-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PwiedIZ2VbVHiyqyMEnrj9zb0YZjosL9ia/lnQUXGlfC5XoqxTAfxJjvcbj6qZjv wq78nCV8r4QtAXwb3sr+UA== /in/edgar/work/20000623/0000930413-00-000991/0000930413-00-000991.txt : 20000920 0000930413-00-000991.hdr.sgml : 20000920 ACCESSION NUMBER: 0000930413-00-000991 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000623 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIFUNDS TRUST I CENTRAL INDEX KEY: 0000744388 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04006 FILM NUMBER: 659586 BUSINESS ADDRESS: STREET 1: 6ST JAMES ST CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6174231679 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK FUNDS I DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARK GROWTH & INCOME FUND DATE OF NAME CHANGE: 19900429 FORMER COMPANY: FORMER CONFORMED NAME: LANDMARKFUNDS MANAGED MUNICIPAL BOND TRUST DATE OF NAME CHANGE: 19860819 N-30D 1 0001.txt SEMI-ANNUAL REPORT CITISELECT(R) PORTFOLIOS SEMI-ANNUAL REPORT April 30, 2000 BUILT FOR TODAY'S INVESTOR | ASSET ALLOCATION | FUND DESIGNED | TO MAKE YOUR CITISELECT(R) FOLIO 100 INCOME | MONEY WORK CITISELECT(R) FOLIO 200 CONSERVATIVE | CITISELECT(R) FOLIO 300 BALANCED | CITISELECT(R) FOLIO 400 GROWTH | CITISELECT(R) FOLIO 500 GROWTH PLUS | ................................................................................ INVESTMENT PRODUCTS: NOT FDIC INSURED O NO BANK GUARANTEE O MAY LOSE VALUE ................................................................................ TABLE OF CONTENTS Letter to Our Shareholders 1 ................................................................................ Portfolio Environment and Outlook 2 ................................................................................ Risk Reward Trade-Off 4 ................................................................................ Fund Facts 5 ................................................................................ Portfolio Highlights 6 ................................................................................ Fund Performance 7 ................................................................................ Statements of Assets and Liabilities 12 ................................................................................ Statements of Operations 14 ................................................................................ Statements of Changes in Net Assets 16 ................................................................................ Financial Highlights 18 ................................................................................ Notes to Financial Statements 22 ................................................................................ LETTER TO OUR SHAREHOLDERS Dear CitiSelect Portfolios Shareholder: During the six months ended April 30, 2000, the U.S. stock and bond markets experienced historic levels of volatility, leaving many investors with little or no clear indication of the future direction of the financial markets. Despite the ongoing strength and expansion of both the U.S. and global economies, investor concerns regarding inflation and rising interest rates led to wide fluctuations in stock prices. In this environment, the CitiSelect Portfolios' investment adviser, Citibank, N.A., continued to manage the Funds according to their individual investment objectives and risk characteristic parameters set forth in the prospectus. Accordingly, on a relative basis, CitiSelect Folio 500 Growth Plus produced the highest returns with the greatest level of risk, while CitiSelect Folio 400 Growth, Folio 300 Balanced and Folio 200 Conservative provided incrementally lower returns and risks, respectively. CitiSelect Folio 100 Income, the most conservative portfolio, provided the lowest returns with the least risk. This report reviews the Funds' investment activities and investment performance during the reporting period and provides a summary of Citibank's perspective on and outlook for the financial markets. On behalf of the Board of Trustees, I want to thank you for your continued confidence and participation during these challenging times. /s/ Philip W. Coolidge - ---------------------- Philip W. Coolidge President May 15, 2000 1 PORTFOLIO ENVIRONMENT AND OUTLOOK THE PERFORMANCE OF LARGE CAP GROWTH STOCKS DURING THE REPORTING PERIOD CAN BEST BE DESCRIBED IN 19TH CENTURY AUTHOR CHARLES DICKENS' FAMOUS WORDS AS BOTH "THE BEST OF TIMES AND THE WORST OF TIMES". (Growth stocks are shares of those companies that are expected to grow earnings faster than the overall market.) To many investors, the performance of stocks in the fourth quarter of 1999 was reflective of the "best of times". Many large cap growth stocks, especially technology and telecommunications stocks, rose sharply as investors drove up prices amid optimism about the so-called "New Economy", represented primarily by technology stocks in the biotechnology, communications, Internet and software industries. During the first quarter of 2000, however, investor optimism waned, triggering a decline in many share prices, resulting in what seemed like the "worst of times". The prices of many stocks, especially those in the technology sector, fell amid investors' concerns regarding the fundamentals and valuations of their issuers. IN THE OPINION OF MANAGEMENT, INVESTORS BEGAN TO CONCLUDE THAT SOME COMPANIES' STOCK PRICES MAY BE TOO HIGH RELATIVE TO FUNDAMENTALS SUCH AS REVENUES AND EARNINGS. THE HIGH LEVELS OF VOLATILITY OF THE U.S. STOCK MARKET TOOK PLACE AGAINST AN ECONOMIC BACKDROP OF ROBUST ECONOMIC GROWTH AND RISING INTEREST RATES. Strengthening economies worldwide encouraged many investors to believe that expanding global demand for goods and services would in turn fuel rising revenues and earnings for large U.S. companies. However, rising U.S. interest rates tended to have the opposite effect during the reporting period, dampening investor enthusiasm because of the adverse effects of higher financing costs that can negatively impact corporate earnings. Indeed, higher interest rates were the result of more restrictive monetary policies adopted by several central banks that became increasingly concerned that unsustainable economic growth might reignite inflationary pressures. In an attempt to reduce the rate of economic growth, the Federal Reserve Board ("Fed") raised short-term interest rates by three 25-basis point* increments (to 6.00%) during the reporting period**. Despite these rate hikes, SEVERAL MAJOR U.S. STOCK MARKET INDEXES, INCLUDING THE STANDARD & POOR'S 500 INDEX ("S&P 500")***, REACHED RECORD LEVELS BY THE END OF 1999. However, a closer examination revealed that many investors had already begun to turn their attention away from the large, well-known, blue chip companies that previously led the market and in which the CitiSelect Portfolios invest. Investors gravitated toward young and, for the most part, relatively unproven technology companies that they believed had great investment potential. Similarly, for the first time in several years, the small cap growth sector of the U.S. stock market outperformed the large cap sector during the reporting period. The value sector continued to remain largely out of favor with most investors and continued to underperform the overall market. (Value stocks are stocks that are inexpensive compared to the stocks of other companies with similar earnings or assets.) However, during the first quarter of 2000, the performance of the U.S. stock market dramatically changed. Faced with evidence that the U.S. economy was gaining momentum and that inflationary pressures were building, investor sentiment shifted dramatically. The prices of many large cap stocks fell sharply in January and February before recovering in early March. Between mid-March and the end of April, however, the market experienced a substantial correction. The tech-laden NASDAQ Composite Index**** fell by more than 30%, including a single-day drop of 10% on April 14, 2000. Shares of more seasoned "blue chip" companies ("Old Economy") declined less severely, reflected by the 7.18% return of the S&P 500. Overseas stock markets roughly followed the patterns established in the United States, wherein many technology companies drove Japanese and European equity markets higher during the fourth quarter of 1999 and, after considerable volatility, lower during the first quarter of 2000. IN THE U.S. BOND MARKET, MOST BOND PRICES MODESTLY DECLINED AS A RESULT OF HIGHER INTEREST RATES. This was especially true of the higher yielding market sectors such as corporate bonds and mortgage-backed securities. Conversely, long-term U.S. Treasury securities rallied during the period, primarily due to unique supply and demand influences and the federal government's buyback of outstanding U.S. Treasury debt. * A basis point is .01% or one one-hundredth of one percent. ** Please note that on May 16, 2000, after this letter was written, the Fed raised interest rates 50 basis points to 6.50%. *** The S&P 500 is an index of U.S. common stocks is used as a gauge of general U.S. stock market performance. **** The NASDAQ Composite Index is a market value-weighted index that measures all domestic-based securities listed on the NASDAQ stock market. 2 FACED WITH THESE VOLATILE MARKET CONDITIONS, CITISELECT(R) PORTFOLIOS CONTINUED TO ADHERE TO THEIR LONG-TERM DIVERSIFICATION STRATEGY. Broad diversification enabled CitiSelect Folio 500, the most aggressive portfolio, to somewhat cushion the volatility of the stock markets while still participating in some of its gains. Yet, overall, management is disappointed by the Funds' returns since they are below their expected long-term performance. Looking ahead, the CitiSelect management team expects heightened volatility to continue in 2000 because of ongoing investor uncertainty about inflation and the pace of economic growth. Please note that international investing involves certain risks, such as currency fluctuations, differing accounting and financial disclosure standards and the potential for adverse political developments. 3 RISK REWAR TRADE-OFF CitiSelect Portfolios use a proprietary asset allocation which seeks an optimal mix of stocks, bonds and cash to help maximize potential return (without sales charge) for any given level of risk. CitiSelect Folio 100 Income and CitiSelect Folio 200 Conservative have the lowest risk level -- and the lowest returns. CitiSelect Folio 300 Balanced scores slightly higher on both counts, followed by CitiSelect Folio 400 Growth, then CitiSelect Folio 500 Growth Plus. [Table below represents line chart in its printed piece] This graph shows how the performance of each CitiSelect Portfolio compares to the other CitiSelect Portfolios over the same period. +CitiSelect Folio 100 Income commenced operations on May 3, 1999. 4 FUND FACTS MANAGER Citibank, N.A. SUBADVISERS Franklin Advisory Services, LLC -- Small Cap Value Portfolio Hotchkis and Wiley -- International Portfolio SSB Citi Fund Management LLC -- Large Cap Value Portfolio Salomon Brothers Asset Management Inc. -- High Yield Bond Portfolio Salomon Brothers Asset Management Ltd. -- Foreign Bond Portfolio CITISELECT FOLIO 100 INCOME FUND OBJECTIVE As high a level of current income as is consistent with a dominant emphasis on fixed income securities and a small allocation to equity securities. COMMENCEMENT OF OPERATIONS DIVIDENDS May 3, 1999 Declared daily; paid monthly NET ASSETS AS OF 4/30/00 CAPITAL GAINS $207,421 Class A Paid annually, if any $147,851 Class B CITISELECT FOLIO 200 CONSERVATIVE FUND OBJECTIVE As high a total return over time as is consistent with a primary emphasis on fixed income securities and a secondary emphasis on equity securities. COMMENCEMENT OF OPERATIONS DIVIDENDS June 17, 1996 Paid quarterly, if any NET ASSETS AS OF 4/30/00 CAPITAL GAINS $58.7 million Class A Paid annually, if any $638,046 Class B CITISELECT FOLIO 300 BALANCED FUND OBJECTIVE As high a total return over time as is consistent with a balanced emphasis on equity and fixed income securities. COMMENCEMENT OF OPERATIONS DIVIDENDS June 17, 1996 Paid quarterly, if any NET ASSETS AS OF 4/30/00 CAPITAL GAINS $103.4 million Class A Paid annually, if any $869,960 Class B CITISELECT FOLIO 400 GROWTH FUND OBJECTIVE As high a total return over time as is consistent with a primary emphasis on equity securities and a secondary emphasis on fixed income securities. COMMENCEMENT OF OPERATIONS DIVIDENDS June 17, 1996 Paid annually, if any NET ASSETS AS OF 4/30/00 CAPITAL GAINS $118.2 million Class A Paid annually, if any $727,645 Class B CITISELECT FOLIO 500 GROWTH PLUS FUND OBJECTIVE As high a total return over time as is consistent with a dominant emphasis on equity securities and a small allocation to fixed income securities. COMMENCEMENT OF OPERATIONS DIVIDENDS September 3, 1996 Paid annually, if any NET ASSETS AS OF 4/30/00 CAPITAL GAINS $49.4 million Class A Paid annually, if any $282,042 Class B 5 PORTFOLIO HIGHLIGHTS TOP FIVE SECURITIES (STOCKS)
LARGE CAP GROWTH PORTFOLIO COMPANY INDUSTRY % NET ASSETS ======================================================================================================== General Electric Co. Conglomerates 7.91% Cisco Systems Computer & Telecommunications Equipment 7.17% Intel Corp. Semi-Conductors 6.69% Microsoft Corp. Computer Software 4.79% International Business Machines Corp. Computer & Telecommunications Equipment 4.40% LARGE CAP VALUE PORTFOLIO COMPANY INDUSTRY % NET ASSETS ======================================================================================================== Exxon Corp. Energy 3.56% Kimberly-Clark Corp. Consumer Staples 3.41% Marsh & McLennan Companies, Inc. Finance 3.38% PepsiCo, Inc. Consumer Staples 3.31% Williams Companies Inc. Utilities 3.31% SMALL CAP GROWTH PORTFOLIO COMPANY INDUSTRY % NET ASSETS ======================================================================================================== Mercury Interactive Corp. Technology Services 2.96% R & B Falcon Corp. Energy Minerals 2.70% Powerwave Technologies, Inc. Electronics/Technical Services 2.17% Amkor Technologies, Inc. Electronics/Technical Services 2.16% Pinnacle Holdings, Inc. Electronics/Technical Services 2.10% SMALL CAP VALUE PORTFOLIO COMPANY INDUSTRY % NET ASSETS ======================================================================================================== Presidential Life Corp. Finance 4.61% JLG Industries, Inc. Producer Manufacturing 3.87% Professionals Group Inc. Finance 3.39% Timken Co. Producer Manufacturing 3.29% Wolverine World Wide Inc. Consumer Non-Durables 2.88% DOMESTIC FIXED INCOME HIGH YIELD PORTFOLIO COMPANY INDUSTRY % NET ASSETS ======================================================================================================== Frontier Vision Holdings LP Cable & Other Media 3.87% Airplane Trust Mortgage Obligations 3.23% United International Holdings Consumer Products/Tobacco 2.57% NTL Inc. Cable & Other Media 2.46% Heafner JH Inc. Cable & Other Media 2.14% DOMESTIC FIXED INCOME U.S. FIXED INCOME PORTFOLIO INSTRUMENTS % NET ASSETS ======================================================================================================== Mortgage and Asset Backed Securities 64.60% Domestic Corporations 19.37% U.S. Treasury Issues 14.70% Short-Term Obligations 12.00% Foreign Corporations 5.40% TOP 5 COUNTRIES (INTERNATIONAL ASSET CLASSES) FOREIGN BOND PORTFOLIO COUNTRY % NET ASSETS ======================================================================================================== Japan 27.18% Great Britain 17.94% United States (excludes short-term) 17.64% Germany 11.25% France 6.66% INTERNATIONAL PORTFOLIO COUNTRY % NET ASSETS ======================================================================================================== Great Britain 29.80% Japan 10.90% France 9.70% Netherlands 8.20% Switzerland 5.50%
6 FUND PERFORMANCE CITISELECT FOLIO 100 INCOME TOTAL RETURNS SINCE SIX 5/3/99 ALL PERIODS ENDED APRIL 30, 2000 MONTHS** INCEPTION** ================================================================================ CitiSelect(R)Folio 100 Income (Class A) without sales charge (0.94)% (1.95)% CitiSelect(R)Folio 100 Income (Class A) with a maximum sales charge of 4.50% (5.39)% (6.36)% Composite Benchmark+ (Class A) 1.77% 1.11% CitiSelect(R)Folio 100 Income (Class B) without deferred sales charge (1.05)% (2.20)% CitiSelect(R)Folio 100 Income (Class B) with a maximum deferred sales charge of 4.50% (5.51)% (6.60)% Composite Benchmark+ (Class B) 1.77% 1.11% **Not Annualized GROWTH OF A $10,000 INVESTMENT A $10,000 investment in the Fund made on inception date would be worth $9,364 with sales charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks over the same period. [Table below represents line chart in its printed piece] C100 LB S&P CB 5/3/99 9550 10000 10000 10000 5/31/99 9477 9764 9884 9912 6/30/99 9503 10306 9911 9880 7/31/99 9419 9984 9856 9839 8/31/99 9384 9934 9823 9834 9/30/99 9441 9662 9860 9948 10/31/99 9452 10273 9934 9985 11/30/99 9462 10482 9983 9984 12/31/99 9486 11100 10022 9936 1/31/00 9384 10542 9933 9903 2/29/00 9390 10342 10001 10023 3/31/00 9520 11354 10152 10155 4/30/00 9363 11013 10111 10126 The graph includes the initial sales charge on the Fund (no comparable charge exists for the other indices) and assumes all dividends and distributions from the Fund are reinvested at Net Asset Value. Notes: We believe that the performance comparison to the composite benchmark, on which the Fund's asset allocation model is based, is a more appropriate comparison than a comparison to any single broad-based securities market index, such as the S&P 500 Index or the Lehman Brothers Aggregate Bond Index, which securities regulations require us to include. All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Returns reflect certain voluntary fee waivers. If the waivers were not in place, the Fund's return would have been lower. Investors may not invest directly in an index or in the Composite Benchmark. +The returns are based on the composite performance of unmanaged indices and assume reinvestment of dividends and interest payments. Indices and percentages used as of 4/30/00: S&P 500 Index -- Large Cap Stocks (10%); Lehman Bros. Aggregate Bond Index -- Domestic Bonds (70%); Salomon Bros. High Yield Bond Index -- High Yield (20%). Unlike the Fund's total return the Composite Benchmark total return does not reflect any fees or expenses. Components of the Composite Benchmark may change at any time. 7 FUND PERFORMANCE CITISELECT FOLIO 200 CONSERVATIVE TOTAL RETURNS
SINCE SIX ONE 6/17/96 ALL PERIODS ENDED APRIL 30, 2000 MONTHS** YEAR INCEPTION* ========================================================================================= CitiSelect(R)Folio 200 Conservative (Class A) without sales charge 2.08% 0.61% 5.58% CitiSelect(R)Folio 200 Conservative (Class A) with a maximum sales charge of 4.50% (2.52)% (3.92)% 4.33% Composite Benchmark+ (Class A) 4.37% 4.10% 8.77% CitiSelect(R)Folio 200 Conservative (Class B) without deferred sales charge 1.83% 0.30% (0.25)%# CitiSelect(R)Folio 200 Conservative (Class B) with a maximum deferred sales charge of 4.50% (2.75)% (4.21)% (3.67)%# Composite Benchmark+ (Class B) 4.37% 4.10% 0.61%
*Average Annual Total Return **Not Annualized #Commencement of Operations 1/4/99 GROWTH OF A $10,000 INVESTMENT A $10,000 investment in the Fund made on inception date would have grown to $11,786 with sales charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks over the same period. [Table below represents line chart in its printed piece] 200 C200 LB S&P CB 6/17/96 9500 10000 10000 10000 6/30/96 9519 10086 10023 10137 7/31/96 9405 9640 9882 10165 8/31/96 9619 9844 10026 10147 9/30/96 9805 10397 10222 10324 10/31/96 9886 10684 10324 10553 11/30/96 10150 11490 10592 10734 12/31/96 10106 11263 10572 10634 1/31/97 10159 11966 10618 10667 2/28/97 10115 12060 10588 10693 3/31/97 9932 11566 10425 10575 4/30/97 9961 12255 10520 10733 5/31/97 10376 13000 10941 10835 6/30/97 10598 13583 11174 10964 7/31/97 10791 14662 11403 11260 8/31/97 10733 13841 11310 11165 9/30/97 11061 14598 11656 11329 10/31/97 10936 14111 11572 11493 11/30/97 10916 14764 11592 11546 12/31/97 10917 15018 11667 11662 1/31/98 10937 15183 11749 11812 2/28/98 11276 16278 12086 11802 3/31/98 11445 17111 12253 11842 4/30/98 11515 17286 12366 11904 5/31/98 11376 16989 12261 12017 6/30/98 11445 17678 12364 12119 7/31/98 11236 17491 12224 12145 8/31/98 10628 14962 11652 12343 9/30/98 10957 15921 12119 12631 10/31/98 11246 17216 12520 12564 11/30/98 11386 18259 12721 12636 12/31/98 11674 19311 13063 12674 1/31/99 11664 20119 13154 12764 2/28/99 11292 19494 12780 12541 3/31/99 11419 20273 12966 12610 4/30/99 11653 21059 13302 12650 5/31/99 11547 20561 13151 12539 6/30/99 11672 21703 13299 12498 7/31/99 11555 21025 13202 12446 8/31/99 11480 20920 13113 12440 9/30/99 11453 20347 13111 12584 10/31/99 11485 21634 13267 12631 11/30/99 11572 22074 13450 12629 12/31/99 11787 23374 13764 12569 1/31/00 11572 22200 13554 12527 2/29/00 11674 21780 13811 12679 3/31/00 11885 23910 14008 12846 4/30/00 11724 23191 13848 12809 The graph includes the initial sales charge on the Fund (no comparable charge exists for the other indices) and assumes all dividends and distributions from the Fund are reinvested at Net Asset Value. Notes: We believe that the performance comparison to the composite benchmark, on which the Fund's asset allocation model is based, is a more appropriate comparison than a comparison to any single broad-based securities market index, such as the S&P 500 Index or the Lehman Brothers Aggregate Bond Index, which securities regulations require us to include. All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Returns reflect certain voluntary fee waivers. If the waivers were not in place, the Fund's return would have been lower. The maximum sales charge of 4.50% went into effect on January 4, 1999. Investors may not invest directly in an index or in the Composite Benchmark. +The returns are based on the composite performance of unmanaged indices and assume reinvestment of dividends and interest payments. Indices and percentages used as of 4/30/00: S&P 500 Index -- Large Cap Stocks (15%); Russell 2000 Index - -- Small Cap Stocks (10%); Morgan Stanley EAFE Index -- International Stocks (5%); Lehman Bros. Aggregate Bond Index -- Domestic Bonds (40%); Salomon Bros. Currency-Hedged Non-$ World Gov't Bond Index -- Foreign Gov't Bonds (10%); Salomon Bros. High Yield Bond Index -- High Yield (20%). Unlike the Fund's total return the Composite Benchmark total return does not reflect any fees or expenses. Components of the Composite Benchmark may change at any time. 8 FUND PERFORMANCE CITISELECT FOLIO 300 BALANCED TOTAL RETURNS
SINCE SIX ONE 6/17/96 ALL PERIODS ENDED APRIL 30, 2000 MONTHS** YEAR INCEPTION* ========================================================================================= CitiSelect(R)Folio 300 Balanced (Class A) without sales charge 4.61% 4.13% 7.29% CitiSelect(R)Folio 300 Balanced (Class A) with a maximum sales charge of 4.50% (0.09)% (0.56)% 6.02% Composite Benchmark+ (Class A) 6.80% 7.26% 10.85% CitiSelect(R)Folio 300 Balanced (Class B) without deferred sales charge 4.49% 3.92% 2.61%# CitiSelect(R)Folio 300 Balanced (Class B) with a maximum deferred sales charge of 4.50% (0.22)% (0.76)% (0.91)%# Composite Benchmark+ (Class B) 6.80% 7.26% 0.44%
*Average Annual Total Return **Not Annualized #Commencement of Operations 1/4/99 GROWTH OF A $10,000 INVESTMENT A $10,000 investment in the Fund made on inception date would have grown to $12,542 with sales charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks over the same period. [Table below represents line chart in its printed piece] C300 LB S&P CB 6/17/96 9500 10000 10000 10000 6/30/96 9519 10086 10018 10137 7/31/96 9320 9640 9790 10165 8/31/96 9605 9844 9966 10147 9/30/96 9838 10397 10216 10324 10/31/96 9914 10684 10313 10553 11/30/96 10267 11490 10654 10734 12/31/96 10223 11263 10624 10634 1/31/97 10300 11966 10688 10667 2/28/97 10242 12060 10651 10693 3/31/97 10022 11566 10435 10575 4/30/97 10060 12255 10557 10733 5/31/97 10587 13000 11100 10835 6/30/97 10890 13583 11409 10964 7/31/97 11168 14662 11716 11260 8/31/97 11053 13841 11550 11165 9/30/97 11476 14598 12003 11329 10/31/97 11255 14111 11815 11493 11/30/97 11245 14764 11846 11546 12/31/97 11231 15018 11941 11662 1/31/98 11241 15183 12042 11812 2/28/98 11718 16278 12506 11802 3/31/98 11967 17111 12748 11842 4/30/98 12036 17286 12873 11904 5/31/98 11828 16989 12706 12017 6/30/98 11907 17678 12836 12119 7/31/98 11589 17491 12630 12145 8/31/98 10675 14962 11738 12343 9/30/98 11013 15921 12268 12631 10/31/98 11410 17216 12805 12564 11/30/98 11609 18259 13109 12636 12/31/98 11971 19311 13556 12674 1/31/99 11928 20119 13676 12764 2/28/99 11471 19494 13189 12541 3/31/99 11645 20273 13436 12610 4/30/99 11982 21059 13893 12650 5/31/99 11873 20561 13734 12539 6/30/99 12132 21703 14023 12498 7/31/99 12034 21025 13889 12446 8/31/99 11925 20920 13752 12440 9/30/99 11849 20347 13718 12584 10/31/99 11926 21634 13952 12631 11/30/99 12091 22074 14247 12629 12/31/99 12482 23374 14835 12569 1/31/00 12173 22200 14513 12527 2/29/00 12399 21780 14978 12679 3/31/00 12705 23910 15205 12846 4/30/00 12476 23191 14901 12809 The graph includes the initial sales charge on the Fund (no comparable charge exists for the other indices) and assumes all dividends and distributions from the Fund are reinvested at Net Asset Value. Notes: We believe that the performance comparison to the composite benchmark, on which the Fund's asset allocation model is based, is a more appropriate comparison than a comparison to any single broad-based securities market index, such as the S&P 500 Index or the Lehman Brothers Aggregate Bond Index, which securities regulations require us to include. All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Returns reflect certain voluntary fee waivers. If the waivers were not in place, the Fund's return would have been lower. The maximum sales charge of 4.50% went into effect on January 4, 1999. Investors may not invest directly in an index or in the Composite Benchmark. +The returns are based on the composite performance of unmanaged indices and assume reinvestment of dividends and interest payments. Indices and percentages used as of 4/30/00: S&P 500 Index -- Large Cap Stocks (20%); Russell 2000 Index - -- Small Cap Stocks (20%); Morgan Stanley EAFE Index -- International Stocks (10%); Lehman Bros. Aggregate Bond Index -- Domestic Bonds (25%); Salomon Bros. Currency-Hedged Non-$ World Gov't Bond Index -- Foreign Gov't Bonds (10%); Salomon Bros. High Yield Bond Index -- High Yield (15%). Unlike the Fund's total return the Composite Benchmark total return does not reflect any fees or expenses. Components of the Composite Benchmark may change at any time. 9 FUND PERFORMANCE CITISELECT FOLIO 400 GROWTH TOTAL RETURNS
SINCE SIX ONE 6/17/96 ALL PERIODS ENDED APRIL 30, 2000 MONTHS** YEAR INCEPTION* ======================================================================================== CitiSelect(R)Folio 400 Growth (Class A) without sales charges 6.89% 7.47% 8.15% CitiSelect(R)Folio 400 Growth (Class A) with a maximum sales charge of 5.00% 1.54% 2.10% 6.73% Composite Benchmark+ (Class A) 8.61% 10.20% 11.95% CitiSelect(R)Folio 400 Growth (Class B) without deferred sales charge 6.58% 6.87% 4.94%# CitiSelect(R)Folio 400 Growth (Class B) with a maximum deferred sales charge of 5.00% 1.25% 1.53% 0.94%# Composite Benchmark+ (Class B) 8.61% 10.20% (0.15)%
*Average Annual Total Return **Not Annualized #Commencement of Operations 1/4/99 GROWTH OF A $10,000 INVESTMENT A $10,000 investment in the Fund made on inception date would have grown to $12,864 with sales charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks over the same period. [Table below represents line chart in its printed piece] C400 LB S&P CB 6/17/96 9500 10000 10000 10000 6/30/96 9491 10086 9987 10137 7/31/96 9215 9640 9637 10165 8/31/96 9605 9844 9868 10147 9/30/96 9880 10397 10153 10324 10/31/96 9918 10684 10187 10553 11/30/96 10346 11490 10580 10734 12/31/96 10340 11263 10577 10634 1/31/97 10435 11966 10618 10667 2/28/97 10368 12060 10567 10693 3/31/97 10120 11566 10320 10575 4/30/97 10082 12255 10424 10733 5/31/97 10770 13000 11131 10835 6/30/97 11161 13583 11529 10964 7/31/97 11439 14662 11865 11260 8/31/97 11305 13841 11648 11165 9/30/97 11880 14598 12228 11329 10/31/97 11506 14111 11863 11493 11/30/97 11449 14764 11869 11546 12/31/97 11399 15018 11976 11662 1/31/98 11369 15183 12082 11812 2/28/98 12039 16278 12718 11802 3/31/98 12394 17111 13048 11842 4/30/98 12483 17286 13180 11904 5/31/98 12148 16989 12913 12017 6/30/98 12197 17678 13041 12119 7/31/98 11724 17491 12731 12145 8/31/98 10345 14962 11388 12343 9/30/98 10640 15921 11900 12631 10/31/98 11192 17216 12597 12564 11/30/98 11487 18259 13026 12636 12/31/98 11916 19311 13591 12674 1/31/99 11786 20119 13704 12764 2/28/99 11233 19494 13122 12541 3/31/99 11461 20273 13427 12610 4/30/99 11970 21059 14049 12650 5/31/99 11873 20561 13842 12539 6/30/99 12241 21703 14264 12498 7/31/99 12166 21025 14136 12446 8/31/99 12079 20920 13981 12440 9/30/99 11938 20347 13923 12584 10/31/99 12035 21634 14255 12631 11/30/99 12252 22074 14648 12629 12/31/99 12804 23374 15506 12569 1/31/00 12404 22200 15033 12527 2/29/00 12695 21780 15621 12679 3/31/00 13119 23910 15941 12846 4/30/00 12864 23191 15482 12809 The graph includes the initial sales charge on the Fund (no comparable charge exists for the other indices) and assumes all dividends and distributions from the Fund are reinvested at Net Asset Value. Notes: We believe that the performance comparison to the composite benchmark, on which the Fund's asset allocation model is based, is a more appropriate comparison than a comparison to any single broad-based securities market index, such as the S&P 500 Index or the Lehman Brothers Aggregate Bond Index, which securities regulations require us to include. All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Returns reflect certain voluntary fee waivers. If the waivers were not in place, the Fund's return would have been lower. The maximum sales charge of 5.00% went into effect on January 4, 1999. Investors may not invest directly in an index or in the Composite Benchmark. +The returns are based on the composite performance of unmanaged indices and assume reinvestment of dividends and interest payments. Indices and percentages used as of 4/30/00: S&P 500 Index -- Large Cap Stocks (25%); Russell 2000 Index - -- Small Cap Stocks (25%); Morgan Stanley EAFE Index -- International Stocks (20%); Lehman Bros. Aggregate Bond Index -- Domestic Bonds (10%); Salomon Bros. Currency-Hedged Non-$ World Gov't Bond Index -- Foreign Gov't Bonds (10%); Salomon Bros. High Yield Bond Index -- High Yield (10%). Unlike the Fund's total return the Composite Benchmark total return does not reflect any fees or expenses. Components of the Composite Benchmark may change at any time. 10 FUND PERFORMANCE CITISELECT FOLIO 400 GROWTH TOTAL RETURNS
SINCE SIX ONE 9/3/96 ALL PERIODS ENDED APRIL 30, 2000 MONTHS** YEAR INCEPTION* ======================================================================================== CitiSelect(R)Folio 500 Growth Plus (Class A) without sales charge 8.64% 10.65% 8.96% CitiSelect(R)Folio 500 Growth Plus (Class A) with a maximum sales charge of 5.00% 3.21% 5.12% 7.44% Composite Benchmark+ (Class A) 10.15% 13.00% 14.64% CitiSelect(R)Folio 500 Growth Plus (Class B) without deferred sales charge 8.37% 10.19% 8.06%#** CitiSelect(R)Folio 500 Growth Plus (Class B) with deferred sales charge of 5.00% 2.95% 4.68% 3.94%#** Composite Benchmark+ (Class B) 10.15% 13.00% (0.85)%** *Average Annual Total Return **Not Annualized #Commencement of Operations 1/4/99
GROWTH OF A $10,000 INVESTMENT A $10,000 investment in the Fund made on inception date would have grown to $13,004 with sales charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks over the same period. [Table below represents line chart in its printed piece] 9/3/96 9500 10000 10000 10000 9/30/96 9719 10356 10174 10315 10/31/96 9709 10345 10400 10212 11/30/96 10156 10787 10578 10621 12/31/96 10184 10797 10479 10487 1/31/97 10308 10853 10512 10122 2/28/97 10261 10817 10538 10290 3/31/97 10032 10553 10421 10330 4/30/97 9984 10681 10577 10387 5/31/97 10756 11492 10678 11065 6/30/97 11185 11972 10805 11678 7/31/97 11509 12388 11097 11870 8/31/97 11366 12081 11002 10985 9/30/97 11976 12758 11164 11603 10/31/97 11509 12216 11326 10714 11/30/97 11471 12236 11378 10607 12/31/97 11405 12375 11493 10702 1/31/98 11366 12516 11640 11195 2/28/98 12164 13284 11631 11916 3/31/98 12611 13717 11670 12285 4/30/98 12689 13838 11731 12384 5/31/98 12290 13510 11843 12328 6/30/98 12339 13657 11943 12424 7/31/98 11765 13287 11968 12553 8/31/98 9995 11546 12163 11000 9/30/98 10171 11985 12448 10666 10/31/98 10803 12783 12382 11780 11/30/98 11182 13344 12453 12387 12/31/98 11587 13977 12490 12879 1/31/99 11390 14114 12579 12844 2/28/99 10852 13486 12358 12541 3/31/99 11131 13846 12426 13068 4/30/99 11752 14587 12466 13599 5/31/99 11628 14313 12357 12902 6/30/99 12135 14904 12317 13407 7/31/99 12093 14775 12265 13810 8/31/99 12021 14593 12259 13864 9/30/99 11835 14517 12401 14006 10/31/99 11969 14965 12447 14534 11/30/99 12238 15465 12446 15043 12/31/99 12924 16624 12386 16395 1/31/00 12413 15965 12345 15356 2/29/00 12765 16710 12495 15772 3/31/00 13311 17141 12660 16387 4/30/00 13004 16484 12623 15529 The graph includes the initial sales charge on the Fund (no comparable charge exists for the other indices) and assumes all dividends and distributions from the Fund are reinvested at Net Asset Value. Notes: We believe that the performance comparison to the composite benchmark, on which the Fund's asset allocation model is based, is a more appropriate comparison than a comparison to any single broad-based securities market index, such as the Lehman Brothers Aggregate Bond Index or the Morgan Stanley EAFE Index, which securities regulations require us to include. All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Returns reflect certain voluntary fee waivers. If the waivers were not in place, the Fund's return would have been lower. The maximum sales charge of 5.00% went into effect on January 4, 1999. Investors may not invest directly in an index or in the Composite Benchmark. +The returns are based on the composite performance of unmanaged indices and assume reinvestment of dividends and interest payments. Indices and percentages used as of 4/30/00: S&P 500 Index -- Large Cap Stocks (30%); Russell 2000 Index -- Small Cap Stocks (30%); Morgan Stanley EAFE Index -- International Stocks (30%); Lehman Bros. Aggregate Bond Index -- Domestic Bonds (5%); Salomon Bros. High Yield Bond Index -- High Yield (5%). Unlike the Fund's total return the Composite Benchmark total return does not reflect any fees or expenses. Components of the Composite Benchmark may change at any time. 11 CITISELECT PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES
CITISELECT CITISELECT FOLIO 100 FOLIO 200 APRIL 30, 2000 (Unaudited) INCOME CONSERVATIVE ============================================================================================== ASSETS: Investment in, at value: Large Cap Growth Portfolio $ 18,322 $ 3,677,927 Large Cap Value Portfolio 18,661 4,957,102 Small Cap Growth Portfolio -- 2,578,660 Small Cap Value Portfolio -- 2,573,381 International Portfolio -- 3,724,686 U.S. Fixed Income Portfolio 268,731 23,700,822 Foreign Bond Portfolio -- 6,144,660 High Yield Portfolio 77,562 12,223,006 - ---------------------------------------------------------------------------------------------- Total Investments (Note 1A) 383,276 59,580,244 Receivable from Sub-Administrator 11,347 -- Receivable for shares of beneficial interest sold -- 1,194 Other assets -- 43,471 - ---------------------------------------------------------------------------------------------- Total Assets 394,623 59,624,909 - ---------------------------------------------------------------------------------------------- LIABILITIES: Dividends payable 763 -- Payable for shares of beneficial interest repurchased 158 224,647 Payable to affiliates-- Management fees (Note 2) -- 6,660 Accrued expenses 38,430 84,659 - ---------------------------------------------------------------------------------------------- Total Liabilities 39,351 315,966 - ---------------------------------------------------------------------------------------------- NET ASSETS $355,272 $59,308,943 ============================================================================================== NET ASSETS CONSIST OF: Paid-in capital $385,536 $59,424,744 Undistributed net investment income (loss) -- 560,950 Accumulated net realized gain (loss) on investments (22,146) (3,121,643) Unrealized appreciation (depreciation) of investments and foreign currency transactions (8,118) 2,444,892 - ---------------------------------------------------------------------------------------------- Net Assets $355,272 $59,308,943 ============================================================================================== COMPUTATION OF CLASS A SHARES: Net Asset Value per share (net asset value / shares outstanding, respectively: $207,421/22,320, $58,670,897/5,748,896, $103,430,369/9,976,963, $118,213,966/11,134,995, $49,430,785/4,316,150) $9.29 $10.21 Offering price per share based on a 4.50% sales charge for CitiSelect Folios 100, 200 and 300 and on a 5.00% sales charge on CitiSelect Folios 400 and 500 ($9.29 / 0.955, $10.21 / 0.955, $10.37 / 0.955, $10.62 / 0.950, $11.45 / 0.950, respectively) $9.73* $10.69* ============================================================================================== CLASS B SHARES: Net Asset Value per share and offering price (net asset value / shares outstanding, respectively: $147,851/15,916, $638,046/62,650, $869,960/84,162, $727,645/69,035, $282,042/24,843) $9.29** $10.18** ==============================================================================================
*Based upon single purchases of less than $25,000. **Redemption price per share is equal to net asset value less any applicable contingent deferred sales charges. See notes to financial statements 12 CITISELECT CITISELECT CITISELECT FOLIO 300 FOLIO 400 FOLIO 500 BALANCED GROWTH GROWTH PLUS ================================================================================ $ 9,111,716 $ 13,234,509 $ 6,582,874 10,695,389 15,374,469 7,341,737 9,552,142 12,824,571 6,573,690 10,704,416 15,447,403 8,176,885 12,162,228 25,995,939 16,186,034 25,878,972 11,616,247 2,220,588 10,935,686 12,585,715 -- 16,259,792 12,419,007 2,677,234 - -------------------------------------------------------------------------------- 105,300,341 119,497,860 49,759,042 -- -- 4,202 2,006 16,961 333 152,894 373,447 226,724 - -------------------------------------------------------------------------------- 105,455,241 119,888,268 49,990,301 - -------------------------------------------------------------------------------- -- -- -- 852,046 666,208 230,383 13,671 9,375 -- 289,195 271,074 47,091 - -------------------------------------------------------------------------------- 1,154,912 946,657 277,474 - -------------------------------------------------------------------------------- $104,300,329 $ 118,941,611 $ 49,712,827 ================================================================================ $ 99,880,141 $ 111,085,796 $ 43,194,056 854,185 1,378,916 223,688 (12,581,676) (19,664,465) (927,458) 16,147,679 26,141,364 7,222,541 - -------------------------------------------------------------------------------- $104,300,329 $ 118,941,611 $ 49,712,827 ================================================================================ $10.37 $10.62 $11.45 $10.86* $11.18* $12.05* ================================================================================ $10.34** $10.54** $11.35** ================================================================================ 13 CITISELECT PORTFOLIOS STATEMENTS OF OPERATIONS
CITISELECT CITISELECT FOLIO 100 FOLIO 200 FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited) INCOME CONSERVATIVE =============================================================================================== INVESTMENT INCOME (Note 6): Interest* $ 16,291 $2,109,320 Dividends* 501 176,565 Allocated net expenses (1,123) (234,018) Foreign tax reclaims -- 816 - ----------------------------------------------------------------------------------------------- 15,669 2,052,683 - ----------------------------------------------------------------------------------------------- EXPENSES: Management fees (Note 2) 141 80,616 Service fees Class A (Note 3) 711 187,496 Service fees Class B (Note 3) 643 2,808 Transfer agent fees 32,732 44,745 Custody and fund accounting fees 12,530 13,570 Shareholder reports 9,911 23,456 Audit fees 9,690 10,085 Legal fees 5,360 12,590 Trustees fees 2,632 4,160 Registration fees 141 -- Other 20,807 29,411 - ----------------------------------------------------------------------------------------------- Total expenses 95,298 408,937 Less aggregate amount waived by the Manager (Note 2) (141) (73,956) Less expenses assumed by the Sub-Administrator (Note 7) (93,214) -- - ----------------------------------------------------------------------------------------------- Net expenses 1,943 334,981 - ----------------------------------------------------------------------------------------------- Net investment income 13,726 1,717,702 - ----------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (Note 6): Net realized gain (loss) (17,161) (141,421) Net change in unrealized appreciation 549 241,785 - ----------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) (16,612) 100,364 - ----------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,886) $1,818,066 =============================================================================================== *Net of foreign taxes withheld -- $ 12,022
See notes to financial statements 14 CITISELECT CITISELECT CITISELECT FOLIO 300 FOLIO 400 FOLIO 500 BALANCED GROWTH GROWTH PLUS ====================================================================== $2,671,804 $ 1,797,482 $ 308,200 481,330 779,101 433,250 (463,695) (578,460) (258,395) 2,198 5,826 6,129 - ---------------------------------------------------------------------- 2,691,637 2,003,949 489,184 - ---------------------------------------------------------------------- 101,017 66,703 14,487 332,192 372,744 156,582 3,370 3,871 1,553 29,278 5,860 32,110 10,052 10,070 12,535 12,878 21,902 9,320 10,085 10,085 10,085 7,694 9,890 3,890 4,624 4,678 3,998 -- -- -- 29,505 4,068 25,151 - ---------------------------------------------------------------------- 540,695 509,871 269,711 -- -- (14,487) -- -- (40,888) - ---------------------------------------------------------------------- 540,695 509,871 214,336 2,150,942 1,494,078 274,848 - ---------------------------------------------------------------------- 4,232,034 8,712,421 5,146,055 485,593 791,428 372,484 - ---------------------------------------------------------------------- 4,717,627 9,503,849 5,518,539 - ---------------------------------------------------------------------- $6,868,569 $10,997,927 $5,793,387 $ 34,210 $ 65,789 $ 36,882 ====================================================================== 15 CITISELECT PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS
CITISELECT FOLIO 100 CITISELECT FOLIO 200 INCOME CONSERVATIVE - -------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD SIX MONTHS MAY 3, 1999 SIX MONTHS ENDED (COMMENCEMENT ENDED YEAR APRIL 30, 2000 OF OPERATIONS) TO APRIL 30, 2000 ENDED (Unaudited) OCTOBER 31, 1999 (Unaudited) OCTOBER 31, 1999 ================================================================================================================================= INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS: Net investment income $ 13,726 $ 10,307 $ 1,717,702 $ 4,675,819 Net realized gain (loss) (17,161) (4,985) (141,421) 1,357,465 Net change in unrealized appreciation (depreciation) of investments 549 (8,667) 241,785 (1,235,326) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (2,886) (3,345) 1,818,066 4,797,958 - --------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS FROM: Net income (Class A) (8,691) (5,104) (1,145,593) (8,439,415) (Class B) (5,035) (5,203) (11,159) (16,857) Net realized gain on investments (Class A) -- -- (3,353,915) (5,996,539) Net realized gain on investments (Class B) -- -- (30,856) -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (13,726) (10,307) (4,541,523) (14,452,811) - --------------------------------------------------------------------------------------------------------------------------------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5): CLASS A Net proceeds from sale of shares -- 344,182 109,373 13,705,529 Net asset value of shares issued to shareholders from reinvestment of distributions 8,691 4,653 4,499,508 14,428,481 Cost of shares repurchased (112,395) (22,027) (39,093,092) (128,964,342) - --------------------------------------------------------------------------------------------------------------------------------- Total Class A (103,704) 326,808 (34,484,211) (100,830,332) - --------------------------------------------------------------------------------------------------------------------------------- CLASS B** Net proceeds from sale of shares -- 301,013 18,901 980,874 Net asset value of shares issued to shareholders from reinvestment of distributions 4,954 3,854 37,740 13,840 Cost of shares repurchased (48,143) (99,246) (251,564) (111,437) - --------------------------------------------------------------------------------------------------------------------------------- Total Class B (43,189) 205,621 (194,923) 883,277 - --------------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (146,893) 532,429 (34,679,134) (99,947,055) - --------------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (163,505) 518,777 (37,402,591) (109,601,908) - --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 518,777 -- 96,711,534 206,313,442 - --------------------------------------------------------------------------------------------------------------------------------- End of period* $ 355,272 $518,777 $59,308,943 $ 96,711,534 ================================================================================================================================= *Including undistributed (overdistributed) net investment income $ -- $ -- $ 560,950 $ -- =================================================================================================================================
**January 4, 1999 (Commencement of Operations). See notes to financial statements 16
CITISELECT FOLIO 300 CITISELECT FOLIO 400 CITISELECT FOLIO 500 BALANCED GROWTH GROWTH PLUS - --------------------------------------------------------------------------------------------------------------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR APRIL 30, 2000 ENDED APRIL 30, 2000 ENDED APRIL 30, 2000 ENDED (Unaudited) OCTOBER 31, 1999 (Unaudited) OCTOBER 31, 1999 (Unaudited) OCTOBER 31, 1999 ================================================================================================================================= $ 2,150,942 $ 5,660,816 $ 1,494,078 $ 3,752,073 $ 274,848 $ 690,511 4,232,034 4,083,333 8,712,421 5,977,259 5,146,055 3,218,138 485,593 4,334,465 791,428 15,299,428 372,484 9,229,350 - --------------------------------------------------------------------------------------------------------------------------------- 6,868,569 14,078,614 10,997,927 25,028,760 5,793,387 13,137,999 - --------------------------------------------------------------------------------------------------------------------------------- (1,286,220) (10,844,955) (114,878) (7,033,484) (63,337) (1,880,597) (10,537) (9,785) (284) -- (1,051) -- (11,110,680) (20,082,498) (17,231,681) (29,317,452) (6,149,408) (7,715,623) (71,153) -- (85,306) -- (29,537) -- - --------------------------------------------------------------------------------------------------------------------------------- (12,478,590) (30,937,238) (17,432,149) (36,350,936) (6,243,333) (9,596,220) - --------------------------------------------------------------------------------------------------------------------------------- 1,366,709 10,176,905 969,487 8,811,457 896,628 4,457,544 12,396,900 30,927,441 17,346,559 36,350,930 6,212,745 9,596,217 (68,399,861) (201,073,561) (77,262,253) (260,612,272) (33,000,965) (105,357,073) - --------------------------------------------------------------------------------------------------------------------------------- (54,636,252) (159,969,215) (58,946,207) (215,449,885) (25,891,592) (91,303,312) - --------------------------------------------------------------------------------------------------------------------------------- 7,816 958,471 33,447 916,036 19,418 358,761 72,160 8,794 68,404 -- 28,029 -- (101,786) (26,067) (136,127) (137,286) (75,674) (55,004) - --------------------------------------------------------------------------------------------------------------------------------- (21,810) 941,198 (34,276) 778,750 (28,227) 303,757 - --------------------------------------------------------------------------------------------------------------------------------- (54,658,062) (159,028,017) (58,980,483) (214,671,135) (25,919,819) (90,999,555) - --------------------------------------------------------------------------------------------------------------------------------- (60,268,083) (175,886,641) (65,414,705) (225,993,311) (26,369,765) (87,457,776) - --------------------------------------------------------------------------------------------------------------------------------- 164,568,412 340,455,053 184,356,316 410,349,627 76,082,592 163,540,368 - --------------------------------------------------------------------------------------------------------------------------------- $104,300,329 $164,568,412 $ 118,941,611 $ 184,356,316 $49,712,827 $ 76,082,592 ================================================================================================================================= $ 854,185 $-- $ 1,378,916 $-- $ 223,688 $ 13,228 =================================================================================================================================
17 CITISELECT PORTFOLIOS Financial Highlights
CITISELECT FOLIO 100 INCOME CITISELECT FOLIO 200 CONSERVATIVE CLASS A CLASS A - ----------------------------------------------------------------------------------------------------------------------------- SIX MONTHS SIX MONTHS ENDED MAY 3, 1999+ ENDED YEAR YEAR TEN MONTHS APRIL 30, 2000 TO APRIL 30, 2000 ENDED OCTOBER ENDED OCTOBER ENDED OCTOBER (Unaudited) OCTOBER 31, 1999 (Unaudited) 31, 1999 31, 1999 31, 1999 ============================================================================================================================= Net Asset Value, Beginning of Period $9.66 $10.00 $10.60 $11.28 $11.33 $10.50 - ----------------------------------------------------------------------------------------------------------------------------- Income From Operations: Net investment income 0.283 0.242+++ 0.271 0.333+++ 0.240 0.138 Net realized and unrealized gain (loss) on investments (0.370) (0.345) (0.052)++ (0.091) 0.068++ 0.722 - ----------------------------------------------------------------------------------------------------------------------------- Total from operations (0.087) (0.103) 0.219 0.242 0.308 0.860 - ----------------------------------------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.283) (0.237) (0.174) (0.574) (0.172) (0.007) Net realized gain on investments -- -- (0.435) (0.348) (0.186) (0.023) In excess of net income -- -- -- -- -- -- In excess of realized gains on investments -- -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------- Total distributions (0.283) (0.237) (0.609) (0.922) (0.358) (0.030) - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, end of period $9.29 $ 9.66 $10.21 $10.60 $11.28 $11.33 ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $207 $322 $58,671 $95,853 $206,313 $166,203 Ratio of expenses to average net assets (A) 1.25%* 1.25%* 1.50%* 1.50% 1.50% 1.50%* Ratio of net investment income to average net assets 6.11%* 5.42%* 4.54%* 3.04% 2.70% 2.88%* Total return (0.94)%** (1.03)%** 2.08%** 2.13% 2.84% 8.21%** Note: If Agents of the Funds and Agents of the respective Portfolios had not voluntarily agreed to waive a portion of their fees, and the Sub-administrator had not assumed expenses for the periods indicated, the net investment income per share and the ratios would have been as follows: Net investment income (loss) per share $(2.159) $(1.434)+++ $0.258 $0.333+++ $0.238 $0.126 RATIOS: Expenses to average net assets (A) 39.56%* 37.47%* 1.69%* 1.50% 1.52% 1.75%* Net investment income to average net assets (32.20)%* (30.80)%* 4.35%* 3.04% 2.68% 2.63%* ========================================================================================================================
(A) Includes allocated expenses for the periods indicated from the respective portfolios. * Annualized ** Not Annualized + Commencement of Operations ++ The amount shown for a share outstanding does not correspond with the aggregate net realized and unrealized gain (loss) on investments for the period ended due to the timing of sales of Fund shares in relation to fluctuating market value of the investments. +++ The per share amounts were computed using a monthly average number of shares outstanding during the period. See notes to financial statements 18
CITISELECT FOLIO 300 BALANCED CLASS A - ------------------------------------------------------------------------------------------- JUNE 17, 1996+ SIX MONTHS TO ENDED YEAR YEAR DECEMBER 31, APRIL 30, 2000 ENDED ENDED 1996 (Unaudited) OCTOBER 31, 1999 OCTOBER 31,1998 =========================================================================================== Net Asset Value, Beginning of Period $10.00 $10.84 $11.48 $11.71 - ------------------------------------------------------------------------------------------- Income From Operations: Net investment income 0.128 0.204 0.246+++ 0.187 Net realized and unrealized gain (loss) on investments 0.506 0.282 0.258 (0.036) - ------------------------------------------------------------------------------------------- Total from operations 0.634 0.486 0.504 0.151 - ------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.112) (0.119) (0.437) (0.138) Net realized gain on investments (0.022) (0.837) (0.707) (0.243) In excess of net income -- -- -- -- In excess of realized gain on investments -- -- -- -- - ------------------------------------------------------------------------------------------- Total distributions (0.134) (0.956) (1.144) (0.381) - ------------------------------------------------------------------------------------------- Net Asset Value, end of period $10.50 $10.37 $10.84 $11.48 =========================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $102,775 $103,430 $163,635 $340,455 Ratio of expenses to average net assets (A) 1.50%* 1.50%* 1.50% 1.50% Ratio of net investment income to average net assets 2.84%* 3.22%* 2.23% 2.09% Total return 6.38%** 4.61%** 4.52% 1.38% Net investment income (loss) per share $0.076 $0.205 $0.246+++ $0.187 RATIOS: Expenses to average net assets (A) 2.66%* 1.50%* 1.50% 1.50% Net investment income to average net assets 1.68%* 3.22%* 2.23% 2.09% ===========================================================================================
CITISELECT PORTFOLIOS Financial Highlights
CITISELECT FOLIO 300 BALANCED CITISELECT FOLIO 400 GROWTH CLASS A (Cont'd) CLASS A - ----------------------------------------------------------------------------------------------------------------------------------- JUNE 17, 1996+ SIX MONTHS TEN MONTHS TO ENDED YEAR YEAR TEN MONTHS ENDED DECEMBER 31, APRIL 30, 2000 ENDED ENDED ENDED OCTOBER 31, 1997 1996 (Unaudited) OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997 =================================================================================================================================== $10.66 $10.00 $11.11 $11.36 $12.01 $10.82 - ---------------------------------------------------------------------------------------------------------------------------------- 0.101 0.088 0.131 0.143+++ 0.090 0.037 0.974 0.671 0.587 0.682 (0.417) 1.183 - ---------------------------------------------------------------------------------------------------------------------------------- 1.075 0.759 0.718 0.825 (0.327) 1.220 - ---------------------------------------------------------------------------------------------------------------------------------- (0.002) (0.075) (0.008) (0.208) (0.079) (0.003) (0.023) (0.024) (1.200) (0.867) (0.244) (0.027) -- -- -- -- -- -- -- -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- (0.025) (0.099) (1.208) (1.075) (0.323) (0.030) - ---------------------------------------------------------------------------------------------------------------------------------- $11.71 $10.66 $10.62 $11.11 $11.36 $12.01 =================================================================================================================================== $325,193 $195,428 $118,214 $183,559 $410,350 $455,747 1.50%* 1.50%* 1.45%* 1.45% 1.47% 1.65% 2.30%* 2.38%* 2.00%* 1.30% 1.26% 1.39% 10.09%** 7.61%** 6.89%** 7.63% (2.73)% 11.28%** $0.100 $0.060 $0.131 $0.143+++ $0.090 $0.037 1.52%* 2.26%* 1.45%* 1.45% 1.47% 1.65% 2.28%* 1.62%* 2.00%* 1.30% 1.26% 1.39%* ===================================================================================================================================
19
CITISELECT FOLIO 500 BALANCED CLASS A - ----------------------------------------------------------------------------------------------------------------------------------- JUNE 17, 1996+ SIX MONTHS SEPTEMBER 3, 1996+ TO ENDED YEAR YEAR TEN MONTHS TO DECEMBER 31, APRIL 30, 2000 ENDED ENDED ENDED DECEMBER 31, 1996 (Unaudited) OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997 1996 =================================================================================================================================== $10.00 $11.57 $11.11 $12.08 $10.69 $10.00 - ---------------------------------------------------------------------------------------------------------------------------------- 0.042 0.060 0.069++ 0.053 0.044 0.019 0.841 0.899 1.086 (0.786) 1.346 0.701 - ---------------------------------------------------------------------------------------------------------------------------------- 0.883 0.959 1.154 (0.733) 1.390 0.720 - ---------------------------------------------------------------------------------------------------------------------------------- (0.029) (0.011) (0.136) (0.083) -- (0.019) (0.034) (1.068) (0.558) (0.154) -- -- -- -- -- -- -- (0.001) -- -- -- -- -- (0.010) - ---------------------------------------------------------------------------------------------------------------------------------- (0.063) (1.079) (0.694) (0.237) -- (0.030) - ---------------------------------------------------------------------------------------------------------------------------------- $10.82 $11.45 $11.57 $11.11 $12.08 $10.69 =================================================================================================================================== $253,556 $49,431 $75,768 $163,540 $202,823 $85,072 1.75%* 1.50%* 1.45% 1.48% 1.72%* 1.76%* 1.39%* 0.88%* 0.60% 0.72% 0.88%* 1.09%* 8.84%** 8.64%** 10.80% (6.14)% 13.00%** 7.20%** $0.028 $0.048 $0.062+++ $0.053 $0.040 $0.001 2.20%* 1.68%* 1.51% 1.48% 1.80%* 2.80%* 0.93%* 0.70%* 0.54% 0.72% 0.80%* 0.04%* ===================================================================================================================================
CITISELECT PORTFOLIOS FINANCIAL HIGHLIGHTS
CITISELECT FOLIO 100 INCOME CITISELECT FOLIO 200 CONSERVATIVE CITISELECT FOLIO 300 BALANCED CLASS B CLASS B CLASS B - ----------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD FOR THE PERIOD MAY 3, 1999 JANUARY 4, 1999 FOR THE PERIOD SIX MONTHS (COMMENCEMENT SIX MONTHS (COMMENCEMENT SIX MONTHS JANUARY 4, 1999 ENDED OF OPERATIONS) ENDED OF OPERATIONS) ENDED (OF OPERATIONS) APRIL 30, 2000 TO OCTOBER 31, APRIL 30, 2000 TO OCTOBER 31, APRIL 30, 2000 TO OCTOBER 31, (Unaudited) 1999 (Unaudited) 1999 (Unaudited) 1999 ==================================================================================================================================== Net Asset Value, Beginning of Period $9.66 $10.00 $10.59 $11.03 $10.83 $11.07 ==================================================================================================================================== Income From Operations: Net investment income 0.271 0.218+++ 0.248 0.292+++ 0.161 0.201+++ Net realized and unrealized gain (loss) on investments (0.370) (0.333) (0.054)++ (0.526) 0.312 (0.310) - ------------------------------------------------------------------------------------------------------------------------------------ Total from operations (0.099) (0.115) 0.194 (0.234) 0.473 (0.109) - ------------------------------------------------------------------------------------------------------------------------------------ Less Distributions From: Net investment income (0.271) (0.225) (0.169) (0.206) (0.126) (0.131) Net realized gain on investments -- -- (0.435) -- (0.837) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (0.271) (0.225) (0.604) (0.206) (0.963) (0.131) - ------------------------------------------------------------------------------------------------------------------------------------ Net Asset Value end of period $9.29 $9.66 $10.18 $10.59 $10.34 $10.83 ==================================================================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $148 $197 $638 $859 $870 $933 Ratio of expenses to average net assets (A) 1.50%* 1.50%* 1.75%* 1.75%* 1.75%* 1.75%* Ratio of net investment income to average net assets 5.86%* 5.17%* 4.29%* 2.79%* 2.97%* 1.98%* Total return (1.05)%** (1.16)%** 1.83%** (2.13)%** 4.49%** (0.99)%** Note: If Agents of the Funds and the Agents of Asset Allocation Portfolios had not voluntarily agreed to waive a portion of their fees, and the Sub-administrator had not assumed expenses for the periods indicated, the net investment income per share and the ratios would have been as follows: Net investment income (loss) per share $(2.171) $(1.459)+++ $0.236 $0.292+++ $0.161 $0.201+++ RATIOS: Expenses to average net assets (A) 39.81%* 37.72%* 1.94%* 1.75%* 1.75%* 1.75%* Net investment income to average net assets (32.45)%* (31.05)%* 4.10%* 2.79%* 2.97%* 1.98%* ====================================================================================================================================
(A) Includes allocated expenses for the periods indicated from the respective portfolios. * Annualized ** Not Annualized ++ The amount shown for a share outstanding does not correspond with the aggregate net realized and unrealized gain (loss) on investments for the period ended due to the timing of sales of Fund shares in relation to fluctuating market value of the investments. +++ The per share amounts were computed using a monthly average number of shares outstanding during the period. See notes to financial statements 20 CITISELECT FOLIO 400 GROWTH CITISELECT FOLIO 500 GROWTH PLUS CLASS B CLASS B - -------------------------------------------------------------------------------- FOR THE PERIOD FOR THE PERIOD SIX MONTHS JANUARY 4, 1999 SIX MONTHS JANUARY 4, 1999 ENDED (COMMENCEMENT ENDED (COMMENCEMENT OF APRIL 30, 2000 OF OPERATIONS) APRIL 30, 2000 OPERATIONS) (Unaudited) TO OCTOBER 31, 1999 (Unaudited) TO OCTOBER 31, 1999 ================================================================================ $11.06 $11.05 $11.53 $11.28 ================================================================================ 0.085 0.098+++ 0.041 0.027+++ 0.599 (0.088) 0.885 0.223 - -------------------------------------------------------------------------------- 0.684 0.010 0.926 0.250 - -------------------------------------------------------------------------------- (0.004) -- (0.038) -- (1.200) -- (1.068) -- - -------------------------------------------------------------------------------- (1.204) -- (1.106) -- - -------------------------------------------------------------------------------- $10.54 $11.06 $11.35 $11.53 ================================================================================ $728 $797 $282 $314 1.95%* 1.95%* 2.00%* 1.95%* 1.50%* 0.80%* 0.38%* 0.10%* 6.58%** 0.09%** 8.37%** 2.22%** $0.085 $0.098+++ $0.027 $0.021+++ 1.95%* 1.95%* 2.18%* 2.01%* 1.50%* 0.80%* 0.20%* 0.04%* ================================================================================ 21 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES CitiSelect Folio 100 Income, CitiSelect Folio 200 Conservative, CitiSelect Folio 300 Balanced, CitiSelect Folio 400 Growth and CitiSelect Folio 500 Growth Plus (individually, the "Fund", or collectively, the "Funds") are each a separate series of CitiFunds Trust I (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. CitiSelect Folio 100 Income, CitiSelect Folio 200 Conservative, CitiSelect Folio 300 Balanced, CitiSelect Folio 400 Growth and CitiSelect Folio 500 Growth Plus each invest all of their investable assets in some or all of the following: Large Cap Growth Portfolio, Large Cap Value Portfolio, Small Cap Growth Portfolio, Small Cap Value Portfolio, International Portfolio, U.S. Fixed Income Portfolio, Foreign Bond Portfolio, and High Yield Bond Portfolio (the "Portfolios"). All Portfolios are registered under the Investment Company Act of 1940, as amended, as open-end, diversified management investment companies and have multiple investors. These Portfolios are organized as trusts under the laws of the state of New York and are treated as partnerships for U.S. tax purposes. The Declarations of Trust permit the Trustees to issue beneficial interests in the respective Portfolios. The financial statements of the Portfolios, including the portfolio of investments (which are not part of the Funds' financial statements), may be obtained without charge, and further inquiries about the Portfolios may be made, by calling 1-800-625-4554. Citibank, N.A. ("Citibank") is the Investment Manager of each of the Portfolios and has hired Subadvisers for certain Portfolios. CFBDS, Inc. ("CFBDS") acts as each Fund's Sub-Administrator and Distributor. The Funds offer Class A and Class B shares. The Funds commenced their public offering of Class B shares on January 4, 1999 (except for CitiSelect 100 Income--on May 3, 1999). Class A shares have a front-end, or initial, sales charge effective January 4, 1999. This sales charge may be reduced or eliminated in certain circumstances. Class B shares have no front-end sales charges, pay a higher ongoing distribution fee than Class A shares and are subject to a deferred sales charge if sold within five years of purchase. Class B shares automatically convert into Class A shares after eight years. Expenses of the Funds are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the Rule 12b-1 service and distribution fees applicable to such class), and votes as a class only with respect to its own Rule 12b-1 plan. Shares of each class would receive their pro-rata share of the assets of the Fund if the Funds were liquidated. Class A shares have lower expenses than Class B shares. For the six months ended April 30, 2000, CFBDS, acting as the distributor received $0, $3,996, $12,070, $22,116 and $16,076 from sales charges of Class A shares and $0, $756, $153, $1,505 and $409 in deferred sales charges from redemptions of Class B shares of CitiSelect 100 Income, CitiSelect 200 Conservative, CitiSelect 300 Balanced, CitiSelect 400 Growth and CitiSelect 500 Growth Plus, respectively. CitiSelect Folio 100 Income seeks to achieve as high a level of current income as is consistent with a dominant emphasis on fixed income securities and a small allocation to equity securities by investing all of its investable assets in the Portfolios. CitiSelect Folio 200 Conservative seeks to achieve its investment objective of as high a total return over time as is consistent with a primary emphasis on fixed income securities and a secondary emphasis on equity securities by investing all of its investable assets in the Portfolios. CitiSelect Folio 300 Balanced seeks to achieve its investment objective of as high a total return over time as is consistent with a balanced emphasis on equity and fixed income securities by investing all of its investable assets in the Portfolios. CitiSelect Folio 400 Growth seeks to achieve its investment objective of as high a total return over time as is consistent with a primary emphasis on equity securities, and a secondary emphasis on fixed income securities by investing all of its investable assets in the Portfolios. CitiSelect Folio 500 Growth Plus seeks to achieve its investment objective of as high a total return over time as is consistent with a dominant emphasis on equity securities and a small allocation to fixed income securities by investing all of its investable assets in the Portfolios. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The significant accounting policies consistently followed by the Funds are as follows: A. INVESTMENT VALUATION Each Fund's net asset value will fluctuate based on changes in the values of the underlying Portfolios' securities. The values of each Fund's beneficial interest in its Portfolios are determined by multiplying the net asset value of a Portfolio by a Fund's percentage of the aggregate beneficial interest in that Portfolio for that day. This proportionate percentage of interest in a Portfolio, including the effects of the prior day's contributions and withdrawals, is then applied to determine the value of each Fund's interest in a Portfolio as of the close of regular trading on the New York Stock Exchange on each business day. Portfolios' investments are valued primarily on the basis of market quotations, or if market quotations are not available, by a method believed to accurately reflect fair value. An equity security that is primarily traded on a U.S. or foreign exchange (including securities traded through the NASDAQ national market system) is valued at the last sale price on that exchange or, if there were no sales during the day (or for unlisted securities not reported on the NASDAQ system), at the quoted bid price. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Bonds, foreign bonds and other fixed income securities (other than short term securities maturing in sixty days or less) are valued on the basis of valuations furnished by pricing services authorized by the Board of Trustees, which utilize market quotations and transactions, quotations from dealers and various relationships among securities in deter- 22 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited) mining value. Short-term obligations (maturing in 60 days or less) are valued at amortized cost. Other assets and securities for which no quotations are readily available are valued at fair value as determined in good faith by or under guidelines established by the Trustees. B. INVESTMENT INCOME Each Fund earns income, net of Portfolio expenses, daily based on its investment in each Portfolio. Additionally, each Fund reclaims its pro rata portion of recoverable foreign taxes. C. FEDERAL TAXES The Funds' policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders all of its taxable income, including any net realized gain on investment transactions. Accordingly, no provision for federal income or excise tax is necessary. At October 31, 1999, CitiSelect Folio 100, for federal income tax purposes, had a capital loss carryover of $2,623 which will expire on October 31, 2007. D. EXPENSES Each Fund bears all costs of its operations other than expenses specifically assumed by Citibank and CFBDS. Expenses incurred by the Trust with respect to any two or more funds or series are allocated in proportion to the average net assets of each fund, except when allocations of direct expenses to each Fund can otherwise be made fairly. Expenses directly attributable to a Fund are charged to that Fund. A Fund's share of the Portfolio's expenses are charged against and reduce the amount of the Fund's investment in that Portfolio. E. DISTRIBUTIONS Distributions to shareholders are recorded on the ex-dividend date. The amount and character of income and net realized gains to be distributed are determined in accordance with income tax rules and regulations, which may differ from generally accepted accounting principles. These differences are attributable to permanent book and tax accounting differences. Reclassifications are made to each Fund's capital accounts to reflect income and net realized gains available for distribution (or available capital loss carryovers) under income tax rules and regulations. F. OTHER All the realized and unrealized gain and loss of the Portfolios are allocated pro rata, based on respective ownership interests, among the Funds and the other investors in each Portfolio at the time of such determination. 2. MANAGEMENT FEES Citibank is responsible for overall management of each Fund's business affairs, and has a separate Management Agreement with each of the Funds. Citibank also provides certain administrative services to the Funds. These administrative services include providing general office facilities and supervising the overall administration of the Funds. CFBDS acts as Sub-Administrator and performs certain duties and receives compensation from Citibank from time to time as agreed to by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of Citigroup Inc. For the services of Citibank under the Management Agreements which covers the Funds and respective Portfolios and the services of the Subadvisers, the Funds and respective Portfolios pay an aggregate fee, which is accrued daily and paid monthly, of 0.75% (0.50% for CitiSelect 100 Income) of the average daily net assets on an annualized basis for the current fiscal year. Citibank may voluntarily agree to waive a portion of its management fee from any Fund. The management fees paid to Citibank for CitiSelect Folio 100 Income, CitiSelect Folio 200 Conservative, CitiSelect Folio 300 Balanced, CitiSelect Folio 400 Growth and CitiSelect Folio 500 Growth Plus for the six months ended April 30, 2000 amounted to $141 (all of which was voluntarily waived), $80,616 (of which $73,956 was voluntarily waived), $101,017 (none was waived), $66,703 (none was waived) and $14,487 (all of which were voluntarily waived), respectively. The Trust pays no compensation directly to any Trustee or any other officer who is affiliated with the Sub-Administrator, all of whom receive remuneration for their services to the Trust from the Sub-Administrator or its affiliates. 3. SERVICE FEES The Funds maintain separate Service Plans for Class A and Class B shares, which have been adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended. Under the Class A Service Plan, the Funds may pay monthly fees at an annual rate not to exceed 0.50% of the average daily net assets represented by Class A shares of the Funds. The Service fees for Class A shares of CitiSelect Folio 100 Income, CitiSelect Folio 200 Conservative, CitiSelectFolio 300 Balanced, CitiSelect Folio 400 Growth and CitiSelect Folio 500 Growth Plus amounted to $711, $187,496, $332,192, $372,744 and $156,582, respectively, for the six months ended April 30, 2000. Under the Class B Service Plan, the Funds may pay a combined monthly distribution and service fee at an annual rate not to exceed 0.75% of the average daily net assets represented by Class B shares of CitiSelect Folio 100 Income, CitiSelect Folio 200 Conservative and CitiSelect Folio 300 Balanced and 1.00% of the average daily net assets represented by Class B shares of CitiSelect Folio 400 Growth and CitiSelect Folio 500 Growth Plus. TheService fees for Class B shares of CitiSelect Folio 100 Income, CitiSelect Folio 200 Conservative, CitiSelectFolio 300 Balanced, CitiSelect Folio 400 Growth and CitiSelect Folio 500 Growth Plus amounted to $643, $2,808, $3,370, $3,871 and $1,553, respectively, for the six months ended April 30, 2000. These fees may be used to make payments to the Distributor for distribution services and to others as compensation for the sale of shares of the applicable class of the Funds, for advertising, marketing or other promotional activity, and for preparation, printing and distribution of prospectuses, statements of additional information and reports for recipients other than regulators and existing shareholders. The Funds may make payments to the Distributor and others for providing personal service or the maintenance of shareholder accounts. 23 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 4. INVESTMENT TRANSACTIONS Contributions and withdrawals in the Funds' investment in the Portfolios for the six months ended April 30, 2000 were as follows: CONTRIBUTIONS WITHDRAWALS ================================================================================ CitiSelect Folio 100 Income $ 93,774 $ 190,922 CitiSelect Folio 200 Conservative $ 488,143 $40,837,454 CitiSelect Folio 300 Balanced $2,404,290 $70,900,423 CitiSelect Folio 400 Growth $2,207,864 $80,091,729 CitiSelect Folio 500 Growth Plus $1,586,485 $34,167,199 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). Transactions in shares of beneficial interest were as follows: CITISELECT FOLIO 100 INCOME - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS A Shares sold -- 35,027 Shares reinvested 913 480 Shares repurchased (11,871) (2,229) - -------------------------------------------------------------------------------- Net increase (decrease) (10,958) 33,278 ================================================================================ SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS B Shares sold -- 30,273 Shares reinvested 521 395 Shares repurchased (5,024) (10,249) - -------------------------------------------------------------------------------- Net increase (decrease) (4,503) 20,419 ================================================================================ CITISELECT FOLIO 200 CONSERVATIVE - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS A Shares sold 10,549 1,228,419 Shares reinvested 437,461 1,335,448 Shares repurchased (3,739,774) (11,810,906) - -------------------------------------------------------------------------------- Net decrease (3,291,764) (9,247,039) ================================================================================ SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS B Shares sold 1,839 90,155 Shares reinvested 3,679 1,301 Shares repurchased (23,968) (10,356) - -------------------------------------------------------------------------------- Net increase (decrease) (18,450) 81,100 ================================================================================ CITISELECT FOLIO 300 BALANCED - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS A Shares sold 130,516 905,284 Shares reinvested 1,201,397 2,859,378 Shares repurchased (6,452,821) (18,321,523) - -------------------------------------------------------------------------------- Net decrease (5,120,908) (14,556,861) ================================================================================ 24 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited) SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS B Shares sold 759 87,722 Shares reinvested 7,013 809 Shares repurchased (9,769) (2,372) - -------------------------------------------------------------------------------- Net increase (decrease) (1,997) 86,159 ================================================================================ CITISELECT FOLIO 400 GROWTH - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS A Shares sold 89,628 786,829 Shares reinvested 1,682,498 3,400,461 Shares repurchased (7,166,268) (23,777,463) - -------------------------------------------------------------------------------- Net decrease (5,394,142) (19,590,173) ================================================================================ SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS B Shares sold 3,154 84,676 Shares reinvested 6,667 -- Shares repurchased (12,889) (12,573) - -------------------------------------------------------------------------------- Net increase (decrease) (3,068) 72,103 ================================================================================ CitiSelect Folio 500 Growth Plus - -------------------------------------------------------------------------------- SIX MONTHS ENDED APRIL 30, 2000 YEAR ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS A Shares sold 79,040 393,517 Shares reinvested 563,258 884,444 Shares repurchased (2,874,507) (9,445,712) - -------------------------------------------------------------------------------- Net decrease (2,232,209) (8,167,751) ================================================================================ SIX MONTHS ENDED APRIL 30, 2000 PERIOD ENDED (Unaudited) OCTOBER 31, 1999 ================================================================================ CLASS B Shares sold 1,698 32,179 Shares reinvested 2,557 -- Shares repurchased (6,676) (4,915) - -------------------------------------------------------------------------------- Net increase (decrease) (2,421) 27,264 ================================================================================ 6. Pertinent details as to various amounts allocated from each Portfolio to CitiSelect Folio 100 Income for the six months ended April 30, 2000 are noted below. With respect to the Portfolios, investment transactions are accounted for on the trade date basis and realized gains and losses are determined on the identified cost basis.
PORTFOLIO INTEREST DIVIDENDS EXPENSES ============================================================================================================================ Large Cap Growth Portfolio $ 12 $ 72 $ (71) Large Cap Value Portfolio 1 244 (83) High Yield Portfolio 5,074 -- (324) U.S. Fixed Income Portfolio 11,204 185 (645) - ---------------------------------------------------------------------------------------------------------------------------- Total $16,291 $501 $(1,123) ============================================================================================================================
25 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
PERIOD ENDED PERCENTAGE REALIZED UNREALIZED OF OWNERSHIP GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO ================================================================================================================================ Large Cap Growth Portfolio $ 1,723 $ 232 --% Large Cap Value Portfolio 215 (1,161) -- High Yield Portfolio (6,091) (1,203) 0.2% U.S. Fixed Income Portfolio (13,008) 2,681 0.1% - -------------------------------------------------------------------------------------------------------------------------------- Total $(17,161) $ 549 ================================================================================================================================ Pertinent details as to various amounts allocated from each Portfolio to CitiSelect Folio 200 Conservative for the six months ended April 30, 2000 are noted below. With respect to the Portfolios, investment transactions are accounted for on the trade date basis and realized gains and losses are determined on the identified cost basis. PORTFOLIO INTEREST DIVIDENDS EXPENSES ================================================================================================================================= Large Cap Growth Portfolio $ 2,528 $ 15,590 $ (15,323) Large Cap Value Portfolio 321 63,789 (21,797) Small Cap Growth Portfolio 3,295 3,817 (15,701) Small Cap Value Portfolio 1,124 26,760 (16,158) International Portfolio 3,868 49,197 (21,598) Foreign Bond Portfolio 207,502 -- (29,222) High Yield Portfolio 849,947 -- (54,200) U.S. Fixed Income Portfolio 1,040,735 17,412 (60,019) - -------------------------------------------------------------------------------------------------------------------------------- Total $2,109,320 $ 176,565 $ (234,018) ================================================================================================================================= PERIOD ENDED PERCENTAGE REALIZED UNREALIZED OF OWNERSHIP GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO ================================================================================================================================= Large Cap Growth Portfolio $ 383,922 $ 107,085 0.6% Large Cap Value Portfolio 62,797 (276,150) 2.6% Small Cap Growth Portfolio 1,551,211 (92,156) 3.2% Small Cap Value Portfolio (76,610) 280,672 5.0% International Portfolio 227,782 79,480 5.2% Foreign Bond Portfolio (127,408) 65,518 18.0% High Yield Portfolio (988,317) (230,836) 23.8% U.S. Fixed Income Portfolio (1,174,599) 313,779 11.4% Foreign Tax Reclaim (199) (5,607) -- - -------------------------------------------------------------------------------------------------------------------------------- Total $ (141,421) $ 241,785 ================================================================================================================================ Pertinent details as to various amounts allocated from each Portfolio to CitiSelect Folio 300 Balanced for the six months ended April 30, 2000 are noted below. With respect to the Portfolios, investment transactions are accounted for on the trade date basis and realized gains and losses are determined on the identified cost basis. PORTFOLIO INTEREST DIVIDENDS EXPENSES ================================================================================================================================= Large Cap Growth Portfolio $ 6,105 $ 37,216 $ (36,697) Large Cap Value Portfolio 750 150,544 (51,419) Small Cap Growth Portfolio 11,877 13,387 (56,014) Small Cap Value Portfolio 3,979 94,486 (57,040) International Portfolio 13,504 166,357 (73,992) Foreign Bond Portfolio 357,725 -- (50,307) High Yield Portfolio 1,130,170 -- (72,053) U.S. Fixed Income Portfolio 1,147,694 19,340 (66,173) - -------------------------------------------------------------------------------------------------------------------------------- Total $2,671,804 $ 481,330 $(463,695) ================================================================================================================================
26 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited)
PERIOD ENDED PERCENTAGE REALIZED UNREALIZED OF OWNERSHIP GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO ================================================================================================================================ Large Cap Growth Portfolio $ 907,548 $ 223,252 1.4% Large Cap Value Portfolio 140,823 (653,584) 5.6% Small Cap Growth Portfolio 5,491,108 (402,527) 12.0% Small Cap Value Portfolio (281,134) 969,018 20.9% International Portfolio 794,500 233,669 16.9% Foreign Bond Portfolio (189,661) 86,017 31.9% High Yield Portfolio (1,328,287) (310,865) 31.7% U.S. Fixed Income Portfolio (1,302,212) 359,575 12.4% Foreign Tax Reclaim (651) (18,962) -- - -------------------------------------------------------------------------------------------------------------------------------- Total $ 4,232,034 $ 485,593 ================================================================================================================================ Pertinent details as to various amounts allocated from each Portfolio to CitiSelect Folio 400 Growth for the six months ended April 30, 2000 are noted below. With respect to the Portfolios, investment transactions are accounted for on the trade date basis and realized gains and losses are determined on the identified cost basis. PORTFOLIO INTEREST DIVIDENDS EXPENSES ================================================================================================================================ Large Cap Growth Portfolio $ 8,562 $ 52,498 $ (51,898) Large Cap Value Portfolio 1,061 213,396 (73,165) Small Cap Growth Portfolio 16,339 18,701 (77,808) Small Cap Value Portfolio 5,602 132,959 (80,416) International Portfolio 28,617 353,070 (157,545) Foreign Bond Portfolio 388,903 -- (54,745) High Yield Portfolio 844,097 -- (53,808) U.S. Fixed Income Portfolio 504,301 8,477 (29,075) - -------------------------------------------------------------------------------------------------------------------------------- Total $1,797,482 $779,101 $(578,460) ================================================================================================================================ PERIOD ENDED PERCENTAGE REALIZED UNREALIZED OF OWNERSHIP GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO ================================================================================================================================ Large Cap Growth Portfolio $1,274,794 $ 313,606 2.0% Large Cap Value Portfolio 220,754 (884,804) 8.0% Small Cap Growth Portfolio 7,700,522 (533,496) 16.1% Small Cap Value Portfolio (399,209) 1,403,221 30.2% International Portfolio 1,687,645 522,121 36.0% Foreign Bond Portfolio (212,839) 99,243 36.8% High Yield Portfolio (984,847) (234,863) 24.2% U.S. Fixed Income Portfolio (572,661) 153,114 5.6% Foreign Tax Reclaim (1,738) (46,714) -- - -------------------------------------------------------------------------------------------------------------------------------- Total $8,712,421 $ 791,428 ================================================================================================================================ Pertinent details as to various amounts allocated from each Portfolio to CitiSelect Folio 500 Growth Plus for the six months ended April 30, 2000 are noted below. With respect to the Portfolios, investment transactions are accounted for on the trade date basis and realized gains and losses are determined on the identified cost basis. PORTFOLIO INTEREST DIVIDENDS EXPENSES ================================================================================================================================ Large Cap Growth Portfolio $ 4,269 $ 26,077 $ (25,842) Large Cap Value Portfolio 538 108,183 (37,150) Small Cap Growth Portfolio 8,294 9,387 (39,332) Small Cap Value Portfolio 2,831 67,037 (40,586) International Portfolio 18,020 220,941 (98,590) High Yield Portfolio 178,236 -- (11,359) U.S. Fixed Income Portfolio 96,012 1,625 (5,536) - -------------------------------------------------------------------------------------------------------------------------------- Total $308,200 $433,250 $(258,395) ================================================================================================================================
27 CITISELECT PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
PERIOD ENDED PERCENTAGE REALIZED UNREALIZED OF OWNERSHIP GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO ================================================================================================================================ Large Cap Growth Portfolio $ 634,956 $155,408 1.0% Large Cap Value Portfolio 113,149 (445,113) 3.8% Small Cap Growth Portfolio 3,868,940 (305,415) 8.3% Small Cap Value Portfolio (209,579) 699,804 16.0% International Portfolio 1,056,768 319,643 22.4% High Yield Portfolio (207,752) (50,367) 5.2% U.S. Fixed Income Portfolio (109,423) 26,946 1.1% Foreign Tax Reclaim (1,004) (28,422) -- - -------------------------------------------------------------------------------------------------------------------------------- Total $5,146,055 $372,484 ================================================================================================================================
7. ASSUMPTION OF EXPENSES CFBDS, as Sub-Administrator has voluntarily agreed to pay a portion of the unwaived expenses of certain Funds for the six months ended April 30, 2000, which amounted to $93,214 for CitiSelect Folio 100 Income and $40,888 for CitiSelect Folio 500 Growth Plus. 28 THIS PAGE INTENTIONALLY LEFT BLANK. TRUSTEES AND OFFICERS C. Oscar Morong, Jr., CHAIRMAN Philip W. Coolidge*, PRESIDENT Riley C. Gilley Diana R. Harrington Susan B. Kerley Heath B. McLendon** E. Kirby Warren William S. Woods, Jr.*** SECRETARY Robert Frenkel** TREASURER Linwood Downs* *AFFILIATED PERSON OF SUB-ADMINISTRATOR AND DISTRIBUTOR **AFFILIATED PERSON OF INVESTMENT MANAGER ***TRUSTEE EMERITUS INVESTMENT MANAGER Citibank, N.A. 153 East 53rd Street, New York, NY 10043 DISTRIBUTOR CFBDS, Inc. 21 Milk Street, 5th floor Boston, MA 02109 TRANSFER AGENT AND CUSTODIAN State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 LEGAL COUNSEL Bingham Dana LLP 150 Federal Street, Boston, MA 02110 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. (C)2000 Citicorp [Recycle logo] Printed on recycled paper CSS/400 CITIFUNDS(SM) BALANCED PORTFOLIO SEMI-ANNUAL REPORT APRIL 30, 2000 - -------------------------------------------------------------------------------- INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE - -------------------------------------------------------------------------------- TABLE OF CONTENTS Letter to Our Shareholders 1 - -------------------------------------------------------------------------------- Portfolio Environment and Outlook 2 - -------------------------------------------------------------------------------- Fund Facts 4 - -------------------------------------------------------------------------------- Portfolio Highlights 5 - -------------------------------------------------------------------------------- Fund Performance 6 - -------------------------------------------------------------------------------- Statement of Assets and Liabilities 7 - -------------------------------------------------------------------------------- Statement of Operations 8 - -------------------------------------------------------------------------------- Statement of Changes in Net Assets 9 - -------------------------------------------------------------------------------- Financial Highlights 10 - -------------------------------------------------------------------------------- Notes to Financial Statements 12 - -------------------------------------------------------------------------------- LETTER TO OUR SHAREHOLDERS Dear CitiFunds Shareholder: During the six months ended April 30, 2000, the U.S. stock and bond markets were characterized by historic levels of volatility, leaving many investors with no clear indication of the future direction of the financial markets. Despite the ongoing strength and expansion of the U.S. and global economies, concerns regarding inflation and rising interest rates led to wide fluctuations in stock prices and turbulence in the bond market. In this environment, the CitiFunds' investment adviser, Citibank, N.A., continued to manage CitiFundsSM Balanced Portfolio with the goal of achieving its investment objectives which are to provide high current income by investing in a broad range of securities, to preserve capital, and to provide growth potential with reduced risk. This report reviews the Fund's investment activities and performance during the reporting period and provides a summary of Citibank's perspective on and outlook for the U.S. stock and bond markets. Thank you for your continued confidence and participation during these challenging times. Sincerely, /s/ PHILIP W. COOLIDGE - ----------------------- Philip W. Coolidge President May 15, 2000 PORTFOLIO ENVIRONMENT AND OUTLOOK BOTH STOCKS AND BONDS WERE ADVERSELY AFFECTED OVER THE PAST SIX MONTHS by the growing investor uncertainty about persistently strong economic growth, rising inflation fears and a more restrictive Federal Reserve Board (the "Fed") monetary policy in the United States. The U.S. economy continued its record growth rate, with Gross Domestic Product ("GDP") rising 7.3% during the fourth quarter of 1999 and an estimated 5.4% during the first quarter of 2000. This high level of economic growth caused concern among many investors regarding inflation. In an attempt to forestall a potential reacceleration of inflation, the Fed raised interest rates by 75 basis points (0.75%) during the reporting period. HIGHER INTEREST RATES CAUSED MOST SECTORS OF THE U.S. BOND MARKET TO DECLINE. Many bonds were also affected by changing supply-and-demand influences, including the federal government's announcement that it intends to buy back roughly $30 billion of long-term U.S. Treasury bonds. This created an unusual condition in the bond market called an inverted yield curve. An inverted yield curve represents an occurrence whereby longer-term bonds offer lower yields than short-term bonds. In addition, the increased volatility of the stock market created a "flight to quality" among many risk-averse investors, causing the yield differences, or spreads, between high-quality and lower-quality bonds to widen. DURING THE REPORTING PERIOD, THE U.S. STOCK MARKET WAS CHARACTERIZED BY RECORD LEVELS OF VOLATILITY. Throughout 1999, especially during November and December, value stocks (i.e., stocks that are inexpensive compared to other companies with similar earnings or assets) were virtually ignored by investors. In contrast, growth stocks (i.e., stocks issued by companies with the potential for faster-than-average growth within their industries) rose as many investors appeared willing to pay virtually any price for young and, what the Fund's management regards as speculative, technology companies. However, investor sentiment shifted dramatically during the first quarter of 2000. Investors, reacting to the potential threat of inflation, began to reassess the valuations assigned to many companies. As such, many large cap stocks fell sharply in January and February before recovering in early March. Between mid-March and the end of April, however, the market experienced a substantial correction. The tech-laden NASDAQ Composite Index* fell by more than 35% from its high, including a single-day drop of 10% on April 14, 2000. Shares of "blue chip" companies declined less severely, with the Standard & Poor's 500 Index** returning 7.18% during the same time period. Some value-oriented stocks gained ground amid renewed investor interest. * The Nasdaq Composite Index is a market value-weighted index that measures all domestic and non-U.S. based securities listed on the NASDAQ stock market. ** The Standard & Poor's 500 Index ("S&P 500") is an index of U.S. common stocks and is used as a gauge of general U.S. stock market performance. 2 DUE TO THE CONTINUING MARKET CHANGES, THE FUND'S MANAGERS REDUCED THE AVERAGE DURATION OF THE BOND PORTION OF THE PORTFOLIO TO A LEVEL THAT WAS MODESTLY SHORTER THAN THE AVERAGES. (Average duration is a measure of sensitivity to changing interest rates.) The bond portfolio's average duration was reduced to enable management to respond more quickly to investment opportunities when and if they became available. In addition, the Fund's managers maintained an emphasis on high-quality corporate bonds, mortgage-backed securities and asset-backed securities. In their view, these fixed-income securities offered the most competitive values during the period. Of course, there are no guarantees that management's expectations will come true. THE PORTFOLIO'S EQUITY MANAGERS FOLLOW A SPECIFIC DISCIPLINE THAT REQUIRES THAT A COMPANY HAVE A TRACK RECORD OF PROFITABILITY TO BE CONSIDERED FOR PURCHASE, AND THE TEAM AVOIDS SPECULATIVE COMPANIES WITHOUT PROFITS, WHICH INCLUDES MOST INTERNET STOCKS. Instead, the managers continued to focus on large-cap, multinational companies that they believed had high-quality businesses that were not reflected in their stock prices, and were likely to provide improving earnings. The managers identified such opportunities in well-established, "Old Economy" companies that were, in their view, aggressively adopting the technologies needed to expand their businesses. The managers expect the emergence of online markets for chemicals, industrial goods and other commodity-like products to particularly benefit companies in the basic materials and capital goods sectors going forward. Although the prospects of the Portfolio's basic materials and capital holdings have not yet been reflected in their stock prices, the Fund positively benefited from competitive results achieved by other industry groups, including natural gas producers, money-center banks and brokerage firms. In the financial services sector, the Fund's managers focused primarily on businesses with coherent strategies for targeting "New Economy" industries. These companies include financial institutions that provide capital to fast-growing technology, media and communications companies. ALTHOUGH NO ASSURANCES CAN BE MADE, THE FUND'S MANAGEMENT TEAM CONTINUES TO BELIEVE THAT STRENGTHENING GLOBAL DEMAND ULTIMATELY SHOULD BENEFIT THE PORTFOLIO'S STOCK HOLDINGS. Furthermore, in management's view, the recent correction of technology stocks may be evidence that many investors are returning to a more rational approach to investing where financial fundamentals and valuations really matter. While there is no way to predict whether this encouraging development will persist, management believes that this new trend may be positive for certain value-oriented stocks. 3 FUND FACTS FUND OBJECTIVE To provide high current income by investing in a broad range of securities, to preserve capital and to provide growth potential with reduced risk. DIVIDENDS CAPITAL GAINS Paid quarterly, if any Distributed semi-annually, if any INVESTMENT MANAGER PORTFOLIO SUBADVISER U.S. Fixed Income Portfolio Large Cap Value Portfolio Citibank, N.A. SSB Citi Fund Management LLC COMMENCEMENT OF OPERATIONS BENCHMARKS October 19, 1990 o Lipper Balanced Funds Average* o Standard & Poor's Barra Value NET ASSETS AS OF 4/30/00 Index** Class A shares $178.6 million o Lehman Brothers Aggregate Bond Class B shares $1.8 million Index*** * The Lipper Balanced Funds Average reflects the performance (excluding sales charges) of mutual funds with similar objectives. ** The Standard & Poor's Barra Value Index is an index of U.S. common stocks and is used as a gauge of general U.S. stock market performance. The S&P Barra Value Index represents the value of stocks in the S&P500. *** The Lehman Brothers Aggregate Bond Index is a broad measure of the performance of taxable bonds in the U.S. market, with maturities of at least one year. 4 PORTFOLIO HIGHLIGHTS ================================================================================ TOP FIVE SECURITIES (STOCKS) LARGE CAP VALUE PORTFOLIO COMPANY SECTOR % OF NET ASSETS Exxon Corp. Energy 3.56% - -------------------------------------------------------------------------------- Kimberly-Clark Corp. Consumer Staples 3.41% - -------------------------------------------------------------------------------- Marsh & McLennan Co., Inc. Finance 3.38% - -------------------------------------------------------------------------------- Williams Co., Inc. Utilities 3.31% - -------------------------------------------------------------------------------- PepsiCo, Inc. Consumer Staples 3.31% - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME U.S. FIXED INCOME PORTFOLIO INSTRUMENTS % OF NET ASSETS Mortgage and Asset Backed Securities 64.6% - -------------------------------------------------------------------------------- Corporate Bonds 28.0% - -------------------------------------------------------------------------------- U.S. Treasury Issues 14.7% - -------------------------------------------------------------------------------- Preferred Stock 1.5% - -------------------------------------------------------------------------------- Short-Term and Other Assets (8.8)% - -------------------------------------------------------------------------------- 5 FUND PERFORMANCE TOTAL RETURNS
SINCE SIX FIVE 10/19/90 ALL PERIODS ENDED APRIL 30, 2000 MONTHS** 1 YEAR YEARS* INCEPTION* ================================================================================== CitiFunds Balanced Portfolio (Class A) without sales charge (1.01)% (4.00)% 10.41% 11.22% Lipper Balanced Funds Average 5.35% 5.23% 14.49% 13.11%+ S&P Barra Value Index 2.70% 0.46% 19.81% 18.13%+ Lehman Brothers Aggregate Bond Index 1.41% 1.26% 6.79% 7.77%+ CitiFunds Balanced Portfolio (Class A) with a maximum sales charge of 5.00% (5.96)% (8.80)% 9.28% 10.63% CitiFunds Balanced Portfolio (Class B) without deferred sales charge (1.42)% (4.72)% -- 1.15%# Lipper Balanced Funds Average 5.35% 5.23% -- 6.90%++ S&P Barra Value Index 2.70% 0.46% -- 9.04%++ Lehman Brothers Aggregate Bond Index 1.41% 1.26% -- 0.80%++ CitiFunds Balanced Portfolio (Class B) with a maximum deferred sales charge of 5.00% (6.35)% (9.48)% -- (2.70)%#
* Average Annual Total Return ** Not Annualized + From 10/31/90 ++ From 12/31/98 # Commencement of Operations 1/4/99 GROWTH OF $10,000 INVESTMENT A $10,000 investment in the Fund made on 10/31/90 would have grown to $26,197 with sales charge (as of 4/30/00). The graph shows how the Fund compares to its benchmarks for the same period. [The following represents a chart in the printed piece.] Citifunds Lipper S&P BARA Lehman Brothers Balanced Balanced Value Index Aggregate Portfolio Funds Average (unmanaged) Bond Index (Unmanaged) 10/19/90 9500 10/31/90 9334 10000 10000 10000 11/30/90 9851 10435 10683 10215 12/31/90 10079 10677 10924 10374 1/31/91 10550 11034 11441 10503 2/28/91 11090 11521 12187 10592 3/31/91 11225 11725 12298 10665 4/30/91 11235 11753 12395 10781 5/31/91 11650 12099 12986 10843 6/30/91 11245 11726 12341 10838 7/31/91 11783 12122 12831 10988 8/31/91 12242 12434 13017 11226 9/30/91 12077 12450 12880 11454 10/31/91 12298 12633 13068 11581 11/30/91 12087 12354 12339 11687 12/31/91 13064 13358 13389 12034 1/31/92 12821 13242 13389 11871 2/29/92 13013 13401 13661 11948 3/31/92 12853 13203 13447 11881 4/30/92 12904 13323 14103 11966 5/31/92 12975 13462 14142 12192 6/30/92 12746 13317 14026 12360 7/31/92 13175 13714 14533 12612 8/31/92 12981 13584 14111 12740 9/30/92 13214 13755 14266 12891 10/31/92 13409 13756 14152 12720 11/30/92 13840 14096 14536 12723 12/31/92 13955 14357 14799 12925 1/31/93 14058 14551 15207 13173 2/28/93 14038 14647 15732 13403 3/31/93 14523 14922 16166 13460 4/30/93 14337 14738 16102 13553 5/31/93 14565 14980 16403 13570 6/30/93 14560 15148 16619 13816 7/31/93 14446 15172 16825 13894 8/31/93 14904 15630 17485 14138 9/30/93 14893 15683 17478 14177 10/31/93 15019 15824 17572 14230 11/30/93 14862 15593 17258 14109 12/31/93 15139 15869 17551 14185 1/31/94 15468 16255 18369 14377 2/28/94 15160 15936 17704 14127 3/31/94 14582 15350 16976 13779 4/30/94 14668 15379 17334 13669 5/31/94 14860 15451 17622 13667 6/30/94 14518 15168 17134 13637 7/31/94 14917 15511 17713 13907 8/31/94 15219 15908 18214 13925 9/30/94 14810 15620 17573 13720 10/31/94 15027 15712 17956 13707 11/30/94 14658 15325 17229 13677 12/31/94 14827 15454 17441 13772 1/31/95 15013 15646 17914 14044 2/28/95 15485 16117 18609 14378 3/31/95 15771 16393 19122 14466 4/30/95 15970 16693 19752 14668 5/31/95 16578 17231 20630 15236 6/30/95 16743 17553 20787 15348 7/31/95 16954 17957 21504 15313 8/31/95 16943 18111 21687 15498 9/30/95 17321 18515 22442 15649 10/31/95 17344 18471 22092 15852 11/30/95 17948 19036 23249 16090 12/31/95 18187 19295 23893 16316 1/31/96 18500 19642 24608 16424 2/29/96 18326 19713 24839 16139 3/31/96 18372 19790 25420 16026 4/30/96 18361 19996 25680 15936 5/31/96 18535 20242 26068 15904 6/30/96 18759 20262 25942 16118 7/31/96 18231 19709 24848 16162 8/31/96 18430 20068 25533 16135 9/30/96 19124 20811 26626 16416 10/31/96 19289 21198 27529 16779 11/30/96 19974 22146 29635 17067 12/31/96 19567 21913 29149 16908 1/31/97 20206 22513 30493 16960 2/28/97 20144 22540 30715 17002 3/31/97 19427 21913 29665 16813 4/30/97 20485 22511 30777 17065 5/31/97 21115 23465 32707 17227 6/30/97 21824 24148 33956 17431 7/31/97 22959 25500 36673 17901 8/31/97 21864 24834 35015 17748 9/30/97 22632 25765 37067 18010 10/31/97 22540 25322 35703 18272 11/30/97 23341 25697 37063 18356 12/31/97 23647 26034 37886 18540 1/31/98 23947 26195 37420 18778 2/28/98 24786 27274 40227 18764 3/31/98 25807 28040 42266 18829 4/30/98 25883 28219 42765 18927 5/31/98 25416 27934 42162 19107 6/30/98 25503 28350 42482 19269 7/31/98 24741 27933 41560 19310 8/31/98 22550 25486 34877 19624 9/30/98 23308 26521 36998 20083 10/31/98 24450 27571 39876 19977 11/30/98 24919 28553 41954 20091 12/31/98 25498 29515 43427 20151 1/31/99 26053 29975 44304 20294 2/28/99 25463 29157 43350 19939 3/31/99 25937 29816 44664 20048 4/30/99 27288 30758 48515 20159 5/31/99 27252 30346 47658 19981 6/30/99 27617 31141 49488 19917 7/31/99 26944 30571 47966 19832 8/31/99 26363 30174 46743 19822 9/30/99 25859 29776 44916 20052 10/31/99 26465 30616 47451 20126 11/30/99 26189 31017 47173 20124 12/31/99 26122 32010 48945 20027 1/31/00 25900 31136 47388 19961 2/29/00 24829 31152 44427 20203 3/31/00 26687 32844 49059 20469 4/30/00 26197 32256 48731 20410 The graph includes the initial sales charge on the Fund (no comparable charge exists for the indices) and assumes all dividends and distributions are reinvested at Net Asset Value. Note: All Fund performance numbers represent past performance, and are no guarantee of future results. The Fund's share price and investment return will fluctuate, so that the value of an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns include change in share price and reinvestment of dividends and distributions, if any. Total return figures are provided in accordance with SEC guidelines for comparative purposes for prospective investors and reflect certain voluntary fee waivers which may be terminated at any time. If the waivers were not in place, the Fund's return would have been lower. The maximum sales charge of 5.00% went into effect on January 4, 1999. Investors may not invest directly in an index. 6 CITIFUNDS BALANCED PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2000 (Unaudited) ================================================================================ ASSETS: Investment in, at value: Large Cap Value Portfolio $100,075,754 U.S Fixed Income Portfolio 80,914,701 - -------------------------------------------------------------------------------- Total Investments (Note 1A) 180,990,455 Receivable for shares of beneficial interest sold 2,266 Other receivables 31,734 - -------------------------------------------------------------------------------- Total assets 181,024,455 - -------------------------------------------------------------------------------- LIABILITIES: Payable for shares of beneficial interest repurchased 521,438 Accrued expenses and other liabilities 135,563 - -------------------------------------------------------------------------------- Total liabilities 657,001 - -------------------------------------------------------------------------------- NET ASSETS $180,367,454 ================================================================================ NET ASSETS CONSIST OF: Paid-in capital $186,784,631 Unrealized depreciation (4,421,185) Accumulated net realized loss (2,710,559) Undistributed net investment income 714,567 - -------------------------------------------------------------------------------- Total $180,367,454 ================================================================================ COMPUTATION OF CLASS A SHARES: Net Asset Value per share ($178,614,608/13,899,397 shares outstanding $12.85 Offering Price per share ($12.85/0.95) $13.53* ================================================================================ CLASS B SHARES: Net Asset Value per share and offering price ($1,752,846/135,786 shares outstanding) $12.91** ================================================================================ * Based upon single purchases of less than $25,000. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charges. See notes to financial statements 7 CITIFUNDS BALANCED PORTFOLIO STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited) ================================================================================ INVESTMENT INCOME (Note 6): Interest Income $ 3,081,192 Dividend Income (net of foreign withholding tax of $3,765) 1,224,912 Allocated Expenses (584,668) - -------------------------------------------------------------------------------- 3,721,436 - -------------------------------------------------------------------------------- EXPENSES Management fees (Note 2) 206,077 Service fees Class A (Note 3) 242,994 Service fees Class B (Note 3) 9,578 Legal fees 43,282 Shareholder reports 38,233 Custody and fund accounting fees 13,623 Transfer agent fees 13,175 Audit fees 13,175 Trustee fees 7,913 Other 41,448 - -------------------------------------------------------------------------------- Total expenses 629,498 Less aggregate amount waived by the Manager (Note 2) (206,077) - -------------------------------------------------------------------------------- Net expenses 423,421 - -------------------------------------------------------------------------------- Net investment income 3,298,015 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (Note 6): Net realized loss (2,077,505) Unrealized depreciation on investments (3,857,520) - -------------------------------------------------------------------------------- Net realized and unrealized loss (5,935,025) - -------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (2,637,010) ================================================================================ See notes to financial statements 8 CITIFUNDS BALANCED PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS TEN MONTHS YEAR ENDED ENDED ENDED APRIL 30, 2000 OCTOBER 31, 1999 DECEMBER 31, (Unaudited) (Note 1G) 1998 ================================================================================ INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS: Net investment income $ 3,298,015 $ 5,357,423 $ 6,041,370 Net realized gain (loss) (2,077,505) 17,693,990 26,888,409 Unrealized appreciation (depreciation) on investments (3,857,520) (13,913,368) (15,478,163) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (2,637,010) 9,138,045 17,451,616 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (Class A) (3,289,710) (5,213,004) (5,439,336) Net investment income (Class B) (16,279) (30,009) -- Net realized gain (Class A) (16,917,007) (348,563) (34,018,101) Net realized gain (Class B) (166,586) (3,267) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions to shareholders (20,389,582) (5,594,843) (39,457,437) - -------------------------------------------------------------------------------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (Note 5): CLASS A Net proceeds from sale of shares 489,307 6,618,624 23,637,486 Net asset value of shares issued to shareholders from reinvestment of distributions 20,193,832 5,561,567 39,433,879 Cost of shares repurchased (34,733,667) (36,653,939) (31,497,141) - -------------------------------------------------------------------------------- Total Class A (14,050,528) (24,473,748) 31,574,224 - -------------------------------------------------------------------------------- CLASS B* Net proceeds from sale of shares 174,021 2,678,077 -- Net asset value of shares issued to shareholders from reinvestment of distributions 167,102 33,276 -- Cost of shares repurchased (409,135) (627,087) -- - -------------------------------------------------------------------------------- Total Class B (68,012) 2,084,266 -- - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from transactions in shares of beneficial interest (14,118,540) (22,389,482) 31,574,224 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (37,145,132) (18,846,280) 9,568,403 - -------------------------------------------------------------------------------- NET ASSETS: Beginning of period 217,512,586 236,358,866 226,790,463 - -------------------------------------------------------------------------------- End of period (including undistributed net investment income of $714,567, $722,541 and $608,131, respectively) $180,367,454 $217,512,586 $236,358,866 ================================================================================ *January 4, 1999 (Commencement of Operations). See notes to financial statements 9 CITIFUNDS BALANCED PORTFOLIO FINANCIAL HIGHLIGHTS
CLASS A ---------------------------------------------------------------------- SIX MONTHS TEN MONTHS ENDED ENDED APRIL 30, OCTOBER 31, YEAR ENDED DECEMBER 31, 2000 1999 --------------------------------------------- (Unaudited) (Note 1G) 1998 1997 1996 1995 1994+ =============================================================================================== Net Asset Value, beginning of period $14.42 $14.24 $15.77 $15.61 $15.71 $13.52 $14.24 - ----------------------------------------------------------------------------------------------- Income From Operations: Net investment income 0.231 0.340++ 0.420 0.421 0.497 0.486 0.399 Net realized and unrealized gain (loss) (0.402) 0.201 0.795 2.726 0.680 2.540 (0.695) - ----------------------------------------------------------------------------------------------- Total from operations (0.171) 0.541 1.215 3.147 1.177 3.026 (0.296) - ----------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.229) (0.338) (0.380) (0.421) (0.497) (0.495) (0.394) Net realized gain (1.170) (0.023) (2.365) (2.566) (0.780) (0.341) (0.030) - ----------------------------------------------------------------------------------------------- Total distributions (1.399) (0.361) (2.745) (2.987) (1.277) (0.836) (0.424) - ----------------------------------------------------------------------------------------------- Net Asset Value, end of period $12.85 $14.42 $14.24 $15.77 $15.61 $15.71 $13.52 =============================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $178,615 $215,477 $236,359 $226,790 $230,382 $246,002 $227,309 Ratio of expenses to average net assets (A) 1.02%* 1.02%* 1.02% 1.02% 1.02% 1.02% 1.02% Ratio of net investment income to average net assets 3.34%* 2.78%* 2.61% 2.44% 3.04% 3.21% 2.82% Portfolio turnover (B) -- -- -- -- -- -- 29% Total return (1.01)%** 3.79%** 7.83% 20.85% 7.59% 22.66% (2.06)% Note: If Agents of the Fund for the periods indicated had not voluntarily waived a portion of their fees the net investment income per share and the ratios would have been as follows: Net investment income $0.216 $0.323++ $0.390 $0.387 $0.464 $0.463 $0.378 RATIOS: Expenses to average net assets (A) 1.23%* 1.16%* 1.22% 1.22% 1.22% 1.17% 1.17% Net investment income to average net assets 3.13%* 2.64%* 2.41% 2.24% 2.84% 3.06% 2.67% ===============================================================================================
* Annualized ** Not Annualized (A) Includes allocated expenses for the periods indicated from the respective portfolios. (B) Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in securities. + On May 1, 1994 the Fund began investing all of its investable assets in Balanced Portfolio. ++ The per share amounts were computed using monthly average shares during the period. See notes to financial statements 10 CITIFUNDS BALANCED PORTFOLIO FINANCIAL HIGHLIGHTS CLASS B ---------------------------------- SIX MONTHS JANUARY 4, 1999 ENDED (COMMENCEMENT APRIL 30, 2000 OF OPERATIONS) TO (Unaudited) OCTOBER 31, 1999 ================================================================================ Net Asset Value, beginning of period $14.42 $14.28 - -------------------------------------------------------------------------------- Income From Operations: Net investment income 0.163 0.249+ Net realized and unrealized gain (loss) (0.388) 0.180 - -------------------------------------------------------------------------------- Total from operations (0.225) 0.429 - -------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.115) (0.266) Net realized gain (1.170) (0.023) - -------------------------------------------------------------------------------- Total distributions (1.285) (0.289) - -------------------------------------------------------------------------------- Net Asset Value, end of period $12.91 $14.42 ================================================================================ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $1,753 $2,036 Ratio of expenses to average net assets (A) 1.77%* 1.77%* Ratio of net investment income to average net assets 2.59%* 2.03%* Total return (1.42)%** 2.99%** Note: If Agents of the Fund for the periods indicated had not voluntarily waived a portion of their fees the net investment income per share and the ratios would have been as follows: Net investment income $0.149 $0.232+ RATIOS: Expenses to average net assets (A) 1.98%* 1.91%* Net investment income to average net assets 2.38%* 1.89%* ================================================================================ * Annualized ** Not Annualized (A) Includes the allocated expenses for the periods indicated from the respective portfolios. + The per share amounts were computed using monthly average shares during the period. See notes to financial statements 11 CITIFUNDS BALANCED PORTFOLIO NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES CitiFunds Balanced Portfolio (the "Fund") is a separate diversified series of CitiFunds Trust I (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 invested all of its investable assets in Balanced Portfolio until July 31, 1999. On August 1, 1999, the Fund began investing all of its investable assets between Large Cap Value Portfolio and U.S. Fixed Income Portfolio (the "Portfolios"). The Portfolios are registered under the Investment Company Act of 1940, as amended, as open-end, diversified management investment companies and have multiple investors. These Portfolios are organized as trusts under the laws of the state of New York and are treated as partnerships for U.S. tax purposes. The Declaration of Trust permits the Trustees to issue beneficial interests in the Portfolios. Citibank, N.A. ("Citibank") is the Investment Manager of each of the Portfolios and has hired a Subadviser for one of the Portfolios. CFBDS, Inc. ("CFBDS") acts as the Fund's Sub-Administrator and Distributor. The financial statements of the Portfolios, including the Portfolio of Investments (which are not part of the Fund's financial statements), may be obtained without charge, and further inquiries about the Portfolios may be made by calling 1-800-625-4554. The Fund offers Class A shares and Class B shares. The Fund commenced its public offering of Class B shares on January 4, 1999. Class A shares have a front-end, or initial, sales charge effective January 4, 1999. This sales charge may be reduced or eliminated in certain circumstances. Class B shares have no front-end sales charge, pay a higher ongoing distribution fee than Class A shares and are subject to a deferred sales charge if sold within five years of purchase. Class B shares automatically convert into Class A shares after eight years. Expenses of the Fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including Rule 12b-1 service and distribution fees applicable to such class), and votes as a class only with respect to its own Rule 12b-1 plan. Shares of each class would receive their pro-rata share of the net assets of the Fund if the Fund was liquidated. Class A shares have lower expenses than Class B shares. For the period ended April 30, 2000, CFBDS, acting as the distributor, received net commissions paid by investors $3,335 from sales of Class A and $5,934 in deferred sales charges from redemptions of Class B shares. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The significant accounting policies consistently followed by the Fund are as follows: A. INVESTMENT VALUATION The Fund's net asset value will fluctuate based on changes in the values of the underlying portfolio's securities. The values of the Fund's beneficial interest in the Portfolios are determined by multiplying the net asset value of a Portfolio by a Fund's percentage of the aggregate beneficial inter- 12 CITIFUNDS BALANCED PORTFOLIO NOTES TO FINANCIAL STATEMENTS (Unaudited) est in the Portfolio for that day. This proportionate percentage of interest in a Portfolio, including the effects of the prior day's contributions and withdrawals, is then applied to determine the value of the Fund's interest in a Portfolio as of the close of regular trading on the New York Stock Exchange on each business day. The portfolios' investments are valued primarily on the basis of market quotations, or if market quotations are not available, by a method believed to accurately reflect fair value. An equity security that is primarily traded on a U.S. or foreign exchange (including securities traded through the NASDAQ national market system) is valued at the last sale price on that exchange or, if there were no sales during the day (or for unlisted securities not reported on the NASDAQ system), at the quoted bid price. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Bonds, foreign bonds and other fixed income securities (other than short term securities maturing in sixty days or less) are valued on the basis of valuations furnished by pricing services authorized by the Board of Trustees, which utilize market quotations and transactions, quotations from dealers and various relationships among securities in determining value. Short-term obligations (maturing in 60 days or less) are valued at amortized cost. Other assets and securities for which no quotations are readily available are valued at fair value as determined in good faith by or under guidelines established by the Trustees. B. INVESTMENT INCOME The Fund earns income, net of Portfolio expenses, daily based on its investment in the Portfolios. C. FEDERAL TAXES The Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders all of its taxable income, including any net realized gain on investment transactions. Accordingly, no provision for federal income or excise tax is 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 or series are allocated in proportion to the average net assets of each fund, except when allocations of direct expenses to each fund can otherwise be made fairly. Expenses directly attributable to a fund are charged to that fund. The Fund's share of the Portfolios' expenses are charged against and reduce the amount of the Fund's investment in each Portfolio. E. DISTRIBUTIONS Distributions to shareholders are recorded on ex-dividend date. The amount and character of income and net realized gains to be distributed are determined in accordance with income tax rules and regulations, which may differ from generally accepted accounting principles. These differences are attributable to permanent book and tax accounting differences. Reclassifications are made to the Fund's capital accounts to reflect income and net realized gains available for distribution (or available capital loss carryovers) under income tax rules and regulations. 13 CITIFUNDS BALANCED PORTFOLIO NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) F. OTHER All realized and unrealized gain and loss of the Portfolios is allocated pro rata, based on respective ownership interests, among the Fund and the other investors in the Portfolios at the time of such determination. G. CHANGE IN FISCAL YEAR END During fiscal year 1999, the Fund changed its fiscal year end from December 31 to October 31. 2. MANAGEMENT FEES Citibank is responsible for overall management of the Fund's business affairs, and has a separate 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 certain duties and receives compensation from Citibank from time to time as agreed to by Citibank and CFBDS. Citibank is a wholly-owned subsidiary of Citigroup Inc. For the services of Citibank under the Management Agreement which covers the Fund and respective Portfolios and the services of SSBCiti Fund Management LLC, the Subadviser to the Portfolio. The Fund and respective Portfolios pay an aggregate fee, which is accrued daily and paid monthly, of 0.70% of the average daily net assets on an annualized basis for the current fiscal year. Citibank may voluntarily agree to waive a portion of its management fee from any Fund. The management fees paid to Citibank amounted to $206,077, all of which was voluntarily waived for the period April 30, 2000. The Trust pays no compensation directly to any Trustee or any other officer who is affiliated with the Sub-Administrator, all of whom receive remuneration for their services to the Trust from the Sub-Administrator or its affiliates. 3. SERVICE FEES The Fund maintains separate Service Plans for Class A and Class B shares, which have been adopted in accordance with Rule 12b-1 under the 1940 Act. Under the Class A Service Plan, the Fund may pay monthly fees at an annual rate not to exceed 0.25% of the average daily net assets represented by Class A shares of the Fund. The Service fees for Class A shares amounted to $242,994 for the six months ended April 30, 2000. Under the Class B Service Plan, the Fund may pay a combined monthly distribution and service fee at an annual rate not to exceed 1.00% of the average daily net assets represented by Class B shares of the Fund. The Service fees for Class B shares amounted to $9,578 for the period ended April 30, 2000. These fees may be used to make payments to the Distributor for distribution services and to others as compensation for the sale of shares of the applicable class of the Fund, for advertising, marketing or other promotional activity, and for preparation, printing and distribution of prospectuses, statements of additional information and reports for recipients other than regulators and existing shareholders. The Fund may also make payments to the Distributor and others for providing personal service of the maintenance of shareholder accounts. 14 CITIFUNDS BALANCED PORTFOLIO NOTES TO FINANCIAL STATEMENTS (Unaudited) 4. INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolios for the six months ended April 30, 2000 were as follows: CONTRIBUTIONS WITHDRAWALS ================================================================================ Large Cap Value Portfolio $ 353,295 $(17,966,782) U.S. Fixed Income Portfolio 376,276 (17,380,838) ================================================================================ 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). Transactions in shares of beneficial interest were as follows: TEN MONTHS SIX MONTHS ENDED ENDED OCTOBER 31, YEAR ENDED APRIL 30, 2000 1999 DECEMBER 31, (Unaudited) (Note 1G) 1998 ================================================================================ CLASS A Shares sold 36,768 451,225 1,473,554 Shares issued to shareholders from reinvestment of distributions 1,587,154 381,264 2,695,888 Shares repurchased (2,664,032) (2,488,481) (1,950,608) - -------------------------------------------------------------------------------- Class A net increase (decrease) (1,040,110) (1,655,992) 2,218,834 ================================================================================ CLASS B* Shares sold 13,248 181,981 -- Shares issued to shareholders from reinvestment of distributions 13,073 2,011 -- Shares repurchased (31,756) (42,771) -- - -------------------------------------------------------------------------------- Class B net increase (decrease) (5,435) 141,221 -- ================================================================================ *January 4, 1999 (Commencement of Operations). 6. Pertinent details as to various amounts allocated from each Portfolio to CitiFunds Balanced Portfolio for the six months ended April 30, 2000 are noted below. With respect to the Portfolios, investment transactions are accounted for on the trade date basis and realized gains and losses are determined on the identified cost basis. PORTFOLIO INTEREST DIVIDENDS EXPENSES ================================================================================ Large Cap Value Portfolio $ 5,528 $1,172,481 $ (407,624) U.S. Fixed Income Portfolio 3,075,664 52,431 (177,044) - -------------------------------------------------------------------------------- Total $3,081,192 $1,224,912 $ (584,668) ================================================================================ PERCENTAGE REALIZED UNREALIZED OF OWNERSHIP GAIN (LOSS) GAIN (LOSS) OF THE PORTFOLIO ================================================================================ Large Cap Value Portfolio $ 1,486,030 $(4,817,736) 52.2% U.S. Fixed Income Portfolio (3,563,535) 960,216 38.8% - -------------------------------------------------------------------------------- Total $ (2,077,505) $(3,857,520) ================================================================================ 15 THIS PAGE INTENTIONALLY LEFT BLANK. TRUSTEES AND OFFICERS C. Oscar Morong, Jr., Chairman Philip W. Coolidge*, President Elliott J. Berv Mark T. Finn Riley C. Gilley Diana R. Harrington Susan B. Kerley Heath B. McLendon** Walter E. Robb, III E. Kirby Warren William S. Woods, Jr.*** SECRETARY Robert Frenkel** TREASURER Linwood Downs* *AFFILIATED PERSON OF ADMINISTRATOR AND DISTRIBUTOR **AFFILIATED PERSON OF INVESTMENT ADVISER ***TRUSTEE EMERITUS 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 LEGAL COUNSEL Bingham Dana LLP 150 Federal Street, Boston, MA 02110 THE CITIFUNDS FAMILY LARGE CAP STOCKS CitiFunds Growth & Income Portfolio CitiFunds Large Cap Growth Portfolio SMALL CAP STOCKS CitiFunds Small Cap Growth Portfolio CitiFunds Small Cap Value Portfolio INTERNATIONAL STOCKS CitiFunds International Growth & Income Portfolio CitiFunds International Growth Portfolio GROWTH WITH INCOME CitiFunds Balanced Portfolio BONDS CitiFunds Short-Term U.S. Government Income Portfolio CitiFunds Intermediate Income Portfolio CitiFunds National Tax Free Income Portfolio CitiFunds New York Tax Free Income Portfolio CitiFunds California Tax Free Income Portfolio MONEY MARKETS CitiFunds Cash Reserves CitiFunds U.S. Treasury Reserves CitiFunds Tax Free Reserves CitiFunds New York Tax Free Reserves CitiFunds California Tax Free Reserves CitiFunds Connecticut Tax Free Reserves This report is prepared for the information of shareholders of CitiFunds Balanced Portfolio. It is authorized for distribution to prospective investors only when preceded or accompanied by an effective prospectus of CitiFunds Balanced Portfolio. For more information about any of the CitiFunds listed above, ask for a prospectus (except for CitiFunds Balanced Portfolio, which preceded or accompanies this report) containing more complete information, including all sales charges (if any), fees and expenses. Please read the prospectus carefully before you invest or send money. Although each money market fund seeks to maintain the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. Mutual fund shares are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency. CitiFunds are made available by CFBDS, Inc. as distributor. For more information contact your Service Agent or call 1-800-625-4554. (C)2000 Citicorp [Recycle logo] Printed on recycled paper CFS/BAL/400 -----END PRIVACY-ENHANCED MESSAGE-----