CitiFunds Institutional Trust
CITIFUND(SM)
- -------------
INSTITUTIONAL
LIQUID 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 LIQUID 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
- --------------------------------------------------------------------------------
CASH RESERVES PORTFOLIO
Portfolio of Investments 10
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities 13
- --------------------------------------------------------------------------------
Statement of Operations 13
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets 14
- --------------------------------------------------------------------------------
Financial Highlights 14
- --------------------------------------------------------------------------------
Notes to Financial Statements 15
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 6-month period ended February 28, 1999, was a good one for the U.S. economy
and short-term money market securities. Early in the period, concerns about the
potential spread of the Asian currency and credit crisis to Latin America
contributed to the Federal Reserve Board's decision to reduce key short-term
interest rates three times between September and November. While this easing of
monetary policy caused short-term money market yields to decline, very low
inflation continued to support above-average REAL returns, which are nominal
yields less the rate of inflation.
In contrast, longer term fixed-income securities did not fare as well as
money market securities. That's because longer term yields rose in response to
reports of robust U.S. economic growth in the fourth quarter of 1998 and the
first two months of 1999. When yields of longer term securities rise, their
prices decline. Accordingly, money market funds such as CitiFunds Institutional
Liquid Reserves generally performed better than longer term bond funds over the
six-month period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- -------------------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
LOW INFLATION IN THE U.S. AND RECESSIONARY CONDITIONS IN SOME OVERSEAS ECONOMIES
CONTRIBUTED TO LOWER YIELDS on taxable money market securities. The financial
crisis that began in Southeast Asia in mid-1997 spread to other emerging markets
during the third quarter of 1998. Russia was forced by the credit crunch to
devalue its currency and effectively defaulted on its government bonds.
Similarly, the flight of foreign capital from Latin America adversely affected
Brazil, which devalued its currency in January, 1999.
Why did events overseas affect the U.S. money markets? A major reason is that
the U.S. Federal Reserve Board became concerned that the problems in Asia and
Latin America might curtail exports of U.S. companies, which could, in turn,
dampen domestic economic growth. To help stop the further spread of the Asian
crisis and promote continued U.S. economic growth, the Federal Reserve Board
reduced key short-term interest rates in three steps between September and
November.
In anticipation of the Federal Reserve Board's action, WE BEGAN THE REPORTING
PERIOD WITH THE PORTFOLIO'S AVERAGE MATURITY TOWARD THE LONG END OF ITS RANGE.
This strategy enabled us to capture higher yields for as long as practical while
short-term interest rates fell.
In addition, we primarily focused our investments on high-quality bank
obligations and commercial paper during the six-month period. That's because, in
our opinion, bank obligations and commercial paper offered more attractive
values than other short-term money market instruments. For example, the
difference in yields between bank obligations and U.S. Treasury bills was
unusually wide. That's primarily because the federal budget surplus reduced the
government's need to borrow, limiting the supply of Treasury bills available to
investors. Yet, demand for these direct obligations of the federal government
surged in the third quarter of 1998 when U.S. and foreign investors sought a
safe haven amid the turmoil in Asia, Russia and Latin America.
As our holdings matured during the period, we reinvested the proceeds in
money market instruments with modestly shorter maturities. Consequently, THE
PORTFOLIO'S AVERAGE MATURITY GRADUALLY DECLINED OVER THE SIX MONTHS, enabling us
to respond faster to opportunities for higher yields. Such opportunities arose
in February, 1999, for example, when reports of surprisingly strong U.S.
economic growth caused yields of longer term bonds to rise. In this new
environment, we modestly extended the Portfolio's average maturity to capture
the higher yields provided by longer-dated securities.
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. Yet, persistently low inflation should, in our view, prevent the Federal
Reserve Board from raising short-term interest rates in 1999 in an attempt to
forestall inflationary pressures. If our outlook is correct, money market yields
should remain relatively stable over the foreseeable future, while longer term
yields may rise moderately. We intend to continue to monitor global economic
influences carefully, with an eye toward adjusting our investment strategy in a
way that attempts to capture the opportunities and reduce the risks of
prevailing market conditions.
2
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with liquidity and as high a level of current income
as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
CASH RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
COMMENCEMENT OF OPERATIONS BENCHMARKS
October 2, 1992 o Lipper Taxable Institutional Money
Funds Average
NET ASSETS AS OF 2/28/99 o IBC Institutional Taxable Money
$4,536.5 million Funds Average
3
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
FUND PERFORMANCE
TOTAL RETURNS
<TABLE>
<CAPTION>
SINCE
ALL PERIODS ENDED FEBRUARY 28, 1999 SIX ONE FIVE OCTOBER 2, 1992
(Unaudited) MONTHS** YEAR YEARS* INCEPTION*
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CitiFunds Institutional Liquid Reserves 2.58% 5.47% 5.50% 4.99%
Lipper Taxable Institutional Money Funds Average 2.45% 5.20% 5.21% 4.73%+
</TABLE>
** Average Annual Total Return
** Not Annualized
+ From 10/31/92
7-DAY YIELDS
Annualized Current 4.90%
Effective 5.02%
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.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL LIQUID RESERVES
VS. IBC INSTITUTIONAL TAXABLE MONEY FUNDS AVERAGE
As illustrated, CitiFunds Institutional Liquid Reserves generally provided a
higher annualized seven-day yield to that of a comparable IBC Money Fund
Average, as published in IBC Money Fund ReportTM, for the one year period.
[This table represents a chart in the printed piece.]
IBC Institutional CitiFunds
Date Taxable Money Avg. Institutional Liquid Res.
- ---- ------------------ -------------------------
3/3/98 5.33% 5.57%
3/10/98 5.28% 5.50%
3/17/98 5.29% 5.52%
3/24/98 5.28% 5.49%
3/31/98 5.30% 5.54%
4/7/98 5.28% 5.52%
4/14/98 5.28% 5.52%
4/21/98 5.27% 5.49%
4/28/98 5.26% 5.49%
5/5/98 5.26% 5.47%
5/12/98 5.24% 5.43%
5/19/98 5.28% 5.53%
5/26/98 5.26% 5.48%
6/2/98 5.29% 5.55%
6/9/98 5.26% 5.48%
6/16/98 5.28% 5.51%
6/23/98 5.27% 5.49%
6/30/98 5.31% 5.55%
7/7/98 5.29% 5.62%
7/14/98 5.26% 5.48%
7/21/98 5.27% 5.50%
7/28/98 5.28% 5.50%
8/4/98 5.30% 5.53%
8/11/98 5.26% 5.48%
8/18/98 5.28% 5.51%
8/25/98 5.27% 5.49%
9/1/98 5.28% 5.52%
9/8/98 5.25% 5.48%
9/15/98 5.27% 5.50%
9/22/98 5.24% 5.47%
9/29/98 5.22% 5.46%
10/6/98 5.18% 5.44%
10/13/98 5.09% 5.30%
10/20/98 5.05% 5.29%
10/27/98 4.97% 5.12%
11/3/98 5.03% 5.22%
11/10/98 4.95% 5.15%
11/17/98 4.97% 5.15%
11/24/98 4.85% 5.02%
12/1/98 4.90% 5.10%
12/8/98 4.84% 5.03%
12/15/98 4.89% 5.09%
12/22/98 4.87% 5.08%
12/29/98 4.87% 5.06%
1/5/99 4.90% 5.04%
1/12/99 4.80% 4.99%
1/19/99 4.79% 4.98%
1/26/99 4.72% 4.89%
2/2/99 4.72% 4.94%
2/9/99 4.68% 4.91%
2/16/99 4.66% 4.90%
2/23/99 4.72% 4.89%
Note: Mutual Fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. 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
FEBRUARY 28, 1999 (Unaudited)
================================================================================
ASSETS:
Investments in Cash Reserves Portfolio, at value (Note 1A) $4,542,332,112
Receivable for shares of beneficial interest sold 900,000
- --------------------------------------------------------------------------------
Total assets 4,543,232,112
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for shares of beneficial interest repurchased 2,853,344
Dividends payable 3,286,876
Accrued expenses and other liabilities 550,311
- --------------------------------------------------------------------------------
Total liabilities 6,690,531
- --------------------------------------------------------------------------------
NET ASSETS for 4,536,541,581 shares of beneficial
interest outstanding $4,536,541,581
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $4,536,541,581
================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME (Note 1B):
Income from Cash Reserves Portfolio $109,003,049
Allocated expenses from Cash Reserves Portfolio (2,039,031)
- --------------------------------------------------------------------------------
$106,964,018
EXPENSES:
Administrative fees (Note 3A) 7,142,583
Shareholder Servicing Agents' fees (Note 3B) 2,040,738
Distribution fees (Note 4) 2,040,738
Registration fees 402,568
Trustees' fees 33,102
Shareholder reports 8,001
Custody and fund accounting fees 7,732
Legal fees 7,088
Audit fees 6,800
Transfer agent fees 5,000
Miscellaneous 46,264
- --------------------------------------------------------------------------------
Total expenses 11,740,614
Less aggregate amounts waived or assumed by Administrator,
Shareholder Servicing Agents, and Distributor
(Notes 3A, 3B, AND 4) (9,697,285)
- --------------------------------------------------------------------------------
Net expenses 2,043,329
- --------------------------------------------------------------------------------
Net investment income $104,920,689
================================================================================
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED
(Unaudited) AUGUST 31, 1998
==========================================================================================
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income,
declared as dividends to shareholders (Note 2) $104,920,689 $ 168,884,490
==========================================================================================
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST AT
NET ASSET VALUE OF $1.00 PER SHARE (Note 5):
Proceeds from sale of shares $27,079,021,490 $37,431,763,944
Net asset value of shares issued to shareholders
from reinvestment of dividends 78,674,863 131,980,079
Cost of shares repurchased (26,001,655,498) (36,150,734,171)
- ------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 1,156,040,855 1,413,009,852
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,380,500,726 1,967,490,874
- ------------------------------------------------------------------------------------------
End of period $4,536,541,581 $3,380,500,726
==========================================================================================
</TABLE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1999 ----------------------------------------------
(Unaudited) 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 0.02556 0.05548 0.05459 0.05521 0.05698
Less dividends from net investment income (0.02556) (0.05548) (0.05459) (0.05521) (0.05698)
- ---------------------------------------------------------------------------------------------------------------
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) $4,536,542 $3,380,501 $1,967,491 $,257,134 $1,480,097
Ratio of expenses to average net assets+ 0.20%* 0.20% 0.18% 0.20% 0.17%
Ratio of net investment income to
average net assets+ 5.14%* 5.57% 5.52% 5.52% 5.70%
Total return 2.58%** 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 $0.022418 $0.04948 $0.04844 $0.04921 $0.05050
RATIOS:
Expenses to average net assets+ 0.80%* 0.79% 0.80% 0.80% 0.84%
Net investment income to
average net assets+ 4.54%* 4.98% 4.90% 4.92% 5.03%
===============================================================================================================
</TABLE>
** Annualized
** Not Annualized
+ Includes the Fund's share of Cash Reserves Portfolio's allocated expenses
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 (38.7% at February 28, 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 Fund shares available to customers as Shareholder Servicing Agents.
Citibank is a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was
formed as a result of the merger of Citicorp and Travelers Group Inc. which was
completed on October 8, 1998.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The 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 3:00
p.m., Eastern time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Divi-
7
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
dends are distributed in the form of additional shares of the Fund or, at the
election of the shareholder, in cash (subject to the policies of the
shareholder's Shareholder Servicing Agent) on or prior to the last business day
of the month.
3. ADMINISTRATIVE SERVICES PLAN The Trust has adopted an Administrative Services
Plan which provides that the Trust, on behalf of each Fund, may obtain the
services of an Administrator, one or more Shareholder Servicing Agents, and
other Servicing Agents and may enter into agreements providing for the payment
of fees for such services. Under the Trust's Administrative Services Plan, the
aggregate of the fees paid to the Administrator from the Fund under such Plan
and of the fees paid to the Shareholder Servicing Agents from the Fund may not
exceed 0.45% of the Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year. For the six months ended February 28, 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 $7,142,583 of
which $5,615,809 was voluntarily waived for the six months ended February 28,
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. 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 $2,040,738, all of which was voluntarily
waived for the six months ended February 28, 1999.
8
<PAGE>
CITIFUNDS INSTITUTIONAL LIQUID RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 $2,040,738, all of which was voluntarily waived for the six months
ended February 28, 1999. The Distributor has voluntarily agreed to assume all
distribution expenses through February 28, 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 $10,596,612,524 and $9,500,960,725 respectively, for
the six months ended February 28, 1999.
9
<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 New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds 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. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1999 Citicorp R Printed on recycled paper CFS/INS LI/299
<PAGE>
Semi-Annual Report o February 28, 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 6
................................................................................
Statement of Changes in Net Assets 7
................................................................................
Financial Highlights 8
................................................................................
Notes to Financial Statements 9
U.S. TREASURY RESERVES PORTFOLIO
Portfolio of Investments 12
................................................................................
Statement of Assets and Liabilities 13
................................................................................
Statement of Operations 13
................................................................................
Statement of Changes in Net Assets 14
................................................................................
Financial Highlights 14
................................................................................
Notes to Financial Statements 15
................................................................................
<PAGE>
Letter To Our Shareholders
Dear Shareholder:
While the 6-month period ended February 28, 1999, was a good one for the U.S.
economy, yields on short-term U.S. Treasury bills were unusually low relative to
other money market instruments. Early in the period, concerns about the
potential spread of the Asian currency and credit crisis to Latin America caused
a surge in demand for U.S. Treasury securities from domestic and foreign
investors seeking a safe haven.
At the same time, events overseas contributed to the U.S. Federal Reserve
Board's decision to reduce key short-term interest rates three times between
September and November. While this easing on monetary policy caused short-term
U.S. Treasury yields to decline, longer term fixed-income securities did not
fare as well as money market securities. That's because longer term yields rose
in response to reports of robust U.S. economic growth in the fourth quarter of
1998 and the first two months of 1999. When yields of longer term securities
rise, their prices decline. Accordingly, money market funds such as CitiFunds
Institutional U.S. Treasury Reserves generally performed better than longer term
bond funds over the six-month period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ------------------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
LOW INFLATION IN THE U.S. AND RECESSIONARY CONDITIONS IN SOME OVERSEAS
ECONOMIES CONTRIBUTED TO LOWER YIELDS on U.S. Treasury bills. The financial
crisis that began in Southeast Asia in mid-1997 spread to other emerging markets
during the third quarter of 1998. Russia was forced by the credit crunch to
devalue its currency and effectively defaulted on its government bonds.
Similarly, the flight of foreign capital from Latin America adversely affected
Brazil, which devalued its currency in January, 1999.
Why did events overseas affect money market yields in the United States? A
major reason is that the Federal Reserve Board became concerned that the
problems in Asia and Latin America might curtail exports of U.S. companies,
which could, in turn, dampen domestic economic growth. To help stop the further
spread of the Asian crisis and promote continued U.S. economic growth, the
Federal Reserve reduced key short-term interest rates in three steps between
September and November.
In anticipation of the Federal Reserve Board's action, WE BEGAN THE REPORTING
PERIOD WITH THE PORTFOLIO'S AVERAGE MATURITY TOWARD THE LONG END OF ITS RANGE.
This strategy enabled us to capture higher yields for as long as practical while
short-term interest rates fell.
Of course, consistent with our charter, we focused exclusively on U.S.
Treasury securities. However, it is important to note that yields on U.S.
Treasury securities were unusually low during the six-month period relative to
other money market securities, such as high-quality bank obligations and
commercial paper. That's because the federal budget surplus reduced the
government's need to borrow, limiting the supply of Treasury bills available to
investors. Yet, demand for these direct obligations of the federal government
surged when U.S. and foreign investors sought a safe haven amid the turmoil in
Asia, Russia and Latin America.
As our holdings matured during the period, we reinvested the proceeds in U.S.
Treasury securities with modestly shorter maturities, including Cash Management
Bills issued by the U.S. Treasury to finance temporary cash flow needs. As we
opportunistically allowed the Portfolio's average maturity to gradually decline
at various times over the six months, WE WERE ABLE TO RESPOND FASTER TO HIGHER
YIELDS AS THEY BECAME AVAILABLE. Such opportunities arose in February, 1999, for
example, when reports of surprisingly strong U.S. economic growth caused yields
of longer term bonds to rise. In this new environment, we extended the
Portfolio's average maturity to capture the higher yields provided by slightly
longer-dated securities. In addition, we took advantage of changing
supply-and-demand factors to capture higher yields.
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. Yet, persistently low inflation should, in our view, prevent the Federal
Reserve from raising short-term interest rates in 1999 in an attempt to
forestall inflationary pressures. If our outlook is correct, yields on U.S.
Treasury bills should remain relatively stable over the foreseeable future,
while longer term yields may rise modestly. We intend to continue to monitor
global economic influences carefully, with an eye toward adjusting our
investment strategy in a way that takes full advantage of prevailing market
conditions.
2
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide liquidity and as high a level of current income from U.S. Government
obligations as is consistent with the preservation of capital.
INVESTMENT ADVISER, DIVIDENDS
U.S. TREASURY RESERVES PORTFOLIO Declared daily, paid monthly
Citibank, N.A.
COMMENCEMENT OF OPERATIONS BENCHMARK
October 2, 1992 o Lipper S&P AAA rated Taxable
Institutional U.S. Treasury
NET ASSETS AS OF 2/28/99 Money Funds Average
$204.3 million
3
<PAGE>
<TABLE>
<CAPTION>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
ALL PERIODS ENDED FEBRUARY 28, 1999 SIX ONE FIVE OCTOBER 2, 1992
(Unaudited) MONTHS** YEAR YEARS* INCEPTION*
======================================================================================
<S> <C> <C> <C> <C>
CitiFunds Institutional U.S. Treasury Reserves 2.22% 4.82% 4.96% 4.53%
Lipper S&P AAA rated Taxable Institutional
U.S. Treasury Money Funds Average 2.28% 4.96% 5.02% 4.56%+
</TABLE>
* Average Annual Total Return
**Not Annualized
+ From 9/30/92
7-DAY YIELDS
Annualized Current 4.20%
Effective 4.29%
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.
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. 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
February 28, 1999 (Unaudited)
================================================================================
ASSETS:
Investment in U.S. Treasury Reserves Portfolio, at value (Note 1) $206,166,443
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 73,661
Payable for shares of beneficial interest repurchased 1,718,283
Accrued expenses and other liabilities 43,238
- --------------------------------------------------------------------------------
Total liabilities 1,835,182
- --------------------------------------------------------------------------------
NET ASSETS for 204,331,261 shares of beneficial interest
outstanding $204,331,261
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $204,331,261
================================================================================
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME (Note 1A):
Income from U.S. Treasury Reserves Portfolio $6,747,145
Allocated expenses from U.S. Treasury Reserves Portfolio (143,778)
- --------------------------------------------------------------------------------
$6,603,367
EXPENSES:
Administrative fees (Note 3A) 505,349
Shareholder Servicing Agents' fees (Note 3B) 144,385
Distribution fees (Note 4) 144,385
Custody and fund accounting fees 6,705
Shareholder reports 6,551
Transfer agent fees 5,000
Audit fees 4,500
Trustees' fees 4,377
Legal fees 4,121
Registration fees 807
Miscellaneous 14,054
- --------------------------------------------------------------------------------
Total expenses 840,234
Less aggregate amounts waived by Administrator, Shareholder
Servicing Agent and Distributor (Notes 3A, 3B and 4) (625,426)
- --------------------------------------------------------------------------------
Net expenses 214,808
- --------------------------------------------------------------------------------
Net investment income $6,388,559
================================================================================
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31,
(Unaudited) 1998
=============================================================================================
FROM INVESTMENT ACTIVITIES:
Net investment income, declared as dividends
<S> <C> <C> <C>
to shareholders (Note 2): $ 6,388,559 $ 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 $660,668,606 $1,322,758,384
Net asset value of shares issued to shareholders
from reinvestment of dividends 5,672,309 11,341,435
Cost of shares repurchased (726,145,561) (1,376,313,848)
- ---------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (59,804,646) (42,214,029)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 264,135,907 306,349,936
- ---------------------------------------------------------------------------------------------
End of period $204,331,261 $ 264,135,907
=============================================================================================
</TABLE>
See notes to financial statements
7
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1999 ----------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
=======================================================================================================
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
beginning of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
Net investment income 0.02202 0.05001 0.04994 0.05051 0.05200 0.03312
Less dividends from net
investment income (0.02202) (0.05001) (0.04994) (0.05051) (0.05200) (0.03312)
- --------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000 $1.00000 $1.00000 $1.00000 $1.00000
========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $204,331 $264,136 $306,350 $213,395 $120,731 $150,911
Ratio of expenses to
average net assets+ 0.25%* 0.25% 0.25% 0.25% 0.25% 0.23%
Ratio of net investment income
to average net assets+ 4.42%* 5.00% 5.01% 5.03% 5.23% 3.40%
Total return 2.22%** 5.12% 5.11% 5.17% 5.33% 3.36%
- --------------------------------------------------------------------------------------------------------
</TABLE>
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:
<TABLE>
<CAPTION>
Net investment income per
<S> <C> <C> <C> <C> <C> <C>
share $0.01918 $0.04431 $0.04416 $0.04428 $0.04593 $0.02679
RATIOS:
Expenses to average net assets+ 0.82% *0.82% 0.83% 0.87% 0.85% 0.88%
Net investment income to
average net assets+ 3.85%* 4.43% 4.43% 4.41% 4.62% 2.75%
========================================================================================================
+ Includes the Fund's share of U.S. Treasury Reserves Portfolio's allocated expenses.
* Annualized
**Not Annualized
</TABLE>
See notes to financial statements
8
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 (25.6% at February 28, 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 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.
9
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (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. 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 $505,349,
of which $336,656 was voluntarily waived for the six months ended February 28,
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 $144,385, all of which was voluntarily waived
for the six months ended February 28, 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 $144,385, all of which was voluntarily waived for the six months
ended February 28, 1999. The Distributor has voluntarily agreed to assume all
distribution expenses through February 28, 1999.
10
<PAGE>
CITIFUNDS INSTITUTIONAL U.S. TREASURY RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 $710,272,136 and $774,942,728, respectively, for the
six months ended February 28, 1999.
11
<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
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap 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 New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds 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. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent
or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc.
as distributor.
(C)1999 Citicorp R Printed on recycled paper CFS/INS.US/299
<PAGE>
SEMI-ANNUAL REPORT O FEBRUARY 28, 1999
CitiFunds
Institutional
Tax Free Reserves
- --------------------------------------------------------------------------------
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARRRANTEE o MAY LOSE VALUE
- --------------------------------------------------------------------------------
MONEY MARKETS
Table of Contents
<PAGE>
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 6-month period ended February 28, 1999, was a good one for the U.S.
economy and tax-exempt money market securities. Early in the period, concerns
about the potential spread of the Asian currency and credit crisis to Latin
America contributed to the Federal Reserve Board's decision to reduce key
short-term interest rates three times between September and November. While this
easing of monetary policy caused short-term money market yields to decline, very
low inflation continued to support above-average real returns, which are nominal
yields less the rate of inflation.
In contrast, in both the taxable and tax-exempt markets, longer term
fixed-income securities did not fare as well as money market securities. That's
because longer term yields rose in response to reports of robust U.S. economic
growth in the fourth quarter of 1998 and the first two months of 1999. When
yields of longer term securities rise, their prices decline. Accordingly, money
market funds such as CitiFunds Institutional Tax Free Reserves generally
performed better than longer term tax-exempt bond funds over the six-month
period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
Low inflation in the U.S. and recessionary conditions in some overseas
economies contributed to lower yields on tax-exempt money market securities. The
financial crisis that began in Southeast Asia in mid-1997 spread to other
emerging markets during the third quarter of 1998. Russia was forced by the
credit crunch to devalue its currency and effectively defaulted on its
government bonds. Similarly, the flight of foreign capital from Latin America
adversely affected Brazil, which devalued its currency in January, 1999.
Why did economic events overseas affect short-term securities issued by U.S.
municipalities? A major reason is that the Federal Reserve Board became
concerned that the problems in the emerging markets might curtail exports of
U.S. companies, which could, in turn, dampen domestic economic growth. To help
stop the further spread of the Asian crisis and stimulate the U.S. economy, the
Federal Reserve Board reduced key short-term interest rates in three steps
between September and November.
In anticipation of the Federal Reserve Board's action, we began the reporting
period with the Portfolio's average maturity toward the long end of its range.
By October, the average maturity reached 65 days. This strategy enabled us to
capture higher yields for as long as practical while interest rates fell.
As our holdings matured, we reinvested the proceeds in tax-exempt money
market instruments with modestly shorter maturities. Consequently, the
Portfolio's average maturity gradually declined to 45 days by December, enabling
us to respond faster to opportunities for higher yields. Such opportunities
arose in December, for example, when seasonal fund redemptions caused tax-exempt
yields to rise temporarily before declining again in January.
As we noted in our shareholder report six months ago, short-term tax-exempt
securities were relatively scarce in 1998. That's because a strong national
economy helped boost tax revenues, reducing the need for municipalities to
borrow to cover short-term operating expenses. In fact, issuance of short-term,
tax-exempt notes declined about 25% in 1998 from the previous year to its lowest
level in more than 10 years.
At the same time, demand for tax-exempt money market securities rose
significantly in the second half of 1998. Dislocations in the world's stock
markets triggered a "flight to quality" among domestic and foreign investors.
Many domestic investors turned to tax-exempt money market funds as a safe harbor
during this volatile time. The combination of reduced supply and increased
demand made it more difficult to find attractive values in tax-exempt notes.
As a result, we continued to focus on tax-exempt variable-rate demand notes
(VRDNs), which are securitized and issued by investment banks. These "floaters"
generally offered higher yields than other high-quality, short-term tax-exempt
securities. We also found attractive values in tax-exempt commercial paper.
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. This should help support the sound fiscal conditions prevailing in most
states and many municipalities. Yet, persistently low inflation should, in our
view,
2
<PAGE>
prevent the Federal Reserve Board from raising short-term interest rates in 1999
in an attempt to forestall inflationary pressures. If our outlook is correct,
tax-exempt money market yields should remain relatively stable over the
foreseeable future, while longer term yields may rise modestly. We intend to
continue to monitor economic influences carefully, with an eye toward adjusting
our investment strategy in a way that attempts to capture the opportunities and
reduce the risks of prevailing market conditions.
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 2/28/99 BENCHMARKS
$222.4 million o Lipper Institutional Tax Exempt
Money Funds Average
o IBC Institutional Tax Free Money
Funds Average
* A portion of the income may be subject to the Federal Alternative Minimum Tax
(AMT). Consult your personal tax advisor.
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
SIX ONE MAY 21,1997
ALL PERIODS ENDED FEBRUARY 28, 1999 (Unaudited) MONTHS** YEAR INCEPTION*
- --------------------------------------------------------------------------------
CitiFunds Institutional Tax
Free Reserves 1.53% 3.29% 3.40%
Lipper Institutional Tax Exempt
Money Funds Average 1.44% 3.10% 3.20%+
* Average Annual Total Return
** Not Annualized
+ From 5/31/97
7-DAY YIELDS
Annualized Current 2.83%
Effective 2.87%
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.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL TAX FREE
RESERVES VS. IBC INSTITUTIONAL TAX FREE MONEY FUNDS AVERAGE
As Illustrated, Citifunds Institutional Tax Free Reserves provided a similar
annualized seven-day yield to that of a comparable IBC Money Fund Average, as
published in IBC Money Fund ReportTM, for the one year period.
[FIGURES BELOW REPRESENTS LINE CHART]
<TABLE>
<CAPTION>
Date IBC Institutional Institutional Tax IBC Institutional Institutional Tax
Tax Free Funds Avg. Free Res. Tax Free Funds Avg. Free Res.
<S> <C> <C> <C> <C>
3/3/98 3.16% 3.30% 0.0316 0.033
3/10/98 2.82% 3.08% 0.0282 0.0308
3/17/98 2.83% 3.01% 0.0283 0.0301
3/24/98 3.14% 3.29% 0.0314 0.0329
3/31/98 3.30% 3.46% 0.033 0.0346
4/7/98 3.25% 3.42% 0.0325 0.0342
4/14/98 3.25% 3.42% 0.0325 0.0342
4/21/98 3.50% 3.66% 0.035 0.0366
4/28/98 3.72% 3.85% 0.0372 0.0385
5/5/98 3.62% 3.77% 0.0362 0.0377
5/12/98 3.44% 3.62% 0.0344 0.0362
5/19/98 3.46% 3.62% 0.0346 0.0362
5/26/98 3.42% 3.56% 0.0342 0.0356
6/2/98 3.44% 3.61% 0.0344 0.0361
6/9/98 3.25% 3.44% 0.0325 0.0344
6/16/98 3.26% 3.44% 0.0326 0.0344
6/23/98 3.26% 3.44% 0.0326 0.0344
6/30/98 3.29% 3.45% 0.0329 0.0345
7/7/98 3.00% 3.26% 0.03 0.0326
7/14/98 2.95% 3.15% 0.0295 0.0315
7/21/98 3.19% 3.37% 0.0319 0.0337
7/28/98 3.26% 3.46% 0.0326 0.0346
8/4/98 3.24% 3.43% 0.0324 0.0343
8/11/98 2.96% 3.19% 0.0296 0.0319
8/18/98 3.09% 3.22% 0.0309 0.0322
8/25/98 3.07% 3.24% 0.0307 0.0324
9/1/98 3.09% 3.25% 0.0309 0.0325
9/8/98 2.88% 2.97% 0.0288 0.0297
9/15/98 3.02% 3.16% 0.0302 0.0316
9/22/98 3.34% 3.49% 0.0334 0.0349
9/29/98 3.49% 3.62% 0.0349 0.0362
10/6/98 3.28% 3.46% 0.0328 0.0346
10/13/98 3.05% 3.23% 0.0305 0.0323
10/20/98 3.04% 3.21% 0.0304 0.0321
10/27/98 2.95% 3.13% 0.0295 0.0313
11/3/98 2.94% 3.08% 0.0294 0.0308
11/10/98 2.84% 3.01% 0.0284 0.0301
11/17/98 2.94% 3.09% 0.0294 0.0309
11/24/98 3.02% 3.20% 0.0302 0.032
12/1/98 2.96% 3.13% 0.0296 0.0313
12/8/98 2.66% 2.86% 0.0266 0.0286
12/15/98 2.84% 3.02% 0.0284 0.0302
12/22/98 3.02% 3.20% 0.0302 0.032
12/29/98 3.25% 3.38% 0.0325 0.0338
1/5/99 3.46% 3.55% 0.0346 0.0355
1/12/99 2.81% 3.01% 0.0281 0.0301
1/19/99 2.72% 2.91% 0.0272 0.0291
1/26/99 2.66% 2.87% 0.0266 0.0287
2/2/99 2.59% 2.80% 0.0259 0.028
2/9/99 2.21% 2.48% 0.0221 0.0248
2/16/99 2.22% 2.46% 0.0222 0.0246
2/23/99 2.59% 2.70% 0.0259 0.027
</TABLE>
Notes: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. 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
FEBRUARY 28, 1999 (Unaudited)
================================================================================
ASSETS:
Investment in Tax Free Reserves Portfolio, at value (Note 1) $221,081,919
Receivable for shares of beneficial interest sold 1,718,364
- --------------------------------------------------------------------------------
Total assets 222,800,283
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 301,341
Accrued expenses and other liabilities 85,865
- --------------------------------------------------------------------------------
Total liabilities 387,206
- --------------------------------------------------------------------------------
NET ASSETS for 222,408,676 shares of beneficial interest
outstanding $222,413,077
================================================================================
Net Assets Consist of:
Paid-in capital $222,408,676
Accumulated net realized gain 4,401
- --------------------------------------------------------------------------------
Total $222,413,077
================================================================================
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
================================================================================
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
================================================================================
INVESTMENT INCOME (Note 1A):
Income from Tax Free Reserves Portfolio $3,812,596
Allocated expenses from Tax Free Reserves Portfolio (172,797)
- --------------------------------------------------------------------------------
$3,639,799
- --------------------------------------------------------------------------------
EXPENSES:
Administrative fees (Note 3A) 402,443
Shareholder Servicing Agents' fees (Note 3B) 114,984
Distribution fees (Note 4) 114,984
Custody and fund accounting fees 7,474
Registration fees 6,940
Transfer agent fees 5,000
Audit fees 4,600
Legal fees 3,895
Trustees' fees 3,430
Shareholder reports 1,572
Miscellaneous 4,349
- --------------------------------------------------------------------------------
Total expenses 669,671
Less aggregate amounts waived by Administrator,
Shareholder Servicing Agents, and Distributor
(Notes 3A, 3B and 4) (555,170)
- --------------------------------------------------------------------------------
Net expenses 114,501
- --------------------------------------------------------------------------------
Net investment income 3,525,298
NET REALIZED GAIN ON INVESTMENTS FROM TAX FREE
RESERVES PORTFOLIO 1,152
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,526,450
================================================================================
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
STATEMENT OF CHANGES IN NET ASSETS
YEAR
SIX MONTHS ENDED ENDED
FEBRUARY 28, 1999 AUGUST 31,
(Unaudited) 1998
================================================================================
Increase in Net Assets from Operations:
Net investment income $3,525,298 $3,544,863
Net realized gain on investments 1,152 3,249
- --------------------------------------------------------------------------------
Net increase in net assets from operations 3,526,450 3,548,112
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,525,298) (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 384,115,084 426,509,070
Net asset value of shares issued to shareholders
from reinvestment of dividends 958,492 1,493,140
Cost of shares repurchased (369,972,826) (280,741,925)
- --------------------------------------------------------------------------------
Net increase in net assets from transactions
in shares of beneficial interest 15,100,750 147,260,285
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 15,101,902 147,263,534
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 207,311,175 60,047,641
- --------------------------------------------------------------------------------
End of period $222,413,077 $207,311,175
================================================================================
See notes to financial statements
7
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
FINANCIAL HIGHLIGHTS
MAY 21, 1997
YEAR (COMMENCEMENT
SIX MONTHS ENDED ENDED OF OPERATIONS) TO
FEBRUARY 28, 1999 AUGUST 31, AUGUST 31,
(Unaudited) 1998 1997
================================================================================
Net Asset Value, beginning of period $1.00000 $1.00000 $1.00000
Net investment income 0.01524 0.03440 0.00984
Less dividends from net investment income (0.01524) (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) $222,413 $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+ 3.06%* 3.43% 3.47%*
Total return 1.53%** 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 $0.01215 $0.02718 $0.00729
RATIOS:
Expenses to average net assets+ 0.87%* 0.97% 1.15%*
Net investment income to average net assets+ 2.44%* 2.71% 2.57%*
================================================================================
+ Includes the Fund's share of Tax Free Reserves Portfolio's allocated expenses
* Annualized
** Not Annualized
See notes to financial statements
8
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 29.1% at
February 28, 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 Citigroup Inc.
Citigroup Inc. was formed as a 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
9
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
the election of the shareholder, in cash (subject to the policies of
the shareholder's Shareholder Servicing Agent) on or prior to the last business
day of the month.
3. ADMINISTRATIVE SERVICES PLAN The Fund has adopted an Administrative Services
Plan which provides that the Trust, on behalf of each Fund, may obtain the
services of an Administrator, one or more Shareholder Servicing Agents, and
other Servicing Agents, and may enter into agreements providing for the payment
of fees for such services. Under the Trust's Administrative Services Plan, the
aggregate of the fee paid to the Administrator from the Fund and the fees paid
to the Shareholder Servicing Agents from the Fund may not exceed 0.45% of the
Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year. For the six months ended February 28, 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 $402,443, of which $325,202 was voluntarily
waived for the six months ended February 28, 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 $114,984, all of which was voluntarily waived
for the six months ended February 28, 1999.
10
<PAGE>
CITIFUNDS INSTITUTIONAL TAX FREE RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 $114,984, all of which was voluntarily waived for the six months
ended February 28, 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 $1,024,941,669 and $1,015,225,860, respectively, for
the six months ended February 28, 1999.
<PAGE>
This page intentionally left blank.
<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 New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds 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. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent
or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc.
as distributor.
R1999 Citicorp [Logo] Printed on recycled paper CFS/INS TF/299
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, President
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
INVESTMENT ADVISER
(of Tax Free Reserves Portfolio)
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
ADMINISTRATOR AND DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
SEMI-ANNUAL REPORT o FEBRUARY 28, 1999
CITIFUNDS
- ---------
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 7
................................................................................
Statement of Changes in Net Assets 8
................................................................................
Financial Highlights 9
................................................................................
Notes to Financial Statements 10
................................................................................
<PAGE>
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
The 6-month period ended February 28, 1999, was a good one for the U.S.
economy and yields on short-term money market securities. Early in the period,
concerns about the potential spread of the Asian currency and credit crisis to
Latin America contributed to the Federal Reserve Board's decision to reduce key
short-term interest rates three times between September and November. While this
easing on monetary policy caused short-term money market yields to decline, very
low inflation continued to support above-average REAL returns, which are nominal
yields less the rate of inflation.
In contrast, longer term fixed-income securities did not fare as well as
money market securities. That's because longer term yields rose in response to
reports of robust U.S. economic growth in the fourth quarter of 1998 and the
first two months of 1999. When yields rise, prices of longer term securities
decline. Accordingly, money market funds such as CitiFunds Institutional Cash
Reserves generally performed better than longer term bond funds over the
six-month period.
Thank you for your continued confidence and participation.
Sincerely,
/s/ Philip W. Coolidge
- ----------------------
Philip W. Coolidge
President
March 22, 1999
1
<PAGE>
PORTFOLIO ENVIRONMENT AND OUTLOOK
LOW INFLATION IN THE U.S. AND RECESSIONARY CONDITIONS IN SOME OVERSEAS ECONOMIES
CONTRIBUTED TO LOWER YIELDS on taxable money market securities. The financial
crisis that began in Southeast Asia in mid-1997 spread to other emerging markets
during the third quarter of 1998. Russia was forced by the credit crunch to
devalue its currency and effectively defaulted on its government bonds.
Similarly, the flight of foreign capital from Latin America adversely affected
Brazil, which devalued its currency in January, 1999.
Why did events overseas affect the U.S. money markets? A major reason is that
the Federal Reserve Board became concerned that the problems in Asia and Latin
America might curtail exports of U.S. companies, which could, in turn, dampen
domestic economic growth. To help stop the further spread of the Asian crisis
and promote continued U.S. economic growth, the Federal Reserve Board reduced
key short-term interest rates in three steps between September and November.
In anticipation of the Federal Reserve Board's action, WE BEGAN THE REPORTING
PERIOD WITH THE PORTFOLIO'S AVERAGE MATURITY TOWARD THE LONG END OF ITS RANGE.
This strategy enabled us to capture higher yields for as long as practical while
interest rates fell.
In addition, we primarily focused our investments on high-quality bank
obligations and commercial paper during the six-month period. In our opinion,
bank obligations and commercial paper offered more attractive values than other
short-term money market instruments. For example, the difference in yields
between bank obligations and U.S. Treasury bills was unusually wide. That's
because the federal budget surplus reduced the government's need to borrow,
limiting the supply of Treasury bills available to investors. Yet, demand for
these direct obligations of the federal government surged in the third quarter
of 1998 when U.S. and foreign investors sought a safe haven amid the turmoil in
Asia, Russia and Latin America.
As our holdings matured during the period, we reinvested the proceeds in
money market instruments with modestly shorter maturities. Consequently, THE
PORTFOLIO'S AVERAGE MATURITY GRADUALLY DECLINED OVER THE SIX MONTHS, enabling us
to respond faster to opportunities for higher yields. Such opportunities arose
in February, 1999, for example, when reports of surprisingly strong U.S.
economic growth caused yields of longer term bonds to rise. In this new
environment, we modestly extended the Portfolio's average maturity to capture
the higher yields provided by longer-dated securities.
Looking forward, we expect the U.S. economic expansion to continue throughout
1999. Yet, persistently low inflation should, in our view, prevent the Federal
Reserve Board from raising short-term interest rates in 1999 in an attempt to
forestall inflationary pressures. If our outlook is correct, money market yields
should remain relatively stable over the foreseeable future, while longer term
yields may rise moderately. We intend to continue to monitor global economic
influences carefully, with an eye toward adjusting our investment strategy in a
way that attempts to capture the opportunities and reduce the risks of
prevailing market conditions.
2
<PAGE>
FUND FACTS
FUND OBJECTIVE
To provide its shareholders with liquidity and as high a level of current income
as is consistent with the preservation of capital.
INVESTMENT MANAGER DIVIDENDS
Citibank, N.A. Declared daily, paid monthly
COMMENCEMENT OF OPERATIONS CAPITAL GAINS
October 17, 1997 Distributed annually, if any
NET ASSETS AS OF 2/28/99 BENCHMARKS
$420.9 million o Lipper S&P AAA-rated
Institutional Money Funds Average
o IBC Financial S&P AAA-rated
Taxable Institutional Average
3
<PAGE>
FUND PERFORMANCE
TOTAL RETURNS
SINCE
FOR THE PERIOD ENDED FEBRUARY 28, 1999 SIX ONE 10/17/97
(Unaudited) MONTHS** YEAR (INCEPTION)*
- --------------------------------------------------------------------------------
CitiFunds Institutional Cash Reserves 2.55% 5.38% 5.44%
Lipper S&P AAA-rated Institutional
Money Funds Average 2.49% 5.33% 5.37%+
* Average Total Return
** Not Annualized
+ From 10/31/97
7-DAY YIELDS
Annualized Current 4.75%
Effective 4.86%
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.
COMPARISON OF 7-DAY YIELDS FOR CITIFUNDS INSTITUTIONAL CASH RESERVES
VS. IBC FINANCIAL S&P AAA-RATED TAXABLE INSTITUTIONAL AVERAGE
As illustrated, CitiFunds Institutional Cash Reserves generally provided a
higher annualized seven-day yield to that of a comparable IBC Money Fund
Average, as published in IBC Money Fund ReportTM, for the one-year period.
<TABLE>
Date IBC Financial S&P Institutional IBC Financial S&P Institutional
AAA-rated Taxable Inst. Cash Reserves AAA-rated Taxable Inst. Cash Reserves
<S> <C> <C> <C> <C>
3/3/98 5.37% 5.43% 0.0537 0.0543
3/10/98 5.31% 5.39% 0.0531 0.0539
3/17/98 5.32% 5.42% 0.0532 0.0542
3/24/98 5.31% 5.41% 0.0531 0.0541
3/31/98 5.35% 5.42% 0.0535 0.0542
4/7/98 5.31% 5.39% 0.0531 0.0539
4/14/98 5.31% 5.39% 0.0531 0.0539
4/21/98 5.31% 5.39% 0.0531 0.0539
4/28/98 5.30% 5.41% 0.053 0.0541
5/5/98 5.29% 5.40% 0.0529 0.054
5/12/98 5.28% 5.40% 0.0528 0.054
5/19/98 5.33% 5.41% 0.0533 0.0541
5/26/98 5.29% 5.40% 0.0529 0.054
6/2/98 5.33% 5.40% 0.0533 0.054
6/9/98 5.29% 5.40% 0.0529 0.054
6/16/98 5.32% 5.42% 0.0532 0.0542
6/23/98 5.31% 5.41% 0.0531 0.0541
6/30/98 5.35% 5.44% 0.0535 0.0544
7/7/98 5.34% 5.43% 0.0534 0.0543
7/14/98 5.29% 5.41% 0.0529 0.0541
7/21/98 5.31% 5.43% 0.0531 0.0543
7/28/98 5.32% 5.44% 0.0532 0.0544
8/4/98 5.34% 5.45% 0.0534 0.0545
8/11/98 5.31% 5.43% 0.0531 0.0543
8/18/98 5.33% 5.41% 0.0533 0.0541
8/25/98 5.31% 5.38% 0.0531 0.0538
9/1/98 5.33% 5.41% 0.0533 0.0541
9/8/98 5.30% 5.40% 0.053 0.054
9/15/98 5.32% 5.41% 0.0532 0.0541
9/22/98 5.29% 5.40% 0.0529 0.054
9/29/98 5.26% 5.40% 0.0526 0.054
10/6/98 5.22% 5.34% 0.0522 0.0534
10/13/98 5.13% 5.27% 0.0513 0.0527
10/20/98 5.09% 5.22% 0.0509 0.0522
10/27/98 5.00% 5.20% 0.05 0.052
11/3/98 5.08% 5.16% 0.0508 0.0516
11/10/98 4.97% 5.09% 0.0497 0.0509
11/17/98 5.00% 5.05% 0.05 0.0505
11/24/98 4.86% 5.04% 0.0486 0.0504
12/1/98 4.92% 5.07% 0.0492 0.0507
12/8/98 4.86% 5.05% 0.0486 0.0505
12/15/98 4.91% 5.07% 0.0491 0.0507
12/22/98 4.87% 5.03% 0.0487 0.0503
12/29/98 4.88% 5.07% 0.0488 0.0507
1/5/99 4.92% 5.02% 0.0492 0.0502
1/12/99 4.80% 4.97% 0.048 0.0497
1/19/99 4.63% 4.93% 0.0463 0.0493
1/26/99 4.56% 4.90% 0.0456 0.049
2/2/99 4.58% 4.89% 0.0458 0.0489
2/9/99 4.54% 4.86% 0.0454 0.0486
2/16/99 4.53% 4.80% 0.0453 0.048
2/23/99 4.58% 4.73% 0.0458 0.0473
</TABLE>
Note: Mutual fund shares are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
maintain the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. Yields and total returns will fluctuate and past
performance is no guarantee of future results. Total return figures include
reinvestment of dividends. Returns and yields reflect certain voluntary fee
waivers. If the waivers were not in place, the Fund's returns and yields would
have been lower.
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
PORTFOLIO OF INVESTMENTS February 28, 1999
(Unaudited)
PRINCIPAL
AMOUNT
ISSUER (000'S OMITTED) VALUE
- ----------------------------------------------------------------
BANK NOTES--0.9%
- ----------------------------------------------------------------
First Union National Bank
5.83% due 04/29/99 $ 4,000 $ 4,004,039
CERTIFICATES OF DEPOSIT (YANKEE)--18.0%
- ----------------------------------------------------------------
Bank of Nova Scotia
5.10% due 03/15/99 14,000 14,000,054
Banque Nationale de Paris
4.91% due 03/01/99 10,000 10,000,000
Bayerische Landesbank
5.04% due 04/22/99 12,000 12,000,171
Bayerische Vereinsbank
5.16% due 03/09/99 12,000 12,000,000
Canadian Imperial Bank
5.14% due 03/05/99 5,000 5,000,000
Commerzbank AG
5.078% due 02/11/00 10,000 9,996,039
Landesbank Hessen
Thuringen 5.215%
due 02/29/00 13,000 12,986,874
-----------
75,983,138
-----------
COMMERCIAL PAPER--26.8%
- ----------------------------------------------------------------
Albertsons Inc.
4.81% due 03/15/99 10,000 9,981,295
Atlantis One Fundings Corp.
5.05% due 03/15/99 7,000 6,986,253
Bear Stearns
5.10% due 03/01/99 8,000 8,000,000
Daimler Benz
North America
5.12% due 03/19/99 10,000 9,974,400
Ford Motor Credit Co.
4.80% due 03/29/99 12,000 11,955,200
Enterprise Funding Corp.
5.12% due 03/12/99 8,608 8,594,533
General Electric
Capital Corp.
5.23% due 03/05/99 10,000 9,994,189
Pooled Accounts
Receivable Cap
4.90% due 04/23/99 7,918 7,860,880
Pooled Accounts
Receivable Cap
4.83% due 05/12/99 6,351 6,289,649
Prudential Funding Corp.
4.75% due 06/30/99 10,000 9,840,347
Rockwell International
Corp.
4.82% due 03/30/99 13,300 13,248,359
Sigma Finance Inc.
4.96% due 03/30/99 10,000 9,960,044
-----------
112,685,149
-----------
FLOATING RATE NOTES--2.9%
- ----------------------------------------------------------------
Strategic Money Market
Trust Receipts
4.983% due 03/05/99 $12,000 $ 12,000,000
------------
TIME DEPOSIT--5.6%
- ----------------------------------------------------------------
Chase Manhattan Bank
4.75% due 03/01/99 13,584 13,584,000
Dresdner Bank
Grand Cayman
4.75% due 03/01/99 10,000 10,000,000
------------
23,584,000
------------
UNITED STATES GOVERNMENT AGENCY--10.2%
- ----------------------------------------------------------------
Federal Home Loan
Mortgage Discount
Notes
4.76% due 03/31/99 30,000 29,881,000
Federal National Mortgage
Association
4.75% due 03/15/99 13,000 12,975,986
------------
42,856,986
------------
REPURCHASE AGREEMENTS--35.6%
- ----------------------------------------------------------------
First Union Bank
Repurchase Agreement
4.79% due 3/01/99
(collateralized by $49,035,000 Federal Home Loan
Mortgage Association, 6.25% due 2/03/09, valued
at $49,412,000; $2,580,000, 7.00% due 3/12/18,
valued at $2,588,000; $29,520,000, Federal National
Mortgage Association, 6.01% due 11/13/08, valued at
$29,796,000; $10,000,000, Federal Home Loan Mortgage
Association, 6.25% due 9/27/07, valued at $10,285,000;
$11,250,000, Federal National Mortgage Association, 5.76%
due 2/25/03,
valued at $10,959,000) 100,000,000
State Street Bank
Repurchase Agreement
4.81% due 3/01/99
(collateralized by $50,850,000,
Federal National
Mortgage Association,
4.85% due 11/20/00,
valued at $51,002,550) 50,000,000
------------
150,000,000
------------
TOTAL INVESTMENTS, AT
AMORTIZED COST 100.0% $421,113,312
OTHER ASSETS,
LESS LIABILITIES 0.0 (172,688)
----- ------------
NET ASSETS 100.0% $420,940,624
----- ------------
See notes to financial statements
5
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment, at amortized cost (Note 1A) $421,113,312
Cash 336
Interest receivable 965,665
- --------------------------------------------------------------------------------
Total assets 422,079,313
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 1,016,872
Payable to affiliate:
Management fees (Note 3) 39,293
Accrued expenses and other liabilities 82,524
- --------------------------------------------------------------------------------
Total liabilities 1,138,689
- --------------------------------------------------------------------------------
NET ASSETS for 420,940,624 shares of beneficial interest outstanding$420,940,624
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $420,940,624
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE PER SHARE $1.00
See notes to financial statements
6
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B) $7,565,355
Expenses:
Management fees (Note 3) 280,877
Distribution fees (Note 4) 140,438
Custody and fund accounting fees 58,444
Audit fees 15,200
Registration fees 13,619
Legal fees 11,585
Shareholder reports 5,436
Transfer agent fees 5,000
Trustees' fees 2,127
Miscellaneous 10,664
- --------------------------------------------------------------------------------
Total expenses 543,390
- --------------------------------------------------------------------------------
Less aggregate amounts waived by the Manager and Distributor
(Notes 3 and 4) (189,283)
- --------------------------------------------------------------------------------
Net expenses 354,107
- --------------------------------------------------------------------------------
Net investment income $7,211,248
- --------------------------------------------------------------------------------
See notes to financial statements
7
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
SIX MONTHS ENDED OCTOBER 17, 1997+
FEBRUARY 28, 1999 TO
(Unaudited) AUGUST 31, 1998
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income, declared as dividends
to shareholders (Note 2) $ 7,211,248 $ 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 1,301,032,421 2,513,814,384
Cost of shares repurchased (1,125,611,307) (2,268,294,874)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 175,421,114 245,519,510
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 245,519,510 --
- --------------------------------------------------------------------------------
End of period $ 420,940,624 $ 245,519,510
- --------------------------------------------------------------------------------
+ Commencement of Operations
See notes to financial statements
8
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
SIX MONTHS ENDED OCTOBER 17, 1997+
FEBRUARY 28, 1999 TO
(Unaudited) AUGUST 31, 1998
- --------------------------------------------------------------------------------
Net Asset Value, beginning of period $1.00000 $1.00000
Net investment income 0.02011 0.04736
Less dividends from net investment income (0.02011) (0.04736)
- --------------------------------------------------------------------------------
Net Asset Value, end of period $1.00000 $1.00000
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted) $420,941 $245,520
Ratio of expenses to average net assets 0.25%* 0.25%*
Ratio of net investment income to average net assets 5.13%* 5.47%*
Total return 2.55%** 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 $0.01956 $0.04571
RATIOS:
Expenses to average net assets 0.39%* 0.44%*
Net investment income to average net assets 4.99%* 5.28%*
- --------------------------------------------------------------------------------
+ Commencement of Operations
* Annualized
** Not annualized
See notes to financial statements
9
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 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.
10
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 4:00 pm,
Eastern standard time, and all of the net income of the Fund so determined is
declared as a dividend to shareholders of record at the time of such
determination. Dividends are distributed in the form of additional shares of the
Fund or, at the election of the shareholder, in cash on or prior to the last
business day of the month.
3. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's
business affairs, and has a Management Agreement with the Fund. Citibank also
provides certain administrative services to the Fund. These administrative
services include providing general office facilities and supervising the overall
administration of the Fund. CFBDS acts as Sub-Administrator and performs such
duties and receives such compensation from Citibank as from time to time is
agreed to by Citibank and CFBDS.
The management fees paid to Citibank, as compensation for overall investment
management services amounted to $280,877, of which $119,064 was voluntarily
waived for the six months ended February 28, 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 $140,438 of which $70,219 was voluntarily waived
for the six months ended February 28, 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 $3,366,468,062 and $3,206,497,602, respectively, for the
six months ended February 28, 1999.
11
<PAGE>
CITIFUNDS INSTITUTIONAL CASH RESERVES
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
7. FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES The cost of investment
securities owned at February 28, 1999, for federal income tax purposes, amounted
to $421,113,312.
8. LINE OF CREDIT The Fund, along with other CitiFunds, entered into an
agreement with a bank which allows the Funds collectively to borrow up to $60
million for temporary or emergency purposes. Interest on borrowings, if any, is
charged to the specific fund executing the borrowing at the base rate of the
bank. The line of credit requires a quarterly payment of a commitment fee based
on the average daily unused portion of the line of credit. For the period ended
February 28, 1999, the commitment fee allocated to the Fund was $491. Since the
line of credit was established, there have been no borrowings.
12
<PAGE>
TRUSTEES AND OFFICERS
Philip W. Coolidge*, PRESIDENT
Riley C. Gilley
Diana R. Harrington
Susan B. Kerley
SECRETARY
Linda T. Gibson*
TREASURER
John R. Elder*
*AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street 5th Floor, Boston, MA 02109
(617) 423-1679
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
Deloitte & Touche LLP
125 Summer Street,Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
THE CITIFUNDS FAMILY
LARGE CAP STOCKS
o CitiFunds Growth & Income Portfolio
o CitiFunds Large Cap Growth Portfolio
SMALL CAP STOCKS
o CitiFunds Small Cap Growth Portfolio
o CitiFunds Small Cap Value Portfolio
INTERNATIONAL STOCKS
o CitiFunds International Growth & Income Portfolio
o CitiFunds International Growth Portfolio
GROWTH WITH INCOME
o CitiFunds Balanced Portfolio
BONDS
o CitiFunds Short-Term U.S. Government Income Portfolio
o CitiFunds Intermediate Income Portfolio
o CitiFunds National Tax Free Income Portfolio
o CitiFunds New York Tax Free Income Portfolio
o CitiFunds California Tax Free Income Portfolio
MONEY MARKETS
o CitiFunds Cash Reserves
o CitiFunds U.S. Treasury Reserves
o CitiFunds Tax Free Reserves
o CitiFunds Connecticut Tax Free Reserves
o CitiFunds New York Tax Free Reserves
o CitiFunds California 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 share- holders. It is authorized
for distribution to prospective investors only when preceded or accompanied by
an effective prospectus.
For more information contact your Service Agent
or call 1-800-625-4554
CitiFunds are made available by CFBDS, Inc. as distributor.
(C)1999 Citicorp [GRAPHIC] Printed on recycled paper CFS/INS-CR/299
