for the year ended August 31, 1998. Citibank acts as Sub-Administrator and
performs such duties and receives such compensation from CFBDS as from time to
time is agreed to by CFBDS and Citibank. The Fund pays no compensation directly
to any Trustee or any officer who is affiliated with the Administrator, all of
whom receive remuneration for their services to the Fund from the Administrator
or its affiliates. Certain of the officers and a Trustee of the Fund are
officers and a director of the Administrator or its affiliates.
B. Shareholder Servicing Agent Fees The Trust, on behalf of the Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent pursuant to which that Shareholder Servicing Agent acts as an agent for
its customers and provides other related services. For their services, each
Shareholder Servicing Agent receives a fee from the Fund, which may be paid
periodically, but may not exceed, on an annualized basis, an amount equal to
0.10% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors for whom such
Shareholder Servicing Agent maintains a servicing relationship. The Shareholder
Servicing Agent fees amounted to $103,392, all of which was voluntarily waived
for the year ended August 31, 1998.
4. DISTRIBUTION FEE 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 of the Fund. The distribution fees
amounted to $103,392, all of which was voluntarily waived for the year ended
August 31, 1998.
5. SHARE OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional Shares of Beneficial Interest
(without par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $407,508,837 and $263,554,442, respectively, for the
year ended August 31, 1998.
7. ASSUMPTION OF EXPENSES CFBDS has voluntarily agreed to pay a portion of the
unwaived expenses of the Fund for the year ended August 31, 1998, which amounted
to $33,130.
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES:
We have audited the accompanying statement of assets and liabilities of
CitiFunds Institutional Tax Free Reserves, a separate series of CitiFunds
Institutional Trust (the "Trust") (a Massachusetts business trust), as of August
31, 1998, the related statements of operations for the year then ended, the
statement of changes in net assets for the year ended August 31, 1998 and for
the period from May 21, 1997 (commencement of operations) to August 31, 1997,
and the financial highlights for the year ended August 31, 1998 and for the
period from May 21, 1997 (commencement of operations) to August 31, 1997. The
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of CitiFunds
Institutional Tax Free Reserves at August 31, 1998, the results of its
operations, the changes in its net assets, and its financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1998
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------------------
TAX-EXEMPT COMMERCIAL PAPER -- 3.1%
- -------------------------------------------------------------------------------
Dallas, Texas, 3.55% due 10/15/98 $ 6,140 $ 6,140,000
Houston, Texas, Airport System Revenue, AMT,
3.55% due 11/17/98 3,000 3,000,000
Montgomery County, Pennsylvania,
Municipal Securities Trust Certificates,
3.77% due 10/05/98 10,000 10,000,000
Venango, Pennsylvania, Industrial Development
Revenue, AMT, 3.55% due 11/16/98 3,300 3,300,000
------------
22,440,000
------------
GENERAL OBLIGATION BONDS AND NOTES -- 3.3%
- --------------------------------------------
Broward County, Florida, School District,
7.125% due 2/15/99 150 155,155
Chicago, Illinois, 3.55% due 10/29/98 7,200 7,199,745
Chicago, Illinois, 3.65% due 12/03/98 2,500 2,500,000
Chicago, Illinois, 3.55% due 2/04/99 5,000 4,999,041
Clark County, Ohio, 4.20% due 4/01/99 490 491,096
Dade County, Florida, School District,
7.10% due 7/01/99 1,000 1,048,583
Georgia State, 7.70% due 2/01/99 2,165 2,201,580
Georgia State, 6.30% due 3/01/99 2,000 2,026,745
Honolulu, Hawaii, 6.90% due 10/01/98 1,025 1,042,958
Houston, Texas, 6.50% due 2/01/99 1,000 1,011,913
Mecklenburg County, North Carolina,
4.70% due 3/01/99 1,025 1,030,683
Seattle, Washington, 4.50% due 9/01/98 465 465,000
------------
24,172,499
------------
- -------------------------------------------------------------------------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS) -- 12.5%
- -------------------------------------------------------------------------------
Austin, Texas, Utilities System Revenue,
7.25% due 11/15/98 $ 300 $ 307,960
Brazos River, Texas Harbor, 6.50% due 8/15/99 350 358,733
Charlotte, North Carolina, Certificates of
Participation, 4.00% due 9/01/98 1,000 1,000,000
Chicago, Illinois, Metropolitan Water
Reclamation District, 7.25% due 1/01/99 1,200 1,213,726
Chicago, Illinois, Public Building Commercial
Revenue, 7.75% due 1/01/99 1,530 1,579,696
Clark County, Kentucky, Pollution Control
Revenue, 3.60% due 10/15/98 7,500 7,500,000
Cobb County, Georgia, School District,
4.00% due 12/31/98 1,500 1,501,246
Colorado Springs, Colorado, Utilities Revenue,
5.40% due 11/15/98 1,315 1,319,598
Dade County, Florida, Water and Sewer System
Revenue, 4.50% due 10/01/98 350 350,180
Dade County, Florida, Water and Sewer System
Revenue, 12.00% due 10/01/98 2,000 2,013,079
East Stroudsburg, Pennsylvania,
4.50% due 11/15/9 1,000 1,001,785
Florida State, Dividend Bond Financial
Department, 5.00% due 7/01/99 4,900 4,963,832
Fort Smith, Arizona, Sales and Use Tax,
4.00% due 12/01/98 480 480,000
Hamilton, Ohio, Electric System Revenue,
8.00% due 10/15/98 400 410,035
Hawaii State, Airports System Revenue,
5.40% due 7/01/99 1,000 1,015,410
Illinois State, Health Facilities Authority
Revenue, 7.25% due 4/01/99 500 519,233
Illinois State, Sales Tax Revenue,
7.00% due 6/15/99 1,000 1,045,889
Indianapolis, Illinois, Airport Authority
Revenue, 5.00% due 7/01/99 250 252,420
Intermountain Power Agency Revenue,
5.50% due 7/01/99 1,000 1,015,770
Jonesboro, Arkansas, Sales and Use Tax,
3.90% due 11/15/98 1,000 1,000,000
Louisiana Public Facilities Authority,
4.40% due 12/10/98 4,000 4,006,011
Marion County, Tennessee, Industrial
Environmental, AMT, 3.65% due 2/01/99 2,500 2,500,000
Maryland State Department of Transportation,
6.375% due 11/01/98 2,000 2,009,227
Maryland State Department of Transportation,
6.80% due 11/15/98 1,000 1,021,369
Massachusetts State Health and Educational
Facilities, 7.25% due 12/01/98 500 514,142
Massachusetts State Health and Educational
Facilities, 7.375% due 12/01/98 1,995 2,052,265
Mecklenburg County, North Carolina,
6.20% due 1/01/99 1,000 1,008,451
Michigan State, Building Authority Revenue,
4.00% due 10/15/98 575 575,243
Michigan State, Trunk Line, 7.00% due 8/15/99 1,500 1,577,474
Michigan State, Underground Storage,
5.00% due 5/01/99 3,000 3,029,820
Milwaukee, Wisconsin, Metro Sewer District,
6.50% due 10/01/98 1,000 1,002,313
Minnesota Water Pollution Control
Revenue, 5.00% due 3/01/99 2,170 2,184,711
Nashville, Tennessee, Health and Educational
Facilities, 3.75% due 1/15/99 4,000 4,000,000
New Berlin, Wisconsin, 4.50% due 12/01/98 1,105 1,106,999
Newport News, Virginia, 6.875% due 12/01/98 1,700 1,751,699
North Little Rock, Arkansas, Industrial
Development, 3.358% due 2/01/99 750 750,000
Ohio State Public Facilities Authority,
4.50% due 11/01/98 5,000 5,007,297
Ohio State Public Facilities Authority,
5.00% due 11/01/98 1,000 1,002,110
Oklahoma State Water Resource Board State
Loan Revenue, 3.55% due 9/01/98 4,425 4,425,000
Orlando, Florida, Waste Water System Revenue,
5.00% due 10/01/98 300 300,262
Port Seattle, Washington, AMT,
4.80% due 5/01/99 1,400 1,410,390
Pulaski County, Kentucky, Solid Waste
Disposal Revenue, AMT, 3.60% due 2/15/99 4,800 4,800,000
San Antonio, Texas, 8.00% due 8/01/99 1,000 1,039,440
Washington D.C., Airport Authority
Revenue, AMT, 6.80% due 10/01/98 1,000 1,002,409
Washington State, 7.70% due 12/01/98 1,000 1,009,703
Washington State, Housing Finance
Community, AMT, 3.90% due 12/15/98 310 310,000
Washington State, Public Power Supply,
6.00% due 7/01/99 1,525 1,555,217
Washington State, Public Power Supply,
7.50% due 7/01/99 450 472,343
Washington Suburban Sanitation District,
7.00% due 12/01/98 2,500 2,544,243
Western Minnesota Municipal Power Supply Agency,
10.25% due 1/01/99 600 612,674
York County, South Carolina, Pollution
Control, 3.50% due 9/15/98 7,000 7,000,000
------------
90,429,404
------------
REVENUE, TAX, BOND AND TAX
REVENUE ANTICIPATION NOTES -- 2.0%
- -------------------------------------------------------------------------------
Butts County, Georgia, School District,
3.85% due 9/01/98 1,390 1,390,000
Iowa State School Cash Anticipation
Program, 4.25% due 1/28/99 5,970 5,986,016
Kentucky, TRAN'S, 4.50% due 6/25/99 2,800 2,822,268
Michigan State, TRAN'S, 4.50% due 9/30/98 4,500 4,503,133
------------
14,701,417
------------
VARIABLE RATE DEMAND NOTES* -- 78.9%
- -------------------------------------------------------------------------------
ABN Amaro Munitops Certificates Trust,
due 4/05/06 5,000 5,000,000
ABN Amaro Munitops Certificates Trust, AMT,
due 7/05/06 2,000 2,000,000
Alexandria, Virginia, Industrial Development
Authority, due 7/01/26 1,300 1,300,000
Allegheny County, Pennsylvania Industrial
Development, due 7/01/27 2,400 2,400,000
Allegheny County, Pennsylvania Sanitation
Authority Sewer, due 12/01/24 7,000 7,000,000
Allendale County, South Carolina, Industrial
Revenue, due 8/01/01 3,900 3,900,000
Arapahoe County, Colorado, Revenue Authority,
due 7/01/07 1,955 1,955,000
Ashe County, North Carolina, Industrial
Facilities and Pollution, due 7/01/10 2,100 2,100,000
Atlanta, Georgia, Railroad Transit, AMT,
due 7/01/10 2,300 2,300,000
Beloit, Kansas, Industrial Development
Authority, AMT, due 12/01/16 3,100 3,100,000
Bexar County, Texas, Health Facilities
Development, due 7/11/11 915 915,000
Bexar County, Texas, Housing Finance Authority,
due 9/15/26 1,900 1,900,000
Brooks County, Georgia, Development Authority
Revenue, due 3/01/18 2,000 2,000,000
California Pollution Control Financing,
due 10/01/11 600 600,000
Capital Projects Financial Authority Revenue,
due 8/01/17 1,700 1,700,000
Capital Projects Financial Authority Revenue,
due 7/01/27 3,300 3,300,000
Carrollton, Georgia, Payroll Development
Authority, due 3/01/15 1,750 1,750,000
Carthage, Missouri, Industrial Development
Authority Revenue, due 4/01/07 2,000 2,000,000
Carthage, Missouri, Industrial Development
Authority Revenue, AMT, due 9/01/30 2,000 2,000,000
Cherokee County, South Carolina, Industrial
Revenue, AMT, due 8/01/19 200 200,000
Chicago, Illinois, due 1/01/27 23,900 23,900,000
Clarksville, Tennessee, Public Building
Authority, due 10/01/25 980 980,000
Clayton County, Georgia, Housing Authority,
due 1/01/21 865 865,000
Clipper Tax Exempt Trust, AMT, due 3/01/15 3,035 3,035,000
Clipper Tax Exempt Trust, AMT, due 3/01/16 3,500 3,500,000
Colorado Health Facilities Authority Revenue,
due 2/01/22 15,995 15,995,000
Colorado Housing Finance Authority, due 2/15/28 2,000 2,000,000
Columbus, Georgia, Housing Authority
Revenue, due 11/01/17 850 850,000
Connecticut State, due 3/15/12 2,000 2,000,000
Connecticut State, Health & Educational
Facilities, due 7/01/27 1,500 1,500,000
Coweta County, Georgia, Pollution Development
Authority, due 9/01/26 1,600 1,600,000
Crossett, Arizona, Pollution Control Revenue,
due 10/01/98 3,500 3,500,000
Dallas, Fort Worth, Texas, Regional
Airport, AMT, due 11/01/23 1,000 1,000,000
Dauphin County, Pennsylvania, General Authority
Revenue, due 10/01/27 5,000 5,000,000
Davidson County, North Carolina, Industrial
Facilities, due 7/01/20 2,140 2,140,000
De Kalb County, Georgia, Industrial Development
Revenue, due 8/01/00 1,500 1,500,000
De Kalb County, Georgia, Industrial
Development Revenue, due 2/01/18 1,100 1,100,000
De Kalb County, Georgia, Multifamily Housing
Revenue, due 6/01/25 4,300 4,300,000
District of Columbia, due 6/01/03 400 400,000
District of Columbia, Housing Mortgage Revenue,
due 6/01/28 8,100 8,100,000
District of Columbia, Revenue, due 10/01/15 500 500,000
Effingham County, Georgia, Development Authority,
due 4/01/37 2,400 2,400,000
Eloy, Arizona, Industrial Development Authority
Revenue, AMT, 8/01/20 1,000 1,000,000
Farmington, New Mexico, Pollution Control
Revenue, 12/01/16 7,000 7,000,000
Fayetteville, Arkansas, Industrial
Development, AMT, due 12/01/04 1,100 1,100,000
Forsyth County, Georgia, Industrial
Development Revenue, due 1/01/07 2,000 2,000,000
Fort Wayne, Indiana, Economic Development
Revenue, due 12/01/03 1,000 1,000,000
Fort Wayne, Indiana, Hospital Authority Revenue,
due 1/01/16 1,000 1,000,000
Fulton County, Georgia, Development Authority,
due 12/01/12 5,000 5,000,000
Fulton County, Georgia, Development Authority
Revenue, due 2/01/18 2,000 2,000,000
Fulton County, Georgia, Industrial Development
Authority, AMT, due 6/01/27 500 500,000
Gage County, Nevada, Industrial Development
Revenue, AMT, due 10/10/17 1,000 1,000,000
Garfield County, Oklahoma, Industrial
Authority, AMT, due 10/01/15 1,000 1,000,000
Gila County, Arizona, Industrial Development
Authority, due 11/01/25 1,865 1,865,000
Gordon County, Georgia, Industrial Development
Authority Revenue, due 8/01/17 1,000 1,000,000
Grant Parish, Louisiana, Industrial Development
Revenue, AMT, due 10/01/21 1,000 1,000,000
Grapevine, Texas, Industrial Development Corp.
Revenue, due 12/01/24 1,200 1,200,000
Green River, Wyoming, Pollution Control
Revenue, AMT, due 10/01/18 400 400,000
Gulf Breeze, Florida, Revenue, due 3/31/21 4,825 4,825,000
Gwinett County, Georgia, Industrial Development
Revenue, due 6/01/05 1,500 1,500,000
Gwinett County, Georgia, Industrial Development
Revenue, due 3/01/17 700 700,000
Halifax County, North Carolina, Industrial
Facilities, AMT, due 12/01/19 1,500 1,500,000
Henderson, Nevada, Health Care Facilities
Revenue, due 7/01/20 700 700,000
Hernando County, Florida, Industrial Development
Revenue, due 12/01/04 4,550 4,550,000
Illinois Development, due 11/01/17 2,725 2,725,000
Illinois Health Facilities Authority Revenue,
due 11/01/20 1,600 1,600,000
Inland, Florida, Protection Financial Corp.,
due 1/01/04 4,320 4,320,000
Jackson, Mississippi, Industrial Development
Revenue, due 12/01/15 2,650 2,650,000
Jasper County, Missouri, Industrial Development
Authority, AMT, due 10/01/27 1,000 1,000,000
Jefferson Parish, Louisiana, Hospital
District 2, due 12/01/15 2,700 2,700,000
Johnson City, Tennessee Health, due 10/27/99 5,000 5,000,000
Kansas City, Missouri, Industrial Development
Hospital, due 4/15/15 500 500,000
Kentucky Economic Development Finance
Authority, due 11/01/20 3,000 3,000,000
Kentucky State Turnpike Authority, Resource
Recovery, due 7/01/03 8,690 8,690,000
Knox County, Tennessee, Health Educational
Hospital Facilities, due 12/01/27 8,000 8,000,000
Knox County, Tennessee, Industrial Development
Board Revenue, AMT, due 10/01/00 1,400 1,400,000
Kohler, Wisconsin, Industrial Sewer
Facilities, AMT, due 9/01/17 4,000 4,000,000
Long Island Power Authority, due 5/01/33 4,100 4,100,000
Louisa County, Virginia, Industrial Development
Authority, due 1/01/20 900 900,000
Louisiana Housing Finance Agency Mortgage
Revenue, AMT, due 6/01/27 5,390 5,390,000
Macon, Trust Pooled Receipts, due 3/03/07 33,460 33,460,000
Madison, Wisconsin, Community Development
Authority, due 6/01/22 1,105 1,105,000
Marshfield, Wisconsin, Industrial Development
Revenue, due 12/01/14 2,500 2,500,000
Mason County, Kentucky, Pollution Control,
due 10/15/14 2,950 2,950,000
Massachusetts State Turnpike Authority,
due 1/01/17 80 80,000
Mecklenburg County, North Carolina, Industrial
Facilities, due 9/01/14 2,000 2,000,000
Mississippi Home Corp., Single Family,
due 11/01/29 3,305 3,305,000
Mississippi Home Corp., Single Family, AMT,
due 6/01/28 3,485 3,485,000
Missouri State, Health and Educational
Facilities Revenue, due 7/01/18 3,700 3,700,000
Missouri State, Health and Educational
Facilities Revenue, due 8/15/21 1,100 1,100,000
Moorhead, Minnesota, Solid Waste Disposal, AMT,
due 4/01/12 3,000 3,000,000
Morgan Keegan Municipal Productions, AMT,
due 5/06/99 3,685 3,685,000
Multi-State Municipal Securities Trust
Certificates, due 3/01/01 9,140 9,140,000
Multi-State Municipal Securities Trust
Certificates, due 12/01/03 8,380 8,380,000
Municipal Tax Exempt Trust Receipts
due 10/01/30 14,500 14,500,000
Municipal Tax Exempt Trust Receipts due 10/01/32 17,250 17,250,000
Nash County, North Carolina, due 12/01/14 1,000 1,000,000
Nashville, Tennessee, due 5/15/25 6,450 6,450,000
Nevada Business & Industry Development
Revenue, AMT, due 8/01/20 910 910,000
New Hampshire Highway, Educational and Health
Facilities, due 6/01/23 5,945 5,945,000
New Hampshire State Industrial Development
Authority, AMT, due 1/01/18 1,325 1,325,000
New Hanover County, North Carolina, due 3/01/14 2,250 2,250,000
New Jersey Economic Development Authority, AMT,
due 12/15/98 6,000 6,000,000
New York MTA Trust Receipts, due 1/01/18 2,400 2,400,000
New York MTA Trust Receipts, due 1/01/22 1,600 1,600,000
New York State, due 7/01/15 1,000 1,000,000
New York State, due 2/01/19 1,125 1,125,000
New York State, due 8/01/19 1,300 1,300,000
New York State, due 8/01/20 2,100 2,100,000
New York State, due 8/01/21 2,600 2,600,000
New York State Medical Care Facilities
Finance Authority, due 8/15/22 1,000 1,000,000
North Carolina Medical Care Hospital Authority,
due 10/01/13 200 200,000
North Little Rock, Arkansas, Health Facilities,
due 12/01/21 1,700 1,700,000
Oak Creek, Wisconsin, Industrial Development
Authority, due 12/01/07 1,700 1,700,000
Ohio Housing Finance Agency Revenue, AMT,
due 3/01/99 6,000 6,000,000
Orange County, Florida, Industrial Development
Authority, due 1/01/11 450 450,000
Peoria, Illinois, Health Care Facilities Revenue,
due 5/01/17 1,380 1,380,000
Person County, North Carolina, Pollution
Control Authority, due 11/01/19 3,000 3,000,000
Philadelphia, Pennsylvania, Airport Revenue,
due 6/15/10 3,915 3,915,000
Piedmont, South Carolina, Municipal Power
Agency, due 1/01/25 4,700 4,700,000
Pinal County, Arizona, Pollution Control
Revenue, due 12/01/09 1,200 1,200,000
Pinellas County, Florida, Health Facilities
Authority, due 12/01/15 1,000 1,000,000
Pitney Bowes Corp., due 11/13/02 1,873 1,872,640
Pitt County, North Carolina, Industrial
Facilities and Pollution, AMT,
due 5/01/18 3,000 3,000,000
Port Arthur, Texas, Navigation District,
due 10/01/24 300 300,000
Puerto Rico Electricity Power Authority,
due 7/01/22 1,200 1,200,000
Rhode Island State Industrial Facilities
Corp., AMT, due 6/01/05 3,850 3,850,000
Rhode Island State Industrial Facilities Corp.,
due 11/01/05 4,240 4,240,000
Richmond, Virginia, Redevelopment and Housing
Authority, due 11/01/05 5,355 5,355,000
Richmond, Virginia, Redevelopment and
Housing Authority, due 11/01/29 7,000 7,000,000
Roswell, Georgia, Multifamily
Housing Authority, due 8/01/27 2,500 2,500,000
Rutherford County, Tennessee, Industrial
Development, AMT, due 12/01/03 1,500 1,500,000
Saline County, Nebraska, Industrial Development
Revenue, AMT, due 10/01/11 1,000 1,000,000
Savannah, Illinois, Industrial Development
Revenue, due 6/01/04 600 600,000
Scotland County, North Carolina, Industrial
Facilities, AMT, due 5/01/18 1,350 1,350,000
Seattle, Washington, Municipal Lighting and
Power Revenue, due 11/01/18 900 900,000
Sevier County, Tennessee, Public Building
Authority, due 6/01/05 8,000 8,000,000
Sevier County, Tennessee, Public Building
Authority, due 6/01/12 2,590 2,590,000
Sevier County, Tennessee, Public Building
Authority, due 6/01/17 3,255 3,255,000
Sevier County, Tennessee, Public Building
Authority, due 6/01/21 3,400 3,400,000
Sevier County, Tennessee, Public Building
Authority, due 6/01/27 2,500 2,500,000
Shelby County, Tennessee, due 12/01/10 11,725 11,725,000
Sikeston, Missouri, Electricity Revenue
Authority, due 6/01/22 10,098 10,098,000
South Carolina Jobs Economic Development,
AMT, due 11/01/10 3,400 3,400,000
South Carolina Jobs Economic Development, AMT,
due 12/01/12 300 300,000
South Carolina Jobs Economic Development, AMT,
due 4/01/17 300 300,000
Southeastern Oklahoma Industrial Development
Authority, due 6/01/16 3,400 3,400,000
St. Charles Parish, Louisiana, Pollution
Revenue, due 3/01/24 10,725 10,725,000
State of Utah, General Obligations, AMT,
due 7/01/22 3,330 3,330,000
Tarrant County, Texas, Health Facilities
Development, due 2/15/17 8,700 8,700,000
Tarrant County, Texas, Health Facilities
Development, due 11/15/26 980 980,000
Texas State, due 10/01/02 4,950 4,950,000
Texas State, due 4/01/20 9,440 9,440,100
Texas State, Department of Housing
and Community, due 3/01/17 1,995 1,995,000
Texas State, Turnpike Authority, due 1/01/23 3,000 3,000,000
Tipton, Indiana, Economic Development Revenue,
due 7/01/22 1,045 1,045,000
Traill County, North Dakota, Industrial
Development, AMT, due 12/01/11 1,000 1,000,000
Traill County, North Dakota, Industrial
Development, AMT, due 12/11/11 1,000 1,000,000
Traill County, North Dakota, Solid Waste, AMT,
due 12/01/11 6,100 6,100,000
Utah State Board of Regents, due 11/01/25 900 900,000
Utah State Housing Finance Agency, due 7/01/22 1,245 1,245,000
Vermont Industrial Development Authority,
due 12/01/11 800 800,000
Walton County, Georgia, Industrial Building
Authority, due 10/01/00 1,050 1,050,000
Walton County, Georgia, Industrial Building
Authority, due 10/01/02 1,080 1,080,000
Walton County, Georgia, Industrial Building
Authority, due 10/01/17 700 700,000
Washington State Health Care Facilities
Revenue, due 1/01/18 5,540 5,540,000
Washington State Health Care Facilities
Revenue, due 1/01/23 200 200,000
Wayne Charter County, Michigan, Airport
Revenue, AMT, due 12/01/09 12,865 12,865,000
Whitfield County, Georgia, Development
Authority Revenue, AMT, due 11/01/17 1,000 1,000,000
Winchester, Kentucky, Industrial
Building, AMT, due 10/01/18 2,300 2,300,000
Wisconsin Housing and Economic Development,
due 9/01/26 3,870 3,870,000
------------
570,740,740
------------
TOTAL INVESTMENTS, AT AMORTIZED COST 99.8% 722,484,060
OTHER ASSETS, LESS LIABILITIES 0.2 1,374,345
---------------------------
NET ASSETS 100.0% $723,858,405
===========================
AMT-Subject to Alternative Minimum Tax
* Variable rate demand notes have a demand feature under which the fund could
tender them back to the issuer on no more than 7 day's notice.
See notes to financial statements.
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- -------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost and value (Note 1A) $722,484,060
Cash 58,305
Interest receivable 5,898,496
- -------------------------------------------------------------------------------
Total assets 728,440,861
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 4,465,364
Payable to affiliate -- Investment Advisory fees (Note 2A) 75,574
Accrued expenses and other liabilities 41,518
- -------------------------------------------------------------------------------
Total liabilities 4,582,456
- -------------------------------------------------------------------------------
NET ASSETS $723,858,405
- -------------------------------------------------------------------------------
REPRESENTED BY:
Capital paid-in for beneficial interests $723,858,405
===============================================================================
TAX FREE RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- ------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $21,440,138
EXPENSES:
Investment Advisory fees (Note 2A) $1,164,274
Administrative fees (Note 2B) 291,069
Custody and fund accounting fees 186,461
Audit fees 17,800
Trustees' fees 12,338
Legal fees 1,329
Miscellaneous 7,054
- ------------------------------------------------------------------------------
Total expenses 1,680,325
Less aggregate amounts waived by Investment
Advisor and Administrator (Notes 2A and 2B) (796,055)
Less fees paid indirectly (Note 1D) (11,532)
- ------------------------------------------------------------------------------
Net expenses 872,738
- ------------------------------------------------------------------------------
Net investment income 20,567,400
NET REALIZED GAIN ON INVESTMENTS 17,001
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,584,401
==============================================================================
See notes to financial statements
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------
1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 20,567,400 $ 14,529,341
Net realized gain on investments 17,001 4,286
- ---------------------------------------------------------------------------------------
Increase in net assets from operations 20,584,401 14,533,627
- ---------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 1,069,295,431 574,845,460
Value of withdrawals (849,651,201) (477,920,393)
- ---------------------------------------------------------------------------------------
Net increase in net assets from capital
transactions 219,644,230 96,925,067
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 240,228,631 111,458,694
NET ASSETS:
Beginning of period 483,629,774 372,171,080
- ---------------------------------------------------------------------------------------
End of period $ 723,858,405 $ 483,629,774
=======================================================================================
</TABLE>
TAX FREE RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's
omitted) $723,858 $483,630 $372,171 $394,222 $233,108
Ratio of expenses to average net assets 0.15% 0.19% 0.30% 0.32% 0.31%
Ratio of net investment income to
average net assets 3.53% 3.46% 3.31% 3.55% 2.33%
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees during
the periods indicated and the expenses were not reduced for fees paid indirectly for the
years after August 31, 1995, the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.29% 0.31% 0.32% 0.32% 0.32%
Net investment income to average net
assets 3.39% 3.35% 3.29% 3.55% 2.32%
=============================================================================================
</TABLE>
See notes to financial statements
<PAGE>
TAX FREE RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES Tax Free Reserves Portfolio (the "Portfolio")
is registered under the Investment Company Act of 1940, as amended, as a
no-load, non-diversified, open-end management investment company which was
organized as a trust under the laws of the State of New York. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio.
CFBDS, Inc. ("CFBDS"), (formerly Landmark Funds Broker-Dealer Services, Inc.)
acts as the Portfolio's Administrator. Citibank, N.A. ("Citibank") acts as the
Investment Adviser. Citibank is a wholly-owned subsidiary of Citicorp. Citicorp
announced its intention to merge with The Travelers Group. The merger is
expected to occur on or about October 8, 1998.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio
are as follows:
A. Valuation of Investments Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
The Portfolio's use of amortized cost is subject to the Portfolio's compliance
with certain conditions as specified under Rule 2a-7 of the Investment Company
Act of 1940.
B. Investment Income and Expenses Investment income consists of interest
accrued and discount earned (including both original issue and market discount),
adjusted for amortization of premium, on the investments of the Portfolio.
Expenses of the Portfolio are accrued daily.
C. Federal Income Taxes The Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for federal income taxes is necessary.
D. Fees Paid Indirectly The Fund's custodian bank calculates its fees based
on the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
E. Other Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
2. INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE
A. Investment Advisory Fee The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $1,164,274,
of which $504,986 was voluntarily waived for the year ended August 31, 1998. The
investment advisory fee is computed at the annual rate of 0.20% of the
Portfolio's average daily net assets.
B. Administrative Fee Under the terms of an Administrative Services
Agreement, the administrative fee payable to the Administrator, as compensation
for overall administrative services and general office facilities, is computed
at the annual rate of 0.05% of the Portfolio's average daily net assets and
amounted to $291,069, all of which was voluntarily waived for the year ended
August 31, 1998. The Portfolio pays no compensation directly to any Trustee or
any officer who is affiliated with the Administrator, all of whom receive
remuneration for their services to the Portfolio from the Administrator or its
affiliates. Certain of the officers and a Trustee of the Portfolio are officers
and a director of the Administrator or its affiliates.
3. INVESTMENT TRANSACTIONS Purchases, and maturities and sales of money market
instruments, exclusive of securities purchased subject to repurchase agreements,
aggregated $1,907,277,518 and $1,685,688,833, respectively, for the year ended
August 31, 1998.
4. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at August 31, 1998, for federal income tax purposes, amounted
to $722,484,060.
5. LINE OF CREDIT The Portfolio, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1998, the commitment fee allocated to the Portfolio was $1,924. Since
the line of credit was established, there have been no borrowings.
<PAGE>
TAX FREE RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS OF TAX FREE RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Tax Free Reserves Portfolio (a New
York Trust) as of August 31, 1998, the related statement of operations for the
year then ended, the statement of changes in net assets for the years ended
August 31, 1998 and 1997, and the financial highlights for each of the years in
the five-year period ended August 31, 1998. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1998, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Tax Free Reserves
Portfolio at August 31, 1998, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT ADVISER
(OF TAX FREE RESERVES PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio*
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
PREMIUM MONEY MARKETS
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium U.S. Treasury Reserves
INSTITUTIONAL MONEY MARKETS
o CitiFunds Institutional Liquid Reserves
o CitiFunds Institutional U.S. Treasury Reserves
o CitiFunds Institutional Tax Free Reserves
o CitiFunds Institutional Cash Reserves
This report is prepared for the information of shareholders.
It is authorized for distribution to prospective investors
only when preceded or accompanied by an effective prospectus.
*Purchase orders will be accepted beginning November 2, 1998.
For more information contact your Service Agent or call
1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(c)1998 Citicorp [recycle logo] Printed on recycled paper CFA/INS.TF/898
<PAGE>
Annual Report o August 31, 1998
[Logo]
Institutional
Cash Reserves
MONEY MARKETS
---------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
---------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
CitiFunds Institutional Cash Reserves
Letter to Our Shareholders 1
- -----------------------------------------------------------------
Portfolio Environment and Outlook 2
- -----------------------------------------------------------------
Fund Facts 3
- -----------------------------------------------------------------
Fund Performance 4
- -----------------------------------------------------------------
Portfolio of Investments 5
- -----------------------------------------------------------------
Statement of Assets and Liabilities 6
- -----------------------------------------------------------------
Statement of Operations 6
- -----------------------------------------------------------------
Statement of Changes in Net Assets 7
- -----------------------------------------------------------------
Financial Highlights 7
- -----------------------------------------------------------------
Notes to Financial Statements 8
- -----------------------------------------------------------------
Independent Auditors' Report 11
- -----------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 12-month period ended August 31, 1998 saw a continuation of the positive
economic and market conditions that have prevailed over the past three years.
Late in the period, however, heightened volatility caused the stock market to
retrace some of its gains.
Such volatility suggests that money market securities may once again be
poised to demonstrate their true value as relatively safer investments where
investors seek to protect their principal and earn interest. In our view,
CitiFundsSM Institutional Cash Reserves can play a valuable role in investors'
diversified investment portfolios.
As you have probably heard, Citicorp announced its intention to merge with
The Travelers Group. The merger is expected to occur on or about October 8,
1998. As necessary, we will provide you with information that specifically
affects the fund.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
September 21, 1998
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
YIELDS ON MONEY MARKET INSTRUMENTS ENDED THE 12-MONTH REPORTING PERIOD LOWER
THAN WHERE THEY BEGAN, reflecting the general trend of short-term interest
rates. That decline was interrupted, however, during the first quarter of 1998,
which saw an increase in short-term interest rates amid uncertainty over the
economic effects of the financial crisis in Asia. When evidence emerged early in
the year that U.S. economic growth was stronger than most analysts expected,
interest rates rose in anticipation of a move by the Federal Reserve Board to a
more restrictive monetary policy.
Such a move never took place, however, because of the absence of inflationary
pressures. During the second and third quarters of 1998, it became clearer that
the Asian crisis would, in fact, negatively affect U.S. corporate earnings and
dampen U.S. economic growth. In effect, lower demand for U.S. goods from
overseas markets and improved competitive positions for Asian companies
constrained sales and earnings of U.S. companies. As a result, fixed-income
investors became more confident that the Federal Reserve would maintain
short-term interest rates at current levels, and money market yields settled
back to their previous lows.
IN THIS ECONOMIC ENVIRONMENT, WE MAINTAINED AN AVERAGE MATURITY RANGING FROM
35 TO 45 DAYS. In order to maintain ratings assigned by external rating
agencies, the Fund is required to maintain an average maturity not to exceed 55
days. We extended maturities when the money market yield curve steepened,
enabling us to capture the higher yields of longer-dated securities when
short-term interest rates declined.
We also attempted to enhance the portfolio's yield by investing in those
sectors of the short-term money markets that, in our opinion, provided the most
attractive values. We found those values in Yankee CDs, which are certificates
of deposit issued by U.S. branches of foreign banks. These issuers have been
carefully evaluated by our analysts, and their credit quality is considered
first-rate.
Yankee CDs offered higher yields than U.S. Treasury bills of comparable
maturities. That's because the U.S. government's success in balancing its budget
has required less borrowing, reducing the supply of U.S. Treasury bills. Yet,
demand for U.S. Treasury bills remains high. The combination of lower supply and
high demand caused yields of U.S. Treasury bills to fall faster than other types
of money market securities.
WE BELIEVE MONEY MARKET YIELDS ARE LIKELY TO REMAIN NEAR CURRENT LEVELS FOR
THE REMAINDER OF THE YEAR. If economic growth continues to moderate in the
fourth quarter of 1998, as we expect, the Federal Reserve Board will have little
reason to raise short-term interest rates, which they might otherwise do to
forestall a reacceleration of inflation. In our opinion, the opposite is the
more likely scenario: if the economy continues to slow, the Federal Reserve
Board may eventually reduce short-term interest rates modestly in order to
provide an economic stimulus.
In the meantime, we will continue to manage the Portfolio's average maturity
and sector concentrations according to our near-term outlook for interest rates
and the U.S. economy. In our view, this approach will help CitiFunds
Institutional Cash Reserves earn competitive returns commensurate with
preservation of capital, regardless of the fluctuations of the stock and bond
markets.
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with liquidity and as high a level of current income
as is consistent with the preservation of capital.
INVESTMENT MANAGER DIVIDENDS
Citibank, N.A. Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
October 17, 1997 Distributed annually, if any
NET ASSETS AS OF 8/31/98 BENCHMARKS
$245.5 million o Lipper S&P AAA-rated Institutional Money Funds
Average
o IBC Financial S&P AAA-rated Taxable
Institutional Average
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
10/17/97
FOR THE PERIOD ENDED AUGUST 31, 1998 (INCEPTION)*
- ---------------------------------------------------------------------
CitiFunds Institutional Cash Reserves 4.84%
Lipper S&P AAA-rated Institutional Money Funds Average 4.48%
* Not Annualized
From 10/31/97
7-DAY YIELDS
Annualized Current 5.40%
Effective 5.55%
The Annualized Current 7-Day Yield reflects the amount of income generated by
the investment during that seven-day period and assumes that the income is
generated each week over a 365 day period. The yield is shown as a percentage of
the investment.
The Effective 7-Day Yield is calculated similarly, but when annualized the
income earned by the investment during that seven-day period is assumed to be
reinvested. The effective yield is slightly higher than the current yield
because of the compounding effect of this assumed reinvestment.
Note: A money market fund's yield more closely reflects the current earnings of
the fund than does the total return.
IMPORTANT TAX INFORMATION--For the fiscal year ended August 31, 1998, the Fund
paid 0.04736 per share to shareholders from net investment income. For such
period 7.8% of dividends paid were derived from interest earned from U.S.
Government and U.S. Government agency obligations.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL CASH RESERVES
VS. IBC FINANCIAL S&P AAA-RATED TAXABLE INST. AVG.
As illustrated, CitiFunds Institutional Cash Reserves generally provided a
higher annualized seven-day yield to that of a comparable IBC Money Fund
Average, as published in IBC Money Fund ReportTM, for the one-year period.
IBC
Financial
S&P
AAA- CitiFunds
Rated Taxable Institutional
Institutional Average Cash Reserves
--------------------- -------------
10/28/97 5.39 5.37
11/4/97 5.39 5.38
11/11/97 5.39 5.39
11/18/97 5.36 5.35
11/25/97 5.39 5.41
12/2/97 5.43 5.45
12/9/97 5.4 5.43
12/16/97 5.43 5.51
12/23/97 5.48 5.54
12/30/97 5.48 5.59
1/6/98 5.56 5.61
1/13/98 5.4 5.55
1/20/98 5.42 5.45
1/27/98 5.38 5.46
2/3/98 5.39 5.43
2/10/98 5.4 5.41
2/17/98 5.4 5.43
2/24/98 5.36 5.41
3/3/98 5.4 5.43
3/10/98 5.37 5.39
3/17/98 5.36 5.42
3/24/98 5.36 5.41
3/31/98 5.37 5.42
4/7/98 5.36 5.4
4/14/98 5.34 5.4
4/21/98 5.34 5.4
4/28/98 5.33 5.41
5/5/98 5.35 5.39
5/12/98 5.32 5.38
5/19/98 5.34 5.41
5/26/98 5.35 5.4
6/2/98 5.35 5.43
6/9/98 5.34 5.4
6/16/98 5.33 5.42
6/23/98 5.35 5.41
6/30/98 5.37 5.44
7/7/98 5.35 5.43
7/14/98 5.34 5.41
7/21/98 5.32 5.43
7/28/98 5.34 5.44
8/4/98 5.35 5.45
8/11/98 5.36 5.43
8/18/98 5.34 5.41
8/25/98 5.33 5.38
8/31/98 5.35 5.41
Note: The Fund seeks to maintain a stable $1.00 per share price, although there
is no assurance that this will be so on a continuing basis. Fund shares are not
insured or guaranteed by the U.S. Government. Yields and total returns will
fluctuate and past performance is no guarantee of future results. Total return
figures include reinvestment of dividends. Returns and yields reflect certain
voluntary fee waivers. If the waivers were not in place, the Fund's returns and
yields would have been lower.
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
PORTFOLIO OF INVESTMENTS August 31, 1998
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--2.9%
- --------------------------------------------------------------------------------
Nationsbank
5.60% due 12/15/98 $ 7,000 $ 7,000,000
------------
CERTIFICATES OF DEPOSIT (YANKEE)--11.4%
- --------------------------------------------------------------------------------
Bank of Tokyo Mitsubishi
5.85% due 10/01/98 10,000 10,000,000
Bayerische Landesbank
5.57% due 11/30/98 10,000 10,000,493
Deutsche Bank AG
5.56% due 10/15/98 7,000 7,000,000
Rabobank Nederland
5.53% due 02/23/99 1,000 998,536
------------
27,999,029
------------
COMMERCIAL PAPER--46.8%
- --------------------------------------------------------------------------------
Allianz of America Finance
5.55% due 10/06/98 2,430 2,416,888
Allied Signal Inc.
5.55% due 09/14/98 10,000 9,979,958
Atlantis One Funding Corp.
5.55% due 09/24/98 6,000 5,978,725
BBV Finance Inc.
5.50% due 01/14/99 6,000 5,876,250
Bear Stearns
5.51% due 12/15/98 7,000 6,887,504
Commonwealth Bank-
Australia
5.50% due 09/30/98 10,000 9,955,694
E.I. du Pont de
Nemours & Co.
5.50% due 09/28/98 10,000 9,958,750
Enterprise Funding Corp.
5.54% due 09/15/98 8,000 7,982,765
General Electric
Capital Corp.
5.52% due 09/21/98 8,000 7,975,467
J.P. Morgan & Co., Inc.
5.52% due 09/17/98 4,587 4,575,747
5.52% due 10/05/98 2,500 2,486,967
KFW International Finance
5.51% due 09/21/98 6,000 5,981,633
Norwest Corp.
5.50% due 09/30/98 10,000 9,955,694
Pooled Accounts
Receivable Capital Corp.
5.56% due 09/15/98 10,000 9,978,378
Sigma Finance Corp.
5.56% due 09/01/98 5,000 5,000,000
Svenska Handelsbanken Inc.
5.51% due 11/06/98 10,000 9,898,983
------------
114,889,403
------------
FLOATING RATE NOTES--15.5%
- --------------------------------------------------------------------------------
Steers
5.648% due 11/10/98 10,000 9,999,628
Strategic Money Market
Trust Receipts
5.652% due 03/05/99 12,000 12,000,000
Strats Trust
5.67% due 12/15/98 10,000 10,000,000
Triangle Funding Ltd.
5.75% due 10/15/98 6,000 6,000,000
------------
37,999,628
------------
TIME DEPOSIT--19.7%
- --------------------------------------------------------------------------------
Banque Nationale De Paris
5.94% due 09/01/98 12,000 12,000,000
Chase Manhattan Bank
5.75% due 09/01/98 12,000 12,000,000
Dresdner Bank
Grand Cayman
5.94% due 09/01/98 12,000 12,000,000
Westdeutche Landesbank
5.94% due 09/01/98 12,414 12,414,000
------------
48,414,000
------------
REPURCHASE AGREEMENTS--8.1%
- --------------------------------------------------------------------------------
CIBC/Wood Gundy Repurchase Agreement
(collateralized by $10,000,000 U.S.
Treasury Notes 6.875% due 8/31/99,
valued at $10,164,453 and $10,011,000
U.S.Treasury Notes 6.75% due 6/30/99,
valued at $10,235,907)
5.75% due 09/01/98 20,000 20,000,000
------------
TOTAL INVESTMENTS AT
AMORTIZED COST 104.4% $256,302,060
OTHER ASSETS,
LESS LIABILITIES (4.4) (10,782,550)
====== ============
NET ASSETS 100.0% $245,519,510
====== ============
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $256,302,060
Cash 475
Interest receivable 301,127
- --------------------------------------------------------------------------------
Total assets 256,603,662
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for investment purchased 10,000,000
Dividends payable 933,098
Payable to affiliate:
Management fees (Note 3) 12,452
Accrued expenses and other liabilities 138,602
- --------------------------------------------------------------------------------
Total liabilities 11,084,152
- --------------------------------------------------------------------------------
NET ASSETS for 245,519,510 shares of beneficial
interest outstanding $245,519,510
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $245,519,510
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE PER SHARE $1.00
================================================================================
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 17, 1997+ TO AUGUST 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $11,893,932
EXPENSES:
Management fees (Note 3) $415,990
Distribution fees (Note 4) 207,995
Custody and fund accounting fees 101,892
Registration fees 76,636
Audit fees 25,000
Shareholder reports 24,499
Legal fees 12,028
Transfer agent fees 11,500
Trustees' fees 4,682
Miscellaneous 35,383
- --------------------------------------------------------------------------------
Total expenses 915,605
- --------------------------------------------------------------------------------
Less aggregate amounts waived by the Manager
and Distributor (Note 3 and 4) (388,870)
Less fees paid indirectly (Note 1E) (9)
- --------------------------------------------------------------------------------
Net expenses 526,726
- --------------------------------------------------------------------------------
Net investment income $11,367,206
================================================================================
+ Commencement of Operations
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
OCTOBER 17, 1997+
TO
AUGUST 31, 1998
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations:
Net investment income, declared as dividends to
shareholders (Note 2) $ 11,367,206
- --------------------------------------------------------------------------------
Transactions in Shares of Beneficial Interest at
Net Asset Value of $1.00 Per Share (Note 5):
Proceeds from sale of shares 2,513,814,384
Cost of shares repurchased (2,268,294,874)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 245,519,510
NET ASSETS:
Beginning of period --
- --------------------------------------------------------------------------------
End of period $ 245,519,510
================================================================================
+ Commencement of Operations
CITIFUNDS INSTITUTIONAL CASH RESERVES
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
OCTOBER 17, 1997+
TO
AUGUST 31, 1998
- --------------------------------------------------------------------------------
Net Asset Value, beginning of period $ 1.00000
Net investment income 0.04736
Less dividends from net investment income (0.04736)
- --------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00000
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $245,520
Ratio of expenses to average net assets 0.25%*
Ratio of net investment income to average net assets 5.47%*
Total return 4.84%**
Note: If agents of the Fund had not voluntarily waived all or a portion of its
fees from the Fund for the period indicated and the expenses were not reduced
for the fees paid indirectly the ratios and net investment income per share
would have been as follows: Net investment income per share $ 0.04571
RATIOS:
Expenses to average net assets 0.44%*
Net investment income to average net assets 5.28%*
================================================================================
* Annualized
** Not annualized
+ Commencement of Operations
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Institutional Cash Reserves (the
"Fund") is a separate non-diversified series of CitiFunds Institutional Trust
(the "Trust"), which is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. The Investment Manager of the Fund is Citibank,
N.A. ("Citibank"). CFBDS, Inc. ("CFBDS"), (formerly Landmark Funds Broker-Dealer
Services, Inc.) acts as the Fund's Sub-Administrator and Distributor.
Citibank is a wholly-owned subsidiary of Citicorp. Citicorp announced its
intention to merge with The Travelers Group. The merger is expected to occur on
or about October 8, 1998.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The significant accounting policies consistently followed by the Fund are in
conformity with generally accepted accounting principles and are as follows:
A. Valuation of Investments Money market instruments are valued at amortized
cost, which the Trustees have determined in good faith constitutes fair value.
This method involves valuing a Fund security at its cost and thereafter assuming
a constant amortization to maturity of any discount or premium. The Fund's use
of amortized cost is subject to the Fund's compliance with certain conditions as
specified under Rule 2a-7 of the Investment Company Act of 1940.
B. Interest Income and Expenses Interest income consists of interest accrued
and discount earned (including both original issue and market discount) on the
investments of the Fund, accrued ratably to the date of maturity, plus or minus
net realized gain or loss, if any, on investments. Expenses of the Fund are
accrued daily.
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 net investment income. Accordingly, no
provision for federal income or excise tax is necessary.
D. Expenses The Fund bears all costs of its operations other than expenses
specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with
respect to any two or more Funds in a 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.
E. Fees Paid Indirectly The Fund's custodian bank calculates its fees based
on the Fund's average daily net assets. The fee is reduced according to a fee
arrangement, which provides for custody fees to be reduced based on a formula
developed to measure the value of cash deposited with the custodian by the Fund.
This amount is shown as a reduction of expenses on the Statement of Operations.
F. Repurchase Agreements It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund 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.
G. Other Purchases, and maturities and sales of money market instruments are
accounted for on the date of the transaction.
2. DIVIDENDS The net income of the Fund is determined once daily, as of 4:00 pm,
Eastern standard time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash on or prior to the last
business day of the month.
3. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's
business affairs, and has a Management Agreement with the Fund. Citibank also
provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs such
duties and receives such compensation from Citibank as from time to time is
agreed to by Citibank and CFBDS.
The management fees paid to Citibank, as compensation for overall investment
management services amounted to $415,990, of which $284,873 was voluntarily
waived for the period ended August 31, 1998. The management fees are computed at
an annual rate of 0.20% of the Fund's average daily net assets.
4. DISTRIBUTION FEES The Fund has adopted a Service Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, in which the Fund pays
fees for distribution, sales, marketing and shareholder services at an annual
rate not to exceed 0.10% of the Fund's average daily net assets. The
Distribution fee amounted to $207,995 of which $103,997 was voluntarily waived
for the year ended August 31, 1998.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional Shares of Beneficial
Interest (without par value).
6. INVESTMENT TRANSACTIONS Purchases, and maturities and sales of money market
instruments aggregated $9,007,624,110 and $8,757,785,496, respectively, for the
period ended August 31, 1998.
7. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at August 31, 1998, for federal income tax purposes, amounted
to $256,302,060.
8. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the period ended
August 31, 1998, the commitment fee allocated to the Fund was $596. Since the
line of credit was established, there have been no borrowings.
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS OF
CITIFUNDS INSTITUTIONAL CASH RESERVES:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of CitiFunds Institutional Cash Reserves, as of
August 31, 1998, the related statement of operations and changes in net assets
for the period from October 17, 1997 (commencement of operations) to August 31,
1998 and the financial highlights for the year ended August 31, 1998. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
August 31, 1998, by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other audit procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of CitiFunds
Institutional Cash Reserves at August 31, 1998, the results of its operations,
the changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 6, 1998
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*Affiliated Person of Administrator and Distributor
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Intermediate Income Portfolio
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio*
o CitiFunds National Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
PREMIUM MONEY MARKETS
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium U.S. Treasury Reserves
INSTITUTIONAL MONEY MARKETS
o CitiFunds Institutional Liquid Reserves
o CitiFunds Institutional U.S. Treasury Reserves
o CitiFunds Institutional Tax Free Reserves
o CitiFunds Institutional Cash Reserves
This report is prepared for the information of
shareholders. It is authorized for distribution
to prospective investors only when preceded or
accompanied by an effective prospectus.
*Purchase orders will be accepted beginning
November 2, 1998
For more information contact your Service Agent or
call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as
distributor.
(C)1998 Citicorp [Recycle Logo] Printed on recycled paper CFA/INS-CR/898
