ANNUAL REPORT o AUGUST 31, 1999
CITIFUNDS(sm)
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Institutional
Liquid Reserves
MONEY MARKETS
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INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
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<PAGE>
TABLE OF CONTENTS
Letter to Our Shareholders 1
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Portfolio Environment and Outlook 2
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Fund Facts 3
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Fund Performance 4
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CITIFUNDS INSTITUTIONAL LIQUID RESERVES
Statement of Assets and Liabilities 5
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Statement of Operations 6
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Statement of Changes in Net Assets 7
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Financial Highlights 8
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Notes to Financial Statements 9
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Independent Auditors' Report 12
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CASH RESERVES PORTFOLIO
Portfolio of Investments 13
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Statement of Assets and Liabilities 16
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Statement of Operations 16
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Statement of Changes in Net Assets 17
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Financial Highlights 17
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Notes to Financial Statements 18
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Independent Auditors' Report 20
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<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
Despite the volatility of the financial markets over the past twelve months,
money market securities once again provided competitive returns for shareholders
seeking income with capital preservation. Economic conditions during the
reporting period were generally characterized by strong growth coupled with low
inflation. However, many forward-looking investors were alternately concerned
over the past year that the economy might either be deteriorating or growing too
quickly. Those investors who sought the safety of money market funds were
largely unaffected by the volatility of the stock and bond markets caused by
changing market conditions and shifting investor views.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFundssm Institutional Liquid Reserves with the goal of
achieving its investment objectives: providing liquidity and as high a level of
current income as is consistent with preservation of capital.
This report reviews the Fund's investment activities and performance during
the twelve months ended August 31, 1999, and provides a summary of Citibank's
perspective on and outlook for the money market securities marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
September 15, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST YEAR HAS BEEN AN EVENTFUL ONE FOR THE U.S. ECONOMY AND FINANCIAL
MARKETS. Between September 1, 1998 and August 31, 1999, the period that
coincides with CitiFundssm Institutional Liquid Reserves fiscal year, the U.S.
economy underwent a full interest-rate cycle. When the reporting period began,
interest rates were declining sharply in response to the currency and credit
crisis that began in Asia, had already spread to Russia and was threatening
Latin America. Many U.S. investors were concerned that economic weakness abroad
might derail the domestic economy. In response, the Federal Reserve Board (the
"Fed") and other central banks throughout the world reduced short-term interest
rates in an attempt to stimulate global economic growth. As a result, interest
rates and yields of most money market instruments declined over the last four
months of 1998.
However, the first eight months of 1999 reflected dramatically different
economic conditions. When it became apparent early in the year that the worst of
the global financial crisis was over, many investors' concerns about an economic
slowdown eased. Japan's economy began to improve, conditions in Latin America
remained relatively stable and Europe's economies rebounded more strongly than
previously expected. In fact, the U.S. economy was also stronger than most
analysts expected, and evidence quickly emerged that it might be growing at
unsustainable rates. This unexpectedly robust economic growth triggered fears
among fixed-income investors that inflation might accelerate beyond its
prevailing low levels. Tight labor markets and rising commodities prices lent
credence to this view. In response, the Fed raised short-term interest rates
twice during the summer of 1999, effectively offsetting most of the rate cuts it
had implemented last fall.
IN THIS ENVIRONMENT, MONEY MARKET YIELDS GENERALLY ROSE ALONG WITH INTEREST
RATES. In addition, the differences in yields (also known as "spreads") widened
among securities with different maturities. This was due primarily to aggressive
funding strategies adopted by many corporations in anticipation of year-end
concerns over potential Y2K problems. Many corporations have decided to raise
capital now, rather than wait until November or December when investors'
concerns over possible computer-related problems might constrain liquidity in
the markets.
The Fund's management team maintained a conservative investment approach
during the reporting period. Within those parameters, the managers adopted a
relatively defensive posture during most of 1999 when interest rates were
rising. This strategy included an average weighted maturity positioned toward
the short end of its range, which enabled the managers to capture higher yields
quickly as they became available.
LATER IN THE REPORTING PERIOD, THE MANAGERS ATTEMPTED TO TAKE ADVANTAGE OF
HIGHER YIELDS AND WIDER SPREADS BY INVESTING IN HIGHLY RATED MONEY MARKET
INSTRUMENTS WITH LONGER MATURITIES. The management team found especially
attractive income opportunities in bank obligations, commercial paper backed by
credit card receivables and short-term debt instruments issued by industrial
companies and insurance companies. At the same time, the managers tried to
ensure
2
<PAGE>
sufficient liquidity for the Fund by balancing those modestly longer-term
holdings with very short-term positions in commercial paper. This "barbell
strategy"--named because of its concentrations at both ends of the money market
maturity spectrum--produced an average maturity for the Fund of between 75 and
85 days, which is toward the long end of the neutral range.
LOOKING FORWARD, WHILE IT IS POSSIBLE THAT THE FED MAY RAISE SHORT-TERM
INTEREST RATES AGAIN, THE FUND'S MANAGERS EXPECT THAT THE U.S. ECONOMY SHOULD
MODERATE. In their view, evidence of such a slowdown may become apparent toward
the end of 1999 if Y2K concerns become more pronounced. Due to the potential for
disruption in the securities markets, many investors and issuers are being
generally cautious. Many corporate issuers appear to be completing funding
activity earlier than usual, and some investors are maintaining relatively
defensive postures. In case of Y2K-related market disruptions, the Fed has
indicated that it is prepared to do what is necessary to ensure liquidity. In
the managers' opinion, additional Fed interest-rate increases are therefore
unlikely.
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
Market Funds Average
NET ASSETS AS OF 8/31/99 o IBC Financial Data Institutional
$5,794.6 million Taxable Money Market Funds Average
* The Lipper Funds Average and IBCFunds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE OCTOBER 2, 1992
ALL PERIODS ENDED AUGUST 31, 1999 YEAR YEARS* INCEPTION*
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CitiFunds Institutional Liquid Reserves 5.16% 5.59% 4.99%
Lipper Taxable Institutional Money Market 4.87% 5.31% 4.67%+
Funds Average
* Average Annual Total Return
+ From 9/30/92
7-DAY YIELDS
Annualized Current 5.24%
Effective 5.37%
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, 1999, the Fund
paid $0.05041 per share to shareholders from net investment income. For such
periods 0.2% 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 FINANCIAL DATA INSTITUTIONAL TAXABLE MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds Institutional Liquid Reserves generally provided a
higher annualized seven-day yield to that of a comparable IBC Financial Data
Money Market Funds Average, as published in IBC Money Fund ReportTM, for the one
year period.
[This table represents chart in the printed piece]
8/25/98 5.49 5.27
5.52 5.28
5.48 5.25
5.5 5.27
5.47 5.24
5.46 5.22
5.44 5.18
10/13/98 5.3 5.09
5.29 5.05
5.12 4.97
5.22 5.03
5.15 4.95
5.15 4.97
5.02 4.85
5.1 4.9
12/8/98 5.03 4.84
5.09 4.89
5.08 4.87
5.06 4.87
5.04 4.9
4.99 4.8
4.98 4.79
1/26/99 4.89 4.72
4.94 4.72
4.91 4.68
4.9 4.66
4.89 4.72
4.9 4.65
4.86 4.62
4.87 4.63
3/23/99 4.86 4.61
4.89 4.63
4.89 4.64
4.84 4.59
4.83 4.58
4.81 4.57
4.88 4.61
4.81 4.55
5/18/99 4.85 4.57
4.82 4.55
4.85 4.59
4.8 4.55
4.84 4.56
4.84 4.56
4.89 4.62
7/6/99 5.06 4.69
5 4.69
5.04 4.73
5.06 4.75
5.09 4.77
5.04 4.76
5.07 4.8
5.06 4.82
8/31/99 5.24 4.92
Note: Mutual Fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Yields and total returns
will fluctuate and past performance is no guarantee of future results. Total
return figures include reinvestment of dividends. Returns and yields reflect
certain voluntary fee waivers. If the waivers were not in place, the Fund's
returns and yields would have been lower.
4
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<TABLE>
<CAPTION>
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<S> <C> <C>
ASSETS:
Investment in Cash Reserves Portfolio, at value (Note 1A) $5,800,898,945
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LIABILITIES:
Payable for shares of beneficial interest repurchased 1,771,071
Dividends payable 3,617,667
Accrued expenses and other liabilities 910,771
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Total liabilities 6,299,509
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NET ASSETS for 5,794,599,436 shares of beneficial interest outstanding $5,794,599,436
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NET ASSETS CONSIST OF:
Paid-in capital $5,794,599,436
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NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
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</TABLE>
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B):
Income from Cash Reserves Portfolio $243,082,353
Allocated expenses from Cash Reserves Portfolio (4,651,921)
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$238,430,432
EXPENSES:
Administrative fees (Note 3A) 16,283,387
Shareholder Servicing Agents' fees (Note 3B) 4,652,396
Distribution fees (Note 4) 4,652,396
Registration fees 808,981
Trustees' fees 50,141
Legal fees 20,647
Custody and fund accounting fees 16,200
Audit fees 15,892
Shareholder reports 11,541
Transfer agent fees 10,000
Miscellaneous 66,264
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Total expenses 26,587,845
Less aggregate amounts waived or assumed by Administrator,
Shareholder Servicing Agents, and Distributor
(Notes 3A, 3B, and 4) (22,301,193)
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Net expenses 4,286,652
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Net investment income $234,143,780
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</TABLE>
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------
1999 1998
<S> <C> <C>
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FROM INVESTMENT ACTIVITIES:
Net investment income,
declared as dividends to shareholders (Note 2) $234,143,780 $168,884,490
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TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares 64,269,922,643 37,431,763,944
Net asset value of shares issued to shareholders
from reinvestment of dividends 182,380,096 131,980,079
Cost of shares repurchased (62,038,204,029) (36,150,734,171)
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NET INCREASE IN NET ASSETS 2,414,098,710 1,413,009,852
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NET ASSETS:
Beginning of period 3,380,500,726 1,967,490,874
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End of period $5,794,599,436 $3,380,500,726
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</TABLE>
7
See notes to financial statements
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
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1999 1998 1997 1996 1995
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<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 0.05041 0.05548 0.05459 0.05521 0.05698
Less dividends from net investment income (0.05041) (0.05548) (0.05459) (0.05521) (0.05698)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
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RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $5,794,599 $3,380,501 $1,967,491 $1,257,134 $1,480,097
Ratio of expenses to average net assets+ 0.19% 0.20% 0.18% 0.20% 0.17%
Ratio of net investment income to
average net assets+ 5.04% 5.57% 5.52% 5.52% 5.70%
Total return 5.16% 5.69% 5.60% 5.66% 5.85%
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 $0.04557 $0.04948 $0.04844 $0.04921 $0.05050
RATIOS:
Expenses to average net assets+ 0.79% 0.79% 0.80% 0.80% 0.84%
Net investment income to
average net assets+ 4.44% 4.98% 4.90% 4.92% 5.03%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Includes the Fund's share of Cash Reserves Portfolio's allocated expenses
See notes to financial statements
8
<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. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund invests all of its investable assets in Cash Reserves
Portfolio (the "Portfolio"), a management investment company for which Citibank,
N.A. ("Citibank") serves as Investment Adviser. The value of such investment
reflects the Fund's proportionate interest (38.9% at August 31, 1999) in the net
assets of the Portfolio.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The financial statements of the Portfolio, including the portfolio of
investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The significant accounting policies consistently followed by the Fund are as
follows:
A. Investment 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 4:00
p.m. Eastern Standard Time, and all of the net income of the Fund so determined
is declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
9
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services
Plan which provides that the Trust, on behalf of each Fund, may obtain the
services of an Administrator, one or more Shareholder Servicing Agents, and
other Servicing Agents and may enter into agreements providing for the payment
of fees for such services. Under the Trust's Administrative Services Plan, the
aggregate of the fees paid to the Administrator from the Fund under such Plan
and of the fees paid to the Shareholder Servicing Agents from the Fund may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. For the year ended August 31, 1999,
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 $16,283,387 of
which $12,996,401 was voluntarily waived for the year ended August 31, 1999.
Citibank acts as Sub-Administrator and performs certain duties and receives
compensation from CFBDS from time to time as agreed to by CFBDS and Citibank.
CFBDS, Inc. ("CFBDS") 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, which in turn is a wholly-owned subsidiary of Citigroup Inc.
Citigroup Inc. was formed as a result of the merger of Citicorp and Travelers
Group, Inc. which was completed on October 8, 1998. The Fund 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 $4,652,396, all of which was voluntarily
waived for the year ended August 31, 1999.
10
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS
4. DISTRIBUTION FEES The Trust has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, in which the
Fund reimburses the Distributor for expenses incurred 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 $4,652,396, all of which was voluntarily waived for the year ended
August 31, 1999. The Distributor voluntarily agreed to assume all distribution
expenses through August 31, 1999.
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 $23,974,535,957 and $21,751,783,738, respectively, for
the year ended August 31, 1999.
11
<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, 1999 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, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 6, 1999
12
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ---------------------------------------------------------------------------
ASSET BACKED -- 9.1%
- ---------------------------------------------------------------------------
Lincs-Ser *
5.32% due 2/15/00 $ 87,500 $ 87,500,000
5.29% due 4/15/00 100,000 100,000,000
Restructured Asset
Securities *
5.20% due 6/02/00 250,000 250,000,000
SMM Trust *
5.368% due 1/26/00 100,000 100,000,000
Steers *
5.269% due 11/10/99 201,000 201,000,000
Strategic Money Market
Trust Receipts *
5.24% due 12/15/99 200,000 200,000,000
5.20% due 3/15/00 240,000 240,000,000
Strats Trust *
5.38% due 8/18/00 100,000 100,000,000
Triangle Funding Ltd. *
5.35% due 10/15/99 82,000 82,000,000
--------------
1,360,500,000
--------------
BANK NOTES -- 13.2%
- ---------------------------------------------------------------------------
Bank of America
5.50% due 2/25/00 400,000 400,000,000
5.84% due 3/17/00 100,000 100,000,000
FCC National Bank
4.90% due 12/16/99 185,000 184,974,065
5.84% due 2/25/00 100,000 100,000,000
5.85% due 3/20/00 164,000 164,000,000
First National Bank
5.83% due 2/22/00 100,000 100,000,000
First USA Bank
5.93% due 8/29/00 100,000 99,961,992
Key Bank National
Association *
5.475% due 9/23/99 350,000 349,989,452
Morgan Guaranty
Trust Co. *
5.40% due 5/10/00 210,000 209,943,306
Nationsbank
5.00% due 11/19/99 160,000 160,000,000
Westpac Banking Corp.
5.20% due 5/11/00 100,000 99,959,974
--------------
1,968,828,789
--------------
CERTIFICATES OF DEPOSIT
(DOMESTIC) -- 2.8%
- ---------------------------------------------------------------------------
Bankers Trust Co. *
5.57% due 5/15/00 $ 200,000 $ 199,938,194
Morgan Guaranty
Trust Co.
4.90% due 10/15/99 85,000 84,990,073
4.63% due 10/22/99 65,000 64,963,673
4.99% due 12/10/99 62,000 62,000,000
--------------
411,891,940
--------------
CERTIFICATES OF DEPOSIT (EURO) -- 4.2%
- ---------------------------------------------------------------------------
Barclays Bank
5.25% due 11/02/99 100,000 100,000,000
Bayerische Vereinsbank
4.99% due 11/10/99 171,000 171,006,408
5.02% due 11/23/99 100,000 100,002,066
Credit Agricole Indosuez
4.96% due 9/27/99 75,000 75,000,528
Dresdner Bank
5.26% due 11/02/99 100,000 100,000,000
Halifax
5.14% due 12/06/99 55,000 55,015,560
International Nederlanden
Group
4.97% due 9/27/99 25,000 25,000,176
--------------
626,024,738
--------------
CERTIFICATES OF DEPOSIT (YANKEE) -- 27.8%
- ---------------------------------------------------------------------------
Abbey National Treasury
Services *
5.495% due 5/01/00 350,000 349,849,366
Algemene Bank
5.50% due 9/02/99 70,000 70,000,912
Bank Austria
5.15% due 5/04/00 100,000 99,987,016
5.20% due 5/10/00 35,000 34,983,722
5.95% due 8/21/00 100,000 99,953,544
Bank of Montreal
5.59% due 2/04/00 400,000 400,000,000
5.11% due 4/10/00 100,000 99,970,712
Bank of Nova Scotia
5.83% due 2/14/00 115,000 115,000,000
Bayerische Hypo
5.16% due 4/03/00 100,000 99,971,649
5.10% due 4/12/00 100,000 99,976,347
13
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ----------------------------------------------------------------------
Bayerische Vereinsbank
4.99% due 9/07/99 $ 70,000 $ 70,000,228
5.15% due 3/23/00 100,000 99,973,093
Commerzbank
5.22% due 5/10/00 100,000 99,966,780
5.58% due 6/19/00 160,000 159,963,173
5.77% due 7/03/00 120,000 119,961,481
Deutsche Bank
5.33% due 3/09/00 50,000 50,017,532
Deutsche Bank
5.38% due 4/26/00* 225,000 224,897,019
Deutsche Bank
5.51% due 6/08/00 96,000 95,971,628
5.71% due 7/10/00 100,000 99,967,148
5.98% due 9/05/00 100,000 99,946,907
Landesbank Hessen
Thuringen
5.12% due 4/26/00 100,000 99,962,318
Lloyds Bank
5.67% due 7/17/00 100,000 99,958,011
National Westminster
Bank
5.04% due 9/02/99 118,100 118,100,303
5.03% due 2/08/00 55,000 54,869,521
Nord Deutsche
Landesbank
5.16% due 5/17/00 100,000 99,959,009
Rabobank Nederland
5.08% due 4/12/00 100,000 99,970,431
5.52% due 6/07/00 62,000 61,809,773
Svenska Handelsbanken
5.28% due 3/03/00 120,000 120,044,931
5.23% due 5/10/00 100,000 99,973,424
5.59% due 6/19/00 50,000 49,988,493
Toronto Dominion
5.15% due 4/27/00 100,000 99,968,472
UBS AG Stamford
5.29% due 5/22/00 85,000 84,970,447
5.34% due 5/24/00 50,000 49,982,205
5.60% due 6/26/00 25,000 24,990,185
5.76% due 7/05/00 50,000 49,939,138
Westdeutsche Landesbank
5.625% due 9/01/99 100,000 100,000,000
5.125% due 9/15/99 48,000 48,002,540
4.84% due 11/05/99 116,000 115,992,017
5.47% due 2/22/00 85,000 85,000,000
--------------
4,153,839,475
--------------
COMMERCIAL PAPER -- 23.3%
- ----------------------------------------------------------------------
Abbey National
North America
5.21% due 3/03/00 $ 170,000 $ 165,473,089
Associates First Capital
Corp
5.63% due 9/01/99 200,000 200,000,000
Associates Corp. of
North America
5.63% due 9/01/99 100,000 100,000,000
Banco Santander
5.16% due 9/10/99 150,000 149,806,500
BankAmerica Corp.
4.84% due 10/06/99 50,000 49,764,722
Bank of New York
5.65% due 2/11/00 50,000 48,720,903
Caisse D'Amortissement
4.735% due 10/08/99 76,000 75,630,144
Exxon Corp.
5.62% due 9/01/00 200,000 200,000,000
Four Winds Funding Corp.
5.17% due 9/03/99 200,000 199,942,556
General Electric Capital
Corp
4.75% due 10/04/99 125,000 124,455,729
4.75% due 10/05/99 125,000 124,439,236
5.41% due 2/10/00 190,000 185,374,450
5.41% due 2/11/00 100,000 97,550,472
J. P. Morgan & Co., Inc.
5.59% due 2/07/00 85,000 82,901,421
Morgan Stanley Dean
Witter Disc
5.59% due 1/27/00* 200,000 200,000,000
5.62% due 2/04/00 440,000 440,000,000
Moriarty Ltd.
5.34% due 10/26/99 200,000 198,368,333
Newport Funding Corp.
5.34% due 10/22/99 139,721 138,664,011
Province de Quebec
4.80% due 12/17/99 30,000 29,572,000
Prudential Funding Corp.
5.63% due 9/01/99 200,000 200,000,000
Riverwoods Funding Corp.
5.34% due 10/26/99 98,146 97,345,292
Santander Financial
5.69% due 2/11/00 75,000 73,069,469
14
<PAGE>
CASH RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ----------------------------------------------------------------------------
Sigma Finance Corp.
5.34% due 10/26/99 $100,000 $ 99,184,167
5.26% due 11/02/99 125,000 123,867,639
5.43% due 2/01/00 80,000 78,153,800
----------------
3,482,283,933
----------------
CORPORATE NOTES -- 3.5%
- ----------------------------------------------------------------------------
Credit Suisse *
5.54% due 10/07/99 325,000 325,000,000
J. P. Morgan & Co., Inc. *
5.56% due 5/04/00 200,000 200,000,000
----------------
525,000,000
----------------
MEDIUM TERM NOTES -- 5.3%
- ----------------------------------------------------------------------------
Credit Suisse *
5.57% due 5/10/00 200,000 200,000,000
Goldman Sachs Group *
5.39% due 1/31/00 335,500 335,500,000
Sigma Finance Corp.
5.125% due 2/09/00 250,000 250,000,000
----------------
785,500,000
----------------
TIME DEPOSITS -- 7.6%
- ----------------------------------------------------------------------------
Barclays Bank
5.63% due 9/01/99 143,452 143,452,000
Landesbank Hessen
Thuringen
5.66% due 9/01/99 182,500 182,500,000
Rabobank Nederland
5.63% due 9/01/99 100,000 100,000,000
Societe Generale
5.56% due 9/01/99 160,578 160,578,000
Suntrust
5.63% due 9/01/99 400,000 400,000,000
Svenska Grand Cayman
5.63% due 9/01/99 150,000 150,000,000
----------------
1,136,530,000
----------------
UNITED STATES GOVERNMENT AGENCY -- 2.8%
- ----------------------------------------------------------------------------
Federal Home Loan Bank
Consumer Discount
Notes
5.39% due 7/28/00 100,000 95,044,194
Federal Home Loan
Mortgage Discount
Notes
5.21% due 3/09/00 $ 48,062 $ 46,740,429
5.16% due 6/13/00 50,000 47,950,333
5.22% due 6/15/00 135,000 129,362,400
Federal National Mortgage
Association
4.86% due 2/10/00 100,000 99,963,605
----------------
419,060,961
----------------
UNITED STATES TREASURY BILLS -- 0.3%
- ----------------------------------------------------------------------------
United States Treasury Bills
4.135% due 10/14/99 25,000 24,876,524
4.175% due 12/09/99 15,000 14,827,781
----------------
39,704,305
----------------
TOTAL INVESTMENTS AT VALUE
/AMORTIZED COST 99.9% 14,909,164,141
OTHER ASSETS,
LESS LIABILITIES 0.1% 20,180,507
----- ----------------
NET ASSETS 100.0% $14,929,344,648
===== ================
* Variable interest rate - subject to periodic change.
See notes to financial statements
15
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
- -------------------------------------------------------------------------
ASSETS:
Investments at value (Note 1A) $14,909,164,141
Cash 1,804
Interest receivable 121,674,021
- -------------------------------------------------------------------------
Total assets 15,030,839,966
- -------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 99,946,907
Payable to affiliate--Investment Advisory fee (Note 2A) 1,113,656
Accrued expenses and other liabilities 434,755
- -------------------------------------------------------------------------
Total liabilities 101,495,318
NET ASSETS $14,929,344,648
- -------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $14,929,344,648
- -------------------------------------------------------------------------
CASH RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME (Note 1B): $640,703,011
EXPENSES:
Investment Advisory fees (Note 2A) $18,380,593
Administrative fees (Note 2B) 6,126,864
Custody and fund accounting fees 2,505,470
Legal fees 70,203
Trustees' fees 67,304
Audit fees 45,100
Other 153,571
- ----------------------------------------------------------------------------------
Total expenses 27,349,105
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A, and 2B) (15,085,181)
Less fees paid indirectly (Note 1E) (17)
- ----------------------------------------------------------------------------------
Net expenses 12,263,907
- ----------------------------------------------------------------------------------
Net investment income $628,439,104
- ----------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
CASH RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
---------------------------------------
1999 1998
- ----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 628,439,104 $ 504,627,904
- ----------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 47,581,662,450 30,335,511,897
Value of withdrawals (42,086,666,522)
- ----------------------------------------------------------------------------
Net increase in net assets from
capital transactions 5,494,995,928 643,881,772
- ----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 6,123,435,032 1,148,509,676
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 8,805,909,616 7,657,399,940
- ----------------------------------------------------------------------------
End of period $ 14,929,344,648 $ 8,805,909,616
- ----------------------------------------------------------------------------
CASH RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets (000's omitted) $14,929,345 $8,805,910 $7,657,400 $4,442,187 $4,765,406
Ratio of expenses to average net assets 0.10% 0.10% 0.10% 0.10% 0.10%
Ratio of net investment income to average net assets 5.13% 5.65% 5.57% 5.64% 5.88%
Note: If agents of the Portfolio had not voluntarily waived a portion of their
fees for the periods indicated, the ratios would have been as follows:
RATIOS:
Expenses to average net assets 0.22% 0.22% 0.23% 0.23% 0.23%
Net investment income to
average net assets 5.01% 5.53% 5.44% 5.50% 5.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
17
<PAGE>
CASH RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES Cash Reserves Portfolio (the "Portfolio") is
registered under the U.S. Investment Company Act of 1940, as amended, as a
no-load, diversified, open-end management investment company which was organized
as a trust under the laws of the State of New York. The Declaration of Trust
permits the Trustees to issue beneficial interests in the Portfolio. Signature
Financial Group (Grand Cayman), Ltd. ("SFG") acts as the Portfolio's
Administrator and Citibank, N.A. ("Citibank") acts as the Investment Adviser.
Citibank is a wholly-owned subsidiary of Citicorp, which in turn is a
wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as a result
of the merger of Citicorp and Travelers Group, Inc. which was completed on
October 8, 1998.
The preparation of financial statements in accordance with 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 Agreement 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 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
18
<PAGE>
CASH RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 $18,380,593
of which $8,958,317 was voluntarily waived for the year ended August 31 1999.
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 $6,126,864, all of which were voluntarily waived
for the year ended August 31, 1999. 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 $317,241,778,448 and $311,116,822,640, respectively, for
the year ended August 31, 1999.
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 $75
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1999, the commitment fee allocated to the Portfolio was $32,324.
Since the line of credit was established, there have been no borrowings.
19
<PAGE>
CASH RESERVES PORTFOLIO
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND THE INVESTORS OF CASH RESERVES PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of Cash Reserves Portfolio (the
"Portfolio") as at August 31, 1999 and the related statements of operations and
of changes in net assets and the financial highlights for the periods indicated.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits of these financial statements in accordance with
generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at August 31, 1999 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, 1999, 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 LLP
Chartered Accountants
Toronto, Ontario
October 6, 1999
20
<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 Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York 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 of CitiFunds
Institutional Liquid Reserves. It is authorized for distribution to prospective
investors only when preceded or accompanied by an effective prospectus of
CitiFunds Institutional Liquid Reserves.
Ask for a prospectus (except for CitiFunds Institutional Liquid Reserves, which
preceded or accompanies this report) containing more complete information,
including all sales charges (if any), fees and expenses. Please read the
prospectus carefully before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at$1.00 pershare, it is possible to lose money by investing in the funds.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service agent or call 1-800-625-4554.
(C)1999 Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFA/INS.LI/899
<PAGE>
ANNUAL REPORT o AUGUST 31, 1999
CITIFUNDS(sm)
- -----------------
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:
Despite the volatility of the financial markets over the past twelve months,
money market securities once again provided competitive returns for shareholders
seeking income with capital preservation. Economic conditions during the
reporting period were generally characterized by strong growth coupled with low
inflation. However, forward-looking investors were alternately concerned over
the past year that the economy might either be deteriorating or growing too
quickly. Those who sought the safety of money market funds were largely
unaffected by the volatility of the stock and bond markets caused by changing
market conditions and shifting investor views.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFundsSM Institutional U.S. Treasury Reserves with the
goal of achieving its investment objectives: providing liquidity and as high a
level of current income from U.S. government obligations as is consistent with
preservation of capital.
This report reviews the Fund's investment activities and performance during
the twelve months ended August 31, 1999, and provides a summary of Citibank's
perspective on and outlook for the money market securities marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
September 15, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST YEAR HAS BEEN AN EVENTFUL ONE FOR THE U.S. ECONOMY AND FINANCIAL
MARKETS. Between September 1, 1998 and August 31, 1999, a period that coincides
with CitiFundssm Institutional U.S. Treasury Reserves' fiscal year, the U.S.
economy underwent a full interest-rate cycle. When the reporting period began,
interest rates were declining sharply in response to the currency and credit
crisis that began in Asia, had already spread to Russia and was threatening
Latin America. Many U.S. investors were concerned that economic weakness abroad
might derail the domestic economy. In response, the Federal Reserve Board (the
"Fed") and other central banks throughout the world reduced short-term interest
rates in an attempt to stimulate global economic growth. As a result, interest
rates and yields of most money market instruments declined over the last four
months of 1998.
However, the first eight months of 1999 reflected dramatically different
economic conditions. When it became apparent early in the year that the worst of
the global financial crisis was over, many investors' concerns about an economic
slow-down eased. In fact, the U.S. economy was actually stronger than most
investment professionals expected, and evidence quickly emerged that it might be
growing at unsustainable rates. This unexpectedly robust growth triggered fears
among fixed-income investors that inflation might accelerate from its prevailing
low levels. Tight labor markets and rising commodities prices lent credence to
this view. In response, the Fed raised short-term interest rates twice during
the summer of 1999, effectively offsetting most of the rate cuts it had
implemented last fall.
IN THIS ENVIRONMENT, MOST MONEY MARKET YIELDS GENERALLY ROSE ALONG WITH
INTEREST RATES. However, yields of U.S. Treasury bills did not rise to the same
extent as other types of money market instruments primarily because of the
federal budget surplus which has reduced the federal government's need to borrow
to cover short-term operating deficits. Yet, demand for U.S. Treasury bills
remains very strong from investors seeking highly creditworthy investments in an
uncertain market environment.
The Fund's managers maintained the conservative investment approach that has
long characterized the management of this Fund. For example, the managers
adopted a relatively defensive posture during most of 1999 when interest rates
were rising. This posture included a weighted average maturity positioned toward
the short end of its range, which enabled the managers to capture higher yields
quickly as they became available. Later in the reporting period, the managers
attempted to take advantage of higher yields and wider spreads by reinvesting
proceeds from maturing Treasury bills into higher yielding bills and notes with
longer maturities. The management team found especially attractive income
opportunities in Cash Management Bills, which are securities issued by the U.S.
Treasury in anticipation of tax revenues. This strategy produced an average
weighted maturity for the Fund of between 55 and 60 days, which is toward the
long end of the neutral range.
2
<PAGE>
LOOKING FORWARD, WHILE IT IS POSSIBLE THAT THE FED MAY RAISE SHORT-TERM
INTEREST RATES FURTHER, THE MANAGEMENT TEAM EXPECTS THE U.S. ECONOMY SHOULD
MODERATE. In our view, evidence of such a slow-down may become apparent toward
the end of 1999 if Y2K concerns become more pronounced. Due to the potential for
disruption in the securities markets, many investors and issuers are being
generally cautious. Many corporate issuers appear to be completing funding
activity earlier than usual, and some investors are maintaining relatively
defensive postures. In case of Y2K-related market disruptions, the Fed has
indicated that it is prepared to do what is necessary to ensure liquidity. In
our opinion, further Fed interest-rate increases are therefore unlikely.
FUND FACTS
FUND OBJECTIVE
To provide liquidity and as high a level of current income from U.S. Government
obligations as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
U.S. TREASURY RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
COMMENCEMENT OF OPERATIONS BENCHMARK*
October 2, 1992 o Lipper S&P AAA rated Taxable
Institutional U.S. Treasury
NET ASSETS AS OF 8/31/99 Money Market Funds Average
$605.4 million
*The Lipper Funds Average reflect the performance (excluding sales charges) of
mutual funds with similar objectives.
3
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE FIVE OCTOBER 2, 1992
ALL PERIODS ENDED AUGUST 31, 1999 YEAR YEARS* INCEPTION*
- --------------------------------------------------------------------------------
CitiFunds Institutional U.S. Treasury Reserves 4.48% 5.04% 4.53%
Lipper S&P AAA rated Taxable Institutional
U.S. Treasury Money Market Funds Average 4.61% 5.12% 4.52%+
* Average Annual Total Return
+ From 9/30/92
7-DAY YIELDS
Annualized Current 4.44%
Effective 4.54%
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, 1999 the Fund
paid $0.04395 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: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Yields and total returns
will fluctuate and past performance is no guarantee of future results. Total
return figures include reinvestment of dividends. Returns and yields reflect
certain voluntary fee waivers. If the waivers were not in place, the Fund's
returns and yields would have been lower.
4
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in U.S. Treasury Reserves Portfolio, at value (Note 1) $605,626,917
- -----------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 137,706
Payable for shares of beneficial interest repurchased 5,000
Accrued expenses and other liabilities 119,721
- -----------------------------------------------------------------------------------
Total liabilities 262,427
- -----------------------------------------------------------------------------------
NET ASSETS for 605,364,490 shares of beneficial interest outstanding $605,364,490
- -----------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $605,364,490
- -----------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- -----------------------------------------------------------------------------------
</TABLE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME (Note 1A):
Income from U.S. Treasury Reserves Portfolio $13,662,261
Allocated expenses from U.S. Treasury Reserves Portfolio (293,220)
- -----------------------------------------------------------------------------------------------
$13,369,041
EXPENSES:
Administrative fees (Note 3A) 1,027,467
Shareholder Servicing Agents' fees (Note 3B) 293,562
Distribution fees (Note 4) 293,562
Registration fees 74,601
Custody and fund accounting fees 16,168
Legal fees 14,159
Shareholder reports 13,866
Audit fees 12,363
Transfer agent fees 12,000
Trustees' fees 6,804
Miscellaneous 20,763
- -----------------------------------------------------------------------------------------------
Total expenses 1,785,315
Less aggregate amounts waived by Administrator, Shareholder
Servicing Agent and Distributor (Notes 3A, 3B and 4) (1,345,157
- -----------------------------------------------------------------------------------------------
Net expenses 440,158
- -----------------------------------------------------------------------------------------------
Net investment income $12,928,883
- -----------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------
1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
to shareholders (Note 2): $ 12,928,883 $ 13,108,663
- ----------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares $ 1,598,993,736 $ 1,322,758,384
Net asset value of shares issued to shareholders
from reinvestment of dividends 11,328,224 11,341,435
Cost of shares repurchased (1,269,093,377) (1,376,313,848)
- ----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 341,228,583 (42,214,029)
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 264,135,907 306,349,936
- ----------------------------------------------------------------------------------------
End of period $ 605,364,490 $ 264,135,907
- ----------------------------------------------------------------------------------------
</TABLE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------
<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 0.04395 0.05001 0.04994 0.05051 0.05200
Less dividends from net
investment income (0.04395) (0.05001) (0.04994) (0.05051) (0.05200)
- ------------------------------------------------------------------------------------------
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) $605,364 $264,136 $306,350 $213,395 $120,731
Ratio of expenses to
average net assets+ 0.25% 0.25% 0.25% 0.25% 0.25%
Ratio of net investment income
to average net assets+ 4.40% 5.00% 5.01% 5.03% 5.23%
Total return 4.48% 5.12% 5.11% 5.17% 5.33%
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 $0.03806 $0.04431 $0.04416 $0.04428 $0.04593
RATIOS:
Expenses to average net assets+ 0.84% 0.82% 0.83% 0.87% 0.85%
Net investment income to
average net assets+ 3.81% 4.43% 4.43% 4.41% 4.62%
- ------------------------------------------------------------------------------------------
</TABLE>
+ Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated
expenses.
See notes to financial statements
6
<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. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund invests all of its investable assets in
U.S. Treasury Reserves Portfolio (the "Portfolio"), an open-end, diversified
management investment company for which Citibank, N.A. ("Citibank") serves as
Investment Adviser. The value of such investment reflects the Fund's
proportionate interest (51.0% at August 31, 1999) in the net assets of the
Portfolio. CFBDS, Inc. ("CFBDS"), acts as the Trust's Administrator and
Distributor. Citibank also serves as Sub-Administrator and makes shares
available to customers through various Shareholder Servicing Agents. Citibank is
a wholly-owned subsidiary of Citicorp, which in turn is a wholly-owned
subsidiary of Citigroup Inc. Citigroup Inc. was formed as a result of the merger
of Citicorp and Travelers Group, Inc. which was completed on October 8, 1998.
The preparation of financial statements in accordance with 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.
7
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services
Plan which provides that the Trust, on behalf of 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. For the year ended August 31, 1999,
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 from the Fund, as
compensation for overall administrative services and general office facilities,
which is accrued daily and paid monthly at the annual rate of 0.35% of the
Fund's average daily net assets. The Administrative fees amounted to $1,027,467,
of which $758,033 was voluntarily waived for the year ended August 31, 1999.
Citibank acts as Sub-Administrator and performs such duties and receives such
compensation from CFBDS as from time to time is agreed to by CFBDS and Citibank.
The Fund pays no compensation directly to any Trustee or to any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Fund from the Administrator or its affiliates. Certain of the
officers and a Trustee of the Fund are officers and a director of the
Administrator or its affiliates.
B. Shareholder Servicing Agent Fees The Trust, on behalf of the Fund, 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 $293,562, all of which was voluntarily waived
for the year ended August 31, 1999.
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 $293,562, all of which was voluntarily waived for the year ended
August 31, 1999. The Distributor has voluntarily agreed to assume all
distribution expenses through August 31, 1999.
8
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest ($0.00001 par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $1,585,542,943 and $1,257,518,735, respectively, for
the year ended August 31, 1999.
9
<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, 1999, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended August 31, 1999 and 1998,
and the financial highlights for each of the years in the five-year period ended
August 31, 1999. These financial statements and financial highlights are the
responsibility of 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 represent
fairly, in all material respects, the financial position of CitiFunds
Institutional U.S. Treasury Reserves at August 31, 1999, 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 4, 1999
10
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ---------------------------------------------------------------
U.S. TREASURY BILLS--99.8%
- ---------------------------------------------------------------
United States Treasury Bill,
due 9/09/99 $100,271 $ 100,170,432
United States Treasury Bill,
due 9/15/99 62,671 62,544,593
United States Treasury Bill,
due 9/23/99 55,000 54,845,908
United States Treasury Bill,
due 9/30/99 260,917 259,960,007
United States Treasury Bill,
due 10/07/99 174,198 173,418,481
United States Treasury Bill,
due 10/14/99 81,549 81,106,899
United States Treasury Bill,
due 10/28/99 138,008 137,001,768
United States Treasury Bill,
due 11/18/99 76,191 75,417,789
United States Treasury Bill,
due 1/06/00 82,187 80,845,023
United States Treasury Bill,
due 1/27/00 164,768 161,510,570
--------------
TOTAL INVESTMENTS,
AT AMORTIZED COST 99.8% 1,186,821,470
OTHER ASSETS,
LESS LIABILITIES 0.2 1,805,041
----- --------------
NET ASSETS 100.0% $1,188,626,511
===== ==============
See notes to financial statements
11
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
- --------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost (Note 1A) $1,186,821,470
Cash 1,153,532
Receivable for investment sold 49,861,889
- --------------------------------------------------------------------------
Total assets 1,237,836,891
- --------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 49,072,323
Payable to affiliate - Investment advisory fees (Note 2A) 79,609
Accrued expenses and other liabilities 58,448
- --------------------------------------------------------------------------
Total liabilities 49,210,380
- --------------------------------------------------------------------------
NET ASSETS $1,188,626,511
- --------------------------------------------------------------------------
REPRESENTED BY:
Paid-in capital for beneficial interests $1,188,626,511
- --------------------------------------------------------------------------
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1B) $41,286,380
EXPENSES:
Investment Advisory fees (Note 2A) $1,331,983
Administrative fees (Note 2B) 443,994
Custody and fund accounting fees 200,205
Audit fees 19,200
Trustees' fees 12,721
Legal fees 9,710
Miscellaneous 31,445
- --------------------------------------------------------------------------------
Total expenses 2,049,258
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A and 2B) (1,161,259)
Less fees paid indirectly (Note 1D) (107)
- --------------------------------------------------------------------------------
Net expenses 887,892
- --------------------------------------------------------------------------------
Net investment income $40,398,488
- --------------------------------------------------------------------------------
See notes to financial statements
12
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------
1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 40,398,488 $ 44,213,443
- ----------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 3,426,724,559 1,935,301,975
Value of withdrawals (3,190,341,131) (1,975,581,019)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions 236,383,428 (40,279,044)
- ----------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 276,781,916 3,934,399
- ----------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 911,844,595 907,910,196
- ----------------------------------------------------------------------------------------------------
End of period $1,188,626,511 $ 911,844,595
- ----------------------------------------------------------------------------------------------------
</TABLE>
U.S. TREASURY RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
--------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $1,188,627 $911,845 $907,910 $767,804 $832,258
Ratio of expenses to
average net assets 0.10% 0.10% 0.10% 0.10% 0.10%
Ratio of net investment income
to average net assets 4.55% 5.14% 5.15% 5.20% 5.36%
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% 0.23% 0.24% 0.25% 0.25%
Net investment income to
average net assets 4.42% 5.01% 5.01% 5.05% 5.21%
- ---------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
13
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES U.S. Treasury Reserves Portfolio (the
"Portfolio") is registered under the Investment Company Act of 1940, as amended,
as a no-load, diversified, open-end management investment company which was
organized as a trust under the laws of the State of New York. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio.
CFBDS, Inc ("CFBDS"), acts as the Portfolio's Administrator. Citibank N.A.
("Citibank") acts as the Investment Adviser. Citibank is a wholly-owned
subsidiary of Citicorp, which in turn is a wholly-owned subsidiary of Citigroup
Inc. Citigroup Inc. was formed as a result of the merger of Citicorp and
Travelers Group, Inc. which was completed on October 8, 1998.
The preparation of financial statements in accordance with 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 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 $1,331,983
of which $717,265 was voluntarily waived for the year ended August 31, 1999. The
investment advisory fee is computed at an annual rate of 0.15% of the
Portfolio's average daily net assets.
14
<PAGE>
U.S. TREASURY RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
B. Administrative Fees Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation for
overall administrative services and general office facilities, is accrued daily
and paid monthly at the annual rate of 0.05% of the Portfolio's average daily
net assets. The Administrative fees amounted to $443,994, all of which was
voluntarily waived for the year ended August 31, 1999. The Portfolio pays no
compensation directly to any Trustee or any officer who is affiliated with the
Administrator, all of whom receive remuneration for their services to the
Portfolio from the Administrator or its affiliates. Certain 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 $6,789,307,983 and $6,546,755,122, respectively, for the
year ended August 31, 1999.
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 $75
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1999, the commitment fee allocated to the Portfolio was $2,305. Since
the line of credit was established, there have been no borrowings.
15
<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, 1999, the related statement of operations for
the year then ended, the statement of changes in net assets for the years ended
August 31, 1999 and 1998, and the financial highlights for each of the years in
the five-year period ended August 31, 1999. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audits in accordance with 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, 1999, 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, 1999, 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 4, 1999
16
<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 U.S. TREASURY RESERVES PORTFOLIO)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
200 Berkeley Street, Boston, MA 02116
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York 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 of CitiFunds
Institutional U.S. Treasury Reserves. It is authorized for distribution to
prospective investors only when preceded or accompanied by an effective
prospectus of CitiFunds Institutional U.S. Treasury Reserves.
Ask for a prospectus (except for CitiFunds Institutional U.S. Treasury Reserves,
which preceded or accompanies this report) containing more complete information,
including all sales charges (if any), fees and expenses. Please read the
prospectus carefully before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)1999 Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFA/INS.US/899
<PAGE>
ANNUAL REPORT o AUGUST 31, 1999
CITIFUNDS(sm)
- -------------------
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 6
- -----------------------------------------------------------------
Statement of Changes in Net Assets 7
- -----------------------------------------------------------------
Financial Highlights 8
- -----------------------------------------------------------------
Notes to Financial Statements 9
- -----------------------------------------------------------------
Independent Auditors' Report 11
- -----------------------------------------------------------------
TAX FREE RESERVES PORTFOLIO
Portfolio of Investments 12
- -----------------------------------------------------------------
Statement of Assets and Liabilities 20
- -----------------------------------------------------------------
Statement of Operations 20
- -----------------------------------------------------------------
Statement of Changes in Net Assets 21
- -----------------------------------------------------------------
Financial Highlights 21
- -----------------------------------------------------------------
Notes to Financial Statements 22
- -----------------------------------------------------------------
Independent Auditors' Report 24
- -----------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
Despite the volatility of the financial markets over the past twelve months,
money market securities once again provided competitive returns for shareholders
seeking income with capital preservation. Economic conditions during the
reporting period were generally characterized by strong growth coupled with low
inflation. However, many forward-looking investors were alternately concerned
over the past year that the economy might either be deteriorating or growing too
quickly. Those who sought the safety of money market funds were largely
unaffected by the volatility of the stock and bond markets caused by changing
market conditions and shifting investor views.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFundssm Institutional Tax Free Reserves with the goal of
achieving its investment objectives: providing high levels of current income
exempt from federal income taxes, preservation of capital and liquidity.
This annual report reviews the Fund's investment activities and performance
during the twelve months ended August 31, 1999, and provides a summary of
Citibank's perspective on and outlook for the tax-exempt money market securities
marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
September 15, 1999
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST YEAR HAS BEEN AN EVENTFUL ONE FOR THE U.S. ECONOMY AND FINANCIAL
MARKETS. Between September 1, 1998 and August 31, 1999, the period that
coincides with CitiFundssm Institutional Tax Free Reserves' fiscal year, the
U.S. economy underwent a full interest-rate cycle. When the reporting period
began, interest rates were declining sharply in response to the currency and
credit crisis that began in Asia, spread to Russia and threatened Latin America.
Many U.S. investors were concerned that economic weakness abroad might derail
the domestic economy. In response, the Federal Reserve Board (the "Fed") and
other central banks throughout the world reduced short-term interest rates in an
attempt to stimulate global economic growth. As a result, interest rates and
yields of most money market instruments declined over the last four months of
1998.
However, the first eight months of 1999 reflected dramatically different
economic conditions. When it became apparent early in the year that the worst of
the global financial crisis was over, many investors' concerns about an economic
slowdown eased. In fact, the U.S. economy was actually stronger than most
investment professionals expected, and evidence quickly emerged that it might be
growing at unsustainable rates. This unexpectedly robust growth triggered fears
among fixed-income investors that inflation might accelerate beyond its
prevailing low levels. Tight labor markets and rising commodities prices lent
credence to this view. In response, the Fed raised short-term interest rates
twice during the summer of 1999, effectively offsetting most of the rate cuts it
had implemented last fall.
IN THIS ENVIRONMENT, TAX-EXEMPT MONEY MARKET YIELDS GENERALLY ROSE ALONG WITH
INTEREST RATES. However, tax-exempt money market yields tended to rise less than
yields of taxable money market instruments, primarily because of different
supply-and-demand influences in the two markets. While issuance from
corporations in the taxable market remained robust, there was a relative
shortage of tax-exempt instruments. The strong economy had enabled many states
and municipalities to improve their fiscal operations, reducing their need to
borrow in order to cover short-term deficits. Yet, demand for tax-exempt money
market instruments remained high from individuals and institutions seeking to
minimize their tax liabilities. The combination of low supply and strong demand
helped constrain the rise of tax-exempt yields relative to taxable yields.
The relative shortage of municipal notes made it more difficult for the
Fund's managers to find high-yielding opportunities in high quality, highly
liquid instruments. The Fund's management team found such opportunities
primarily in Variable Rate Demand Notes (VRDNs), which are short-term
instruments that are securitized and issued by investment banks. During the
first seven months of 1999, VRDNs comprised roughly 70% of total portfolio
assets. However, toward the end of the reporting period, even VRDNs were in
relatively short supply because of decreased issuance. In fact, despite higher
interest rates, the yields of VRDNs with daily or weekly maturities were
modestly lower at the end of the reporting period than they were at the
beginning.
2
<PAGE>
By focusing primarily on VRDNs, the Fund's managers were able to gradually
reduce its weighted average maturity to as low as 35 days. In a rising interest
rate environment, this maturity stance enabled the investment team to have funds
available for higher yielding instruments as they became available. The managers
also strategically managed the portfolio's average duration in response to
short-term technical influences, such as temporary changes in supply and demand.
LOOKING FORWARD, THE INVESTMENT TEAM BELIEVES THAT THE FED'S SHIFT TO HIGHER
INTEREST RATES SHOULD HELP EASE INVESTORS' CONCERNS REGARDING THE POSSIBILITY OF
AN OVERHEATED ECONOMY AND RISING INFLATION. Accordingly, the fund's managers are
monitoring market conditions carefully to identify opportunities to take
advantage of interest-rate changes.
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 8/31/99 BENCHMARKS**
$165.7 million o Lipper Institutional Tax Exempt
Money Market Funds Average
o IBC Financial Data Institutional Tax
Free Money Market Funds
Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
** The Lipper Funds Average and IBC Funds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE MAY 21, 1997
ALL PERIODS ENDED AUGUST 31, 1999 YEAR INCEPTION*
- --------------------------------------------------------------------------------
CitiFunds Institutional Tax Free Reserves 3.07% 3.32%
Lipper Institutional Tax Exempt Money Market Funds Average 2.90% 3.13%+
* Average Annual Total Return
+ From 5/31/97
7-DAY YIELDS
Annualized Current 3.06%
Effective 3.10%
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, 1999 the Fund
paid $0.03026 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, 12.9% 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 FINANCIAL DATA INSTITUTIONAL TAX FREE MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds Institutional Tax Free Reserves provided a similar
annualized seven-day yield to that of a comparable IBC Financial Data Money
Market Funds Average, as published in IBC Financial Data Money Fund ReportTM,
for the one year period.
[This table represents chart in the printed piece]
8/25/98 3.24 3.07
3.25 3.09
2.97 2.88
3.16 3.02
3.49 3.34
3.62 3.49
3.46 3.28
10/13/98 3.23 3.05
3.21 3.04
3.13 2.95
3.08 2.94
3.01 2.84
3.09 2.94
3.2 3.02
3.13 2.96
12/8/98 2.86 2.66
3.02 2.84
3.2 3.02
3.38 3.25
3.55 3.46
3.01 2.81
2.91 2.72
1/26/99 2.87 2.66
2.8 2.59
2.48 2.21
2.46 2.22
2.7 2.59
2.84 2.67
2.72 2.56
2.86 2.71
3/23/99 2.91 2.75
2.89 2.72
2.84 2.69
2.72 2.51
2.89 2.77
3.12 3.02
3.31 3.29
3.27 3.19
5/18/99 3.17 3.1
3.08 2.98
3.01 2.93
2.89 2.75
2.96 2.81
3.07 2.93
3.22 3.18
7/6/99 3.14 3.02
2.79 2.55
2.84 2.66
2.95 2.79
2.96 2.81
2.87 2.7
2.96 2.863
3.01 2.84
8/31/99 3.05 2.88
Note: Mutual Fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Yields and total returns
will fluctuate and past performance is no guarantee of future results. Total
return figures include reinvestment of dividends. Returns and yields reflect
certain voluntary fee waivers. If the waivers were not in place, the Fund's
returns and yields would have been lower.
4
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in Tax Free Reserves Portfolio, at value (Note 1) $166,081,221
- ---------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 274,648
Accrued expenses and other liabilities 81,055
- ---------------------------------------------------------------------------------------
Total liabilities 355,703
- ---------------------------------------------------------------------------------------
NET ASSETS for 165,717,088 shares of beneficial interest outstanding $165,725,518
- ---------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $165,717,088
Accumulated net realized gain 8,430
- ---------------------------------------------------------------------------------------
Total $165,725,518
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1A):
Income from Tax Free Reserves Portfolio $6,962,627
Allocated expenses from Tax Free Reserves Portfolio (319,754)
- --------------------------------------------------------------------------------
$6,642,873
EXPENSES:
Administrative fees (Note 3A) 745,566
Shareholder Servicing Agents' fees (Note 3B) 213,019
Distribution fees (Note 4) 213,019
Legal fees 21,108
Custody and fund accounting fees 16,582
Shareholder reports 13,359
Audit fees 11,300
Transfer agent fees 10,000
Trustees' fees 7,994
Miscellaneous 3,213
- --------------------------------------------------------------------------------
Total expenses 1,255,160
Less aggregate amounts waived by Administrator, Shareholder
Servicing Agents, and Distributor (Notes 3A, 3B and 4 (1,042,916)
- --------------------------------------------------------------------------------
Net expenses 212,244
- --------------------------------------------------------------------------------
Net investment income 6,430,629
NET REALIZED GAIN ON INVESTMENTS FROM TAX FREE RESERVES PORTFOLIO 5,181
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,435,810
- --------------------------------------------------------------------------------
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------
1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 6,430,629 $ 3,544,863
Net realized gain on investments 5,181 3,249
- ----------------------------------------------------------------------------------------
Net increase in net assets from operations 6,435,810 3,548,112
- ----------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (6,430,629) (3,544,863)
- ----------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares 849,251,536 426,509,070
Net asset value of shares issued to shareholders
from reinvestment of dividends 1,824,220 1,493,140
Cost of shares repurchased (892,666,594) (280,741,925)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets from transactions
in shares of beneficial interest (41,590,838) 147,260,285
- ----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (41,585,657) 147,263,534
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 207,311,175 60,047,641
- ----------------------------------------------------------------------------------------
End of period $ 165,725,518 $ 207,311,175
- ----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 21, 1997
(COMMENCEMENT
YEAR ENDED AUGUST 31, OF OPERATIONS) TO
-------------------- AUGUST 31
1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, beginning of period $1.00000 $1.00000 $1.00000
Net investment income 0.03026 0.03440 0.00984
Less dividends from net investment income (0.03026) (0.03440) (0.00984)
- -----------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000
- -----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $165,726 $207,311 $60,048
Ratio of expenses to average net assets+ 0.25% 0.25% 0.25%*
Ratio of net investment income to average net assets+ 3.02% 3.43% 3.47%*
Total return 3.07% 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 the Administrator had not voluntarily
assumed expenses during the periods indicated, the net investment income per
share and the ratios would have been as follows:
Net investment income per share $0.02395 $0.02718 $0.00729
RATIOS:
Expenses to average net assets+ 0.88% 0.97% 1.15%*
Net investment income to average net assets+ 2.39% 2.71% 2.57%*
- -----------------------------------------------------------------------------------------------
</TABLE>
+ Includes the Fund's share of Tax Free Reserves Portfolio's allocated expenses
* Annualized
** Not Annualized
See notes to financial statements
8
<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. 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. The value of such
investment reflects the Fund's proportionate interest (approximately 25.3% at
August 31, 1999) in the net assets of the Portfolio. CFBDS, Inc. ("CFBDS"), acts
as the Fund's Administrator and Distributor. Citibank also serves as
Sub-Administrator and makes Fund shares available to customers as Shareholder
Servicing Agent. Citibank is a wholly-owned subsidiary of Citicorp, which in
turn is a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as
a result of the merger of Citicorp and Travelers Group, Inc. which was completed
on October 8, 1998.
The 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.
9
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 1999, 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 $745,566, of which $616,878 was voluntarily
waived for the year ended August 31, 1999. 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 $213,019 all of which was voluntarily waived
for the year ended August 31, 1999.
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 $213,019, all of which was voluntarily waived for the year ended
August 31, 1999.
5. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees
to issue an unlimited number of full and fractional Shares of Beneficial
Interest (without par value).
6. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in
the Portfolio aggregated $1,452,432,729 and $1,500,724,722, respectively, for
the year ended August 31, 1999.
10
<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, 1999, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended August 31, 1999 and 1998,
and the financial highlights for the years ended August 31, 1999 and 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, 1999, 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 4, 1999
11
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------
TAX-EXEMPT COMMERCIAL PAPER--7.5%
- -------------------------------------------------------------
Dallas Texas, Water & Sewer
System Revenue, 3.35%
due 10/07/99 $ 9,813 $ 9,813,000
Houston, Texas,
3.30% due 9/07/99 5,000 5,000,000
Intermountain Power
Agency Revenue,
3.35% due 10/13/99 5,000 5,000,000
Massachusetts Health &
Education, Harvard,
3.25% due 9/14/99 10,000 10,000,000
Phenix City, Alabama,
Environmental Revenue,
AMT 3.30%
due 10/13/99 2,000 2,000,000
Phenix City, Alabama,
Environmental Revenue,
AMT 3.55%
due 2/09/00 7,000 7,000,000
Sullivan Pollution Control
Revenue, Indiana, 3.20%
due 9/08/99 5,000 5,000,000
Sunshine State, Florida,
3.40% due 2/11/00 4,000 4,000,000
Venango, Pennsylvania,
Industrial Development
Authority Revenue, AMT
3.30% due 10/19/99 1,300 1,300,000
------------
49,113,000
------------
GENERAL OBLIGATION BONDS
AND NOTES--2.8%
- -------------------------------------------------------------
Connecticut State,
3.09% due 8/01/12 1,800 1,800,000
Connecticut State,
3.05% due 5/15/14 5,500 5,500,000
Delaware State,
6.13% due 4/01/00 1,465 1,490,535
Hilton Head,
3.60% due 2/17/00 6,000 6,008,043
Minnesota State,
5.60% due 10/01/99 1,260 1,262,218
Ohio State,
4.50% due 5/15/00 1,000 1,008,894
Pennsylvania State,
6.875% due 11/01/99 490 500,336
Wisconsin State,
5.00% due 5/01/00 250 252,668
Wisconsin State,
5.75% due 5/01/00 600 609,417
------------
18,432,111
------------
ANNUAL AND SEMI-ANNUAL TENDER REVENUE
BONDS AND NOTES (PUTS)--19.4%
- -------------------------------------------------------------
Abilene Texas,
6.40% due 2/15/00 $ 300 $ 304,093
Aiken County, South
Carolina, School District,
5.00% due 4/01/00 1,900 1,919,387
Anderson County, South
Carolina, School District,
6.00% due 5/01/00 355 361,206
Arizona Educational Loan
Marketing, 6.90%
due 3/01/00 500 508,270
Austin Texas,
7.00% due 9/01/99 1,880 1,880,000
Austin Texas, Utility System
Revenue, 10.75%
due 5/15/00 2,250 2,366,380
Boston Massachusetts,
5.25% due 10/01/99 2,000 2,002,796
Boston Massachusetts,
Water & Sewer Revenue,
4.50% due 11/01/99 2,840 2,846,959
Camden County, Georgia,
School District, 4.75%
due 4/01/00 1,000 1,008,624
Charlotte, North Carolina,
4.90% due 6/01/00 975 986,741
Chicago, Illinois,
3.05% due 10/31/99 4,000 4,000,000
Chicago, Illinois,
Metropolitan Water
Reclamation District,
4.70% due 12/01/99 3,000 3,012,042
Claremont County, Ohio,
Hospital Facilities
Revenue,
4.70% due 9/01/99 1,200 1,200,000
Clark County, California,
School District, 4.25%
due 9/01/99 750 750,000
Clark County, Kentucky,
Pollution Control
Revenue, 3.10%
due 10/15/99 2,200 2,200,000
Clark County, Nevada,
5.80% due 10/01/99 1,000 1,002,045
Clark County, Nevada,
ARPT Revenue, 3.40%
due 7/01/28 1,445 1,445,000
Clark County, Nevada,
School District, 5.50%
due 6/15/00 2,000 2,035,320
12
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ---------------------------------------------------------------
Collin County, Texas, 4.15%
due 3/01/00 $ 2,725 $2,737,538
Harris County, Texas, Flood
Control District, 7.125%
due 10/01/99 1,190 1,193,943
Hockley County, Texas
Industrial Development Corp., 3.15%
due 11/01/99 9,000 9,000,000
Honolulu, Hawaii, City &
County, 4.60%
due 10/01/99 2,200 2,202,112
Illinois State, Sales Tax
Revenue, 5.75%
due 6/15/00 125 127,196
Iowa State, School
Cash Anticipation Program,
3.50% due 1/28/00 3,000 3,004,203
Irving, Texas,
5.00% due 9/15/99 1,100 1,100,824
Jacksonville, Florida,
Electrical Authority
Revenue, 4.40%
due 10/01/99 1,200 1,201,184
Jefferson County, Kentucky,
Capital Projections, 5.40%
due 4/01/00 670 677,973
Jefferson Parish, Louisiana,
Home Mortgage
Authority Revenue,
3.65% due 6/01/00 2,000 2,000,000
Kentucky State Turnpike
Authority Economical
Development, 7.25%
due 5/15/00 145 150,994
King County, Water, 5.00%
due 12/01/99 850 853,511
Knoxville Tennesee, 5.00%
due 5/01/00 1,000 1,011,331
Lancaster Pennsylvania,
School District, 4.00%
due 5/15/00 1,300 1,305,949
Louisiana State,Offshore,
3.25%
due 9/01/08 2,100 2,100,000
Madison Wisconsin, 4.00%
due 5/01/00 2,050 2,059,930
McHenry County, Illinois,
Public Common
Revenue, 4.00%
due 12/01/99 1,450 1,451,193
Mercer County, North
Dakota, Solid Waste
Disposal Authority, AMT,
3.25% due 12/01/99 $3,500 $3,500,000
Metro Washington D.C.,
Authority Revenue,
5.80% due 10/01/99 2,000 2,004,190
Michigan State, Building
Authority Revenue,
4.00% due 10/01/99 1,240 1,240,645
Michigan State, Building
Authority Revenue,
4.25% due 10/15/99 1,265 1,266,551
Monroe Wisconsin School
District, 3.55%
due 12/10/99 2,500 2,501,213
Montgomery County,
Pennsylvania, 6.80%
due 11/01/99 1,660 1,703,071
Montgomery County,
Pennsylvania, Education &
Health, 7.50%
due 11/01/99 3,465 3,490,373
Murray County, Utah,
Hospital Revenue,
4.50% due 5/15/00 500 503,936
New Orleans, Louisiana,
Single Family Mortgage,
AMT, 3.15%
due 12/01/99 3,500 3,500,000
North Carolina State,
4.50% due 4/01/00 3,000 3,024,905
Northumberland County,
Pennsylvania, 6.30%
due 10/15/99 500 501,657
Ohio State Building
Authority, 5.00%
due 10/01/99 2,520 2,523,330
Oklahoma State Water
Resource Board State
Loan Revenue, 2.95%
due 9/01/99 3,630 3,630,000
Oklahoma State Water
Resource Board State
Loan Revenue, 3.60%
due 3/01/00 1,360 1,360,000
Oregon State, Housing &
Community Services
Development, AMT
3.20% due 4/13/00 2,810 2,810,000
Pennsylvania State,
Turnpike Revenue, 7.50%
due 12/01/99 1,700 1,752,603
Portland Maine,
3.40% due 9/01/99 1,515 1,515,000
13
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -----------------------------------------------------------
Port Houston, Texas,
5.375% due 10/01/99 $ 680 $ 681,241
Rhode Island State, Health
and Educational
Revenue, 8.38% due
4/01/00 1,000 1,048,948
Rhode Island State, Health
and Educational
Revenue, 3.00%
due 12/01/29 1,000 1,000,000
Richmond County, Georgia,
Board of Education,
4.00% due 9/01/99 1,750 1,750,000
San Antonio, Texas, Water
Revenue, 5.90%
due 5/15/00 1,300 1,323,143
Spokane, Washington, 3.50%
due 1/31/00 2,000 2,004,059
Stevens Point, Wisconsin,
3.50% due 5/01/00 300 300,387
Tennesee State, School
Board Authority, 5.00%
due 5/01/00 1,000 1,011,658
Texas State, 5.125%
due 10/01/99 100 100,158
Texas State, 7.75%
due 10/01/99 500 501,700
Texas State, 9.00%
due 10/01/99 500 502,179
Tulsa County, Oklahoma,
Criminal Justice,
4.50% due 9/01/99 2,900 2,900,000
Tulsa County, Oklahoma,
Public School District,
4.50% due 2/01/00 1,375 1,382,247
Utah Water Finance Agency
Revenue, 4.40%
due 10/01/99 1,000 1,000,718
Vermont Housing Finance
Agency, AMT 3.15%
due 4/28/00 4,255 4,255,000
Virginia State, Housing
Development Authority,
6.00% due 7/01/00 3,000 3,054,553
Washington State, 6.10%
due 6/01/00 750 765,561
Wyoming Student Loan
Corp. Revenue, 6.25%
due 12/01/99 5,000 5,036,476
-------------
127,452,246
-------------
REVENUE, TAX, BOND AND TAX REVENUE
ANTICIPATION NOTES--4.2%
- -----------------------------------------------------------
Anchorage, Alaska, TAN's,
3.75% due 1/04/00 $ 5,000 $ 5,013,290
Canton, Massachusetts,
BAN's, 3.90%
due 9/17/99 4,925 4,926,083
Texas State, TRAN's, 4.50%
due 8/31/00 10,500 10,580,955
West Jordan, Utah State,
TRAN's, 4.00%
due 6/30/00 7,350 7,385,267
-------------
27,905,595
-------------
VARIABLE RATE DEMAND NOTES*--67.2%
- -----------------------------------------------------------
ABN-Amro Munitops
Certificates Trust,
due 4/05/06 5,000 5,000,000
ABN-Amro Munitops
Certificates Trust, AMT,
due 7/05/06 2,000 2,000,000
Adams County, Colorado,
Industrial Development Revenue,
due 12/01/15 2,000 2,000,000
Alaska State, Housing
Finance Corp.,
due 6/01/26 3,000 3,000,000
Alexandria, Virginia, Industrial
Development Authority,
due 7/01/26 1,300 1,300,000
Allegheny County,
Pennsylvania, Industrial
Development Authority
Revenue,
due 7/01/27 1,100 1,100,000
Arapahoe County,
Colorado, Revenue
Authority,
due 7/01/07 1,775 1,775,000
Ascension, Louisiana,
Revenue, AMT
due 12/01/27 2,000 2,000,000
Ashe County, North
Carolina, Industrial
Facilities and Pollution,
due 7/01/10 2,100 2,100,000
Beloit, Kansas, Industrial
Development Authority,
AMT, due 12/01/16 3,100 3,100,000
14
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------
Beaver County, Pennsylvania,
Pollution Control
Revenue,
due 12/01/20 $1,500 $ 1,500,000
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
Burke County, Georgia,
Development Authority
Pollution Control,
due 7/01/24 1,200 1,200,000
Carrollton, Georgia, Payroll
Development Authority,
due 3/01/15 1,650 1,650,000
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
Chester County,
Pennsylvania, Health &
Educational Facilities,
due 5/15/22 415 415,000
Chesterfield County, Virginia,
Industrial Development,
due 2/01/03 1,400 1,400,000
Chicago, Illinois, O'Hare
International Airport
Revenue,
due 7/01/10 500 500,000
Clark County, Nevada,
Industrial Development
Revenue, AMT
due 10/01/30 2,700 2,700,000
Clarksville, Arizona,
Industrial Development
Revenue, AMT
due 8/01/13 2,025 2,025,000
Clarksville, Tennessee, Public
Building Authority,
due 10/01/25 765 765,000
Clipper Tax Exempt
Trust, AMT,
due 3/01/15 $ 1,255 $ 1,255,000
Clipper Tax Exempt
Trust, AMT,
due 3/01/16 7,320 7,320,000
Colorado Health Facilities
Authority Revenue,
due 6/01/21 5,000 5,000,000
Columbus, Georgia, Housing
Authority Revenue,
due 11/01/17 850 850,000
Connecticut State, Health &
Educational Facilities,
due 7/01/27 1,500 1,500,000
Davidson County, North
Carolina, Industrial
Facilities, due 7/01/20 2,140 2,140,000
De Kalb County, Georgia,
Industrial Development
Revenue, due 8/01/01 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,
Multi-family Housing
Revenue, due 6/15/2 52,700 2,700,000
Director of State of
Nevada, Department of
Business, AMT,
due 8/01/20 865 865,000
District of Columbia,
Revenue, due 10/01/15 500 500,000
East Baton Rouge,
Louisiana, Pollution
Control Revenue,
due 6/01/11 1,400 1,400,000
Eloy, Arizona, Industrial
Development Authority
Revenue, AMT,
due 8/01/20 1,000 1,000,000
Emmaus, Pennsylvania,
General Authority
Revenue, due 3/01/24 18,300 18,300,000
Facilities Municipal Trust,
due 12/15/14 1,000 1,000,000
Farmington, New Mexico,
Pollution Control
Revenue, due 12/01/16 6,200 6,200,000
Farmington, New Mexico,
Pollution Control
Revenue, due 5/01/24 900 900,000
Fayetteville, Arkansas,
Industrial Development,
AMT, due 12/01/04 1,100 1,100,000
15
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------
Floyd County, Georgia,
Development Authority,
due 3/01/24 $$2,000 $ $2,000,000
Floyd County, Georgia,
Development Authority,
due 9/01/26 1,080 1,080,000
Forsyth County, Georgia,
Industrial Development
Revenue, due 1/01/07 2,000 2,000,000
Fulton County, Georgia,
Development Authority
Revenue, due 2/01/18 2,000 2,000,000
Fulton County, Georgia,
Industrial Development
Authority, AMT,
due 6/01/27 3,900 3,900,000
Georgia Local Government
Trust Certificates Partner-
ships, due 6/01/28 3,000 3,000,000
Gila County, Arizona,
Industrial Development
Authority,
due 11/01/25 1,725 1,725,000
Glasgow, Kentucky, Industrial
Building Revenue, AMT,
due 5/01/14 3,345 3,345,000
Gordon County, Georgia,
Industrial Development
Authority Revenue,
due 8/01/17 1,000 1,000,000
Grapevine, Texas, Industrial
Development Authority
Revenue,
due 12/01/24 1,100 1,100,000
Greenville, Wisconsin
Industrial Development
Revenue, AMT,
due 9/01/13 1,640 1,640,000
Gulf Breeze, Florida,
Revenue,
due 3/31/21 1,485 1,485,000
Gwinett County, Georgia,
Industrial Development
Revenue, due 6/01/05 1,500 1,500,000
Gwinett County, Georgia,
Industrial Development
Revenue, due 3/01/17 465 465,000
Harris County, Texas,
due 8/01/15 7,800 7,800,000
Harris County, Texas,
Health Facilities
Development,
due 2/15/27 900 900,000
Hawkins County, Tennessee,
Industrial Development
Board, due 10/01/27 $$1,450 $ $1,450,000
Hays, Texas, Mental Health
Development Facilities,
due 11/15/14 2,000 2,000,000
Heard County, Georgia,
Pollution Development
Revenue, due 9/01/26 1,800 1,800,000
Heber City, Utah, Industrial
Development Revenue,
AMT, due 7/01/33 3,650 3,650,000
Henderson, Nevada, Health
Care Facilities Revenue,
due 7/01/20 700 700,000
Henrico County, Virginia,
Industrial Development
Authority, due 8/01/23 180 180,000
Illinois Educational Facilities
Authority Revenue,
due 12/01/25 700 700,000
Illinois Educational Facilities
Authority Revenue,
due 1/01/04 7,000 7,000,000
Illinois Health Facilities
Authority Revenue,
due 11/01/15 1,800 1,800,000
Illinois Health Facilities
Authority Revenue,
due 12/01/15 3,875 3,875,000
Illinois Health Facilities
Authority Revenue,
due 1/01/28 1,800 1,800,000
Jackson County, Mississippi,
Pollution Control
Revenue, due 12/01/16 2,800 2,800,000
Jackson County, Mississippi,
Pollution Control
Revenue, due 6/01/23 1,200 1,200,000
Jackson County, Mississippi,
Industrial Development
Revenue, due 12/01/15 2,650 2,650,000
Jacksonville, Florida, Health
Facilities Revenue,
due 12/01/23 1,500 1,500,000
Jefferson County, Alabama,
Sewer Revenue,
due 2/01/33 5,000 5,000,000
Jefferson Parish, Louisiana,
Hospital District 2,
due 12/01/15 2,700 2,700,000
Jefferson Parish, Louisiana,
Home Mortgage,
due 12/01/26 1,690 1,690,000
16
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -------------------------------------------------------------------
Kenton County, Kentucky,
Board Revenue, AMT
due 3/01/15 $ 1,800 $ 1,800,000
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 1,000 1,000,000
Lone Star Texas Authority,
due 12/01/14 400 400,000
Louisa County, Virginia,
Industrial Development
Authority, due 1/01/20 720 720,000
Louisiana Housing Finance
Agency Mortgage
Revenue, AMT,
due 6/01/27 2,970 2,970,000
Macon Trust Pooled
Receipts, due 3/03/07 26,240 26,240,000
Macon Trust Pooled
Receipts, AMT
due 12/05/30 2,315 2,315,000
Madison, Wisconsin,
Community
Development Authority,
due 6/01/22 1,085 1,085,000
Maricopa County, Arizona,
Pollution Control,
due 5/01/29 600 600,000
Marshfield, Wisconsin,
Industrial Development
Revenue, due 12/01/14 2,500 2,500,000
Maryland State,
due 8/01/12 2,115 2,115,000
Maryland State,
Community Development,
due 4/01/25 1,930 1,930,000
Mason County, Kentucky,
Pollution Control,
due 10/15/14 2,900 2,900,000
Massachusetts State Health
and Educational Facilities,
due 7/01/05 1,600 1,600,000
Massachusetts State
Housing Finance
Authority, due 7/01/19 8,500 8,500,000
Massachusetts State Water
Resource Authority,
due 11/01/26 8,000 8,000,000
Mecklenburg County, North
Carolina, Industrial
Facilities, due 9/01/14 $ 2,000 $ 2,000,000
Metropolitan Government,
Nashville Tennessee,
Industrial, due 12/01/18 1,000 1,000,000
Metropolitan Pier & Expo,
Illinois, due 6/15/21 570 570,000
Michigan State Hospital
Finance Authority
Revenue, due 8/15/15 3,000 3,000,000
Minneapolis/St. Paul,
Minnesota,
due 8/15/25 1,000 1,000,000
Mississippi Home Corp.,
Single Family, AMT,
due 6/01/28 3,465 3,465,000
Missouri State, Health and
Educational Facilities
Revenue, due 7/01/18 3,700 3,700,000
Missouri State, Housing &
Development Common
Mortgage, due 3/01/30 4,000 4,000,000
Moorhead, Minnesota, Solid
Waste Disposal, AMT,
due 4/01/12 3,000 3,000,000
Morgan County, Utah, Solid
Waste, due 8/01/31 500 500,000
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
Nash County, North
Carolina, due 12/01/14 1,000 1,000,000
New Hampshire High
Educational & Health,
due 6/01/23 1,300 1,300,000
New Hanover County,
North Carolina,
due 3/01/14 2,250 2,250,000
New Hanover County,
North Carolina,
due 3/01/15 2,250 2,250,000
New Hanover County,
North Carolina,
due 3/01/16 2,250 2,250,000
New Jersey State,
due 2/15/11 3,800 3,800,000
New York City Municipal
Water Finance,
due 6/15/31 6,225 6,225,000
17
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued) August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------
New York City Municipal
Water Finance Authority,
due 6/15/24 $ 1,700 $ 1,700,000
New York Pooled Puttable
Trust, due 10/01/30 595 595,000
New York Pooled Puttable
Trust, AMT
due 12/05/30 30 30,000
New York State,
due 8/01/16 2,700 2,700,000
New York State, Energy
Development,
due 12/01/25 2,400 2,400,000
New York State Thruway
Authority Revenue,
due 1/01/27 10,705 10,705,000
North Carolina Educational
Facilities, due 9/01/26 200 200,000
North Carolina Medical
Care Commonwealth,
due 11/15/28 6,000 6,000,000
North Central, Texas, Health
Facilities Development,
due 12/01/15 1,500 1,500,000
North Little Rock, Arkansas,
Health Facilities,
due 12/01/21 1,700 1,700,000
Oakland California,
Economic Development
Revenue, due 8/01/27 280 280,000
Ohio State, Air Quality
Development Authority,
due 5/01/26 1,755 1,755,000
Orange County, Florida,
Industrial Development
Authority, due 1/01/11 400 400,000
Peoria, Illinois, Health Care
Facilities Revenue,
due 5/01/17 1,255 1,255,000
Person County, North
Carolina, Pollution
Control Authority,
due 11/01/19 3,000 3,000,000
Piedmont, South Carolina,
Municipal Power Agency,
due 1/01/22 1,000 1,000,000
Pinal County, Arizona,
Pollution Control
Revenue, due 12/01/11 2,500 2,500,000
Pitney Bowes Credit Corp.
Leasetops, due 11/13/02 1,620 1,620,465
Port Arthur, Texas,
Navigation District,
due 10/01/24 300 300,000
Puerto Rico Public Finance
Corp., due 6/01/12 $ 300 $ 300,000
Puerto Rico Commonwealth,
due 7/01/20 1,200 1,200,000
Red Bay, Alabama, Industrial
Development Board
Revenue, due 11/01/10 3,400 3,400,000
Rhode Island State Industrial
Facilities Corp.,
due 5/01/05 1,500 1,500,000
Rhode Island State Industrial
Facilities Corp., AMT,
due 6/01/05 3,300 3,300,000
Rhode Island State Industrial
Facilities Corp.,
due 11/01/05 3,710 3,710,000
Richmond Virginia,
Development & Housing
Authority, due 11/01/29 4,900 4,900,000
Roswell, Georgia, Multi-family
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
Saint Charles, Parish,
Louisiana, Pollution
Control Revenue,
due 3/01/24 5,200 5,200,000
San Antonio, Texas, Electrical
Gas Revenue,
due 2/01/19 12,000 12,000,000
Savannah, Illinois, Industrial
Development Revenue,
due 6/01/04 600 600,000
Seattle, Washington,
Municipal Lighting and
Power Revenue,
due 11/01/18 900 900,000
Southeastern Oklahoma
Industrial Development
Authority, due 6/01/16 3,400 3,400,000
Sumner County, Tennessee,
Health Educational
Revenue, due 6/01/29 10,000 10,000,000
Syracuse Industrial
Economic Development
Revenue, due 12/01/05 680 680,000
Tarrant County, Texas,
Health Facilities
Development,
due 11/15/26 960 960,000
18
<PAGE>
TAX FREE RESERVES PORTFOLIO
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ------------------------------------------------------------------
Texas State,
due 10/01/08 $ 4,950 $ 4,950,000
Texas State, Department
of Housing and Community,
due 3/01/17 1,995 1,995,000
Tipton, Indiana, Economic
Development Revenue,
due 7/01/22 1,025 1,025,000
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, due 3/01/18 5,750 5,750,000
Uinta County, Wyoming,
Pollution Control
Revenue, due 12/01/22 1,500 1,500,000
Uinta County, Wyoming,
Pollution Control
Revenue, due 8/15/20 1,400 1,400,000
Utah State Board of
Regents, due 11/01/25 900 900,000
Valdez, Arkansas, Marine
Term Revenue,
due 8/01/25 4,000 4,000,000
Valley, California, Health &
Hospital System Revenue,
due 5/15/25 3,300 3,300,000
Vermont Industrial
Development Authority
Revenue, AMT,
due 12/01/11 800 800,000
Volisia County, Florida,
Health Facilities Authority,
due 11/01/15 1,000 1,000,000
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
Multi-family Mortgage
Revenue, due 7/01/25 1,425 1,425,000
Washington State Health
Care Facilities Revenue,
due 1/01/23 200 200,000
Washington State Public
Power Supply,
due 7/01/17 $ 1,000 $ 1,000,000
Winchester, Kentucky,
Industrial Building, AMT,
due 10/01/18 2,400 2,400,000
Wisconsin State Health &
Educational Facility,
due 8/15/17 2,100 2,100,000
-----------
441,465,465
-----------
TOTAL INVESTMENTS,
AT AMORTIZED COST 101.1% 664,368,417
OTHER ASSETS,
LESS LIABILITIES (1.1) (7,248,098)
----- -----------
NET ASSETS 100.0% $ 657,120,319
===== =============
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 days notice.
See notes to financial statements
19
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
- ------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost and value (Note 1A) $664,368,417
Cash 53,884
Interest receivable 4,779,961
- ------------------------------------------------------------------------
Total assets 669,202,262
- ------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 11,940,955
Payable to affiliate - Investment advisory fees (Note 2A) 72,123
Accrued expenses and other liabilities 68,865
- ------------------------------------------------------------------------
Total liabilities 12,081,943
- ------------------------------------------------------------------------
NET ASSETS $657,120,319
- ------------------------------------------------------------------------
REPRESENTED BY:
Capital paid-in for beneficial interests $657,120,319
- ------------------------------------------------------------------------
TAX FREE RESERVES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME (Note 1B): $23,864,214
- --------------------------------------------------------------------------------------
EXPENSES
Investment Advisory fees (Note 2A) $1,461,892
Administrative fees (Note 2B) 365,473
Custody and fund accounting fees 206,804
Legal fees 30,556
Audit fees 20,500
Trustees' fees 13,991
Miscellaneous 11,664
- --------------------------------------------------------------------------------------
Total expenses 2,110,880
Less aggregate amounts waived by Investment Adviser and
Administrator (Notes 2A and 2B) (1,002,903)
Less fees paid indirectly (Note 1D) (12,038)
- --------------------------------------------------------------------------------------
Net expenses 1,095,939
- --------------------------------------------------------------------------------------
Net investment income 22,768,275
NET REALIZED GAIN ON INVESTMENTS 16,677
- --------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $22,784,952
- --------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
20
<PAGE>
TAX FREE RESERVES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 22,768,275 $ 20,567,400
Net realized gain on investments 16,677 17,001
- ----------------------------------------------------------------------------------------------------
Increase in net assets from operations 22,784,952 20,584,401
- ----------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Proceeds from contributions 3,367,197,193 1,069,295,431
Value of withdrawals (3,456,720,231) (849,651,201)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital transactions (89,523,038) 219,644,230
- ----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (66,738,086) 240,228,631
- ----------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 723,858,405 483,629,774
- ----------------------------------------------------------------------------------------------------
End of period $ 657,120,319 $ 723,858,405
- ----------------------------------------------------------------------------------------------------
</TABLE>
TAX FREE RESERVES PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period
(000's omitted) $657,120 $723,858 $483,630 $372,171 $394,222
Ratio of expenses to
average net assets 0.15% 0.15% 0.19% 0.30% 0.32%
Ratio of net investment income
to average net assets 3.11% 3.53% 3.46% 3.31% 3.55%
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% 0.29% 0.31% 0.32% 0.32%
Net investment income to average
net assets 2.98% 3.39% 3.35% 3.29% 3.55%
- ---------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
21
<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, nondiversified, open-end management investment company which was
organized as a trust under the laws of the State of New York. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio.
CFBDS, Inc. ("CFBDS"), acts as the Portfolio's Administrator. Citibank, N.A.
("Citibank") acts as the Investment Adviser. Citibank is a wholly-owned
subsidiary of Citicorp, which in turn, is a wholly-owned subsidiary of Citigroup
Inc. Citigroup Inc. was formed as a result of the merger of Citicorp and
Travelers Group, Inc., which was completed on October 8, 1998.
The preparation of financial statements in accordance with 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 Portfolio's custodian calculates its fees based
on the Portfolio's average daily net assets. The fee is reduced according to a
fee arrangement, which provides for custody fees to be reduced based on a
formula developed to measure the value of cash deposited with the custodian by
the Portfolio. This amount is shown as a reduction of expenses on the Statement
of Operations.
E. Other Purchases, maturities and sales, of money market instruments are
accounted for on the date of the transaction.
2. INVESTMENT ADVISORY FEE AND ADMINISTRATIVE FEE
A. Investment Advisory Fee The investment advisory fee paid to Citibank, as
compensation for overall investment management services, amounted to $1,461,892,
of which $637,430 was voluntarily waived for the year ended August 31, 1999. The
investment advisory fee is computed at the annual rate of 0.20% of the
Portfolio's average daily net assets.
22
<PAGE>
TAX FREE RESERVES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 $365,473, all of which was voluntarily waived for the year ended
August 31, 1999. The Portfolio pays no compensation directly to any Trustee or
any officer who is affiliated with the Administrator, all of whom receive
remuneration for their services to the Portfolio from the Administrator or its
affiliates. Certain 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 $2,623,416,618 and $2,678,252,942, respectively, for the year ended
August 31, 1999.
4. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at August 31, 1999, for federal income tax purposes, amounted
to $664,368,417.
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 $75
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1999, the commitment fee allocated to the Portfolio was $1,942. Since
the line of credit was established, there have been no borrowings.
23
<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, 1999, the related statement of operations for the
year then ended, the statement of changes in net assets for the years ended
August 31, 1999 and 1998, and the financial highlights for each of the years in
the five-year period ended August 31, 1999. 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, 1999, 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, 1999, 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 4, 1999
24
<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
200 Berkeley Street, Boston, MA 02116
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 Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York Tax Free Reserves
PREMIUM MONEY MARKETS
o CitiFunds Premium Liquid Reserves
o CitiFunds Premium US 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 of CitiFunds
Institutional Tax Free Reserves. It is authorized for distribution to
prospective investors only when preceded or accompanied by an effective
prospectus of CitiFunds Institutional Tax Free Reserves.
Ask for a prospectus (except for CitiFunds Institutional Tax Free Reserves,
which preceded or accompanies this report) containing more complete information,
including all sales charges (if any), fees and expenses. Please read the
prospectus carefully before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)1999 Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFSA/INS TF/899
<PAGE>
ANNUAL REPORT o AUGUST 31, 1999
CITIFUNDS(sm)
- -------------------
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:
Despite the volatility of the financial markets over the past twelve months,
money market securities once again provided competitive returns for shareholders
seeking income with capital preservation. Economic conditions during the
reporting period were generally characterized by strong growth coupled with low
inflation. However, many forward-looking investors were alternately concerned
over the past year that the economy might either be deteriorating or growing too
quickly. Those investors who sought the safety of money market funds were
largely unaffected by the volatility of the stock and bond markets caused by
changing market conditions and shifting investor views.
In this environment, the CitiFunds' investment adviser, Citibank, N.A.,
continued to manage CitiFundsSM Institutional Cash Reserves with the goal of
achieving its investment objectives: providing liquidity and as high a level of
current income as is consistent with the preservation of capital.
This report reviews the Fund's investment activities and performance during
the twelve months ended August 31, 1999, and provides a summary of Citibank's
perspective on and outlook for the money market securities marketplace.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
September 15, 1999
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
THE PAST YEAR HAS BEEN AN EVENTFUL ONE FOR THE U.S. ECONOMY AND FINANCIAL
MARKETS. Between September 1, 1998 and August 31, 1999, a period that coincides
with CitiFundsSM Institutional Cash Reserves, fiscal year, the U.S. economy
underwent a full interest-rate cycle. When the reporting period began, interest
rates were declining sharply in response to the currency and credit crisis that
began in Asia, had already spread to Russia and was threatening Latin America.
Many U.S. investors were concerned that economic weakness abroad might derail
the domestic economy. In response, the Federal Reserve Board (the "Fed") and
other central banks throughout the world reduced short-term interest rates in an
attempt to stimulate global economic growth. As a result, interest rates and
yields of most money market instruments declined over the last four months of
1998.
However, the first eight months of 1999 reflected dramatically different
economic conditions. When it became apparent early in the year that the worst of
the global financial crisis was over, many investors' concerns about an economic
slowdown eased. Japan's economy began to improve, conditions in Latin America
remained relatively stable and Europe's economies rebounded more strongly than
previously expected. In fact, the U.S. economy was also stronger than most
analysts expected, and evidence quickly emerged that it might be growing at
unsustainable rates. This unexpectedly robust economic growth triggered fears
among fixed-income investors that inflation might accelerate from its prevailing
low levels. Tight labor markets and rising commodities prices lent credence to
this view. In response, the Fed raised short-term interest rates twice during
the summer of 1999, effectively offsetting most of the rate cuts it had
implemented last fall.
IN THIS ENVIRONMENT, MONEY MARKET YIELDS GENERALLY ROSE ALONG WITH INTEREST
RATES. In addition, the differences in yields (also known as "spreads") widened
among securities with different maturities. This was due primarily to aggressive
funding strategies adopted by many corporations in anticipation of year-end
concerns over potential Y2K problems. Many corporations have decided to raise
capital now, rather than wait until November or December when investors'
concerns over possible computer related problems might constrain liquidity in
the markets.
The Fund's management team maintained a conservative investment approach that
characterizes the management of this Fund. Within those parameters, the managers
adopted a relatively defensive posture during most of 1999 when interest rates
were rising. This strategy included an weighted average maturity positioned
toward the short end of its range, which enabled the managers to capture higher
yields quickly as they became available.
LATER IN THE REPORTING PERIOD, THE FUND'S MANAGERS ATTEMPTED TO TAKE
ADVANTAGE OF HIGHER YIELDS AND WIDER SPREADS BY INVESTING IN HIGHLY RATED MONEY
MARKET INSTRUMENTS WITH LONGER MATURITIES. The management team found especially
attractive income opportunities in bank obligations, commercial
2
<PAGE>
paper backed by credit card receivables and short-term debt instruments issued
by industrial companies and insurance companies. At the same time, the managers
tried to ensure sufficient liquidity for the Fund by balancing those modestly
longer-term holdings with very short-term positions in commercial paper. This
"barbell strategy"--named because of its concentrations at both ends of the
money market maturity spectrum--produced a weighted average maturity for the
Fund of between 45 and 50 days, which is toward the long end of the neutral
range.
LOOKING FORWARD, WHILE IT IS POSSIBLE THAT THE FED MAY RAISE SHORT-TERM
INTEREST RATES AGAIN, THE MANAGERS EXPECT THAT THE U.S. ECONOMY SHOULD MODERATE.
In their view, evidence of such a slowdown may become apparent toward the end of
1999 if Y2K concerns become more pronounced. Many investors and issuers are
being generally cautious. Many corporate issuers are completing funding activity
earlier than usual, and investors are maintaining relatively defensive postures.
In case of Y2K-related market disruptions, the Fed has indicated that it is
prepared to do what is necessary to ensure liquidity. According to the managers,
additional Fed interest-rate increases are therefore unlikely.
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 8/31/99 BENCHMARKS*
$388.9 million o Lipper S&P AAA-rated
Institutional Money Market
Funds Average
o IBC Financial Data S&P AAA-rated
Taxable Institutional Money
Market Average
* The Lipper Funds Average and IBCFunds Average reflect the performance
(excluding sales charges) of mutual funds with similar objectives.
3
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ONE 10/17/97
FOR THE PERIOD ENDED AUGUST 31, 1999 YEAR (INCEPTION)*
- --------------------------------------------------------------------------------
CitiFunds Institutional Cash Reserves 5.04% 5.29%
Lipper S&P AAA-rated Institutional
Money Market Funds Average 4.94% 5.19%+
* Average Total Return
+ From 10/31/97
7-DAY YIELDS
Annualized Current 5.07%
Effective 5.19%
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, 1999, the Fund
paid $0.04930 per share to shareholders from net investment income. For such
period 2.4% of dividends paid were derived from interest earned from U.S.
Government and U.S. Government agency obligations.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL CASH RESERVES VS. IBC
FINANCIAL DATA S&P AAA-RATED TAXABLE INSTITUTIONAL MONEY MARKET FUNDS AVERAGE
As illustrated, CitiFunds Institutional Cash Reserves generally provided a
higher annualized seven-day yield to that of a comparable IBC Financial Data
Money Market Funds Average, as published in IBC Money Fund ReportTM, for the
one-year period.
[This table represents chart in printed piece]
8/25/98 5.38 5.31
5.41 5.33
5.4 5.3
5.41 5.32
5.4 5.29
5.4 5.26
5.34 5.22
10/13/98 5.27 5.13
5.22 5.09
5.2 5
5.16 5.08
5.09 4.97
5.05 5
5.04 4.86
5.07 4.92
12/8/98 5.05 4.86
5.07 4.91
5.03 4.87
5.07 4.87
5.02 4.92
4.97 4.79
4.93 4.79
1/26/99 4.9 4.73
4.89 4.73
4.86 4.69
4.8 4.67
4.73 4.66
4.75 4.67
4.72 4.64
4.72 4.64
3/23/99 4.72 4.61
4.73 4.65
4.75 4.67
4.7 4.6
4.67 4.6
4.65 4.58
4.68 4.63
4.64 4.55
5/18/99 4.71 4.59
4.73 4.56
4.58 4.61
4.67 4.55
4.68 4.58
4.72 4.58
4.77 4.65
7/6/99 4.88 4.72
4.86 4.72
4.88 4.75
4.89 4.76
4.91 4.77
4.92 4.78
4.95 4.87
4.95 4.89
8/31/99 5.07 4.92
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Yields and total returns
will fluctuate and past performance is no guarantee of future results. Total
return figures include reinvestment of dividends. Returns and yields reflect
certain voluntary fee waivers. If the waivers were not in place, the Fund's
returns and yields would have been lower.
4
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
PORTFOLIO OF INVESTMENTS August 31, 1999
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- -----------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (DOMESTIC) -- 6.4%
- -----------------------------------------------------------------------
Harris Trust &
Savings Bank
5.15 % due 9/13/99 $ 10,000 $ 10,000,000
National Westminster
Bank PLC
5.37 % due 10/25/99 15,000 15,000,334
--------------
25,000,334
--------------
CERTIFICATES OF DEPOSIT (YANKEE) -- 9.4%
- -----------------------------------------------------------------------
Bayerische Vereinsbank
4.99 % due 9/07/99 10,000 10,000,008
Commerzbank AG
5.078% due 2/11/00 10,000 9,998,139
Deutsche Bank AG
5.28 % due 10/12/99 10,000 9,999,365
Rabobank Netherland
4.96 % due 11/09/99 6,500 6,494,893
--------------
36,492,405
--------------
COMMERCIAL PAPER -- 69.1%
- -----------------------------------------------------------------------
Allianz of America
5.10 % due 9/14/99 12,000 11,977,900
Atlantis One
Fundings Corp.
5.27 % due 9/10/99 15,000 14,980,237
B P America Inc.
5.13 % due 9/30/99 12,000 11,950,410
Barton Capital Corp.
5.23 % due 9/14/99 11,000 10,979,344
Enterprise Funding Corp.
5.28 % due 9/28/99 12,000 11,952,480
Four Winds Funding Corp.
5.30 % due 9/20/99 12,000 11,966,433
General Electric
Capital Corp.
5.16 % due 11/15/99 10,000 9,892,500
General Electric
Capital Corp.
5.70 % due 2/11/00 5,000 4,870,958
Halifax PLC
5.27 % due 9/03/99 17,000 16,995,023
Household Financial
Corp
5.23 % due 9/13/99 16,000 15,972,107
KFW International
Finance Inc.
5.22 % due 11/22/99 6,500 6,422,715
Monte Rosa
Capital Corp.
5.31 % due 9/24/99 15,000 14,949,400
Pooled Accounts
Receivable Capital
Corp
5.19 % due 9/29/99 11,000 10,955,597
Province de Quebec
4.80 % due 10/14/99 8,000 7,954,133
Prudential Funding
Corp
5.21 % due 9/30/99 $ 15,000 $ 14,937,046
Reed Elsevier
5.27 % due 10/18/99 7,750 7,696,678
Repeat Offering
Securitization
5.42 % due 10/20/99 15,000 14,890,363
St. Michael
Financial LTD
5.15 % due 9/21/99 8,782 8,756,874
Santander Financial
5.26 % due 10/28/99 12,000 11,901,390
Siemens Capital Corp.
5.25 % due 9/30/99 15,000 14,936,563
Sigma Financial Inc.
5.47 % due 12/01/99 12,000 11,836,503
UBS Finance
Delaware Inc.
4.87 % due 10/12/99 10,000 9,944,536
Windmill Funding
Corp
5.25 % due 9/01/99 12,000 12,000,000
--------------
268,719,190
--------------
CORPORATE NOTES -- 5.1%
- -----------------------------------------------------------------------
Goldman Sachs
Group Inc.
5.66 % due 8/07/00 10,000 10,000,000
Morgan Stanley
Dean Witter
5.62 % due 2/04/00 10,000 10,000,000
--------------
20,000,000
--------------
FLOATING RATE NOTES -- 3.9%
- -----------------------------------------------------------------------
Bear Stearns
Companies Inc.
5.33 % due 4/10/00 15,000 15,000,000
--------------
TIME DEPOSITS -- 10.2%
- -----------------------------------------------------------------------
Canadian Imperial Bank
5.33 % due 9/01/99 12,000 12,000,000
Dresdner Bank
5.33 % due 9/01/99 12,484 12,484,000
Westdeutsche
Landesbank
5.33 % due 9/01/99 15,000 15,000,000
--------------
39,484,000
--------------
TOTAL INVESTMENTS, AT
AMORTIZED COST 104.1% 404,695,929
OTHER ASSETS,
LESS LIABILITIES (4.1) (15,757,248)
----- --------------
NET ASSETS 100.0% $ 388,938,681
===== ==============
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at amortized cost (Note 1A) $404,695,929
Cash 484
Interest receivable 926,773
- -----------------------------------------------------------------------------------
Total assets 405,623,186
- -----------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 15,000,000
Dividends payable 1,557,839
Payable to affiliate:
Management fees (Note 3) 10,347
Accrued expenses and other liabilities 116,319
- -----------------------------------------------------------------------------------
Total liabilities 16,684,505
- -----------------------------------------------------------------------------------
NET ASSETS for 388,938,681 shares of beneficial interest outstanding $388,938,681
- -----------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $388,938,681
- -----------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
- -----------------------------------------------------------------------------------
</TABLE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME (Note 1B) $15,063,789
EXPENSES:
Management fees (Note 3) $ 576,270
Distribution fees (Note 4) 288,348
Custody and fund accounting fees 112,807
Audit fees 31,954
Registration fees 31,489
Legal fees 30,278
Shareholder reports 21,162
Transfer agent fees 19,364
Trustees' fees 5,616
Miscellaneous 27,450
- ------------------------------------------------------------------------------------------------
Total expenses 1,144,738
Less aggregate amounts waived by the Manager and Distributor
(Notes 3 and 4) (422,177)
- ------------------------------------------------------------------------------------------------
Net expenses 722,561
- ------------------------------------------------------------------------------------------------
Net investment income $14,341,228
- ------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 17, 1997+
YEAR ENDED TO
AUGUST 31, 1999 AUGUST 31, 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income, declared as dividends to shareholders
(Note 2) $ 14,341,228 $ 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 2,452,254,402 2,513,814,384
Net asset value of shares issued to shareholders
from reinvestment of dividends 817 --
Cost of shares repurchased (2,308,836,048) (2,268,294,874)
- -------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 143,419,171 245,519,510
- -------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 245,519,510 --
- -------------------------------------------------------------------------------------------------
End of period $ 388,938,681 $ 245,519,510
- -------------------------------------------------------------------------------------------------
</TABLE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
OCTOBER 17, 1997+
YEAR ENDED TO
AUGUST 31, 1999 AUGUST 31, 1998
- --------------------------------------------------------------------------------
Net Asset Value, beginning of period $ 1.00000 $1.00000
Net investment income 0.04930 0.04736
Less dividends from net investment income (0.04930) (0.04736)
- --------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00000 $1.00000
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $388,939 $245,520
Ratio of expenses to average net assets 0.25% 0.25%*
Ratio of net investment income to average net assets 4.97% 5.47%*
Total return 5.04% 4.84%**
Note: If agents of the Fund had not voluntarily waived all or a portion of their
fees from the Fund for the periods 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 $0.04791 $0.04571
RATIOS:
Expenses to average net assets 0.40% 0.44%*
Net investment income to average net assets 4.83% 5.28%*
- --------------------------------------------------------------------------------
+ Commencement of Operations
* Annualized
** Not annualized
See notes to financial statements
7
<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"), acts as the Fund's Sub-Administrator
and Distributor. Citibank is a wholly-owned subsidiary of Citicorp, which in
turn is a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was formed as
a result of the merger of Citicorp and Travelers Group, Inc., which was
completed on October 8, 1998.
The preparation of financial statements in accordance with 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.
8
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
E. 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.
F. 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 5:00 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 $576,270, of which $293,247 was voluntarily
waived for the year ended August 31, 1999. 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 $288,348 of which $128,930 was voluntarily waived
for the year ended August 31, 1999.
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 $8,784,221,252 and $8,635,827,383, respectively, for the
year ended August 31, 1999.
9
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
NOTES TO FINANCIAL STATEMENTS (Continued)
7. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at August 31, 1999, for federal income tax purposes, amounted
to $404,695,929.
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 $75
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the year ended
August 31, 1999, the commitment fee allocated to the Fund was $852. Since the
line of credit was established, there have been no borrowings.
10
<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, a separate series of CitiFunds Institutional Trust (the "Trust") (a
Massachusetts business trust), as of August 31, 1999, the related statement of
operations for the year then ended, the statement of changes in net assets and
the financial highlights for the year ended August 31, 1999 and for the period
from October 17, 1997 (commencement of operations) to 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, 1999, 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 CitiFunds
Institutional Cash Reserves at August 31, 1999, 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 4, 1999
11
<PAGE>
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<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
200 Berkeley Street, Boston, MA 02116
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 Value Portfolio
o CitiFunds Small Cap Growth Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds California Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York 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 of CitiFunds
Institutional Cash Reserves. It is authorized for distribution to prospective
investors only when preceded or accompanied by an effective prospectus of
CitiFunds Institutional Cash Reserves.
Ask for a prospectus (except for CitiFunds Institutional Cash Reserves, which
preceded or accompanies this report) containing more complete information,
including all sales charges (if any), fees and expenses. Please read the
prospectus carefully before you invest or send money.
Although each money market fund seeks to maintain the value of your investment
at $1.00 per share, it is possible to lose money by investing in the funds.
CitiFunds are made available by CFBDS, Inc. as distributor. For more information
contact your Service Agent or call 1-800-625-4554.
(C)1999 Citicorp [GRAPHIC OMITTED] Printed on recycled paper CFA/INS-CR/899
