UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6118 TAX FREE RESERVES PORTFOLIO (Exact name of registrant as specified in charter) 125 Broad Street, New York, NY 10004 (Address of principal executive offices) (Zip code) Robert I. Frenkel, Esq. Smith Barney Fund Management LLC 300 First Stamford Place Stamford, CT 06902 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 451-2010 Date of fiscal year end: AUGUST 31 Date of reporting period: FEBRUARY 29, 2004ITEM 1. REPORT TO STOCKHOLDERS. The SEMI-ANNUAL Report to Stockholders is filed herewith.
Tax Free Reserves Portfolio
S C H E D U L E O F I N V E S T M E N T S
February 29, 2004
| (Unaudited) | |||||
| Principal | |||||
| Amount | |||||
Issuer | (000’s omitted) | Value | |||
| Annual and Semi-Annual | |||||
| Tender Revenue | |||||
| Bonds and Notes (Puts) — 7.3% | |||||
| Colorado Housing and | |||||
| Finance Authority, | |||||
| AMT, | |||||
| 1.20% due 3/01/04 $ | $ 5,000 | $ 5,000,000 | |||
| Georgia State, Road & | |||||
| Tollway Authority, | |||||
| 2.25% due 10/01/04 | 7,015 | 7,064,134 | |||
| Indiana Health Facilities | |||||
| Finance Authority | |||||
| Hospital Revenue, | |||||
| 1.15% due 3/02/04 | 17,900 | 17,900,000 | |||
| Maryland State | |||||
| Community | |||||
| Development | |||||
| Administration, AMT, | |||||
| 1.25% due 12/21/04 | 4,000 | 4,000,000 | |||
| Michigan State, | |||||
| 2.00% due 9/30/04 | 15,000 | 15,088,765 | |||
| Michigan State | |||||
| Housing Development | |||||
| Authority, AMT, | |||||
| 1.20% due 12/15/04 | 9,000 | 9,000,000 | |||
| New Jersey State, | |||||
| 2.00% due 6/25/04 | 33,000 | 33,113,846 | |||
| New Jersey State | |||||
| Housing & Mortgage | |||||
| Finance Agency, AMT, | |||||
| 1.10% due 4/01/04 | 8,000 | 8,000,000 | |||
| Old Rochester, | |||||
| Massachusetts, | |||||
| Regional School | |||||
| District, | |||||
| 2.00% due 2/18/05 | 15,000 | 15,122,203 | |||
| Tennessee, Housing | |||||
| Development Agency, | |||||
| 2.00% due 7/01/04 | 4,385 | 4,399,112 | |||
| Texas Department of | |||||
| Housing & Community | |||||
| Affairs, | |||||
| 1.10% due 5/03/04 | 5,000 | 5,000,000 | |||
| Vermont Educational | |||||
| and Health Buildings | |||||
| Financing Agency, | |||||
| 1.10% due 11/01/04 | 9,900 | 9,900,000 | |||
| 133,588,060 | |||||
| Bond, Revenue,Tax and Tax | |||||
| and Revenue Anticipation | |||||
| Notes — 15.6% | |||||
| Boulder Valley, | |||||
| Colorado, School | |||||
| District,TANs, | |||||
| 2.00% due 6/30/04 | 20,000 | 20,063,277 | |||
| Principal | ||||||
| Amount | ||||||
Issuer | (000’s omitted) | Value | ||||
| Essex County, | ||||||
| New Jersey, BANs, | ||||||
| 2.00% due 11/04/04 | $ 42,000 | $ 42,224,871 | ||||
| Essex County, | ||||||
| New Jersey, | ||||||
| Improvement Authority, | ||||||
| BANs, | ||||||
| 2.00% due 8/05/04 | 7,000 | 7,028,213 | ||||
| Hudson, Massachusetts, | ||||||
| BANs, | ||||||
| 2.00% due 5/14/04 | 48,419 | 48,506,122 | ||||
| Lynnfield, Massachusetts, | ||||||
| BANs, | ||||||
| 2.00% due 3/12/04 | 12,500 | 12,503,343 | ||||
| Milton, Massachusetts, | ||||||
| BANs, | ||||||
| 2.00% due 10/29/04 | 36,000 | 36,226,751 | ||||
| Missouri State Health | ||||||
| and Educational | ||||||
| Facilities Authority, | ||||||
| RANs, | ||||||
| 2.25% due 4/23/04 | 2,150 | 2,153,072 | ||||
| Moorestown Township, | ||||||
| New Jersey, BANs, | ||||||
| 1.75% due 5/27/04 | 4,000 | 4,007,055 | ||||
| Paterson, New Jersey, | ||||||
| BANs, | ||||||
| 2.00% due 6/25/04 | 9,745 | 9,778,665 | ||||
| Philadelphia, | ||||||
| Pennsylvania,TRANs, | ||||||
| 2.00% due 6/30/04 | 40,000 | 40,136,252 | ||||
| Saint Louis, Missouri, | ||||||
| General Fund | ||||||
| Revenue,TRANs, | ||||||
| 2.00% due 6/25/04 | 20,000 | 20,065,786 | ||||
| Texas State,TRANs, | ||||||
| 2.00% due 8/31/04 | 2,400 | 2,412,377 | ||||
| Tisbury, Massachusetts, | ||||||
| BANs, | ||||||
| 2.00% due 3/04/04 | 2,668 | 2,668,184 | ||||
| Tyngsborough, | ||||||
| Massachusetts, BANs, | ||||||
| 2.00% due 11/04/04 | 24,908 | 25,063,278 | ||||
| Worcester, | ||||||
| Massachusetts, BANs, | ||||||
| 2.00% due 8/31/04 | 11,195 | 11,245,097 | ||||
| 284,082,343 | ||||||
| General Obligation Bonds | ||||||
| and Notes — 3.0% | ||||||
| Chicago, Illinois, | ||||||
| 1.05% due 12/09/04 | 12,000 | 12,000,000 | ||||
| Jersey City, New Jersey, | ||||||
| 2.00% due 7/02/04 | 6,880 | 6,901,734 | ||||
| Mecklenberg County, | ||||||
| North Carolina, | ||||||
| 2.00% due 2/01/05 | 16,133 | 16,132,901 | ||||
11
Tax Free Reserves Portfolio
S C H E D U L E O F I N V E S T M E N T S (Continued) February 29, 2004
| Principal | ||||||
| Amount | ||||||
| Issuer | (000’s omitted) | Value | ||||
| General Obligation Bonds | ||||||
| and Notes — 3.0% (cont’d) | ||||||
| West Haven, | ||||||
| Connecticut, | ||||||
| 2.00% due 7/15/04 | $ 20,000 | $ 20,078,686 | ||||
| 55,113,321 | ||||||
| Variable Rate Demand Notes* — 73.8% | ||||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, | ||||||
| due 4/05/06 | 16,000 | 16,000,000 | ||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, | ||||||
| due 3/07/07 | 4,000 | 4,000,000 | ||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, | ||||||
| due 7/04/07 | 5,000 | 5,000,000 | ||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, | ||||||
| due 9/01/09 | 4,965 | 4,965,000 | ||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, | ||||||
| due 12/01/09 | 15,000 | 15,000,000 | ||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, | ||||||
| due 2/01/11 | 8,590 | 8,590,000 | ||||
| ABN-Amro Munitops | ||||||
| Certificates Trust, AMT, | ||||||
| due 7/05/06 | 9,000 | 9,000,000 | ||||
| Alachua County, | ||||||
| Florida, Health Facilities, | ||||||
| due 10/01/32 | 15,120 | 15,120,000 | ||||
| Alaska State | ||||||
| Housing Finance Corp., | ||||||
| AMT, | ||||||
| due 6/01/07 | 13,490 | 13,490,000 | ||||
| Atlanta, Georgia, Airport | ||||||
| Revenue, | ||||||
| due 1/01/30 | 35,500 | 35,500,000 | ||||
| Atlanta, Georgia, Water | ||||||
| and Wastewater | ||||||
| Revenue, | ||||||
| due 11/01/33 | 6,000 | 6,000,000 | ||||
| Blount County, | ||||||
| Tennessee, Public | ||||||
| Building Authority, | ||||||
| due 6/01/26 | 15,300 | 15,300,000 | ||||
| Calcasieu Parish, Louisiana | ||||||
| Industrial Development | ||||||
| Board, AMT, | ||||||
| due 6/01/25 | 3,400 | 3,400,000 | ||||
| California Housing | ||||||
| Finance Agency | ||||||
| Revenue, AMT, | ||||||
| due 2/01/32 | 50,000 | 50,000,000 | ||||
| Principal | ||||||
Issuer | Amount | Value | ||||
| Charleston, | ||||||
| South Carolina, | ||||||
| Waterworks and | ||||||
| Sewer Revenue, | ||||||
| due 1/01/33 | $ 8,000 | $ 8,000,000 | ||||
| Chattanooga,Tennessee, | ||||||
| Health Education | ||||||
| and Housing, | ||||||
| due 11/01/18 | 10,000 | 10,000,000 | ||||
| Chicago, Illinois, | ||||||
| due 1/01/23 | 29,996 | 29,996,000 | ||||
| Chicago, Illinois, | ||||||
| O’Hare International | ||||||
| Airport Revenue, | ||||||
| due 7/01/10 | 17,150 | 17,150,000 | ||||
| Cincinnati, Ohio, | ||||||
| City School District, | ||||||
| due 6/01/10 | 3,870 | 3,870,000 | ||||
| Clark County, Nevada, | ||||||
| Airport Revenue, | ||||||
| AMT, | ||||||
| due 7/01/28 | 2,875 | 2,875,000 | ||||
| Clark County, Nevada, | ||||||
| Airport Revenue, | ||||||
| AMT, | ||||||
| due 7/01/36 | 12,950 | 12,950,000 | ||||
| Clarksville, Arkansas, | ||||||
| Industrial | ||||||
| Development | ||||||
| Revenue, AMT, | ||||||
| due 8/01/13 | 2,025 | 2,025,000 | ||||
| Clarksville,Tennessee, | ||||||
| Public Building | ||||||
| Authority, | ||||||
| due 7/01/31 | 2,185 | 2,185,000 | ||||
| Cleveland Cuyahoga | ||||||
| County, Ohio, | ||||||
| due 1/01/33 | 20,000 | 20,000,000 | ||||
| Colorado Educational | ||||||
| and Cultural Facilities | ||||||
| Authority, | ||||||
| due 9/01/33 | 8,100 | 8,100,000 | ||||
| Colorado Health | ||||||
| Facilities Authority | ||||||
| Revenue, | ||||||
| due 1/01/33 | 6,000 | 6,000,000 | ||||
| Delaware State | ||||||
| Economic | ||||||
| Development | ||||||
| Authority, AMT, | ||||||
| due 7/01/28 | 24,400 | 24,400,000 | ||||
| Detroit, Michigan, | ||||||
| City School | ||||||
| District, | ||||||
| due 5/01/11 | 1,750 | 1,750,000 | ||||
12
Tax Free Reserves Portfolio
S C H E D U L E O F I N V E S T M E N T S (Continued) February 29, 2004
| (Unaudited) | ||||||
| Principal | ||||||
| Amount | ||||||
Issuer | (000’s omitted) | Value | ||||
| Variable Rate Demand | ||||||
| Notes* — 73.8% (cont’d) | ||||||
| District of Columbia | ||||||
| Revenue, | ||||||
| due 3/01/28 | $ 2,715 | $ 2,715,000 | ||||
| Du Page County, | ||||||
| Illinois, | ||||||
| due 4/01/30 | 9,855 | 9,855,000 | ||||
| Du Page County, | ||||||
| Illinois, | ||||||
| due 10/15/38 | 10,000 | 10,000,000 | ||||
| Emery County, | ||||||
| Utah, Pollution | ||||||
| Control Revenue, | ||||||
| due 11/01/24 | 34,400 | 34,400,000 | ||||
| Everett, Washington, | ||||||
| due 12/01/21 | 2,600 | 2,600,000 | ||||
| Franklin County, | ||||||
| Ohio, | ||||||
| Hospital Revenue, | ||||||
| due 11/01/25 | 20,085 | 20,085,000 | ||||
| Franklin County, | ||||||
| Ohio, Hospital | ||||||
| Revenue, | ||||||
| due 11/01/33 | 20,000 | 20,000,000 | ||||
| Fulton County, | ||||||
| Georgia, | ||||||
| Development | ||||||
| Authority Revenue, | ||||||
| due 12/01/12 | 2,000 | 2,000,000 | ||||
| Fulton County, | ||||||
| Georgia, | ||||||
| Development | ||||||
| Authority Revenue, | ||||||
| due 2/01/18 | 1,720 | 1,720,000 | ||||
| Georgia Municipal | ||||||
| Gas Authority, | ||||||
| due 1/01/08 | 56,185 | 56,185,000 | ||||
| Gwinnett County, | ||||||
| Georgia, Hospital | ||||||
| Authority Revenue, | ||||||
| due 7/01/32 | 10,000 | 10,000,000 | ||||
| Gwinnett County, | ||||||
| Georgia, Industrial | ||||||
| Development | ||||||
| Revenue, | ||||||
| due 3/01/17 | 235 | 235,000 | ||||
| Gwinnett County, | ||||||
| Georgia, Industrial | ||||||
| Development | ||||||
| Revenue, | ||||||
| due 5/01/22 | 10,000 | 10,000,000 | ||||
| Harris County, | ||||||
| Texas, Health | ||||||
| Facilities | ||||||
| Development, | ||||||
| due 2/15/31 | 34,380 | 34,380,000 | ||||
| Principal | |||||
| Amount | |||||
Issuer | (000’s omitted) | Value | |||
| Harris County, | |||||
| Texas, Health | |||||
| Facilities | |||||
| Development, | |||||
| due 12/01/32 | $ 37,000 | $ 37,000,000 | |||
| Harris County, | |||||
| Texas, Health | |||||
| Facilities | |||||
| Development, | |||||
| due 7/01/34 | 7,350 | 7,350,000 | |||
| Hills, Idaho, | |||||
| Healthcare | |||||
| Revenue, | |||||
| due 8/01/32 | 12,545 | 12,545,000 | |||
| Hillsborough County, | |||||
| Florida, | |||||
| School Board, | |||||
| due 1/01/12 | 7,000 | 7,000,000 | |||
| Houston,Texas, | |||||
| Series A, | |||||
| due 4/07/04 | 14,800 | 14,800,000 | |||
| Illinois Educational | |||||
| Facilities Authority | |||||
| Revenue, | |||||
| due 7/01/36 | 15,000 | 15,000,000 | |||
| Illinois State, | |||||
| due 11/01/16 | 10,375 | 10,375,000 | |||
| Indiana Health Facilities | |||||
| Finance Authority | |||||
| Hospital Revenue, | |||||
| due 7/02/04 | 25,000 | 25,000,000 | |||
| Indiana State | |||||
| Educational | |||||
| Authority Revenue, | |||||
| due 7/01/32 | 2,300 | 2,300,000 | |||
| Iowa Higher Education | |||||
| Loan Authority | |||||
| Revenue, | |||||
| due 4/01/33 | 5,600 | 5,600,000 | |||
| Kansas City, | |||||
| Missouri, Industrial | |||||
| Development | |||||
| Authority, | |||||
| due 4/01/27 | 7,000 | 7,000,000 | |||
| Los Angeles, California, | |||||
| Regional Airport | |||||
| Improvement Corp., | |||||
| due 12/01/25 | 21,000 | 21,000,000 | |||
| Louisville & Jefferson | |||||
| Counties, Kentucky, | |||||
| Regional Airport | |||||
| Authority, AMT, | |||||
| due 1/01/29 | 10,000 | 10,000,000 | |||
| Lower Neches Valley | |||||
| Authority,Texas, | |||||
| Pollution Control | |||||
| Revenue, | |||||
| due 8/16/04 | 7,600 | 7,600,000 | |||
13
Tax Free Reserves Portfolio
S C H E D U L E O F I N V E S T M E N T S (Continued) February 29, 2004
(Unaudited)
| Principal | |||||
| Amount | |||||
Issuer | (000’s omitted) | Value | |||
| Variable Rate Demand | |||||
| Notes* — 73.8% (cont’d) | |||||
| Maine Health | |||||
| and Higher | |||||
| Educational Facilities, | |||||
| due 7/01/19 | $ 2,565 | $ 2,565,000 | |||
| Maine State Housing | |||||
| Authority | |||||
| Mortgage | |||||
| Purchase, | |||||
| due 5/15/07 | 5,540 | 5,540,000 | |||
| Maryland State | |||||
| Health and | |||||
| Higher Educational | |||||
| Facilities Authority, | |||||
| due 7/01/23 | 12,000 | 12,000,000 | |||
| Massachusetts State, | |||||
| due 1/01/17 | 14,470 | 14,470,000 | |||
| Massachusetts State, | |||||
| due 8/01/19 | 21,375 | 21,375,000 | |||
| Massachusetts State | |||||
| Health and | |||||
| Educational Facilities, | |||||
| due 2/01/34 | 15,000 | 15,000,000 | |||
| Massachusetts State | |||||
| Industrial Finance | |||||
| Agency, | |||||
| due 11/01/25 | 1,855 | 1,855,000 | |||
| Memphis,Tennessee, | |||||
| Electrical System | |||||
| Revenue, | |||||
| due 12/01/10 | 9,250 | 9,250,000 | |||
| Memphis,Tennessee, | |||||
| Electrical System | |||||
| Revenue, | |||||
| due 12/01/11 | 19,520 | 19,520,000 | |||
| Metropolitan | |||||
| Government | |||||
| Nashville and | |||||
| Davidson County, | |||||
| Tennessee, Health | |||||
| and Educational | |||||
| Facility Board, | |||||
| due 8/03/04 | 20,000 | 20,000,000 | |||
| Metropolitan | |||||
| Government | |||||
| Nashville and | |||||
| Davidson County, | |||||
| Tennessee, Health | |||||
| and Educational | |||||
| Facility Board, | |||||
| due 10/01/32 | 16,775 | 16,775,000 | |||
| Michigan State, | |||||
| due 9/15/08 | 14,000 | 14,000,000 | |||
| Principal | ||||
| Amount | ||||
Issuer | (000’s omitted) | Value | ||
| Minnesota State | ||||
| Housing Finance | ||||
| Agency, AMT, | ||||
| due 12/23/04 | $ 8,000 | $ 8,000,000 | ||
| Minnetonka, Minnesota, | ||||
| Multi-Family | ||||
| Housing Revenue, | ||||
| due 11/15/31 | 5,000 | 5,000,000 | ||
| Missouri State | ||||
| Health and | ||||
| Education | ||||
| Facilities Revenue, | ||||
| due 7/01/18 | 3,200 | 3,200,000 | ||
| Morristown,Tennessee, | ||||
| Industrial | ||||
| Development | ||||
| Board, AMT, | ||||
| due 2/01/15 | 4,250 | 4,250,000 | ||
| Municipal Securities | ||||
| Trust Certificates, | ||||
| due 8/24/11 | 10,000 | 10,000,000 | ||
| Murray City, | ||||
| Utah, Hospital | ||||
| Revenue, | ||||
| due 5/15/36 | 11,000 | 11,000,000 | ||
| New Hampshire State | ||||
| Housing Finance | ||||
| Authority, | ||||
| AMT, due 4/15/33 | 11,400 | 11,400,000 | ||
| New Hampshire | ||||
| Health and | ||||
| Education | ||||
| Facilities | ||||
| Authority Revenue, | ||||
| due 7/01/32 | 2,800 | 2,800,000 | ||
| New Hanover County, | ||||
| North Carolina, | ||||
| due 3/01/14 | 2,250 | 2,250,000 | ||
| New Hanover County, | ||||
| North Carolina, | ||||
| due 3/01/15 | 2,250 | 2,250,000 | ||
| New Hanover County, | ||||
| North Carolina, | ||||
| due 3/01/16 | 2,250 | 2,250,000 | ||
| New York, New York, | ||||
| City Transitional | ||||
| Subseries 1 | ||||
| due 11/01/22 | 14,100 | 14,100,000 | ||
| New York, New York, | ||||
| City Transitional | ||||
| Subseries 2 | ||||
| due 11/01/22 | 8,400 | 8,400,000 | ||
| New York, New York, | ||||
| Subseries 3 | ||||
| City Transitional, | ||||
| due 11/01/22 | 24,065 | 24,065,000 | ||
14
Tax Free Reserves Portfolio
S C H E D U L E O F I N V E S T M E N T S (Continued) February 29, 2004
| (Unaudited) | ||||||
| Principal | ||||||
| Amount | ||||||
Issuer | (000’s omitted) | Value | ||||
| Variable Rate Demand | ||||||
| Notes* — 73.8% (cont’d) | ||||||
| New York State | ||||||
| Dormitory | ||||||
| Authority, | ||||||
| due 2/15/21 | $ 18,000 | $ 18,000,000 | ||||
| North Carolina | ||||||
| Capital Facilities | ||||||
| Finance Agency, | ||||||
| due 9/01/31 | 1,100 | 1,100,000 | ||||
| North Carolina | ||||||
| Medical Care | ||||||
| Commission, | ||||||
| due 11/15/28 | 6,840 | 6,840,000 | ||||
| Oakland, California, | ||||||
| due 1/15/32 | 6,000 | 6,000,000 | ||||
| Pennsylvania State, | ||||||
| due 12/01/08 | 6,745 | 6,745,000 | ||||
| Pennsylvania State | ||||||
| Turnpike Commission, | ||||||
| due 6/01/11 | 4,995 | 4,995,000 | ||||
| Philadelphia, | ||||||
| Pennsylvania, | ||||||
| Hospitals and | ||||||
| Higher Education | ||||||
| Facilties Authority, | ||||||
| due 2/15/14 | 8,600 | 8,600,000 | ||||
| Quakertown, | ||||||
| Pennsylvania, | ||||||
| Hospital Authority | ||||||
| Revenue, | ||||||
| due 7/01/05 | 20,000 | 20,000,000 | ||||
| Rhode Island State | ||||||
| Health and | ||||||
| Educational | ||||||
| Building Corp., | ||||||
| due 9/01/32 | 15,000 | 15,000,000 | ||||
| Rhode Island State | ||||||
| Industrial Facilities | ||||||
| Corp., AMT, | ||||||
| due 11/01/05 | 1,060 | 1,060,000 | ||||
| Rockdale County, | ||||||
| Georgia, Hospital | ||||||
| Authority, | ||||||
| due 10/01/33 | 14,700 | 14,700,000 | ||||
| Roswell, Georgia, | ||||||
| Multi-Family | ||||||
| Housing Authority, | ||||||
| due 8/01/27 | 2,500 | 2,500,000 | ||||
| Salt Lake County, | ||||||
| Utah, | ||||||
| due 8/01/07 | 10,000 | 10,000,000 | ||||
| Seattle, Washington, | ||||||
| Water System | ||||||
| Revenue, | ||||||
| due 3/01/32 | 26,300 | 26,300,000 | ||||
| Principal | |||||
| Amount | |||||
Issuer | (000’s omitted) | Value | |||
| Sevier County, | |||||
| Tennessee, Public | |||||
| Building Authority, | |||||
| due 6/01/17 | $ 1,185 | $ 1,185,000 | |||
| South Carolina, | |||||
| Education Facilities | |||||
| Authority, | |||||
| due 12/01/22 | 9,700 | 9,700,000 | |||
| South Carolina, | |||||
| Jobs Economic | |||||
| Development | |||||
| Authority, | |||||
| due 11/01/31 | 46,400 | 46,400,000 | |||
| South Carolina, | |||||
| Transportation | |||||
| Infrastructure | |||||
| Revenue, | |||||
| due 10/01/21 | 2,500 | 2,500,000 | |||
| South Dakota | |||||
| State Health | |||||
| and Educational | |||||
| Facilities Authority, | |||||
| due 9/01/27 | 10,600 | 10,600,000 | |||
| Stevenson, Alabama, | |||||
| Industrial | |||||
| Development, | |||||
| Board Revenue, | |||||
| AMT, | |||||
| due 2/01/34 | 15,000 | 15,000,000 | |||
| Tarrant County, | |||||
| Texas, Health | |||||
| Facilities | |||||
| Development, | |||||
| due 11/15/26 | 915 | 915,000 | |||
| University of Alabama, | |||||
| University Revenues, | |||||
| due 9/01/31 | 9,975 | 9,975,000 | |||
| University of | |||||
| South Florida | |||||
| Foundation Inc., | |||||
| due 10/01/33 | 20,075 | 20,075,000 | |||
| University Of | |||||
| Toledo, Ohio, | |||||
| due 6/01/32 | 16,400 | 16,400,000 | |||
| Virginia College | |||||
| Building Authority, | |||||
| due 9/01/18 | 4,975 | 4,975,000 | |||
| Washington State | |||||
| Public Power Supply, | |||||
| due 1/01/05 | 6,700 | 6,700,000 | |||
| Washington State | |||||
| Public Power Supply, | |||||
| due 7/01/07 | 9,600 | 9,600,000 | |||
| Weber County, Utah, | |||||
| Hospital Revenue, | |||||
| due 2/15/32 | 14,000 | 14,000,000 | |||
15
Tax Free Reserves Portfolio
S C H E D U L E O F I N V E S T M E N T S (Continued) February 29, 2004
| (Unaudited) | |||||||
| Principal | |||||||
| Amount | |||||||
Issuer | (000’s omitted) | Value | |||||
| Variable Rate Demand | |||||||
Notes* — 73.8% (cont’d) | |||||||
| William S. Hart | |||||||
| Union High School | |||||||
| District, California, | |||||||
| due 1/15/15 | $ 6,540 | $ | 6,540,000 | ||||
| William S. Hart | |||||||
| Union High School | |||||||
| District, California, | |||||||
| due 1/15/25 | 11,365 | 11,365,000 | |||||
| William S. Hart | |||||||
| Union High School | |||||||
| District, California, | |||||||
| due 1/15/36 | 8,105 | 8,105,000 | |||||
| Wyoming Building | |||||||
| Corporation | |||||||
| Revenue, | |||||||
| due 10/01/18 | 2,900 | 2,900,000 | |||||
| 1,347,501,000 | |||||||
| Total Investments, | |||||||
| at Amortized Cost | 99.7 | % | $ | 1,820,284,724 | |||
| Other Assets, | |||||||
| Less Liabilities | 0.3 | 4,849,277 | |||||
| Net Assets | 100.0 | % | $ | 1,825,134,001 | |||
| AMT — Subject to Alternative Minimum Tax | |||||||
| * | Variable rate demand notes have a demand | ||||||
| feature under which the Fund could tender | |||||||
| them back to the issuer on no more than | |||||||
| 7 days notice. | |||||||
| See notes to financial statements | |||||||
16
| Tax Free Reserves Portfolio | ||||||
| S T A T E M E N T O F A S S E T S A N D L I A B I L I T I E S | ||||||
| February 29, 2004 (Unaudited) | ||||||
| Assets: | ||||||
| Investments, at amortized cost and value (Note 1A) | $ | 1,820,284,724 | ||||
| Cash | 111,229 | |||||
| Interest receivable | 5,202,082 | |||||
| Total assets | 1,825,598,035 | |||||
| Liabilities: | ||||||
| Management fees payable (Note 2) | 188,130 | |||||
| Accrued expenses and other liabilities | 275,904 | |||||
| Total liabilities | 464,034 | |||||
| Net Assets | $ | 1,825,134,001 | ||||
| Represented by: | ||||||
| Paid-in capital for beneficial interests | $ | 1,825,134,001 | ||||
| See notes to financial statements | ||||||
17
| Tax Free Reserves Portfolio | ||||||
S T A T E M E N T O F O P E R A T I O N S | ||||||
| For the Six Months February 29, 2004 (Unaudited) | ||||||
| Interest Income (Note 1B): | $ | 8,968,433 | ||||
| Expenses | ||||||
| Management fees (Note 2) | $ | 1,751,570 | ||||
| Custody and fund accounting fees | 181,414 | |||||
| Trustees’ fees | 44,673 | |||||
| Legal fees | 32,561 | |||||
| Audit fees | 12,300 | |||||
| Miscellaneous | 1,614 | |||||
| Total expenses | 2,024,132 | |||||
| Less: aggregate amounts waived by the Manager (Note 2) | (706,556 | ) | ||||
| Less: fees paid indirectly (Note 1D) | (1,119 | ) | ||||
| Net expenses | 1,316,457 | |||||
| Net investment income | 7,651,976 | |||||
| Net Realized Gain on Investments | 13,191 | |||||
| Net Increase in Net Assets Resulting from Operations | $ | 7,665,167 | ||||
| See notes to financial statements |
18
| Tax Free Reserves Portfolio | ||||||||||
| S T A T E M E N T S O F C H A N G E S I N N E T A S S E T S | ||||||||||
| Six Months Ended | Year Ended | |||||||||
| February 29, 2004 | August 31, | |||||||||
| (Unaudited) | 2003 | |||||||||
| Increase in Net Assets from Operations: | ||||||||||
| Net investment income | $ | 7,651,976 | $ | 17,674,827 | ||||||
| Net realized gain (loss) on investments | 13,191 | (62,203 | ) | |||||||
| Increase in net assets from operations | 7,665,167 | 17,612,624 | ||||||||
| Capital Transactions: | ||||||||||
| Proceeds from contributions | 3,813,605,439 | 4,803,864,491 | ||||||||
| Value of withdrawals | (3,506,698,579 | ) | (4,776,289,886 | ) | ||||||
| Net increase in net assets from capital transactions | 306,906,860 | 27,574,605 | ||||||||
| Net Increase in Net Assets | 314,572,027 | 45,187,229 | ||||||||
| Net Assets: | ||||||||||
| Beginning of period | 1,510,561,974 | 1,465,374,745 | ||||||||
| End of period | $ | 1,825,134,001 | $ | 1,510,561,974 | ||||||
| See notes to financial statements | ||||||||||
19
Tax Free Reserves Portfolio
N O T E S T O F I N A N C I A L S T A T E M E N T S (Unaudited)
1. Significant Accounting Policies Tax Free Reserves Portfolio (the “Portfolio”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a no-load, non-diversified, open-end management investment company which was organized as a trust under the laws of the State of New York. The Declaration of Trust permits the Trustees to issue shares of beneficial interest in the Portfolio. Citi Fund Management Inc. (the “Manager”) acts as the Investment Manager.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Portfolio are as follows:
A. Valuation of Investments Money market instruments are valued at amortized cost, which the Trustees have determined in good faith constitutes fair value. The Portfolio’s use of amortized cost is subject to the Portfolio’s compliance with certain conditions as specified under the 1940 Act.
B. Investment Income and Expenses Investment income consists of interest accrued and discount earned (including both original issue and market discount), adjusted for amortization of premium, on the investments of the Portfolio. Expenses of the Portfolio are accrued daily.
C. Federal Income Taxes The Portfolio’s policy is to comply with the applicable provisions of the Internal Revenue Code. Accordingly, no provision for federal income taxes is necessary.
D. Fees Paid Indirectly The Portfolio’s custodian calculates its fees based on the Portfolio’s average daily net assets. The fee is reduced according to a fee arrangement, which provides for custody fees to be reduced based on a formula developed to measure the value of cash deposited with the custodian by the Portfolio. This amount is shown as a reduction of expenses on the Statement of Operations.
E. Other Purchases, maturities and sales, of money market instruments are accounted for on the date of the transaction.
2. Management Fees The Manager is responsible for overall management of the Portfolio’s business affairs, and has a Management agreement with the Portfolio. The Manager or an affiliate also provides certain administrative services to the Portfolio. These administrative services include providing general office facilities and supervising the overall administration of the Portfolio.
The management fees paid to the Manager are accrued daily and payable monthly. The management fee is computed at the annual rate of 0.20% of the Funds’ average daily net assets. The management fee amounted to $1,751,570, of which $706,556 was voluntarily waived for the six months ended February 29, 2004. The Portfolio pays no compensation directly to any Trustee or any officer who is affiliated with the Manager, all of whom receive remuneration for their services to the Portfolio from the Manager
20
Tax Free Reserves Portfolio
N O T E S TO F I N A N C I A L S T A T E M E N T S (Unaudited) (Continued)
or its affiliates. Certain of the officers and a Trustee of the Portfolio are officers and a director of the Manager or its affiliates.
3. InvestmentTransactions Purchases, and maturities and sales of money market instruments, exclusive of securities purchased subject to repurchase agreements, aggregated $8,360,654,652 and $8,027,161,956, respectively, for the six months ended February 29, 2004.
4. Federal Income Tax Basis of Investment Securities The cost of investment securities owned at February 29, 2004, for federal income tax purposes, amounted to $1,820,284,724.
5.Trustee Retirement Plan The Trustees of the Portfolio have adopted a Retirement Plan for all Trustees who are not “interested persons” of the Portfolio, within the meaning of the 1940 Act. Under the Plan, all Trustees are required to retire from the Board as of the last day of the calendar year in which the applicable Trustee attains age 75 (certain Trustees who had already attained age 75 when the Plan was adopted were required to retire effective December 31, 2003). Trustees may retire under the Plan before attaining the mandatory retirement age. Trustees who have served as Trustee of the Trust or any of the investment companies associated with Citigroup for at least ten years when they retire are eligible to receive the maximum retirement benefit under the Plan. The maximum retirement benefit is an amount equal to five times the amount of retainer and regular meeting fees payable to a Trustee during the calendar year ending on or immediately prior to the applicable Trustee’s retirement. Amounts under the Plan may be paid in installments or in a lump sum (discounted to present value). The Portfolio’s allocable share of the expenses of the Plan for the six months ended February 29, 2004 and the related liability at February 29, 2004 was not material.
6. Additional Information The Portfolio has received the following information from Citigroup Asset Management (“CAM”), the Citigroup business unit which includes the Portfolio’s Investment Manager and other investment advisory companies, all of which are indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an affiliate, into the transfer agent business in the period 1997-1999. As CAM currently understands the facts, at the time CAM decided to enter the transfer agent business, CAM sub-contracted for a period of five years certain of the transfer agency services to a third party and also concluded a revenue guarantee agreement with this sub-contractor providing that the sub-contractor would guarantee certain benefits to CAM or its affiliates (the “Revenue Guarantee Agreement”). In connection with the subsequent purchase of the sub-contractor’s business by an affili-ate of the current sub-transfer agent (PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee Agreement was amended eliminating those ben-efits in exchange for arrangements that included a one-time payment from the sub-contractor.
21
Tax Free Reserves Portfolio
N O T E S TO F I N A N C I A L S T A T E M E N T S (Unaudited) (Continued)
The Boards of CAM-managed funds (the “Boards”) were not informed of the Revenue Guarantee Agreement with the sub-contractor at the time the Boards considered and approved the transfer agent agreements. Nor were the Boards informed of the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
CAM has begun to take corrective actions. CAM will pay to the applicable funds approximately $17 million (plus interest) that CAM and its affiliates received from the Revenue Guarantee Agreement and its amendment. CAM also plans an independent review to verify that the transfer agency fees charged by CAM were fairly priced as compared to competitive alternatives. CAM is instituting new procedures and making changes designed to ensure no similar arrangements are entered into in the future.
CAM has briefed the SEC, the New York State Attorney General and other regulators with respect to this matter, as well as the U.S. Attorney who is investigating the matter. CAM is cooperating with governmental authorities on this matter, the ultimate outcome of which is not yet determinable.
22
| Tax Free Reserves Portfolio | ||||||||||||||||||
| F I N A N C I A L H I G H L I G H T S | ||||||||||||||||||
Six Months Ended | Year Ended August 31, | |||||||||||||||||
February 29, 2004 | ||||||||||||||||||
| (Unaudited) | 2003 | 2002 | 2001 | 2000 | 1999 | |||||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||
| Net Assets, end of period | ||||||||||||||||||
| (000’s omitted) | $1,825,134 | $1,510,562 | $1,465,375 | $752,379 | $675,492 | $657,120 | ||||||||||||
| Ratio of expenses to | ||||||||||||||||||
| average net assets | 0.15% | * | 0.15% | 0.15% | �� | 0.15% | 0.15% | 0.15% | ||||||||||
| Ratio of net investment | ||||||||||||||||||
| income to average | ||||||||||||||||||
| net assets | 0.87% | * | 1.14% | 1.64% | 3.48% | 3.77% | 3.11% | |||||||||||
Note: If Agents of the Portfolio had not voluntarily waived a portion of their fees during the periods indicated and the expenses were not reduced for fees paid indirectly, the ratios would have been as follows:
| Ratios: | ||||||||||||
| Expenses to average | ||||||||||||
| net assets | 0.23% | * | 0.24% | 0.24% | 0.29% | 0.29% | 0.29% | |||||
| Net investment income to | ||||||||||||
| average net assets | 0.79% | * | 1.05% | 1.55% | 3.34% | 3.63% | 2.98% | |||||
| * Annualized. | ||||||||||||
| See notes to financial statements |
23
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANIES.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No changes.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act")) are
effective as of a date within 90 days of the filing date of this
report that includes the disclosure required by this paragraph,
based on their evaluation of the disclosure controls and
procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act) that occurred during the registrant's last fiscal half-year
(the registrant's second fiscal half-year in the case of an
annual report) that have materially affected, or are likely to
materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(a)(2) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section
302 of the Sarbanes-Oxley Act of
2002
(b) Furnished.
Exhibit 99.906CERT Certifications pursuant to Section
906 of the Sarbanes-Oxley Act of
2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to
be signed on its behalf by the undersigned, there unto duly authorized.
TAX FREE RESERVES PORTFOLIO
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
TAX FREE RESERVES PORTFOLIO
Date: May 5, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
(R. Jay Gerken)
Chief Executive Officer of
TAX FREE RESERVES PORTFOLIO
Date: May 5, 2004
By: /s/ ANDREW B. SHOUP
Chief Administrative Officer of
TAX FREE RESERVES PORTFOLIO
Date: May 5, 2004