-----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, AytDcTKP7Nne2FBur6/EDjsxFbMzeF64Tw3zfOWVATuTcvJA68hrguNzULqhKNPz pNuBWP7YlvNNcfZklwDJ6g== /in/edgar/work/20000616/0000929638-00-000106/0000929638-00-000106.txt : 20000919 0000929638-00-000106.hdr.sgml : 20000919 ACCESSION NUMBER: 0000929638-00-000106 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20000616 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: 485APOS SEC ACT: SEC FILE NUMBER: 002-90518 FILM NUMBER: 656212 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 811-04006 FILM NUMBER: 656213 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 485APOS 1 0001.txt CITI SECTOR FUNDS FILING As filed with the Securities and Exchange Commission on June 16, 2000 File Nos. 2-90518 811-4006 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE AMENDMENT NO. 40 AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 41 CITIFUNDS TRUST I* (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) 21 MILK STREET, 5TH FLOOR, BOSTON, MASSACHUSETTS 02109 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679 PHILIP W. COOLIDGE 21 MILK STREET, 5TH FLOOR BOSTON, MASSACHUSETTS 02109 (NAME AND ADDRESS OF AGENT FOR SERVICE) COPY TO: ROGER P. JOSEPH BINGHAM DANA LLP, 150 FEDERAL STREET BOSTON, MASSACHUSETTS 02110 It is proposed that this filing will become effective seventy-five days after filing pursuant to paragraph (a) of Rule 485. - --------------- * This filing relates only to the series of the Trust designated as Citi Financial Services Portfolio, Citi Health Sciences Portfolio and Citi Technology Portfolio. PROSPECTUS SEPTEMBER __, 2000 CITI SECTOR FUNDS Citi Financial Services Portfolio Citi Health Sciences Portfolio Citi Technology Portfolio Class A and D Shares The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy of this prospectus, and any representation to the contrary is a criminal offense. - ------------------------------------------------------------------------------- INVESTMENT PRODUCTS: NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE - ------------------------------------------------------------------------------- TABLE OF CONTENTS THE FUNDS...................................................................... GOALS...................................................................... PRINCIPAL INVESTMENT STRATEGIES............................................ PRINCIPAL RISKS............................................................ FUND PERFORMANCE........................................................... FEES AND EXPENSES.......................................................... MANAGEMENT OF THE FUNDS........................................................ MANAGER.................................................................... MANAGEMENT FEES............................................................ DISTRIBUTION ARRANGEMENTS.................................................. MORE ABOUT THE FUNDS........................................................... INVESTMENT STRATEGIES...................................................... YOUR ACCOUNT................................................................... CHOOSING A CLASS OF SHARES TO BUY.......................................... HOW TO BUY SHARES.......................................................... HOW THE PRICE OF YOUR SHARES IS CALCULATED................................. HOW TO SELL SHARES......................................................... EXCHANGES.................................................................. DIVIDENDS.................................................................. TAX MATTERS................................................................ THE FUNDS GOALS Each Fund seeks long-term capital appreciation by investing primarily in common stocks. Each Fund may change its objective without shareholder approval. PRINCIPAL INVESTMENT STRATEGIES CITI FINANCIAL SERVICES PORTFOLIO Key investments. The Fund normally invests at least 80% of its assets in securities of companies principally engaged in the financial services business. These companies may include, for example, commercial banks, savings and loan associations, broker-dealers, investment banks, investment advisers, insurance companies, real estate-related companies, leasing companies, and consumer and industrial finance companies. The Fund may invest its assets in securities of foreign issuers in addition to securities of domestic issuers. The Fund invests primarily in companies with medium and large market capitalizations. To a lesser extent, the Fund also may invest in common stocks of companies with small market capitalizations. Small and medium market capitalization companies are those companies with market capitalizations under $5 billion. Selection process. The Fund normally invests at least 80% of its assets in companies whose principal business is in the financial services sector. The remainder of the Fund's assets are not required to be invested in that sector. The Fund generally maintains a portion of its assets in cash and liquid securities to meet redemption requests and pay the Fund's expenses. To determine whether a company's principal business is in the sector, the company must meet at least one of the following tests: [] At least 50% of its gross income or its net sales must come from activities in the sector; [] At least 50% of its assets must be devoted to producing revenues from the sector; or [] Based on other available information, the manager determines that the company's primary business is within the sector. In buying and selling securities, the Fund relies on fundamental analysis of each issuer and its potential for success in light of its current financial condition and its industry position. Factors considered, among other things, include long-term growth potential, earnings estimates and quality of management. The Fund may lend its securities to earn income for the Fund. The Fund may, but it is not required to, use various techniques, such as buying and selling options and futures contracts, to increase or decrease its exposure to changing security prices or other factors that affect security values. The Fund may engage in foreign currency transactions solely to manage its exposure to foreign securities. If the Fund's strategies do not work as intended, the Fund may not achieve its objective. Who may want to invest. The Fund may be an appropriate investment if you: [] Are seeking to participate in the long-term growth potential of the financial services sector [] Are seeking capital appreciation and can tolerate short-term volatility [] Are looking for an investment with potentially greater return but higher risk than a fund investing primarily in fixed income securities [] Are comfortable with the risks of the stock market and the special risks of foreign securities, including emerging market securities [] Currently have exposure to the stock market and can tolerate concentrated investment in a single market sector. CITI HEALTH SCIENCES PORTFOLIO Key investments. The Fund normally invests at least 80% of its assets in securities of companies principally engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine. These companies may include, for example, pharmaceutical companies; companies involved in biotechnology, medical diagnostic, biochemical or other health care research and development; companies involved in the operation of health care facilities; and other companies involved in the design, manufacture or sale of health care-related products or services such as medical, dental and optical products, hardware, insurance or services. The Fund may invest its assets in securities of foreign issuers in addition to securities of domestic issuers. The Fund invests primarily in companies with medium and large market capitalization. To a lesser extent, the Fund also may invest in common stocks of companies with small market capitalizations. Small and medium market capitalization companies are those companies with market capitalizations under $5 billion. Selection process. The Fund normally invests at least 80% of its assets in companies whose principal business is in the health sciences sector. The remainder of the Fund's assets are not required to be invested in that sector. The Fund generally maintains a portion of its assets in cash and liquid securities to meet redemption requests and pay the Fund's expenses. To determine whether a company's principal business is in the sector, the company must meet at least one of the following tests: [] At least 50% of its gross income or its net sales must come from activities in the sector; [] At least 50% of its assets must be devoted to producing revenues from the sector; or [] Based on other available information, the manager determines that the company's primary business is within the sector. In buying and selling securities, the Fund relies on fundamental analysis of each issuer and its potential for success in light of its current financial condition and its industry position. Factors considered, among other things, include long-term growth potential, earnings estimates and quality of management. The Fund may lend its securities to earn income for the Fund. The Fund may, but is not required to, use various techniques, such as buying and selling options and futures contracts, to increase or decrease the Fund's exposure to changing security prices or other factors that affect security values. The Fund may engage in foreign currency transactions solely to manage its exposure to foreign securities. If the Fund's strategies do not work as intended, the Fund may not achieve its objective. Who may want to invest. The Fund may be an appropriate investment if you: [] Are seeking to participate in the long-term growth potential of the health sciences sector [] Are seeking capital appreciation and can tolerate significant short-term volatility [] Are looking for an investment with potentially greater return but higher risk than a fund investing primarily in fixed income securities [] Are comfortable with the risks of the stock market and the special risks of foreign securities, including emerging market securities [] Currently have exposure to the stock market and can tolerate concentrated investment in a single market sector. CITI TECHNOLOGY PORTFOLIO Key investments. The Fund normally invests at least 80% of its assets in securities of companies principally engaged in offering, using or developing products, processes or services that will provide or will benefit significantly from technological advances and improvements. These companies may include, for example, companies that develop, produce or distribute products or services in the computer, semi-conductor, software, electronics, media, communications, health care and biotechnology sectors. The Fund may invest its assets in securities of foreign issuers in addition to securities of domestic issuers. The Fund invests primarily in companies with medium and large market capitalizations. To a lesser extent, the Fund also may invest in common stocks of companies with small market capitalizations. Small and medium market capitalization companies are those companies with market capitalizations under $5 billion. Selection process. The Fund normally invests at least 80% of its assets in companies whose principal business is in the technology sector. The remainder of the Fund's assets are not required to be invested in that sector. The Fund generally maintains a portion of its assets in cash and liquid securities to meet redemption requests and pay the Fund's expenses. To determine whether a company's principal business is in the sector, the company must meet at least one of the following tests: [] At least 50% of its gross income or its net sales must come from activities in the sector; [] At least 50% of its assets must be devoted to producing revenues from the sector; or [] Based on other available information, the manager determines that the company's primary business is within the sector. In buying and selling securities, the Fund relies on fundamental analysis of each issuer and its potential for success in light of its current financial condition and its industry position. Factors considered, among other things, include long-term growth potential, earnings estimates and quality of management. The Fund may lend its securities to earn income for the Fund. The Fund may, but it is not required to, use various techniques, such as buying and selling options and futures contracts, to increase or decrease its exposure to changing security prices or other factors that affect security values. The Fund may engage in foreign currency transactions solely to manage its exposure to foreign securities. If the Fund's strategies do not work as intended, the Fund may not achieve its objective. Who may want to invest. The Fund may be an appropriate investment if you: [] Are seeking to participate in the long-term growth potential of the technology sector [] Are seeking capital appreciation and can tolerate significant short-term volatility [] Are looking for an investment with potentially greater return but higher risk than a fund investing primarily in fixed income securities [] Are comfortable with the risks of the stock market and the special risks of foreign securities, including emerging market securities [] Currently have exposure to the stock market and can tolerate concentrated investment in a single market sector. PRINCIPAL RISKS Investors could lose money on their investment in a Fund, or a Fund may not perform as well as other investments, because: [] Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. Different parts of the market can react differently to these developments. [] Foreign markets can be more volatile than the U.S. market because of increased risks of adverse issuer, political, regulatory, market or economic developments and can perform differently than the U.S. market. Currency fluctuations may adversely impact a Fund's investments. [] The value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently than the market as a whole. The value of smaller capitalized companies may involve greater risks such as limited product lines, markets and financial or managerial resources. [] Each Fund is "non-diversified," which means it may invest a larger percentage of its assets in one issuer than a diversified fund. To the extent a Fund concentrates its assets in fewer issuers, the Fund will be more susceptible to negative events affecting those issuers. Each Fund's investments are spread across the sector on which it focuses. However, because those investments are limited to a comparatively narrow segment of the economy, the Fund's investments are not as diversified as most mutual funds, and far less diversified than the broad securities markets. This means that each Fund tends to be more volatile than other mutual funds, and the values of its portfolio investments tend to go up and down more rapidly. As a result, the value of your investment in a Fund may rise or fall rapidly. [] The manager's judgment about the attractiveness, growth prospects, value or potential appreciation of a particular stock may prove to be incorrect. Each Fund is also exposed to the special risks of investing in its sector: [] CITI FINANCIAL SERVICES PORTFOLIO. The financial services industries are subject to extensive government regulation and relatively rapid change because of increasingly blurred distinctions between service segments, and can be significantly affected by availability and cost of capital funds, changes in interest rates, and price competition. The performance of the financial services sector may differ in direction and degree from that of the overall stock market. [] CITI HEALTH SCIENCES PORTFOLIO. The health science industries are subject to government regulation and government approval of products and services, which could have a significant effect on price and availability, and can be significantly affected by rapid obsolescence. Lawsuits or other legal proceedings against the issuer of a security may adversely affect the issuer, the market value of the security or the Fund's performance. The performance of the health sciences sector may differ in direction and degree from that of the overall stock market. [] CITI TECHNOLOGY PORTFOLIO. Technology companies can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, and competition from new market entrants. The technology sector may be subject to greater governmental regulation than many other areas, and changes in governmental policies and the need for regulatory approvals may have a material adverse effect on the sector. The performance of the technology sector may differ in direction and degree from that of the overall stock market. You should know: An investment in a Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency. FUND PERFORMANCE Because each Fund is a new fund, performance information for the Funds is not included in this prospectus. FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold shares of a Fund.
- ------------------------- ------------------------ ------------------------------ -------------------------- Citi Financial Services Portfolio Citi Health Sciences Portfolio Citi Technology Portfolio - ------------------------- ------------------------ ------------------------------ -------------------------- SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) Class A and None None None Class D Shares - ------------------------- ------------------------ ------------------------------ --------------------------
- ------------------------- ------------------------ ------------------------------ -------------------------- Citi Financial Services Citi Health Sciences Portfolio Citi Technology Portfolio Portfolio - ------------------------- ------------ ----------- -------------- --------------- ------------ ------------- Class A Class D Class A Class D Class A Class D - ------------------------- ------------ ----------- -------------- --------------- ------------ ------------- ANNUAL FUND OPERATING EXPENSES(1) (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) - ------------------------- ------------ ----------- -------------- --------------- ------------ ------------- Management Fees 0.80% 0. 80% 0. 80% 0. 80% 0.95% 0.95% - ------------------------- ------------ ----------- -------------- --------------- ------------ ------------- Distribution and Service (12b-1) Fees 0.25% None 0.25% None 0.25% None - ------------------------- ------------ ----------- -------------- --------------- ------------ ------------- Other Expenses (administrative and other expenses) 0.45% 0.45% 0.45% 0.45% 0.40% 0.40% - ------------------------- ------------ ----------- -------------- --------------- ------------ ------------- TOTAL ANNUAL FUND OPERATING EXPENSES* 1.50% 1.25% 1.50% 1.25% 1.60% 1.35% - ------------------------- ------------ ----------- -------------- --------------- ------------ -------------
(1) Based on estimated expenses for the fiscal year ending _____ __, 2000. * Certain of the Funds' service providers are voluntarily waiving fees or reimbursing expenses such that net annual operating expenses are expected to be:
------------------------ -------------------------------- --------------------------- Citi Financial Citi Health Sciences Portfolio Citi Technology Portfolio Services Portfolio ----------- ------------ -------------- ---------------- ------------ -------------- Class A Class D Class A Class D Class A Class D ----------- ------------ -------------- ---------------- ------------ -------------- -----% -----% -----% -----% -----% -----% ----------- ------------ -------------- ---------------- ------------ --------------
These voluntary fee waivers and reimbursements may be reduced or terminated at any time. EXAMPLE This example is intended to help you compare the cost of investing in the Funds to the cost of investing in other mutual funds. The example assumes that: o you invest $10,000 in a Fund for the time periods indicated; o you reinvest all dividends; o you then sell all of your shares at the end of those periods; o your investment has a 5% return each year - the assumption of a 5% return is required by the SEC for the purpose of this example and is not a prediction of any Fund's future performance; and o the Funds' operating expenses as shown in the table remain the same - the example does not include voluntary waivers and fee reimbursements. Although your actual costs may be higher or lower, based on these assumptions your costs would be: - ------------------------------------------- ----------------- ----------------- One Year Three Years - ------------------------------------------- ----------------- ----------------- Citi Financial Services Portfolio Class A $153 $474 Class D $127 $397 - ------------------------------------------- ----------------- ----------------- Citi Health Sciences Portfolio Class A $153 $474 Class D $127 $397 - ------------------------------------------- ----------------- ----------------- Citi Technology Portfolio Class A $163 $505 Class D $137 $428 - ------------------------------------------- ----------------- ----------------- MANAGEMENT OF THE FUNDS MANAGER Each Fund's investment manager is SSB Citi Fund Management LLC, an affiliate of Salomon Smith Barney Inc. The manager's address is 388 Greenwich Street, New York, New York 10013. The manager, utilizing a portfolio management team approach, manages each Fund's investment portfolio and its general operations. The manager and Salomon Smith Barney are subsidiaries of Citigroup Inc. Citigroup businesses offer a broad range of financial services - asset management, banking and consumer finance, credit and charge cards, insurance, investments, investment banking and trading - and use diverse channels to make them available to consumer and corporate customers around the world. MANAGEMENT FEES Each Fund pays the manager a management fee at the annual rate listed opposite its name below: - ----------------------------------- ------------------------------------- FEE, AS PERCENTAGE OF FUND AVERAGE DAILY NET ASSETS - ----------------------------------- ------------------------------------- Citi Financial Services Portfolio 0.80% - ----------------------------------- ------------------------------------- Citi Health Sciences Portfolio 0.80% - ----------------------------------- ------------------------------------- Citi Technology Portfolio 0.95% - ----------------------------------- ------------------------------------- DISTRIBUTION ARRANGEMENTS Each Fund has adopted a service plan under rule 12b-1 under the Investment Company Act of 1940 with respect to its Class A shares. The service plan allows a Fund to pay the distributor, a broker-dealer or financial institution that has entered into a service agreement with the distributor concerning the Class A shares of the Funds, or others a monthly service and distribution fee at an annual rate not to exceed 0.25% of the Fund's average daily net assets attributable to Class A shares. The service and distribution fee may be used to make payments for providing personal service or the maintenance of shareholder accounts, as compensation for the sale of Class A shares of a Fund, and for advertising, marketing or other promotional activity. Because fees under the plans are paid out of Fund assets, over time they will increase the cost of your investment in Class A shares and may cost you more than paying other types of sales charges. The distributor may make payments for distribution and/or shareholder servicing activities out of its past profits and other available sources. The distributor may also make payments for marketing, promotional or related expenses to dealers. The amount of these payments is determined by the distributor and may be substantial. The manager or an affiliate may make similar payments under similar arrangements. MORE ABOUT THE FUNDS The Funds' goals, principal investments and risks are described in THE FUNDS. More information on investment strategies and risks appears below. INVESTMENT STRATEGIES FOREIGN INVESTMENTS Each Fund's investments in securities of foreign issuers involve greater risk than investments in securities of U.S. issuers. Many foreign countries the Funds may invest in have markets that are less liquid and more volatile than markets in the U.S. In some foreign countries, less information is available about foreign issuers and markets because of less rigorous accounting and regulatory standards than in the U.S. Currency fluctuations could erase investment gains or add to investment losses. The risks of investing in foreign securities are greater for securities of emerging market issuers because political or economic instability, lack of market liquidity, and negative government actions like currency controls or seizure of private businesses or property are more likely. DERIVATIVES AND HEDGING TECHNIQUES Each Fund may, but need not, use derivatives, such as futures and options on securities, securities indices or currencies; options on futures contracts; forward currency contracts; and interest rate or currency swaps for any of the following purposes: [] To hedge against the economic impact of adverse changes in the market value of its securities, because of changes in stock market prices, currency exchange rates or interest rates [] Settle transactions in securities quoted in foreign currencies [] As a substitute for buying or selling securities A derivative contract will obligate or entitle the Fund to deliver or receive an asset or cash payment based on the change in value of one or more securities, currencies, or indices. Evan a small investment in derivative contracts can have a big impact on each Fund's stock market, currency and interest rate exposure. Therefore, using derivatives can disproportionately increase losses and reduce opportunities for gains when stock prices, currency rates or interest rates are changing. A Fund may not fully benefit from or may lose money on derivatives if changes in their value do not correspond accurately to changes in the value of the Fund's holdings. The other parties to certain derivative contracts present the same types of credit risk as issuers of fixed income securities. Derivatives can also make a Fund less liquid and harder to value, especially in declining markets. DEFENSIVE INVESTING Each Fund may depart from its principal investment strategies in response to adverse market, economic or political conditions by taking temporary defensive positions in all types of money market and short-term debt securities. If a Fund takes a temporary defensive position, it may be unable to achieve its investment goal. MASTER/FEEDER OPTION Each Fund may in the future seek to achieve its investment objective by investing all of its net assets in another investment company having a similar investment objective and investment policies as those of the Fund. YOUR ACCOUNT CHOOSING A CLASS OF SHARES TO BUY You may purchase CLASS A SHARES which are sold at net asset value with no initial or deferred sales charge. Class A shares are subject to an ongoing service fee. Class A is the class of shares generally available for purchase by investors. CLASS D SHARES are sold at net asset value with no initial or deferred sales charge. Class D shares are not subject to an ongoing service fee. You may purchase Class D shares only if you are participating in certain investment programs. Class D shares also are offered to certain tax-exempt employee benefit and retirement plans. For more information about these programs, please call 1-800-_________. Each share class may not be available for purchase by every investor. HOW TO BUY SHARES Shares of the Funds are offered continuously and purchases may be made Monday through Friday, except on certain holidays. Shares may be purchased from the Funds' distributor or a broker-dealer or financial institution (called a Service Agent) that has entered into a sales or service agreement with the distributor concerning the Funds. Please call 1-800-_______ for information. Shares also may be purchased by customers that have established an account with ________, a Service Agent. To open an account, you must complete the application available through the ________ website (www.______.com), or by calling 1-800-_________. The account application may be submitted electronically. You will also be required to submit a signature guarantee card which will be sent to you by mail. For more detailed information on how to open an account, please visit the ________ website at www.______.com, or call 1-800-_________. Once you open your account, you will be subject to general account requirements imposed by _______, as described in the on-line account application, and will have access to all the electronic financial services made available over the Internet by _________. If you open an on-line account, you can place orders to purchase Fund shares by accessing the ________ website at www.______.com, or by calling 1-800-_________. This prospectus is readily available for viewing and printing on the ________ website. Please note that www.______.com is an inactive textual reference only, meaning that the information contained on the website is not part of this prospectus and is not incorporated herein by reference. On-line investors who have established an account with ________ will receive all shareholder information about the Fund they invest in electronically, unless otherwise requested. Shareholder information includes prospectuses, financial reports, confirmations, proxy solicitations and financial statements, among other things. Shareholders may also receive other Fund-related correspondence through their e-mail account. By purchasing Fund shares on-line, you certify that you have access to the Internet and a current e-mail account, and you acknowledge that you are responsible for providing a correct and operational e-mail address and that you will receive Fund information electronically unless you otherwise request. You may incur costs for on-line access to shareholder documents and maintaining an e-mail account from third parties. Please specify whether you are purchasing Class A or Class D shares. If you fail to specify, Class A shares will be purchased for your account. The Funds do not, but your Service Agent may, impose a minimum initial or subsequent investment requirement. Shares are purchased at net asset value the next time it is calculated after your order is received in proper form by the transfer agent. Each Fund has the right to reject any purchase order or cease offering Fund shares at any time. [To complete a purchase transaction, you must have sufficient funds in your account. If you transfer funds by check, the funds will not be available in your account until the check clears.] If you hold your shares through a Service Agent, your Service Agent may establish and maintain your account and be the shareholder of record. If you wish to transfer your account, you may transfer it to another financial institution, or you may set up an account directly with the Funds' transfer agent. Each Fund sends only one report to a household if more than one account has the same address. Contact your Service Agent, _______ or the transfer agent if you do not want this policy to apply to you. Automatic Investment Plans Each Fund has Monthly and Quarterly Systematic Investment Plans which allow you to automatically invest a specific dollar amount in your account on a monthly or quarterly basis. For more information, please contact the Funds' transfer agent or, if you hold your shares through a Service Agent, your Service Agent. Information also may be obtained on-line on the ________ website at www.______.com. HOW THE PRICE OF YOUR SHARES IS CALCULATED You may buy, exchange or redeem shares at their net asset value next determined after receipt of your request in good order. Each Fund's net asset value is the value of its assets minus its liabilities. Net asset value is calculated separately for each class of shares. Each Fund calculates its net asset value every day the New York Stock Exchange is open. This calculation is done when regular trading closes on the Exchange (normally 4:00 p.m., Eastern time). The Exchange is closed on certain holidays listed in the Statement of Additional Information. Each Fund's currency conversions are done when the London Stock Exchange closes. When reliable market prices or quotations are not readily available, or when the value of a security has been materially affected by events occurring after a foreign exchange closes, a Fund may price those securities at fair value. Fair value is determined in accordance with procedures approved by the Funds' Board of Trustees. Each Fund that uses fair value to price securities may value those securities higher or lower than another Fund using market quotations to price the same securities. International markets may be open on days when U.S. markets are closed and the value of foreign securities owned by a Fund could change on days when you cannot buy or redeem shares. HOW TO SELL SHARES You may sell (redeem) your shares Monday through Friday, except on certain holidays. You may make redemption requests in writing through the Funds' transfer agent or, if you hold your shares through a Service Agent, through your Service Agent. If your account application permits, you may also make redemption requests by telephone. Customers of ________ may redeem shares by placing a redemption order on-line at the ________ website, or by calling 1-800-______. All redemption requests must be in proper form, as determined by the transfer agent. Each Service Agent is responsible for promptly submitting redemption requests to the Funds' transfer agent. For your protection, the Funds may request documentation, such as a signature guarantee, for large redemptions or other unusual activity in your account. Each Fund has a Systematic Withdrawal Plan which allows you to automatically withdraw a specific dollar amount from your account on a regular basis. You must have at least $10,000 in your account to participate in this program. For more information, please contact the Funds' transfer agent or, if you hold your shares through a Service Agent, your Service Agent. If your Service Agent is __________, information also may be obtained on-line on the ________ website at www.______.com. The price of any redemption of Fund shares will be the NAV the next time it is calculated after your redemption request has been received by the transfer agent. Fund shares are redeemed without a sales charge. Your account will be credited with your redemption proceeds in federal funds normally on the business day on which you sell your shares but, in any event, within seven days. Your redemption proceeds may be delayed for up to ten days if your purchase was made by check. Your redemption proceeds may also be delayed, or your right to receive redemption proceeds suspended, if the New York Stock Exchange is closed (other than on weekends or holidays) or trading is restricted, or if an emergency exists. Each Fund has the right to pay your redemption proceeds by giving you securities instead of cash. In that case, you may incur costs (such as brokerage commissions) converting the securities into cash. You should be aware that you may have to pay taxes on your redemption proceeds. Due to increased Internet traffic during periods of dramatic economic or market changes or due to system failures, you may experience difficulty in implementing a redemption via the ________ website. In these situations, investors may want to consider effecting redemptions by calling 1-800-______. However, investors may experience similar difficulties in effecting redemptions via telephone during periods of dramatic economic or market changes. The Funds are not responsible for any losses associated with unexecuted transactions. EXCHANGES Shares may be exchanged for shares of any other Fund offered in this Prospectus, or for certain other Funds that may be made available through your Service Agent. You may exchange Fund shares for shares of the same class. You may exchange Fund shares for shares of another class only if you are participating in certain fee based advisory programs or employer-sponsored retirement plans. You may place exchange orders through the transfer agent or, if you hold your shares through a Service Agent, through your Service Agent. You may place exchange orders by telephone if your account application permits. The transfer agent or your Service Agent can provide you with more information. Customers of ________ may exchange Fund shares by accessing the ________ website and following the instructions for exchanges, or by calling 1-800-______. There is no sales charge on Fund shares you get through an exchange. The exchange privilege may be changed or terminated at any time. You should be aware that you may have to pay taxes on your exchange. DIVIDENDS Each Fund generally pays dividends, if any, and makes capital gains distributions, if any, once a year, typically in December. Each Fund may pay additional distributions and dividends at other times if necessary for the Fund to avoid a federal tax. Each Fund expects distributions to be primarily from capital gains. Unless you choose to receive your dividends in cash, you will receive them as full and fractional additional Fund shares of the same class of shares that you hold. TAX MATTERS This discussion of taxes is very general. You should consult your own tax adviser about your particular situation. TAXATION OF DISTRIBUTIONS: You will normally have to pay federal income taxes on the distributions you receive from a Fund, whether you take the distributions in cash or reinvest them in additional shares. Distributions designated by a Fund as capital gain dividends are taxable as long-term capital gains. Other distributions are generally taxable as ordinary income. Some distributions paid in January may be taxable to you as if they had been paid the previous December. Each year the Funds will make available to you a report of your distributions for the prior year and how they are treated for federal tax purposes. Fund distributions will reduce a Fund's net asset value per share. As a result, if you buy shares just before a Fund makes a distribution, you may pay the full price for the shares and then effectively receive a portion of the purchase price back as a taxable distribution. BACKUP WITHHOLDING: The account application asks each new investor to certify that the investor's Social Security or taxpayer identification number is correct and that the shareholder is not subject to 31% backup withholding for failing to report income to the IRS. A Fund may be required to withhold (and pay over to the IRS for your credit) 31% of certain distributions it pays you if you fail to provide this information or otherwise violate IRS regulations. FOREIGN SHAREHOLDERS: Each Fund will withhold U.S. federal income tax payments at the rate of 30% (or any lower applicable treaty rate) on taxable dividends and other payments subject to withholding taxes that are made to persons who are not citizens or residents of the United States. Distributions received from a Fund by non-U.S. persons also may be subject to tax under the laws of their own jurisdictions. TAXATION OF TRANSACTIONS: If you sell your shares of a Fund, or exchange them for shares of another Fund, it is considered a taxable event. Depending on your purchase price and the sales price of the shares you sell or exchange, you may have a gain or loss on the transaction. You are responsible for any tax liabilities generated by your transaction. The Statement of Additional Information (SAI) provides more details about the Funds and their policies. The SAI is incorporated by reference into this Prospectus and is legally part of it. To obtain free copies of the SAI and the Annual and Semi-Annual Reports for the Funds, when available, or to make other inquiries, please call 1-800-______ toll-free. Annual and Semi-Annual Reports also will be available on the ________ website at www.______.com. The SAI is also available from the Securities and Exchange Commission. You can find it on the EDGAR Database on the SEC Internet site at http://www.sec.gov. Information about the Funds (including the SAI) can also be reviewed and copied at the SEC's Public Reference Room in Washington, DC. You can get information on the operation of the Public Reference Room by calling the SEC at: (202) 942-8090. Copies may also be obtained upon payment of a duplicating fee by electronic request to publicinfo@sec.gov, or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. SEC File Number 811-4006 Statement of Additional Information September __, 2000 Citi Financial Services Portfolio Citi Health Sciences Portfolio Citi Technology Portfolio CitiFunds Trust I (formerly known as "Landmark Funds I") (the "Trust") is an open-end management investment company which was organized as a business trust under the laws of the Commonwealth of Massachusetts on April 23, 1984. The Trust offers shares of Citi Financial Services Portfolio, Citi Health Sciences Portfolio, and Citi Technology Portfolio (collectively, the "Funds"), to which this Statement of Additional Information relates, as well as shares of [eleven] other series. The address and telephone number of the Trust are 21 Milk Street, Boston, Massachusetts 02109, (617) 423-1679. - ------------------------------------------------------------------------------- INVESTMENT PRODUCTS: NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE - ------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE 1. The Trust .........................................................__ 2. Investment Objectives and Policies ................................__ 3. Description of Permitted Investments and Investment Practices .....__ 4. Investment Restrictions ...........................................__ 5. Performance Information and Advertising ...........................__ 6. Determination of Net Asset Value; Valuation of Securities .........__ 7. Additional Information on the Purchase and Sale of Fund Shares ....__ 8. Management ........................................................__ 9. Portfolio Transactions ............................................__ 10. Description of Shares, Voting Rights and Liabilities .............__ 11. Tax Matters .......................................................__ 12. Financial Statements ..............................................__ This Statement of Additional Information sets forth information which may be of interest to investors but which is not necessarily included in the Funds' Prospectus, dated September __, 2000, by which shares of the Funds are offered. This Statement of Additional Information should be read in conjunction with the Prospectus. An investor may obtain copies of the Funds' Prospectus without charge on the ________ website at www._____.com or by calling 1-800-______. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. 1. THE TRUST CitiFunds Trust I (the "Trust") is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts on April 23, 1984. The Trust was called Landmark Funds I until its name was changed effective March 2, 1998. This Statement of Additional Information relates to three funds offered by the Trust - Citi Financial Services Portfolio, Citi Health Sciences Portfolio, and Citi Technology Portfolio (collectively, the "Funds"). SSB Citi Fund Management LLC ("SSB Citi" or the "Manager") is responsible for the overall management of the Funds and also provides certain administrative services to each of the Funds. SSB Citi manages the investments of the Funds in accordance with each Fund's investment objective and policies. The selection of investments for the Funds and the way they are managed depend on the conditions and trends in the economy and the financial marketplaces. The Board of Trustees of the Trust provides broad supervision over the affairs of the Funds. Shares of the Funds are continuously sold by CFBDS, Inc., the Funds' distributor ("CFBDS" or the "Distributor"). 2. INVESTMENT OBJECTIVES AND POLICIES The investment objective (or goal) of each Fund is to seek long-term capital appreciation by investing primarily in common stocks. The investment objective of each Fund may be changed by its Trustees without approval by that Fund's shareholders, but shareholders will be given written notice at least 30 days before any change is implemented. Of course, there can be no assurance that any Fund will achieve its investment objective. The Prospectus contains a discussion of the principal investment strategies of each Fund and the principal risks of investing in each Fund. The following supplements the information contained in the Prospectus concerning the investment policies and techniques of each Fund. 3. DESCRIPTION OF PERMITTED INVESTMENTS AND INVESTMENT PRACTICES The Funds may, but need not, invest in all of the investments and utilize all of the investment techniques described below and in the Prospectus. The selection of investments and the utilization of investment techniques depend on, among other things, the portfolio managers' investment strategies for the Funds, conditions and trends in the economy and financial markets and investments being available on terms that, in the portfolio managers' opinion, make economic sense. FINANCIAL SERVICES PORTFOLIO Financial Services Portfolio seeks long-term capital appreciation by investing primarily in common stocks. The Fund normally invests at least 80% of its assets in securities of companies principally engaged in the financial services business. These companies may include, for example, commercial banks, savings and loan associations, broker-dealers, investment banks, investment advisers, insurance companies, real estate-related companies, leasing companies, and consumer and industrial finance companies. HEALTH SCIENCES PORTFOLIO Health Sciences Portfolio seeks long-term capital appreciation by investing primarily in common stocks. The Fund normally invests at least 80% of its assets in securities of companies principally engaged in the design, manufacture, or sale of products or services used for or in connection with health care or medicine. These companies may include, for example, pharmaceutical companies; companies involved in biotechnology, medical diagnostic, biochemical or other health care research and development; companies involved in the operation of health care facilities; and other companies involved in the design, manufacture, or sale of health care-related products or services such as medical, dental and optical products, hardware, insurance or services. TECHNOLOGY PORTFOLIO Technology Portfolio seeks long-term capital appreciation by investing its assets primarily in common stocks. The Fund normally invests at least 80% of its assets in securities of companies principally engaged in offering, using or developing products, processes or services that will provide or will benefit significantly from technological advances and improvements. These companies may include, for example, companies that develop, produce or distribute products or services in the computer, semi-conductor, software, electronics, media, communications, health care, and biotechnology sectors. EACH FUND Each Fund may invest its assets in securities of foreign issuers in addition to securities of domestic issuers. Because each Fund is considered non-diversified, a Fund may invest a significant percentage of its assets in a single issuer. In buying and selling securities for each Fund, the Manager relies on fundamental analysis of each issuer and its potential for success in light of its current financial condition and its industry position. Factors considered include long-term growth potential, earnings estimates and quality of management. The Manager may lend each Fund's securities to broker-dealers or other institutions to earn income for the Fund. The Manager may, but is not required to, use various techniques, such as buying and selling options and futures contracts, to increase or decrease a Fund's exposure to changing security prices or other factors that affect security values. Each Fund may engage in foreign currency transactions solely to manage its exposure to foreign securities. If the Manager's strategies do not work as intended, a Fund may not achieve its objective. Under normal market conditions, the majority of a Fund's portfolio will consist of common stock, but it also may contain money market instruments for cash management purposes. Each Fund reserves the right, as a defensive measure, to hold money market securities, including repurchase agreements or cash, in such proportions as, in the opinion of management, prevailing market or economic conditions warrant. If a Fund takes a temporary defensive position, it may be unable to achieve its investment goal. EQUITY SECURITIES. Each Fund will normally invest at least 80% of its assets in equity securities, including primarily common stocks and, to a lesser extent, securities convertible into common stock and rights to subscribe for common stock. Common stocks represent an equity (ownership) interest in a corporation. Although equity securities have a history of long-term growth in value, their prices fluctuate based on changes in a company's financial condition and on overall market and economic conditions. WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. Each Fund may purchase securities on a "when-issued" basis, for delayed delivery (i.e., payment or delivery occur beyond the normal settlement date at a stated price and yield) or on a forward commitment basis. No Fund intends to engage in these transactions for speculative purposes, but only in furtherance of its investment goal. These transactions occur when securities are purchased or sold by a Fund with payment and delivery taking place in the future to secure what is considered an advantageous yield and price to a Fund at the time of entering into the transaction. The payment obligation and the interest rate that will be received on when-issued securities are fixed at the time the buyer enters into the commitment. Because of fluctuations in the value of securities purchased or sold on a when-issued, delayed-delivery basis or forward commitment basis, the prices obtained on such securities may be higher or lower than the prices available in the market on the dates when the investments are actually delivered to the buyers. When the Fund agrees to purchase when-issued or delayed-delivery securities, the Fund will set aside cash or liquid securities equal to the amount of the commitment in a segregated account on the Fund's books. Normally, the custodian will set aside portfolio securities to satisfy a purchase commitment, and in such a case the Fund may be required subsequently to place additional assets in the segregated account in order to ensure that the value of the account remains equal to the amount of the Fund's commitment. The assets contained in the segregated account will be marked-to-market daily. It may be expected that the Fund's net assets will fluctuate to a greater degree when it sets aside portfolio securities to cover such purchase commitments than when it sets aside cash. When the Fund engages in when-issued or delayed-delivery transactions, it relies on the other party to consummate the trade. Failure of the seller to do so may result in the Fund's incurring a loss or missing an opportunity to obtain a price considered to be advantageous. FOREIGN SECURITIES. Each Fund may invest in securities of foreign issuers. Such investments involve certain risks not ordinarily associated with investments in securities of domestic issuers. Such risks include currency exchange control regulations and costs, the possibility of expropriation, seizure, or nationalization of foreign deposits, less liquidity and volume and more volatility in foreign securities markets and the impact of political, social, economic or diplomatic developments or the adoption of other foreign government restrictions that might adversely affect the payment of principal and interest on or market value of securities. If it should become necessary, a Fund might encounter greater difficulties in invoking legal processes abroad than would be the case in the United States. In addition, there may be less publicly available information about a non-U.S. company, and non-U.S. companies are not generally subject to uniform accounting and financial reporting standards, practices and requirements comparable to those applicable to U.S. companies. Furthermore, some of these securities may be subject to foreign brokerage and withholding taxes. Each Fund may also invest in securities of foreign issuers in the form of American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") or similar securities representing interests in the common stock of foreign issuers. ADRs are receipts, typically issued by a U.S. bank or trust company, which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, in registered form, are designed for use in the U.S. securities markets and EDRs are designed for use in European securities markets. The underlying securities are not always denominated in the same currency as the ADRs or EDRs. Although investment in the form of ADRs or EDRs facilitates trading in foreign securities, it does not mitigate the risks associated with investing in foreign securities. However, by investing in ADRs or EDRs rather than directly in foreign issuers' stock, a Fund can avoid currency risks during the settlement period for either purchases or sales. In general, there is a large, liquid market in the United States for many ADRs and EDRs. The information available for ADRs and EDRs is subject to the accounting, auditing and financial reporting standards of the domestic market or exchange on which they are traded, which standards are more uniform and more exacting than those to which many foreign issuers may be subject. Information on over-the-counter ADRs is more limited as trading data is not well publicized, company financials do not conform to U.S. standards and the Securities and Exchange Commission ("SEC") does not require companies to communicate with shareholders on a regular basis. Investments in foreign securities incur higher costs than investments in U.S. securities, including higher costs in making securities transactions as well as foreign government taxes, which may reduce the investment return of a Fund. In addition, foreign investments may include additional risks associated with currency exchange rates, less complete financial information about individual companies, less market liquidity and political instability. CURRENCY RISKS. The U.S. dollar value of securities denominated in a foreign currency will vary with changes in currency exchange rates, which can be volatile. Accordingly, changes in the value of the currency in which a Fund's investments are denominated relative to the U.S. dollar will affect the Fund's net asset value. Exchange rates are generally affected by the forces of supply and demand in the international currency markets, the relative merits of investing in different countries and the intervention or failure to intervene of U.S. or foreign governments and central banks. However, currency exchange rates may fluctuate based on factors intrinsic to a country's economy. Some emerging market countries also may have managed currencies, which are not free floating against the U.S. dollar. In addition, emerging markets are subject to the risk of restrictions upon the free conversion of their currencies into other currencies. Any devaluations relative to the U.S. dollar in the currencies in which a Fund's securities are quoted would reduce the Fund's net asset value per share. SECURITIES OF DEVELOPING/EMERGING MARKETS COUNTRIES. A developing or emerging markets country generally is considered to be a country that is in the initial stages of its industrialization cycle. Investing in the equity markets of developing countries involves exposure to economic structures that are generally less diverse and mature, and to political systems that can be expected to have less stability, than those of developed countries. Historical experience indicates that the markets of developing countries have been more volatile than the markets of the more mature economies of developed countries; however, such markets often have provided higher rates of return to investors. One or more of the risks discussed above could affect adversely the economy of a developing market or a Fund's investments in such a market. The claims of many property owners against those of governments may remain unsettled. There can be no assurance that any investments that a Fund might make in such emerging markets would not be expropriated, nationalized or otherwise confiscated at some time in the future. In such an event, the Fund could lose its entire investment in the market involved. Moreover, changes in the leadership or policies of such markets could halt the expansion or reverse the liberalization of foreign investment policies now occurring in certain of these markets and adversely affect existing investment opportunities. MONEY MARKET INSTRUMENTS. Each Fund may invest for temporary defensive purposes in short-term corporate and government bonds and notes and money market instruments. Money market instruments include: obligations issued or guaranteed by the United States government, its agencies or instrumentalities ("U.S. government securities"); certificates of deposit, time deposits and bankers' acceptances issued by domestic banks (including their branches located outside the United States and subsidiaries located in Canada), domestic branches of foreign banks, savings and loan associations and similar institutions; high grade commercial paper; and repurchase agreements with respect to the foregoing types of instruments. Certificates of deposit ("CDs") are short-term, negotiable obligations of commercial banks. Time deposits ("TDs") are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Bankers' acceptances are time drafts drawn on commercial banks by borrowers, usually in connection with international transactions. REPURCHASE AGREEMENTS. Each Fund may agree to purchase securities from a bank or recognized securities dealer and simultaneously commit to resell the securities to the bank or dealer at an agreed-upon date and price reflecting a market rate of interest unrelated to the coupon rate or maturity of the purchased securities ("repurchase agreements"). The Fund would maintain custody of the underlying securities prior to their repurchase; thus, the obligation of the bank or dealer to pay the repurchase price on the date agreed to would be, in effect, secured by such securities. If the value of such securities were less than the repurchase price, plus interest, the other party to the agreement would be required to provide additional collateral so that at all times the collateral is at least 102% of the repurchase price plus accrued interest. Default by or bankruptcy of a seller would expose a Fund to possible loss because of adverse market action, expenses and/or delays in connection with the disposition of the underlying obligations. The financial institutions with which the Funds may enter into repurchase agreements will be banks and non-bank dealers of U.S. Government securities on the Federal Reserve Bank of New York's list of reporting dealers, if such banks and non-bank dealers are deemed creditworthy by the Manager. The Manager will continue to monitor creditworthiness of the seller under a repurchase agreement, and will require the seller to maintain during the term of the agreement the value of the securities subject to the agreement to equal at least 102% of the repurchase price (including accrued interest). In addition, the Manager will require that the value of this collateral, after transaction costs (including loss of interest) reasonably expected to be incurred on a default, be equal to 102% or greater than the repurchase price (including accrued premium) provided in the repurchase agreement or the daily amortization of the difference between the purchase price and the repurchase price specified in the repurchase agreement. The Manager will mark-to-market daily the value of the securities. Repurchase agreements are considered to be loans by a Fund under the Investment Company Act of 1940, as amended (the "1940 Act"). REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase agreements which involve the sale of Fund securities with an agreement to repurchase the securities at an agreed-upon price, date and interest payment and have the characteristics of borrowing. Since the proceeds of borrowings under reverse repurchase agreements are invested, this would introduce the speculative factor known as "leverage." The securities purchased with the funds obtained from the agreement and securities collateralizing the agreement will have maturity dates no later than the repayment date. Generally the effect of such a transaction is that a Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while in many cases it will be able to keep some of the interest income associated with those securities. Such transactions are only advantageous if a Fund has an opportunity to earn a greater rate of interest on the cash derived from the transaction than the interest cost of obtaining that cash. Opportunities to realize earnings from the use of the proceeds equal to or greater than the interest required to be paid may not always be available, and the Funds intend to use the reverse repurchase technique only when the Manager believes it will be advantageous to the Funds. The use of reverse repurchase agreements may exaggerate any interim increase or decrease in the value of a Fund's assets. A Fund's custodian bank will maintain a separate account for the Fund with securities having a value equal to or greater than such commitments. LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory requirements, each Fund may lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Board. The Funds will not lend portfolio securities to affiliates of the Manager unless they have applied for and received specific authority to do so from the SEC. Loans of portfolio securities will be collateralized by cash, letters of credit or U.S. Government Securities, which are maintained at all times in an amount equal to at least 102% of the current market value of the loaned securities. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Fund. From time to time, a Fund may return a part of the interest earned from the investment of collateral received for securities loaned to the borrower and/or a third party that is unaffiliated with the Fund and that is acting as a "finder." By lending its securities, a Fund can increase its income by continuing to receive interest and any dividends on the loaned securities as well as by either investing the collateral received for securities loaned in short-term instruments or obtaining yield in the form of interest paid by the borrower when U.S. Government Securities are used as collateral. Although the generation of income is not the primary investment goal of a Fund, income received could be used to pay the Fund's expenses and would increase an investor's total return. Each Fund will adhere to the following conditions whenever its portfolio securities are loaned: (i) the Fund must receive at least 102% cash collateral or equivalent securities of the type discussed in the preceding paragraph from the borrower; (ii) the borrower must increase such collateral whenever the market value of the securities rises above the level of such collateral; (iii) the Fund must be able to terminate the loan at any time; (iv) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the loaned securities and any increase in market value; (v) the Fund may pay only reasonable custodian fees in connection with the loan; and (vi) voting rights on the loaned securities may pass to the borrower, provided, however, that if a material event adversely affecting the investment occurs, the Board must terminate the loan and regain the right to vote the securities. Loan agreements involve certain risks in the event of default or insolvency of the other party including possible delays or restrictions upon a Fund's ability to recover the loaned securities or dispose of the collateral for the loan. BORROWING. Each Fund may borrow money up to such amounts and in such manner as permitted by the 1940 Act and the rules and regulations promulgated thereunder. If a Fund borrows money, its share price may be subject to greater fluctuation until the borrowing is paid off. If a Fund makes additional investments while borrowings are outstanding, this may be considered a form of leverage. ILLIQUID SECURITIES. Each Fund may invest up to an aggregate amount of 15% of its net assets in illiquid securities, which term includes securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets. RISK FACTORS FINANCIAL SERVICES PORTFOLIO This sector generally is subject to extensive governmental regulation, which may change frequently. In addition, the profitability of businesses in financial services depends heavily upon the availability and cost of money, and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. From time to time, severe competition may also affect the profitability of financial services companies. Most financial services companies are subject to extensive governmental regulation, which limits their activities and may (as with insurance rate regulation) affect the ability to earn a profit from a given line of business. Certain financial services businesses are subject to intense competitive pressures, including market share and price competition. The removal of regulatory barriers to participation in certain segments of the financial services sector may also increase competitive pressures on different types of firms. The availability and cost of funds to financial services firms is crucial to their profitability. Consequently, volatile interest rates and general economic conditions can adversely affect their financial performance. Financial services companies in foreign countries are subject to similar regulatory and interest rate concerns. In particular, government regulation in certain foreign countries may include controls on interest rates, credit availability, prices and currency movements. In some cases, foreign governments have taken steps to nationalize the operations of banks and other financial services companies. The Manager believes that the deregulation of many segments of the financial services sector provides new opportunities for issuers in this sector. As new segments of the financial services sector are opened to certain larger financial services firms formerly prohibited from doing business in these segments (such as national and money center banks); certain established companies in these market segments (such as regional banks or securities firms) may become attractive acquisition candidates for the larger firm seeking entrance into the segment. Typically, acquisitions accelerate the capital appreciation of the shares of the company to be acquired. The Manager will seek to invest in those financial services companies that it believes are well positioned to take advantage of the ongoing changes in the financial services sector. A financial services company may be well positioned for a number of reasons. It may be an attractive acquisition for another company wishing to strengthen its presence in a line of business or a geographic region or to expand into new lines of business or geographic regions, or it may be planning a merger to strengthen its position in a line of business or a geographic area. The financial services company may be engaged in a line or lines of business experiencing or likely to experience strong economic growth; it may be linked to a geographic region experiencing or likely to experience strong economic growth and may be actively seeking to participate in such growth; or it may be expanding into financial services or geographic regions previously unavailable to it (because of an easing of regulatory constraints) in order to take advantage of new market opportunities. HEALTH SCIENCES PORTFOLIO Many faster-growing health care companies have limited operating histories and their potential profitability may be dependent on regulatory approval of their products, which increases the volatility of these companies' security prices. Many of these activities are funded or subsidized by governments; withdrawal or curtailment of this support could lower the profitability and market prices of such companies. Changes in government regulation could also have an adverse impact. Continuing technological advances may mean rapid obsolescence of products and services. TECHNOLOGY PORTFOLIO Many technological products and services are subject to rapid obsolescence, which may lower the market value of the securities of the companies in this sector. Also, the portfolio consists of securities of faster-growing, more volatile technology companies that the Manager believes to be emerging leaders in their fields. The market prices of these companies tend to rise and fall more rapidly than those of larger, more established companies. TECHNOLOGY AND HEALTH SCIENCE AREAS The Manager believes that because of rapid advances in technology and science, an investment in companies with business operations in these areas will offer substantial opportunities for long-term capital appreciation. Of course, prices of common stocks of even the best managed, most profitable corporations are subject to market risk, which means their stock prices can decline. In addition, swings in investor psychology or significant trading by large institutional investors can result in price fluctuations. Industries likely to be represented in the portfolio include computers, networking and internetworking software, computer aided design, telecommunications, media and information services, medical devices and biotechnology. A Fund may also invest in the stocks of companies that should benefit from the commercialization of technological advances, although they may not be directly involved in research and development. The technology and science areas have exhibited and continue to exhibit rapid growth, both through increasing demand for existing products and services and the broadening of the technology market. In general, the stocks of large capitalized companies that are well established in the technology market can be expected to grow with the market and will frequently be found in a Fund's portfolio. The expansion of technology and its related industries, however, also provides a favorable environment for investment in small to medium capitalized companies. A Fund's investment policy is not limited to any minimum capitalization requirement and a Fund may hold securities without regard to the capitalization of the issuer. Overall stock selection for a Fund is not based on the capitalization or size of the company but rather on an assessment of the company's fundamental prospects. Companies in the rapidly changing fields of technology and science face special risks. For example, their products or services may not prove commercially successful or may become obsolete quickly. The value of a Fund's shares may be susceptible to factors affecting the technology and science areas and to greater risk and market fluctuation than an investment in a fund that invests in a broader range of portfolio securities not concentrated in any particular industry. As such, a Fund is not an appropriate investment for individuals who are not long-term investors and who, as their primary objective, require safety of principal or stable income from their investments. The technology and science areas may be subject to greater governmental regulation than many other areas and changes in governmental policies and the need for regulatory approvals may have a material adverse effect on these areas. Additionally, companies in these areas may be subject to risks of developing technologies, competitive pressures and other factors and are dependent upon consumer and business acceptance as new technologies evolve. RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS MARKET RISK. Equity stock prices vary and may fall, thus reducing the value of your Fund's investment. Certain stocks selected for any Fund's portfolio may decline in value more than the overall stock market. FOREIGN SECURITIES. Investments in foreign and emerging markets carry special risks, including currency, political, regulatory and diplomatic risks. Each Fund has the ability to invest more than 25% of their respective assets in the securities of non-U.S. issuers. CURRENCY RISK. A change in the exchange rate between U.S. dollars and a foreign currency may reduce the value of a Fund's investment in a security valued in the foreign currency, or based on that currency value. POLITICAL RISK. Political actions, events or instability may result in unfavorable changes in the value of a security. REGULATORY RISK. Government regulations may affect the value of a security. In foreign countries, securities markets that are less regulated than those in the U.S. may permit trading practices that are not allowed in the U.S. DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a foreign country could affect the value or liquidity of investments. LIQUIDITY RISK. A Fund's portfolio is liquid if the Fund is able to sell the securities it owns at a fair price within a reasonable time. Liquidity is generally related to the market trading volume for a particular security. Investments in smaller companies or in foreign companies or companies in emerging markets are subject to a variety of risks, including potential lack of liquidity. SMALLER CAPITALIZED COMPANIES. The Manager believes that smaller capitalized companies generally have greater earnings and sales growth potential than larger capitalized companies. The level of risk will be increased to the extent each Fund has significant exposure to smaller capitalized or unseasoned companies (those with less than a three-year operating history). Investments in smaller capitalized companies may involve greater risks, such as limited product lines, markets and financial or managerial resources. In addition, less frequently traded securities may be subject to more abrupt price movements than securities of larger capitalized companies. DERIVATIVES RISK. A Fund's use of options, futures and options on futures, forward currency contracts and interest rate or currency swaps ("derivatives") involves additional risks and transaction costs, such as, (i) adverse changes in the value of these instruments, (ii) imperfect correlation between the price of derivatives and movements in the price of the underlying securities, index or futures contracts, (iii) the fact that use of derivatives requires different skills than those needed to select portfolio securities, and (iv) the possible absence of a liquid secondary market for a particular derivative at any moment in time. COUNTERPARTY RISK. This is a risk associated primarily with repurchase agreements and some derivatives transactions. It is the risk that the other party in such a transaction will not fulfill its contractual obligation to complete a transaction with a Fund. LACK OF TIMELY INFORMATION RISK. Timely information about a security or its issuer may be unavailable, incomplete or inaccurate. This risk is more common to smaller company securities issued by foreign companies and companies in emerging markets than it is to the securities of U.S.-based companies. NON-DIVERSIFIED CLASSIFICATION. Each Fund is classified as a non-diversified fund under the 1940 Act which means the Fund is not limited by the Act in the proportion of its assets it may invest in the obligations of a single issuer. As a result, the Funds may be subject to greater volatility with respect to their portfolio securities than funds that are more broadly diversified. Each Fund intends to conduct its operations, however, so as to qualify as a "regulated investment company" for purposes of the Internal Revenue Code of 1986, as amended (the "Code"), which will relieve the Fund of any liability for Federal income tax to the extent its earnings are distributed to shareholders. To qualify as a regulated investment company, the Fund will, among other things, limit its investments so that, at the close of each quarter of the taxable year (a) not more than 25% of the market value of the Fund's total assets will be invested in the securities of a single issuer and (b) with respect to 50% of the market value of its total assets, not more than 5% of the market value of its total assets will be invested in the securities of a single issuer and the Fund will not own more than 10% of the outstanding voting securities of a single issuer. MASTER/FEEDER FUND STRUCTURE. The Board of Trustees has the discretion to invest each Fund's assets in a master fund in a master/feeder fund structure. A master/feeder fund structure is one in which a fund (a "feeder fund"), instead of investing directly in a portfolio of securities, invests most or all of its investment assets in a separate registered investment company (the "master fund") with a similar investment objective and policies as the feeder fund. Such a structure permits the pooling of assets of two or more feeder funds, preserving separate identities or distribution channels at the feeder fund level. Based on the premise that certain of the expenses of operating an investment portfolio are relatively fixed, a larger investment portfolio may eventually achieve a lower ratio of operating expenses to average net assets. An existing investment company is able to convert to a feeder fund by selling all of its investments, which involves brokerage and other transaction costs and realization of a taxable gain or loss, or by contributing its assets to the master fund and avoiding transaction costs and, if proper procedures are followed, the realization of taxable gain or loss. OPTIONS, FUTURES AND CURRENCY STRATEGIES. Each Fund may, but is not required to, use forward currency contracts and certain options and futures strategies to seek to increase total return or hedge its portfolio, i.e., reduce the overall level of investment risk normally associated with the Fund. There can be no assurance that such efforts will succeed. In order to assure that a Fund will not be deemed to be a "commodity pool" for purposes of the Commodity Exchange Act, regulations of the Commodity Futures Trading Commission ("CFTC") require that the Fund enter into transactions in futures contracts and options on futures only (i) for bona fide hedging purposes (as defined in CFTC regulations), or (ii) for non-hedging purposes, provided the aggregate initial margin and premiums on such non-hedging positions do not exceed 5% of the liquidation value of the Fund's assets. To attempt to hedge against adverse movements in exchange rates between currencies, the Fund may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future date. Such contracts may involve the purchase or sale of a foreign currency against the U.S. dollar or may involve two foreign currencies. The Fund may enter into forward currency contracts either with respect to specific transactions or with respect to its portfolio positions. For example, when the Manager anticipates making a purchase or sale of a security, it may enter into a forward currency contract in order to set the rate (either relative to the U.S. dollar or another currency) at which the currency exchange transaction related to the purchase or sale will be made ("transaction hedging"). Further, when the Manager believes a particular currency may decline compared to the U.S. dollar or another currency, the Fund may enter into a forward contract to sell the currency expected to decline in an amount approximating the value of some or all of the Fund's securities denominated in that currency, or when the Manager believes one currency may decline against a currency in which some or all of the portfolio securities held by the Fund are denominated, it may enter into a forward contract to buy the currency expected to decline for a fixed amount ("position hedging"). In this situation, the Fund may, in the alternative, enter into a forward contract to sell a different currency for a fixed amount of the currency expected to decline where the Manager believes the value of the currency to be sold pursuant to the forward contract will fall whenever there is a decline in the value of the currency in which portfolio securities of the Fund are denominated ("cross hedging"). The Fund places (i) cash, (ii) U.S. Government securities or (iii) equity securities or debt securities (of any grade) in certain currencies provided such assets are liquid, unencumbered and marked to market daily, or other high-quality debt securities denominated in certain currencies in a separate account of the Fund having a value equal to the aggregate amount of the Fund's commitments under forward contracts entered into with respect to position hedges and cross-hedges. If the value of the securities placed in a separate account declines, additional cash or securities are placed in the account on a daily basis so that the value of the amount will equal the amount of the Fund's commitments with respect to such contracts. For hedging purposes, a Fund may write covered call options and purchase put and call options on currencies to hedge against movements in exchange rates and on debt securities to hedge against the risk of fluctuations in the prices of securities held by the Fund or which the Manager intends to include in its portfolio. The Fund also may use interest rates futures contracts and options thereon to hedge against changes in the general level in interest rates. A Fund may write call options on securities and currencies only if they are covered, and such options must remain covered so long as the Fund is obligated as a writer. A call option written by a Fund is "covered" if the Fund owns the securities or currency underlying the option or has an absolute and immediate right to acquire that security or currency without additional cash consideration (or for additional cash consideration held in a segregated account on the Fund's books) upon conversion or exchange of other securities or currencies held in its portfolio. A call option is also covered if the Fund holds on a share-for-share basis a call on the same security or holds a call on the same currency as the call written where the exercise price of the call held is equal to less than the exercise price of the call written or greater than the exercise price of the call written if the difference is maintained by the Fund in cash, Treasury bills or other high-grade, short-term obligations in a segregated account on the Fund's books. A Fund may purchase put and call options in anticipation of declines in the value of portfolio securities or increases in the value of securities to be acquired. If the expected changes occur, the Fund may be able to offset the resulting adverse effect on its portfolio, in whole or in part, through the options purchased. The risk assumed by the Fund in connection with such transactions is limited to the amount of the premium and related transaction costs associated with the option, although the Fund may lose such amounts if the prices of securities underlying the options do not move in the direction or to the extent anticipated. Although the portfolio managers may decide not to use forward currency contracts, options and futures, the use of any of these strategies would involve certain investment risks and transaction costs. These risks include: dependence on the Manager's ability to predict movements in the prices of individual securities, fluctuations in the general fixed-income markets and movements in interest rates and currency markets, imperfect correlation between movements in the price of currency, options, futures contracts or options thereon and movements in the price of the currency or security hedged or used for cover; the fact that skills and techniques needed to trade options, futures contracts and options thereon or to use forward currency contracts are different from those needed to select the securities in which the Fund invests; and lack of assurance that a liquid market will exist for any particular option, futures contract or option thereon at any particular time. Over-the-counter options in which a Fund may invest differ from exchange traded options in that they are two-party contracts, with price and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-traded options. A Fund may be required to treat as illiquid over-the-counter options purchased and securities being used to cover certain written over-the-counter options. OPTIONS ON SECURITIES. As discussed more generally above, each Fund may engage in writing covered call options. Each Fund may also purchase put options and enter into closing transactions. The principal reason for writing covered call options on securities is to attempt to realize, through the receipt of premiums, a greater return than would be realized on the securities alone. In return for a premium, the writer of a covered call option forgoes the right to any appreciation in the value of the underlying security above the strike price for the life of the option (or until a closing purchase transaction can be effected). Nevertheless, the call writer retains the risk of a decline in the price of the underlying security. Similarly, the principal reason for writing covered put options is to realize income in the form of premiums. The writer of a covered put option accepts the risk of a decline in the price of the underlying security. The size of the premiums the Fund may receive may be adversely affected as new or existing institutions, including other investment companies, engage in or increase their option-writing activities. Options written by the Fund will normally have expiration dates between one and six months from the date written. The exercise price of the options may be below, equal to, or above the current market values of the underlying securities when the options are written. In the case of call options, these exercise prices are referred to as "in-the-money," "at-the-money" and "out-of-the-money," respectively. A Fund may write (a) in-the-money call options when the Manager expects the price of the underlying security to remain flat or decline moderately during the option period, (b) at-the-money call options when the Manager expects the price of the underlying security to remain flat or advance moderately during the option period and (c) out-of-the-money call options when the Manager expects that the price of the security may increase but not above a price equal to the sum of the exercise price plus the premiums received from writing the call option. In any of the preceding situations, if the market price of the underlying security declines and the security is sold at this lower price, the amount of any realized loss will be offset wholly or in part by the premium received. Out-of-the-money, at-the-money and in-the-money put options (the reverse of call options as to the relation of exercise price to market price) may be utilized in the same market environments as such call options are used in equivalent transactions. So long as the obligation of a Fund as the writer of an option continues, the Fund may be assigned an exercise notice by the broker-dealer through which the option was sold, requiring it to deliver, in the case of a call, or take delivery of, in the case of a put, the underlying security against payment of the exercise price. This obligation terminates when the option expires or the Fund effects a closing purchase transaction. The Fund can no longer effect a closing purchase transaction with respect to an option once it has been assigned an exercise notice. To secure its obligation to deliver the underlying security when it writes a call option, or to pay for the underlying security when it writes a put option, the Fund will be required to deposit in escrow the underlying security or other assets in accordance with the rules of the Options Clearing Corporation ("Clearing Corporation") or similar clearing corporation and the securities exchange on which the option is written. An option position may be closed out only where there exists a secondary market for an option of the same series on a recognized securities exchange or in the over-the-counter market. Each Fund expects to write options only on national securities exchanges or in the over-the-counter market. A Fund may purchase put options issued by the Clearing Corporation or in the over-the-counter market. A Fund may realize a profit or loss upon entering into a closing transaction. In cases in which the Fund has written an option, it will realize a profit if the cost of the closing purchase transaction is less than the premium received upon writing the original option and will incur a loss if the cost of the closing purchase transaction exceeds the premium received upon writing the original option. Similarly, when the Fund has purchased an option and engages in a closing sale transaction, whether it recognizes a profit or loss will depend upon whether the amount received in the closing sale transaction is more or less than the premium the Fund initially paid for the original option plus the related transaction costs. Although a Fund generally will purchase or write only those options for which the Manager believes there is an active secondary market so as to facilitate closing transactions, there is no assurance that sufficient trading interest to create a liquid secondary market on a securities exchange will exist for any particular option or at any particular time, and for some options no such secondary market may exist. A liquid secondary market in an option may cease to exist for a variety of reasons. In the past, for example, higher than anticipated trading activity or order flow, or other unforeseen events, have at times rendered certain of the facilities of the Clearing Corporation and national securities exchanges inadequate and resulted in the institution of special procedures, such as trading rotations, restrictions on certain types of orders or trading halts or suspensions in one or more options. There can be no assurance that similar events, or events that may otherwise interfere with the timely execution of customers' orders, will not recur. In such event, it might not be possible to effect closing transactions in particular options. If, as a covered call option writer, a Fund is unable to effect a closing purchase transaction in a secondary market, it will not be able to sell the underlying security until the option expires or it delivers the underlying security upon exercise. Securities exchanges generally have established limitations governing the maximum number of calls and puts of each class which may be held or written, or exercised within certain periods, by an investor or group of investors acting in concert (regardless of whether the options are written on the same or different securities exchanges or are held, written or exercised in one or more accounts or through one or more brokers). It is possible that the Fund and other clients of the Manager and certain of their affiliates may be considered to be such a group. A securities exchange may order the liquidation of positions found to be in violation of these limits, and it may impose certain other sanctions. In the case of options written by a Fund that are deemed covered by virtue of the Fund's holding convertible or exchangeable preferred stock or debt securities, the time required to convert or exchange and obtain physical delivery of the underlying common stocks with respect to which the Fund has written options may exceed the time within which the Fund must make delivery in accordance with an exercise notice. In these instances, the Fund may purchase or temporarily borrow the underlying securities for purposes of physical delivery. By so doing, the Fund will not bear any market risk because the Fund will have the absolute right to receive from the issuer of the underlying security an equal number of shares to replace the borrowed stock, but the Fund may incur additional transaction costs or interest expenses in connection with any such purchase or borrowing. Although the Manager will attempt to take appropriate measures to minimize the risks relating to a Fund's writing of call options and purchasing of put and call options, there can be no assurance that the Fund will succeed in its option-writing program. STOCK INDEX OPTIONS. As described generally above, each Fund may purchase put and call options and write call options on domestic stock indexes listed on domestic exchanges in order to realize its investment objective of long-term capital appreciation or for the purpose of hedging its portfolio. A stock index fluctuates with changes in the market values of the stocks included in the index. Some stock index options are based on a broad market index such as the New York Stock Exchange Composite Index or the Canadian Market Portfolio Index, or a narrower market index such as the Standard & Poor's 100. Indexes also are based on an industry or market segment such as the American Stock Exchange Oil and Gas Index or the Computer and Business Equipment Index. Options on stock indexes are generally similar to options on stock except that the delivery requirements are different. Instead of giving the right to take or make delivery of stock at a specified price, an option on a stock index gives the holder the right to receive a cash "exercise settlement amount" equal to (a) the amount, if any, by which the fixed exercise price of the option exceeds (in the case of a put) or is less than (in the case of a call) the closing value of the underlying index on the date of exercise, multiplied by (b) a fixed "index multiplier." Receipt of this cash amount will depend upon the closing level of the stock index upon which the option is based being greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash received will be equal to such difference between the closing price of the index and the exercise price of the option expressed in dollars or a foreign currency, as the case may be, times a specified multiple. The writer of the option is obligated, in return for the premium received, to make delivery of this amount. The writer may offset its position in stock index options prior to expiration by entering into a closing transaction on an exchange or it may let the option expire unexercised. The effectiveness of purchasing or writing stock index options as a hedging technique will depend upon the extent to which price movements in the portion of the securities portfolio of a Fund correlate with price movements of the stock index selected. Because the value of an index option depends upon movements in the level of the index rather than the price of a particular stock, whether a Fund will realize a gain or loss from the purchase or writing of options on an index depends upon movements in the level of stock prices in the stock market generally or, in the case of certain indexes, in an industry or market segment, rather than movements in the price of a particular stock. Accordingly, successful use by a Fund of options on stock indexes will be subject to the Manager's ability to predict correctly movements in the direction of the stock market generally or of a particular industry. This requires different skills and techniques than predicting changes in the price of individual stocks. FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. As described generally above, each Fund may invest in stock index futures contracts and options on futures contracts traded on a domestic exchange or board of trade. Futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific security at a specified future time and at a specified price. The primary purpose of entering into a futures contract by a Fund is to protect the Fund from fluctuations in the value of securities without actually buying or selling the securities. A Fund may enter into futures contracts and options on futures to seek higher investment returns when a futures contract is priced more attractively than stocks comprising a benchmark index, to facilitate trading or to reduce transaction costs. A Fund will only enter into futures contracts and options on futures contracts that are traded on a domestic exchange and board of trade. Assets committed to futures contracts will be segregated on a Fund's books to the extent required by law. The purpose of entering into a futures contract by a Fund is to protect the Fund from fluctuations in the value of securities without actually buying or selling the securities. For example, in the case of stock index futures contracts, if a Fund anticipates an increase in the price of stocks it intends to purchase at a later time, the Fund could enter into contracts to purchase the stock index (known as taking a "long" position) as a temporary substitute for the purchase of stocks. If an increase in the market occurs that influences the stock index as anticipated, the value of the futures contracts increases and thereby serves as a hedge against the Fund's not participating in a market advance. The Fund then may close out the futures contracts by entering into offsetting futures contracts to sell the stock index (known as taking a "short" position) as it purchases individual stocks. A Fund can accomplish similar results by buying securities with long maturities and selling securities with short maturities. But by using futures contracts as an investment tool to reduce risk, given the greater liquidity in the futures market, it may be possible to accomplish the same result more easily and more quickly. No consideration will be paid or received by a Fund upon the purchase or sale of a futures contract. Initially, the Fund will be required to deposit with the broker an amount of cash or cash equivalents equal to approximately 1% to 10% of the contract amount (this amount is subject to change by the exchange or board of trade on which the contract is traded and brokers or members of such board of trade may charge a higher amount). This amount is known as "initial margin" and is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund, upon termination of the futures contract, assuming all contractual obligations have been satisfied. Subsequent payments, known as "variation margin," to and from the broker, will be made daily as the price of the index or securities underlying the futures contract fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as "marking-to-market." In addition, when a Fund enters into a long position in a futures contract or an option on a futures contract, it must deposit into a segregated account with the Fund's custodian an amount of cash or cash equivalents equal to the total market value of the underlying futures contract, less amounts held in the Fund's commodity brokerage account at its broker. At any time prior to the expiration of a futures contract, a Fund may elect to close the position by taking an opposite position, which will operate to terminate the Fund's existing position in the contract. There are several risks in connection with the use of futures contracts as a hedging device. Successful use of futures contracts by a Fund is subject to the ability of the Manager to predict correctly movements in the stock market or in the direction of interest rates. These predictions involve skills and techniques that may be different from those involved in the management of investments in securities. In addition, there can be no assurance that there will be a perfect correlation between movements in the price of the securities underlying the futures contract and movements in the price of the securities that are the subject of the hedge. A decision of whether, when and how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of market behavior or unexpected trends in market behavior or interest rates. Positions in futures contracts may be closed out only on the exchange on which they were entered into (or through a linked exchange) and no secondary market exists for those contracts. In addition, although the Funds intend to enter into futures contracts only if there is an active market for the contracts, there is no assurance that an active market will exist for the contracts at any particular time. Most futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit. It is possible that futures contract prices could move to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses. In such event, and in the event of adverse price movements, a Fund would be required to make daily cash payments of variation margin; in such circumstances, an increase in the value of the portion of the portfolio being hedged, if any, may partially or completely offset losses on the futures contract. As described above, however, no assurance can be given that the price of the securities being hedged will correlate with the price movements in a futures contract and thus provide an offset to losses on the futures contract. SWAPS AND RELATED TRANSACTIONS. Each Fund may enter into interest rate swaps, currency swaps, equity swaps and other types of available swap agreements, such as caps, collars and floors, for the purpose of attempting to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Interest rate swaps involve the exchange by the Fund with another party of their respective commitments to pay or receive interest. An equity swap is an agreement to exchange cash flows on a principal amount based on changes in the values of the reference index. A currency swap is an agreement to exchange cash flows on a principal amount based on changes in the values of the currency exchange rates. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the counterparty. For example, the purchase of an interest rate cap entitles the buyer, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the counterparty selling such interest rate cap. The sale of an interest rate floor obligates the seller to make payments to the extent that a specified interest rate falls below an agreed-upon level. A collar arrangement combines elements of buying a cap and selling a floor. A Fund will maintain liquid assets with its custodian or otherwise cover its current obligations under swap transactions in accordance with current regulations and policies applicable to the Fund. The most significant factor in the performance of swaps, caps, floors and collars is the change in the specific interest rate, equity, currency or other factor that determines the amount of payments to be made under the arrangement. If the Manager is incorrect in its forecasts of such factors, the investment performance of the Fund would be less than what it would have been if these investment techniques had not been used. If a swap agreement calls for payments by the Fund, the Fund must be prepared to make such payments when due. No Fund will enter into any swap unless the Manager deems the counterparty to be creditworthy. If the counterparty's creditworthiness declined, the value of the swap agreement would be likely to decline, potentially resulting in losses. If the counterparty defaults, the Fund's risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive. Each Fund anticipates that it will be able to eliminate or reduce its exposure under these arrangements by assignment or other disposition or by entering into an offsetting agreement with the same or another counterparty. Swap agreements are subject to each Fund's overall limit that not more than 15% of its net assets may be invested in illiquid securities. 4. INVESTMENT RESTRICTIONS The Trust, on behalf of the Funds, has adopted the following policies which may not be changed with respect to any Fund without approval by holders of a majority of the outstanding voting securities of that Fund, which as used in this Statement of Additional Information means the vote of the lesser of (i) 67% or more of the outstanding voting securities of the Fund present at a meeting at which the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy, or (ii) more than 50% of the outstanding voting securities of the Fund. The term "voting securities" as used in this paragraph has the same meaning as in the 1940 Act. None of the Funds may: (1) Borrow money, if such borrowing is specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder. (2) Make loans to other persons if such loans are specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder. (3) Underwrite securities issued by other persons, except that all or any portion of the assets of the Fund may be invested in one or more investment companies, to the extent not prohibited by the 1940 Act, the rules and regulations thereunder, and exemptive orders granted under such Act, and except insofar as the Fund may technically be deemed an underwriter under the Securities Act in selling a security. (4) Purchase or sell real estate (including limited partnership interests but excluding securities secured by real estate or interests therein), interests in oil, gas or mineral leases, commodities or commodity contracts in the ordinary course of business (the foregoing shall not be deemed to preclude any Fund from purchasing or selling futures contracts or options thereon, and each Fund reserves the freedom of action to hold and to sell real estate acquired as a result of the ownership of securities by the Fund). (5) Issue any senior security (as that term is defined in the 1940 Act) if such issuance is specifically prohibited by the 1940 Act or the rules and regulations promulgated thereunder. (6) Purchase or sell the securities of any issuer, if, as a result of such purchase or sale, less than 25% of the assets of the Fund would be invested in the securities of issuers principally engaged in the business activities having the specific characteristics denoted by the Fund, provided that the Fund may invest without limit in short-term corporate and government bonds and notes and money market instruments for temporary defensive purposes. For purposes of restriction (1) above, covered mortgage dollar rolls and arrangements with respect to securities lending are not treated as borrowing. If a percentage or rating restriction on investment or utilization of assets set forth above or referred to in this Registration Statement is adhered to at the time an investment is made or assets are so utilized, a later change in percentage resulting from changes in the value of the securities or a later change in the rating of the securities held for the Fund will not be considered a violation of policy. 5. PERFORMANCE INFORMATION AND ADVERTISING Fund performance may be quoted in advertising, shareholder reports and other communications in terms of total rate of return. All performance information is historical and is not intended to indicate future performance. Total rates of return fluctuate in response to market conditions and other factors, and the value of a Fund's shares when redeemed may be worth more or less than their original cost. Each Fund may provide its period, annualized, cumulative and average annual "total rates of return". The "total rate of return" refers to the change in the value of an investment in the Fund over a stated period, reflects any change in net asset value per share and is compounded to include the value of any shares purchased with any dividends or capital gains declared during such period. Period total rates of return may be "annualized". An "annualized" total rate of return assumes that the period rate of return is generated over a one-year period. Average annual total return figures represent the average annual percentage change over the specified period. Cumulative total return figures are not annualized and represent the aggregate percentage or dollar value changes over a stated period of time. A total rate of return quotation for a Fund is calculated for any period by (a) dividing (i) the sum of the net asset value per share on the last day of the period and the net asset value per share on the last day of the period of shares purchasable with dividends and capital gains distributions declared during such period with respect to a share held at the beginning of such period and with respect to shares purchased with such dividends and capital gains distributions, by (ii) the public offering price per share on the first day of such period, and (b) subtracting 1 from the result. Any annualized total rate of return quotation is calculated by (x) adding 1 to the period total rate of return quotation calculated above, (y) raising such sum to a power which is equal to 365 divided by the number of days in such period, and (z) subtracting 1 from the result. Average annual total return is a measure of a Fund's performance over time. It is determined by taking a Fund's performance over a given period and expressing it as an average annual rate. The average annual total return quotation is computed in accordance with a standardized method prescribed by SEC rules. The average annual total return for a specific period is found by taking a hypothetical $1,000 initial investment in Fund shares on the first day of the period, reducing the amount to reflect the maximum sales charge, and computing the redeemable value of the investment at the end of the period. The redeemable value is then divided by the initial investment, and its quotient is taken to the Nth root (N representing the number of years in the period) and is subtracted from the result, which is then expressed as a percentage. The calculation assumes that all income and capital gains distributions have been reinvested in Fund shares at net asset value on the reinvestment dates during the period. Cumulative total return for a specific period is calculated by first taking a hypothetical initial investment in Fund shares on the first day of a period, deducting (as applicable) the maximum sales charge, and computing the "redeemable value" of that investment at the end of the period. The cumulative total return percentage is then determined by subtracting the initial investment from the redeemable value and dividing the remainder by the initial investment and expressing the result as a percentage. The calculation assumes that all income and capital gains distributions by each Fund have been reinvested at net asset value on the reinvestment dates during the period. Cumulative total return may also be shown as the increased dollar value of the hypothetical investment over the period. Each Fund may provide annualized "yield" quotations. The "yield" of a Fund refers to the income generated by an investment in the Fund over a 30-day or one-month period (which period is stated in any such advertisement or communication). This income is then annualized; that is, the amount of income generated by the investment over that period is assumed to be generated each month over a one year period and is shown as a percentage of the maximum public offering price on the last day of that period. A "yield" quotation, unlike a total rate of return quotation, does not reflect changes in net asset value. Any current yield quotation for a Fund consists of an annualized historical yield, carried at least to the nearest hundredth of one percent, based on a 30 calendar day or one month period and is calculated by (a) raising to the sixth power the sum of 1 plus the quotient obtained by dividing the Fund's net investment income earned during the period by the product of the average daily number of shares outstanding during the period that were entitled to receive dividends and the public offering price per share on the last day of the period, (b) subtracting 1 from the result, and (c) multiplying the result by 2. In computing total rates of return and yield quotations, all Fund expenses are included. However, fees that may be charged directly to a shareholder by other financial intermediaries are not included. Of course, any such fees will reduce the shareholder's net return on investment. The Funds are newly-offered and do not have performance information as of the date of this Statement of Additional Information. 6. DETERMINATION OF NET ASSET VALUE; VALUATION OF SECURITIES The net asset value per share of each Fund is determined for each class on each day during which the New York Stock Exchange (the "Exchange") is open for trading ("Business Day"). As of the date of this Statement of Additional Information, the Exchange is open for trading every weekday except for the following holidays (or the days on which they are observed): New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. This determination of net asset value is made once each day as of the close of regular trading on the Exchange by adding the market value of all securities and other assets attributable to a class, then subtracting the liabilities attributable to that class, and then dividing the result by the number of outstanding shares of the class. The net asset value per share is effective for orders received and accepted by the Transfer Agent prior to its calculation. For purposes of calculating net asset value per share, all assets and liabilities initially expressed in non-U.S. currencies will be converted into U.S. dollars at the prevailing market rates or if there are no market rates, at fair value, at the time of valuation. Equity securities are valued at the last sale price on the exchange on which they are primarily traded or on the NASDAQ system for unlisted national market issues, or at the last quoted bid price for securities in which there were no sales during the day or for unlisted securities not reported on the NASDAQ system. Securities listed on a foreign exchange are valued at the last quoted sale price available before the time when net assets are valued. Bonds and other fixed income securities (other than short-term obligations) are valued on the basis of valuations furnished by a pricing service, use of which has been approved by the Board of Trustees of the Trust. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. In certain instances, securities are valued on the basis of valuations received from a single dealer, which is usually an established market maker in the security. In these instances, additional dealer valuations are obtained monthly. Short-term obligations (maturing in 60 days or less) are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees of the Trust. Futures contracts are normally valued at the settlement price on the exchange on which they are traded. Securities for which there are no such valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees of the Trust. Trading in securities on most foreign exchanges and over-the-counter markets is normally completed before the close of regular trading on the Exchange. Trading may also take place on days on which the Exchange is closed and on which it is not possible to purchase or redeem shares of the Funds. If events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when a Fund's net asset value is calculated, such securities may be valued at fair value in accordance with procedures established by and under the general supervision of the Board of Trustees of the Trust. Interest income on long-term obligations held for a Fund is determined on the basis of interest accrued plus amortization of "original issue discount" (generally, the difference between issue price and stated redemption price at maturity) and premiums (generally, the excess of purchase price over stated redemption price at maturity). Interest income on short-term obligations is determined on the basis of interest accrued plus amortization of premiums. 7. ADDITIONAL INFORMATION ON THE PURCHASE AND SALE OF FUND SHARES Shares of the Funds are sold at net asset value without an initial sales charge. There are no fees or deferred sales charges when you sell your shares. Class A shares of the Funds may pay distribution and service fees of up to 0.25% of the average daily net assets represented by these shares. Class D shares are offered to a limited group of investors who participate in certain investment programs which charge a fee for participation. In addition, Class D shares are offered to certain tax-exempt employee benefit and retirement plans. For more information about these programs, please visit the ________ website at www.______.com, or call 1-800-_________. During periods of drastic economic or market changes or severe weather or other emergencies, shareholders may experience difficulties implementing a telephone or Internet exchange or redemption. In such an event, another method of instruction, if available, should be considered. The Funds will employ reasonable procedures to confirm that instructions communicated by telephone or Internet are genuine. These procedures may include recording of the telephone or Internet instructions and verification of a shareholder's identity by asking for the shareholder's name, address, telephone number, Social Security number, account number, or password identification number. If these or other reasonable procedures are not followed, the Funds or their transfer agent (the "Transfer Agent") may be liable for any losses to a shareholder due to unauthorized or fraudulent instructions. Otherwise, the shareholders will bear all risk of loss relating to a redemption or exchange by telephone or Internet. Systematic Withdrawal Plan. Each Fund's Systematic Withdrawal Plan permits you to have a specified dollar amount (minimum of $100 per withdrawal) automatically withdrawn from your account on a regular basis if you have at least $10,000 in your Fund account at the time of enrollment. You are limited to one withdrawal per month under the Plan. You may receive your withdrawals by check, or have the monies transferred directly into your bank account. Or you may direct that payments be made directly to a third party. To participate in the Plan, you must complete the appropriate forms provided by the Transfer Agent or, if you hold your shares through a Service Agent, by your Service Agent. Systematic Investment Plan. Shareholders may make additions to their accounts at any time by purchasing shares through a service known as the Systematic Investment Plan. Under the Systematic Investment Plan, the Transfer Agent is authorized through preauthorized transfers of at least $25 on a monthly basis or at least $50 on a quarterly basis to charge the shareholder's account held with a bank or other financial institution on a monthly or quarterly basis as indicated by the shareholder, to provide for systematic additions to the shareholder's Fund account. A shareholder who has insufficient funds to complete the transfer will be charged a fee of up to $25 by the Transfer Agent. The Systematic Investment Plan also authorizes the Funds to apply cash held in the shareholder's ________ brokerage account to make additions to the account. Additional information is available from the Fund , through the ________ website (www.______.com), or by calling 1-800-_________. Subject to compliance with applicable regulations, the Trust has reserved the right to pay the redemption price of shares of the Funds either totally or partially, by a distribution in kind of securities (instead of cash). The securities so distributed would be valued at the same amount as that assigned to them in calculating the net asset value for the shares being sold. If a holder of shares received a distribution in kind, such holder could incur brokerage or other charges in converting the securities to cash. The Trust may suspend the right of redemption or postpone the date of payment for shares of a Fund more than seven days during any period when (a) trading in the markets the Fund normally utilizes is restricted, or an emergency, as defined by the rules and regulations of the SEC, exists making disposal of the Fund's investments or determination of its net asset value not reasonably practicable; (b) the New York Stock Exchange is closed (other than customary weekend and holiday closings); or (c) the SEC has by order permitted such suspension. As described in the Prospectus, the Funds provide you with alternative ways of purchasing shares based upon your individual investment needs. There are no conversion, preemptive or other subscription rights. Investors may be able to invest in the Funds under one of several tax-sheltered plans. Such plans include IRAs, Keogh or Corporate Profit-Sharing and Money-Purchase Plans, 403(b) Custodian Accounts, and certain other qualified pension and profit-sharing plans. Investors should consult with the Transfer Agent and their tax and retirement advisers. ADDITIONAL DEALER CONCESSIONS From time to time, the Funds' Distributor or SSB Citi, at its expense, may provide additional commissions, compensation or promotional incentives ("concessions") to dealers that sell or arrange for the sale of shares of the Funds. Such concessions provided by the Funds' Distributor or SSB Citi may include financial assistance to dealers in connection with pre-approved conferences or seminars, sales or training programs for invited registered representatives and other employees, payment for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for the public, advertising and sales campaigns regarding the Funds, and/or other dealer-sponsored events. From time to time, the Funds' Distributor or SSB Citi may make expense reimbursements for special training of a dealer's registered representatives and other employees in group meetings or to help pay the expenses of sales contests. Other concessions may be offered to the extent not prohibited by state laws or any self-regulatory agency, such as the NASD. 8. MANAGEMENT Each Fund is supervised by the Board of Trustees of the Trust. In each case, a majority of the Trustees are not affiliated with SSB Citi. The Trustees and officers of the Trust and their principal occupations during the past five years are set forth below. Their titles may have varied during that period. Asterisks indicate that those Trustees and officers are "interested persons" (as defined in the 1940 Act) of the Funds. Unless otherwise indicated below, the address of each Trustee and officer of the Trust is 21 Milk Street, Boston, Massachusetts. TRUSTEES OF THE TRUST PHILIP W. COOLIDGE* (age 49) -- President of the Trust; Chief Executive Officer and President, Signature Financial Group, Inc. and CFBDS. RILEY C. GILLEY (age 74) -- Vice President and General Counsel, Corporate Property Investors (November 1988 to December 1991); Partner, Breed, Abbott & Morgan (Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard North, Naples, Florida. DIANA R. HARRINGTON (age 60) -- Professor, Babson College (since September 1993); Trustee, the Highland Family of Funds (March 1997 to March 1998). Her address is 120 Goulding Street, Holliston, Massachusetts. SUSAN B. KERLEY (age 49) -- President, Global Research Associates, Inc. (Investment Research) (since September 1990); Trustee, Mainstay Institutional Funds (since December 1990). Her address is P.O. Box 9572, New Haven, Connecticut. HEATH B. MCLENDON* (age 67) - Chairman, President, and Chief Executive Officer of SSB Citi (since March 1996); Managing Director of Salomon Smith Barney (since August 1993); and Chairman, President and Chief Executive Officer of fifty-eight investment companies sponsored by Salomon Smith Barney. His address is 388 Greenwich Street, New York, New York. C. OSCAR MORONG, JR. (age 65) - Chairman of the Board of the Trust; Managing Director, Morong Capital Management (since February 1993); Director, Indonesia Fund (1990 to 1999); Director, MAS Funds (since 1993). His address is 1385 Outlook Drive West, Mountainside, New Jersey. E. KIRBY WARREN (age 66) -- Professor of Management, Graduate School of Business, Columbia University (1987 to December 1999). His address is Laurel Road, P.O. Box 146, Tuxedo Park, New York. OFFICERS OF THE TRUST PHILIP W. COOLIDGE* (age 49) -- President of the Trust; Chief Executive Officer and President, Signature Financial Group, Inc. and CFBDS. ROBERT I. FRENKEL, ESQ.* (age ___) -- Secretary of the Trust, ___________________. THOMAS C. MANDIA, ESQ.* (age 38) -- Assistant Secretary of the Trust, ______________. CHRISTINE D. DORSEY* (age 29) -- Assistant Secretary and Assistant Treasurer of the Trust; Vice President, Signature Financial Group, Inc. (since January 1996); Paralegal and Compliance Officer, various financial companies (July 1992 to January 1996). LINWOOD C. DOWNS* (age 39) -- Treasurer of the Trust; Chief Financial Officer and Senior Vice President, Signature Financial Group; Treasurer, CFBDS. TAMIE EBANKS-CUNNINGHAM* (age 27) -- Assistant Secretary of the Trust; Office Manager, Signature Financial Group (Cayman) Ltd. (since April 1995); Administrator, Cayman Islands Primary School (prior to April 1995). Her address is P.O. Box 2494, Elizabethan Square, George Town, Grand Cayman, Cayman Islands, B.W.I. SUSAN JAKUBOSKI* (age 36) -- Vice President, Assistant Secretary and Assistant Treasurer of the Trust; Vice President, Signature Financial Group (Cayman) Ltd. MOLLY S. MUGLER* (age 48) -- Assistant Secretary and Assistant Treasurer of the Trust; Vice President, Signature Financial Group, Inc.; Assistant Secretary, CFBDS. JULIE J. WYETZNER* (age 41) -- Vice President, Assistant Secretary and Assistant Treasurer of the Trust; Vice President, Signature Financial Group, Inc. The Trustees and officers of the Trust also hold comparable positions with certain other funds for which CFBDS, Signature Financial Group, Inc. or their affiliates serve as the distributor or administrator. The Trustees of the Trust received the following remuneration from the sources indicated below during its fiscal year ended October 31, 1999:
- --------------------------- -------------- -------------- --------------- -------------- Pension or Total Retirement Compensation Benefits Estimated from Trust Aggregate Accrued as Annual and Fund Compensation Part of Fund Benefits Upon Complex Paid Trustee from Trust(1) Expenses Retirement to Trustees(1) - --------------------------- -------------- -------------- --------------- -------------- Philip W. Coolidge None None None None - --------------------------- -------------- -------------- --------------- -------------- Riley C. Gilley $2,007 None None $65,250 - --------------------------- -------------- -------------- --------------- -------------- Diana R. Harrington $2,600 None None $71,250 - --------------------------- -------------- -------------- --------------- -------------- Susan B. Kerley $2,562 None None $69,750 - --------------------------- -------------- -------------- --------------- -------------- Heath B. McLendon None None None None - --------------------------- -------------- -------------- --------------- -------------- C. Oscar Morong, Jr. $3,053 None None $92,000 - --------------------------- -------------- -------------- --------------- -------------- E. Kirby Warren $2,293 None None $62,750 - --------------------------- -------------- -------------- --------------- --------------
(1) Messrs. Coolidge, Gilley, McLendon, Morong and Warren and Mses. Harrington and Kerley are trustees of 48, 35, 23, 39, 39, 30 and 30 funds, respectively, of the family of open-end registered investment companies advised or managed by Citibank, N.A., an affiliate of the Manager. As of the date of this Statement of Additional Information, there are no shareholders of the Funds. The Declaration of Trust of the Trust provides that the Trust will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust unless, as to liability to the Trust or its shareholders, it is finally adjudicated that they engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices, or unless with respect to any other matter it is finally adjudicated that they did not act in good faith in the reasonable belief that their actions were in the best interests of the Trust. In the case of settlement, such indemnification will not be provided unless it has been determined by a court or other body approving the settlement or other disposition, or by a reasonable determination, based upon a review of readily available facts, by vote of a majority of disinterested Trustees of the Trust, or in a written opinion of independent counsel, that such officers or Trustees have not engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of their duties. MANAGER SSB Citi is responsible for the overall management of the Funds and provides certain administrative services to the Funds pursuant to separate management agreements (the "Management Agreements"). SSB Citi is a wholly owned subsidiary of Salomon Smith Barney Holdings Inc., which in turn, is a wholly-owned subsidiary of Citigroup Inc. Unless otherwise terminated, each Management Agreement with the Trust will continue in effect indefinitely as long as after the first two years such continuance is specifically approved at least annually by the Board of Trustees of the Trust or by a vote of a majority of the outstanding voting securities of the applicable Fund, and, in either case, by a majority of the Trustees of the Trust who are not parties to the Management Agreement or interested persons of any such party, at a meeting called for the purpose of voting on the Management Agreement. SSB Citi provides the Funds with general office facilities and supervises the overall administration of the Funds, including, among other responsibilities, the negotiation of contracts and fees with, and the monitoring of performance and billings of, the Funds' independent contractors and agents; the preparation and filing of all documents required for compliance by the Funds with applicable laws and regulations; and arranging for the maintenance of books and records of the Funds. Trustees, officers, and investors in the Trust are or may be or may become interested in SSB Citi, as directors, officers, employees, or otherwise and directors, officers and employees of SSB Citi are or may become similarly interested in the Trust. Each Management Agreement provides that SSB Citi may render services to others. Each Management Agreement is terminable without penalty on not more than 60 days' nor less than 30 days' written notice by the Trust, when authorized either by a vote of a majority of the outstanding voting securities of the applicable Fund or by a vote of a majority of the Board of Trustees of the Trust, or by SSB Citi on not more than 60 days' nor less than 30 days' written notice, and will automatically terminate in the event of its assignment. Each Management Agreement with the Trust provides that neither SSB Citi nor its personnel shall be liable for any error of judgment or mistake of law or for any omission in the administration or management of the Trust or the performance of its duties under the Management Agreement, except for willful misfeasance, bad faith or gross negligence or reckless disregard of its or their obligations and duties under the Management Agreement with the Trust. The Funds pay the following aggregate management fees, which are accrued daily and paid monthly and are based on each Fund's average daily net assets on an annualized basis for the Fund's then-current fiscal year: - ------------------------------------- ----------------------------------- Citi Financial Services Portfolio 0.80% - ------------------------------------- ----------------------------------- Citi Health Sciences Portfolio 0.80% - ------------------------------------- ----------------------------------- Citi Technology Portfolio 0.95% - ------------------------------------- ----------------------------------- Pursuant to a Services Agreement with SSB Citi, CFBDS performs such sub-administrative duties for the Trust as from time to time are agreed upon by SSB Citi and CFBDS. For performing such sub-administrative services, CFBDS receives compensation as from time to time is agreed upon by SSB Citi, not in excess of the amount paid to SSB Citi for its services under the Management Agreements with the Trust. All such compensation to CFBDS is paid by SSB Citi. DISTRIBUTOR CFBDS, 21 Milk Street, Boston, MA 02109, serves as the Distributor of each Fund's shares pursuant to Distribution Agreements with the Trust with respect to each class of shares of the Funds (the "Distribution Agreements"). [In those states where CFBDS is not a registered broker-dealer, shares of the Funds are sold through Signature Broker-Dealer Services, Inc., as dealer.] Under the Distribution Agreements, the Distributor is obligated to use its best efforts to sell shares of the Funds. Either party may terminate the Distribution Agreements on not less than thirty days' nor more than sixty days' written notice to the other party. Unless otherwise terminated the Distribution Agreements will continue from year to year upon annual approval by the Trust's Board of Trustees and by the vote of a majority of the Board of Trustees of the Trust who are not parties to the Distribution Agreement or interested persons of any party to the Distribution Agreement, cast in person at a meeting called for the purpose of voting on such approval. The Distribution Agreements will terminate in the event of their assignment, as defined in the 1940 Act. The Class A shares of the Funds have adopted a Service Plan (the "Service Plan") in accordance with Rule 12b-1 under the 1940 Act. Under the Plan, the Class A shares of a Fund may pay the Distributor, a broker-dealer or financial institution that has entered into a service agreement with the Distributor concerning the Class A shares of the Funds or others a monthly distribution and service fee at an annual rate not to exceed 0.25% of the average daily net assets represented by Class A shares of a Fund. The Service Plan permits the Funds to pay fees to the Distributor, Service Agents and others as compensation for their services, not as reimbursement for specific expenses incurred. Thus, even if their expenses exceed the fees provided for by the Plan, the Fund will not be obligated to pay more than those fees and, if their expenses are less than the fees paid to them, they will realize a profit. Class A shares of each Fund will pay the fees to the Distributor, and others until the Service Plan or Distribution Agreement is terminated or not renewed. In that event, the Distributor's or other recipient's expenses in excess of fees received or accrued through the termination date will be the Distributor's or other recipient's sole responsibility and not obligations of the Fund. In their annual consideration of the continuation of the Service Plan for the Class A shares of each Fund, the Trustees will review the Service Plan and the expenses for each Fund separately. The Service Plan continues in effect if such continuance is specifically approved at least annually by a vote of both a majority of the Trust's Trustees and a majority of the Trustees who are not "interested persons" of the Trust and who have no direct or indirect financial interest in the operation of the Service Plan or in any agreement related to the Plan (for purposes of this paragraph "Qualified Trustees"). The Service Plan requires that the Trust and the Distributor provide to the Board of Trustees, and the Board of Trustees review, at least quarterly, a written report of the amounts expended (and the purposes therefor) under the Service Plan. The Service Plan further provides that the selection and nomination of the Qualified Trustees is committed to the discretion of such Qualified Trustees then in office. The Service Plan may be terminated with respect to the Class A shares of any Fund at any time by a vote of a majority of the Trust's Qualified Trustees or by a vote of a majority of the outstanding voting securities representing the Class A shares of that Fund. The Service Plan may not be amended to increase materially the amount of a Fund's permitted expenses thereunder without the approval of a majority of the outstanding securities representing the Class A shares of that Fund and may not be materially amended in any case without a vote of a majority of both the Trustees and Qualified Trustees. The Distributor will preserve copies of any plan, agreement or report made pursuant to the Service Plan for a period of not less than six years, and for the first two years the Distributor will preserve such copies in an easily accessible place. CODE OF ETHICS The Trust, the Manager and the Distributor each have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act. Each code of ethics permits personnel subject to such code to invest in securities, including securities that may be purchased or held by a Fund. However, the codes of ethics contain provisions and requirements designed to identify and address certain conflicts of interest between personal investment activities and the interests of the Funds. Of course, there can be no assurance that the codes of ethics will be effective in identifying and addressing all conflicts of interest relating to personal securities transactions. EXPENSES In addition to amounts payable under the Management Agreements and the Service Plan, each Fund is responsible for its own expenses, including, among other things, the costs of securities transactions, the compensation of Trustees that are not affiliated with SSB Citi or the Fund's distributor, government fees, taxes, accounting and legal fees, expenses of communication with shareholders, interest expense, and insurance premiums. The Prospectus for the Funds contains more information about the expenses of each Fund. TRANSFER AGENT AND CUSTODIAN The Trust has entered into a Transfer Agency and Service Agreement with Citi Fiduciary Trust Company ("Citi Fiduciary") pursuant to which Citi Fiduciary acts as transfer agent for each Fund. Under the Transfer Agency and Service Agreement, Citi Fiduciary maintains the shareholder account records for the Funds, handles certain communications between shareholders and the Funds and distributes dividends and distributions payable by the Funds. For these services, Citi Fiduciary receives a monthly fee computed on the basis of the number of shareholder accounts it maintains for a Fund during the month and is reimbursed for out-of-pocket expenses. The Trust also has entered into a Custodian Agreement, a Fund Accounting Agreement, and a Sub-Transfer Agency Agreement with State Street Bank and Trust Company ("State Street"), pursuant to which custodial, fund accounting, and sub-transfer agency services, respectively, are provided for each Fund. Among other things, State Street calculates the daily net asset value for the Funds. Securities may be held by a sub-custodian bank approved by the Trustees. The principal business address of Citi Fiduciary is 388 Greenwich Street, New York, New York 10013. The principal business address of State Street is 225 Franklin Street, Boston, Massachusetts 02110. AUDITORS _________, independent auditors, _______________, have been selected to serve as auditors of the Funds and to render opinions on each Fund's financial statements. COUNSEL Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110, is counsel for each Fund. 9. PORTFOLIO TRANSACTIONS SSB Citi trades securities for a Fund if it believes that a transaction net of costs (including custodian charges) will help achieve the Fund's investment objective. Changes in the Fund's investments are made without regard to the length of time a security has been held, or whether a sale would result in the recognition of a profit or loss. Therefore, the rate of turnover is not a limiting factor when changes are appropriate. Specific decisions to purchase or sell securities for each Fund are made by one or more portfolio managers who are employees of SSB Citi and who are appointed and supervised by senior officers of SSB Citi. The portfolio managers may serve other clients in a similar capacity. In connection with the selection of brokers or dealers and the placing of portfolio securities transactions, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) to a Fund and/or the other accounts over which SSB Citi or its affiliates exercise investment discretion. SSB Citi is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if SSB Citi determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which SSB Citi and its affiliates have with respect to accounts over which they exercise investment discretion. The management fee that each Fund pays to SSB Citi will not be reduced as a consequence of SSB Citi's receipt of brokerage and research services. While such services are not expected to reduce the expenses of SSB Citi, it would, through the use of the services, avoid the additional expenses which would be incurred if it should attempt to develop comparable information through its own staff or obtain such services independently. It is possible that certain of the research services received primarily will benefit one or more other accounts for which SSB Citi exercises investment discretion. Conversely, a Fund may be the primary beneficiary of services received as a result of portfolio transactions effected for other accounts. In certain instances there may be securities that are suitable as an investment for a Fund as well as for one or more of SSB Citi's other clients. Investment decisions for each Fund and for SSB Citi's other clients are made with a view to achieving their respective investment objectives. It may develop that a particular security is bought or sold for only one client even though it might be held by, or bought or sold for, other clients. Likewise, a particular security may be bought for one or more clients when one or more clients are selling the same security. Some simultaneous transactions are inevitable when several clients receive investment advice from the same investment adviser, particularly when the same security is suitable for the investment objectives of more than one client. When two or more clients are simultaneously engaged in the purchase or sale of the same security, the securities are allocated among clients in a manner believed to be equitable to each. It is recognized that in some cases this system could adversely affect the price of or the size of the position obtainable in a security for a Fund. When purchases or sales of the same security for a Fund and for other portfolios managed by SSB Citi occur contemporaneously, the purchase or sale orders may be aggregated in order to obtain any price advantages available to large volume purchases or sales. Because the Funds are newly-offered, they have not paid brokerage commissions as of the date of this Statement of Additional Information. 10. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES The Trust's Declaration of Trust permits the Trust to issue an unlimited number of full and fractional shares of beneficial interest (without par value) of each series, to divide or combine the shares of any series into a greater or lesser number of shares of that series without thereby changing the proportionate beneficial interests in that series and to divide such shares into classes. The Trust has reserved the right to create and issue additional series and classes of shares. Shares of each series participate equally in the earnings, dividends and distribution of net assets of the particular series upon liquidation or dissolution (except for any differences between classes of shares of a series). Shares of each series are entitled to vote separately to approve management agreements or changes in investment policy, and shares of a class are entitled to vote separately to approve any distribution or service arrangements relating to that class, but shares of all series may vote together in the election or selection of Trustees and accountants for the Trust. In matters affecting only a particular Fund, only shares of that particular Fund are entitled to vote. Shareholders are entitled to one vote for each share held on matters on which they are entitled to vote. Shareholders in the Trust do not have cumulative voting rights, and shareholders owning more than 50% of the outstanding shares of the Trust may elect all of the Trustees of the Trust if they choose to do so and in such event the other shareholders in the Trust would not be able to elect any Trustee. The Trust is not required to hold, and has no present intention of holding, annual meetings of shareholders but the Trust will hold special meetings of shareholders when in the judgment of the Trustees it is necessary or desirable to submit matters for a shareholder vote. Shareholders have, under certain circumstances (e.g., upon the application and submission of certain specified documents to the Trustees by a specified number of shareholders), the right to communicate with other shareholders in connection with requesting a meeting of shareholders for the purpose of removing one or more Trustees. Shareholders also have under certain circumstances the right to remove one or more Trustees without a meeting by a declaration in writing by a specified number of shareholders. No material amendment may be made to the Trust's Declaration of Trust without the affirmative vote of the holders of a majority of the outstanding shares of each series affected by the amendment. (See "Investment Restrictions.") The Trust may enter into a merger or consolidation, or sell all or substantially all of its assets (or all or substantially all of the assets belonging to any series of the Trust), if approved by a vote of the holders of two-thirds of the Trust's outstanding shares, voting as a single class, or of the affected series of the Trust, as the case may be, except that if the Trustees of the Trust recommend such sale of assets, merger or consolidation, the approval by vote of the holders of a majority of the Trust's or the affected series outstanding shares would be sufficient. The Trust or any series of the Trust, as the case may be, may be terminated (i) by a vote of a majority of the outstanding voting securities of the Trust or the affected series or (ii) by the Trustees by written notice to the shareholders of the Trust or the affected series. If not so terminated, the Trust will continue indefinitely. The Funds' Transfer Agent maintains a share register for shareholders of record. Share certificates are not issued. The Trust is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders of such a business trust may, under certain circumstances, be held personally liable as partners for its obligations and liabilities. However, the Declaration of Trust of the Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust and provides for indemnification and reimbursement of expenses out of Trust property for any shareholder held personally liable for the obligations of the Trust. The Declaration of Trust of the Trust also provides that the Trust may maintain appropriate insurance (e.g., fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations. The Trust's Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust and that the Trustees will not be liable for any action or failure to act, but nothing in the Declaration of Trust of the Trust protects a Trustee against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. 11. TAX MATTERS TAXATION OF THE FUNDS FEDERAL TAXES. Each Fund is treated as a separate entity for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"). Each Fund has elected to be treated, and intends to qualify each year, as a "regulated investment company" under Subchapter M of the Code by meeting all applicable requirements of Subchapter M, including requirements as to the nature of the Fund's gross income, the amount of Fund distributions, and the composition of the Fund's portfolio assets. Provided all such requirements are met, no U.S. federal income or excise taxes generally will be required to be paid by the Funds. If a Fund should fail to qualify as a "regulated investment company" for any year, the Fund would incur a regular corporate federal income tax upon its taxable income and Fund distributions would generally be taxable as ordinary income to shareholders. FOREIGN TAXES. Investment income and gains received by a Fund from non-U.S. securities may be subject to non-U.S. taxes. The U.S. has entered into tax treaties with many other countries that may entitle a Fund to a reduced rate of tax or an exemption from tax on such income. Each Fund intends to qualify for treaty reduced rates where applicable. It is not possible, however, to determine a Fund's effective rate of non-U.S. tax in advance since the amount of the Fund's assets to be invested within various countries is not known. Shareholders will not be able to claim any deduction or credit for any part of the foreign taxes paid by a Fund. If a Fund holds more than 50% of its assets in foreign stock and securities at the close of its taxable year, the Fund may elect to "pass through" to the Fund's shareholders foreign income taxes paid. If the Fund so elects, shareholders will be required to treat their pro rata portion of the foreign income taxes paid by the Fund as part of the amounts distributed to them by the Fund and thus includable in their gross income for federal income tax purposes. Shareholders who itemize deductions would then be allowed to claim a deduction or credit (but not both) on their federal income tax returns for such amounts, subject to certain limitations. Shareholders who do not itemize deductions would (subject to such limitations) be able to claim a credit but not a deduction. No deduction for such amounts will be permitted to individuals in computing their alternative minimum tax liability. If a Fund does not qualify or elect to "pass through" to the Fund's shareholders foreign income taxes paid by it, shareholders will not be able to claim any deduction or credit for any part of the foreign taxes paid by the Fund. TAXATION OF SHAREHOLDERS TAXATION OF DISTRIBUTIONS. Shareholders of a Fund will generally have to pay federal income taxes and any state or local taxes on the dividends and capital gain distributions they receive from the Fund. Dividends from ordinary income and any distributions from net short-term capital gains are taxable to shareholders as ordinary income for federal income tax purposes, whether the distributions are made in cash or in additional shares. Distributions of net capital gains (i.e., the excess of net long-term capital gains over net short-term capital losses), whether made in cash or in additional shares, are taxable to shareholders as long-term capital gains without regard to the length of time the shareholders have held their shares. Any Fund dividend that is declared in October, November, or December of any calendar year, that is payable to shareholders of record in such a month, and that is paid the following January, will be treated as if received by the shareholders on December 31 of the year in which the dividend is declared. Any Fund distribution will have the effect of reducing the per share net asset value of shares in the Fund by the amount of the distribution. Shareholders purchasing shares shortly before the record date of any distribution may thus pay the full price for the shares and then effectively receive a portion of the purchase price back as a taxable distribution. DIVIDENDS-RECEIVED DEDUCTION. The portion of each Fund's ordinary income dividends attributable to dividends received in respect of equity securities of U.S. issuers is normally eligible for the dividends received deduction for corporations subject to U.S. federal income taxes. Availability of the deduction for particular shareholders is subject to certain limitations, and deducted amounts may be subject to the alternative minimum tax and result in certain basis adjustments. TAX TREATMENT FOR NON-U.S. PERSONS. The Funds will withhold tax payments at a rate of 30% (or any lower applicable tax treaty rate) on taxable dividends and other payments subject to withholding taxes that are made to persons who are not citizens or residents of the United States. Distributions received from the Funds by non-U.S. persons also may be subject to tax under the laws of their own jurisdiction. BACKUP WITHHOLDING. The account application asks each new shareholder to certify that the shareholder's Social Security or taxpayer identification number is correct and that the shareholder is not subject to 31% backup withholding for failing to report income to the IRS. The Funds may be required to withhold (and pay over to the IRS for the shareholder's credit) 31% of certain distributions and redemption proceeds paid to shareholders who fail to provide this information or who otherwise violate IRS regulations. DISPOSITION OF SHARES. In general, any gain or loss realized upon a taxable disposition of shares of a Fund by a shareholder that holds such shares as a capital asset will be treated as a long-term capital gain or loss if the shares have been held for more than twelve months and otherwise as a short-term capital gain or loss. However, any loss realized upon a disposition of shares in a Fund held for six months or less will be treated as a long-term capital loss to the extent of any distributions of net capital gain made with respect to those shares. Any loss realized upon a disposition of shares may also be disallowed under rules relating to wash sales. EFFECTS OF CERTAIN INVESTMENTS AND TRANSACTIONS OPTIONS, ETC. Each Fund's transactions in options, futures and forward contracts will be subject to special tax rules that may affect the amount, timing and character of Fund income and distributions to shareholders. For example, certain positions held by each Fund on the last business day of each taxable year will be marked to market (i.e., treated as if closed out) on that day, and any gain or loss associated with the positions will be treated as 60% long-term and 40% short-term capital gain or loss. Certain positions held by a Fund that substantially diminish its risk of loss with respect to other positions in its portfolio may constitute "straddles," and may be subject to special tax rules that would cause deferral of Fund losses, adjustments in the holding periods of Fund securities, and conversion of short-term into long-term capital losses. Certain tax elections exist for straddles that may alter the effects of these rules. Each Fund intends to limit its activities in options, futures and forward contracts to the extent necessary to meet the requirements of Subchapter M of the Code. FOREIGN INVESTMENTS. The Funds may make non-U.S. investments. Special tax considerations apply with respect to such investments. Foreign exchange gains and losses realized by a Fund will generally be treated as ordinary income and loss. Use of non-U.S. currencies for non-hedging purposes and investment by a Fund in certain "passive foreign investment companies" may have to be limited in order to avoid a tax on a Fund. A Fund may elect to mark to market any investments in "passive foreign investment companies" on the last day of each taxable year. This election may cause the Fund to recognize ordinary income prior to the receipt of cash payments with respect to those investments; in order to distribute this income and avoid a tax on the Fund, the Fund may be required to liquidate portfolio securities that it might otherwise have continued to hold potentially resulting in additional taxable gain or loss to the Fund. 12. FINANCIAL STATEMENTS The Funds are newly-offered and have not issued financial statements as of the date of this Statement of Additional Information. PART C
Item 23. Exhibits. * a(1) Amended and Restated Declaration of Trust of the Registrant **, ***,*******, a(2) Amendments to the Amended and Restated Declaration of ******** Trust of the Registrant ********* and herewith a(3) Forms of Amendments to the Amended and Restated Declaration of Trust of the Registrant *** b(1) Amended and Restated By-Laws of the Registrant *** b(2) Amendments to the Amended and Restated By-Laws of the Registrant ********* b(3) Form of Amendment to the Amended and Restated By-Laws of the Registrant d Form of Management Agreement between the Registrant and SSB Citi Fund Management LLC ("SSB Citi"), as manager to Citi Financial Services Portfolio, Citi Health Sciences Portfolio, and Citi Technology Portfolio (collectively, the "Funds") e(1) Form of Distribution Agreement between the Registrant and CFBDS, Inc. (the "Distributor"), as distributor with respect to the Class A shares of the Funds e(2) Form of Distribution Agreement between the Registrant and Distributor with respect to the Class D shares of the Funds *** g(1) Custodian Contract between the Registrant and State Street Bank and Trust Company ("State Street"), as custodian g(2) Form of Letter Agreement adding the Funds to the Custodian Contract between the Registrant and State Street h(1) Transfer Agency Agreement with Citi Fiduciary Trust Company, as transfer agent h(2) Form of Letter Agreement adding the Funds to the Transfer Agency and Servicing Agreement with Citi Fiduciary Trust Company, as transfer agent i Opinion and consent of counsel m Form of Service Plan of the Registrant with respect to the Class A shares of the Funds ***** o Multiple Class Plan of the Registrant ********* p(1) Code of Ethics for the Registrant and SSB Citi ********* p(2) Code of Ethics for Distributor **** and q(1) Powers of Attorney for the Registrant ******
* Incorporated herein by reference to Post-Effective Amendment No. 20 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on December 31, 1996. ** Incorporated herein by reference to Post-Effective Amendment No. 25 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on April 18, 1997. *** Incorporated herein by reference to Post-Effective Amendment No. 26 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on December 30, 1997. **** Incorporated herein by reference to Post-Effective Amendment No. 27 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on February 24, 1998. ***** Incorporated herein by reference to Post-Effective Amendment No. 31 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on February 12, 1999. ****** Incorporated herein by reference to Post-Effective Amendment No. 35 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on April 16, 1999. ******* Incorporated herein by reference to Post-Effective Amendment No. 37 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on December 29, 1999. ******** Incorporated herein by reference to Post-Effective Amendment No. 38 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on February 28, 2000. ********* Incorporated herein by reference to Post-Effective Amendment No. 39 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on June 2, 2000. Item 24. Persons Controlled by or under Common Control with Registrant. Not applicable. Item 25. Indemnification. Reference is hereby made to (a) Article V of the Registrant's Declaration of Trust, filed as an Exhibit to Post-Effective Amendment No. 20 to its Registration Statement on Form N-1A; (b) Section 6 of the Distribution Agreements between the Registrant and Distributor, filed as an Exhibit hereto; and (c) the undertaking of the Registrant regarding indemnification set forth in its Registration Statement on Form N-1A. The Trustees and officers of the Registrant and the personnel of the Registrant's administrator are insured under an errors and omissions liability insurance policy. The Registrant and its officers are also insured under the fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940. Item 26. Business and Other Connections of Investment Adviser. Manager - SSB Citi Fund Management LLC (successor to SSBC Fund Management Inc.) ("SSB Citi") (formerly known as Mutual Management Corp.) SSB Citi was incorporated in December 1968 under the laws of the State of Delaware and converted to a Delaware limited liability company in 1999. SSB Citi is a wholly owned subsidiary of Salomon Smith Barney Holdings Inc., formerly known as Smith Barney Holdings Inc., which in turn is a wholly owned subsidiary of Citigroup Inc. ("Citigroup"). SSB Citi is registered as an investment adviser under the Investment Advisers Act of 1940 (the "1940 Act"). The list required by this Item 26 of officers and directors of SSB Citi together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated by reference to Schedules A and D of Form ADV filed by SSB Citi pursuant to the Investment Advisers Act of 1940 Act (the "Advisers Act") (SEC File No. 801-8314). Item 27. Principal Underwriters. (a) CFBDS, the Registrant's distributor, is also the distributor for CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM) International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves, CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves, CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM) Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM) Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves, CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free Reserves, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Short-Term U.S. Government Income Portfolio, CitiFunds(SM) New York Tax Free Income Portfolio, CitiFunds(SM) National Tax Free Income Portfolio, CitiFunds(SM) California Tax Free Income Portfolio, CitiFunds(SM) Small Cap Value Portfolio, CitiFunds(SM) Large Cap Growth Portfolio, CitiFunds(SM) Small Cap Growth Portfolio, CitiFunds(SM) Balanced Portfolio, CitiSelect(R) Folio 100 Income, CitiSelect(R) Folio 200 Conservative, CitiSelect(R) Folio 300 Balanced, CitiSelect(R) Folio 400 Growth, CitiSelect(R) Folio 500 Growth Plus, CitiSelect(R) VIP Folio 200 Conservative, CitiSelect(R) VIP Folio 300 Balanced, CitiSelect(R) VIP Folio 400 Growth, CitiSelect(R) VIP Folio 500 Growth Plus and CitiFunds(SM) Small Cap Growth VIP Portfolio. CFBDS is also the placement agent for Large Cap Growth Portfolio, Small Cap Growth Portfolio, High Yield Portfolio, U.S. Fixed Income Portfolio, Government Income Portfolio, International Equity Portfolio, Large Cap Value Portfolio, Small Cap Value Portfolio, International Portfolio, Foreign Bond Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio. CFBDS also serves as the distributor for the following funds: The Travelers Fund U for Variable Annuities, The Travelers Fund VA for Variable Annuities, The Travelers Fund BD for Variable Annuities, The Travelers Fund BD II for Variable Annuities, The Travelers Fund BD III for Variable Annuities, The Travelers Fund BD IV for Variable Annuities, The Travelers Fund ABD for Variable Annuities, The Travelers Fund ABD II for Variable Annuities, The Travelers Separate Account PF for Variable Annuities, The Travelers Separate Account PF II for Variable Annuities, The Travelers Separate Account QP for Variable Annuities, The Travelers Separate Account TM for Variable Annuities, The Travelers Separate Account TM II for Variable Annuities, The Travelers Separate Account Five for Variable Annuities, The Travelers Separate Account Six for Variable Annuities, The Travelers Separate Account Seven for Variable Annuities, The Travelers Separate Account Eight for Variable Annuities, The Travelers Fund UL for Variable Annuities, The Travelers Fund UL II for Variable Annuities, The Travelers Variable Life Insurance Separate Account One, The Travelers Variable Life Insurance Separate Account Two, The Travelers Variable Life Insurance Separate Account Three, The Travelers Variable Life Insurance Separate Account Four, The Travelers Separate Account MGA, The Travelers Separate Account MGA II, The Travelers Growth and Income Stock Account for Variable Annuities, The Travelers Quality Bond Account for Variable Annuities, The Travelers Money Market Account for Variable Annuities, The Travelers Timed Growth and Income Stock Account for Variable Annuities, The Travelers Timed Short-Term Bond Account for Variable Annuities, The Travelers Timed Aggressive Stock Account for Variable Annuities, The Travelers Timed Bond Account for Variable Annuities, Small Cap Fund, Government Fund, Growth Fund, Growth and Income Fund, International Equity Fund, Mid Cap Fund, Municipal Bond Fund, Select Small Cap Portfolio, Select Government Portfolio, Select Growth Portfolio, Select Growth and Income Portfolio, Select Mid Cap Portfolio, Balanced Investments, Emerging Markets Equity Investments, Government Money Investments, High Yield Investments, Intermediate Fixed Income Investments, International Equity Investments, International Fixed Income Investments, Large Capitalization Growth Investments, Large Capitalization Value Equity Investments, Long- Term Bond Investments, Mortgage Backed Investments, Municipal Bond Investments, S&P 500 Index Investments, Small Capitalization Growth Investments, Small Capitalization Value Equity Investments, Multi-Sector Fixed Income Investments, Multi-Strategy Market Neutral Investments, Appreciation Portfolio, Diversified Strategic Income Portfolio, Emerging Growth Portfolio, Equity Income Portfolio, Equity Index Portfolio, Growth & Income Portfolio, Intermediate High Grade Portfolio, International Equity Portfolio, Money Market Portfolio, Total Return Portfolio, Smith Barney Adjustable Rate Government Income Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney Appreciation Fund Inc., Smith Barney Arizona Municipals Fund Inc., Smith Barney California Municipals Fund Inc., Balanced Portfolio, Conservative Portfolio, Growth Portfolio, High Growth Portfolio, Income Portfolio, Global Portfolio, Select Balanced Portfolio, Select Conservative Portfolio, Select Growth Portfolio, Select High Growth Portfolio, Select Income Portfolio, Concert Social Awareness Fund, Smith Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund Inc., Large Cap Value Fund, Short-Term High Grade Bond Fund, U.S. Government Securities Fund, Smith Barney Balanced Fund, Smith Barney Convertible Fund, Smith Barney Diversified Strategic Income Fund, Smith Barney Exchange Reserve Fund, Smith Barney High Income Fund, Smith Barney Municipal High Income Fund, Smith Barney Premium Total Return Fund, Smith Barney Total Return Bond Fund, Cash Portfolio, Government Portfolio, Municipal Portfolio, Concert Peachtree Growth Fund, Smith Barney Contrarian Fund, Smith Barney Government Securities Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith Barney Hansberger Global Value Fund, Smith Barney Investment Grade Bond Fund, Smith Barney Premier Selections Fund, Smith Barney Small Cap Value Fund, Smith Barney Small Cap Growth Fund, Smith Barney Intermediate Maturity California Municipals Fund, Smith Barney Intermediate Maturity New York Municipals Fund, Smith Barney Large Capitalization Growth Fund, Smith Barney S&P 500 Index Fund, Smith Barney Mid Cap Blend Fund, Smith Barney EAFE Index Fund, Smith Barney US 5000 Index Fund, Smith Barney Managed Governments Fund Inc., Smith Barney Managed Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund, Cash Portfolio, Government Portfolio, Retirement Portfolio, California Money Market Portfolio, Florida Portfolio, Georgia Portfolio, Limited Term Portfolio, National Portfolio, Massachusetts Money Market Portfolio, New York Money Market Portfolio, New York Portfolio, Pennsylvania Portfolio, Smith Barney Municipal Money Market Fund, Inc., Smith Barney Natural Resources Fund Inc., Smith Barney Financial Services Fund, Smith Barney Health Sciences Fund, Smith Barney Technology Fund, Smith Barney New Jersey Municipals Fund Inc., Smith Barney Oregon Municipals Fund, Zeros Plus Emerging Growth Series 2000, Smith Barney Security and Growth Fund, Smith Barney Small Cap Blend Fund, Inc., Smith Barney Telecommunications Income Fund, Income and Growth Portfolio, Reserve Account Portfolio, U.S. Government/High Quality Securities Portfolio, Emerging Markets Portfolio, European Portfolio, Global Government Bond Portfolio, International Equity Portfolio, Pacific Portfolio, AIM Capital Appreciation Portfolio, Smith Aggressive Growth Portfolio, Smith Mid Cap Portfolio, Alliance Growth Portfolio, INVESCO Global Strategic Income Portfolio, MFS Total Return Portfolio, Putnam Diversified Income Portfolio, Smith Barney High Income Portfolio, Smith Barney Large Cap Value Portfolio, Smith Barney International Equity Portfolio, Smith Barney Large Capitalization Growth Portfolio, Smith Barney Money Market Portfolio, Smith Barney Pacific Basin Portfolio, Travelers Managed Income Portfolio, Van Kampen Enterprise Portfolio, Centurion U.S. Equity Fund, Centurion International Equity Fund, Centurion U.S. Contra Fund, Centurion International Contra Fund, Global High-Yield Bond Fund, International Equity Fund, Emerging Opportunities Fund, Core Equity Fund, Long-Term Bond Fund, Global Dimensions Fund L.P., Citicorp Private Equity L.P., AIM V.I. Capital Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM V.I. International Equity Fund, AIM V.I. Value Fund, Fidelity VIP Growth Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Equity Income Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund Portfolio, Fidelity VIP II Index 500 Portfolio, MFS World Government Series, MFS Money Market Series, MFS Bond Series, MFS Total Return Series, MFS Research Series, MFS Emerging Growth Series, Salomon Brothers Institutional Money Market Fund, Salomon Brothers Cash Management Fund, Salomon Brothers New York Municipal Money Market Fund, Salomon Brothers National Intermediate Municipal Fund, Salomon Brothers U.S. Government Income Fund, Salomon Brothers High Yield Bond Fund, Salomon Brothers International Equity Fund, Salomon Brothers Strategic Bond Fund, Salomon Brothers Large Cap Growth Fund, Salomon Brothers Balanced Fund, Salomon Brothers Asia Growth Fund, Salomon Brothers Capital Fund Inc, Salomon Brothers Investors Value Fund Inc, Salomon Brothers Opportunity Fund Inc, Salomon Brothers Institutional High Yield Bond Fund, Salomon Brothers Institutional Emerging Markets Debt Fund, Salomon Brothers Variable Investors Fund, Salomon Brothers Variable Capital Fund, Salomon Brothers Variable Total Return Fund, Salomon Brothers Variable High Yield Bond Fund, Salomon Brothers Variable Strategic Bond Fund, Salomon Brothers Variable U.S. Government Income Fund, Salomon Brothers Variable Asia Growth Fund, and Salomon Brothers Variable Small Cap Growth Fund. (b) The information required by this Item 27 with respect to each director and officer of CFBDS is incorporated by reference to Schedule A of Form BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.8-32417). (c) Not applicable. Item 28. Location of Accounts and Records. The accounts and records of the Registrant are located, in whole or in part, at the office of the Registrant and the following locations: NAME ADDRESS CFBDS, Inc. 21 Milk Street (distributor) Boston, MA 02109 State Street Bank and Trust Company 1776 Heritage Drive (custodian) North Quincy, MA 02171 Citi Fiduciary Trust Company 388 Greenwich Street (transfer agent) New York, New York 10013 SSB Citi Fund Management LLC 388 Greenwich Street (manager) New York, New York 10013 Item 29. Management Services. Not applicable. Item 30. Undertakings. Not applicable. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston and Commonwealth of Massachusetts on the 16th day of June, 2000. CITIFUNDS TRUST I By: Philip W. Coolidge ------------------------- Philip W. Coolidge President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated below on June 16, 2000. Signature Title Philip W. Coolidge President, Principal Executive ---------------------------- Officer and Trustee Philip W. Coolidge Linwood C. Downs Principal Financial Officer and ---------------------------- Principal Accounting Officer Linwood C. Downs Riley C. Gilley* Trustee ---------------------------- Riley C. Gilley Diana R. Harrington* Trustee ---------------------------- Diana R. Harrington Susan B. Kerley* Trustee ---------------------------- Susan B. Kerley Heath B. McLendon* Trustee ---------------------------- Heath B. McLendon C. Oscar Morong, Jr.* Trustee ---------------------------- C. Oscar Morong, Jr. E. Kirby Warren* Trustee ---------------------------- E. Kirby Warren *By: Philip W. Coolidge ------------------------- Philip W. Coolidge Executed by Philip W. Coolidge on behalf of those indicated pursuant to Powers of Attorney. EXHIBIT INDEX Exhibit No.: Description: a(3) Form of Amendment to the Amended and Restated Declaration of Trust of the Registrant d Form of Management Agreement between the Registrant and SSB Citi Fund Management LLC ("SSB Citi"), as manager to Citi Financial Services Portfolio, Citi Health Sciences Portfolio, and Citi Technology Portfolio (collectively, the "Funds") e(1) Form of Distribution Agreement between the Registrant and CFBDS, Inc. (the "Distributor"), as distributor with respect to the Class A shares of the Funds e(2) Form of Distribution Agreement between the Registrant and Distributor with respect to the Class D shares of the Funds g(2) Form of Letter Agreement adding the Funds to the Custodian Contract between the Registrant and State Street h(1) Transfer Agency Agreement with Citi Fiduciary Trust Company, as transfer agent h(2) Form of Letter Agreement adding the Funds to the Transfer Agency and Servicing Agreement with Citi Fiduciary Trust Company, as transfer agent i Opinion and consent of counsel m Form of Service Plan of the Registrant with respect to the Class A shares of the Funds EX-99.A(3) 2 0002.txt FORM OF AMENDED & RESTATED DESIGNATION OF SERIES Exhibit a(3) CITIFUNDS TRUST I FORM OF AMENDED AND RESTATED ESTABLISHMENT AND DESIGNATION OF SERIES OF SHARES OF BENEFICIAL INTEREST (WITHOUT PAR VALUE) Pursuant to Section 6.9 of the Declaration of Trust, dated April 23, 1984, as amended and restated (the "Declaration of Trust"), of CitiFunds Trust I (formerly, Landmark Funds I) (the "Trust"), the undersigned, being a majority of the Trustees of the Trust, do hereby amend and restate the Trust's existing Establishment and Designation of Series of Shares of Beneficial Interest (without par value) in order to add eight new series of Shares (as defined in the Declaration of Trust) of the Trust. No changes to the special and relative rights of the existing series are intended by this amendment and restatement. 1. The series shall be as follows: The new series of the Trust shall be designated as: Citi 1000 Index Portfolio; Citi Small Cap Index Portfolio; Citi Global Titans Index Portfolio; Citi Nasdaq 100 Portfolio; Citi U.S. Bond Index Portfolio; Citi Financial Services Portfolio; Citi Health Sciences Portfolio; and Citi Technology Portfolio. The remaining series are as follows: CitiFunds Balanced Portfolio CitiSelect Folio 100; CitiSelect Folio 200; CitiSelect Folio 300; CitiSelect Folio 400; and CitiSelect Folio 500. 2. Each series shall be authorized to invest in cash, securities, instruments and other property as from time to time described in the Trust's then currently effective registration statement under the Securities Act of 1933 to the extent pertaining to the offering of Shares of each series. Each Share of each series shall be redeemable, shall be entitled to one vote or fraction thereof in respect of a fractional share on matters on which shares of that series shall be entitled to vote, shall represent a pro rata beneficial interest in the assets allocated or belonging to such series, and shall be entitled to receive its pro rata share of the net assets of such series upon liquidation of the series, all as provided in Section 6.9 of the Declaration of Trust. 3. Shareholders of each series shall vote separately as a class on any matter to the extent required by, and any matter shall be deemed to have been effectively acted upon with respect to each series as provided in, Rule 18f-2, as from time to time in effect, under the Investment Company Act of 1940, as amended, or any successor rule, and by the Declaration of Trust. 4. The assets and liabilities of the Trust shall be allocated to each series as set forth in Section 6.9 of the Declaration of Trust. 5. Subject to the provisions of Section 6.9 and Article IX of the Declaration of Trust, the Trustees (including any successor Trustees) shall have the right at any time and from time to time to reallocate assets and expenses or to change the designation of any series now or hereafter created or otherwise to change the special and relative rights of any such series. IN WITNESS WHEREOF, the undersigned have executed this Establishment and Designation of Series on separate counterparts this ____ day of June, 2000. ___________________________ ______________________________ PHILIP W. COOLIDGE RILEY C. GILLEY As Trustee and Not Individually As Trustee and Not Individually ___________________________ ______________________________ DIANA R. HARRINGTON SUSAN B. KERLEY As Trustee and Not Individually As Trustee and Not Individually ___________________________ ______________________________ HEATH B. MCLENDON C. OSCAR MORONG, JR. As Trustee and Not Individually As Trustee and Not Individually ____________________________ E. KIRBY WARREN As Trustee and Not Individually EX-99.D 3 0003.txt FORM OF MANAGEMENT AGREEMENT Exhibit d FORM OF MANAGEMENT AGREEMENT CITIFUNDS TRUST I [Name of Series] MANAGEMENT AGREEMENT, dated as of ________ __, 2000, by and between CitiFunds Trust I, a Massachusetts trust (the "Trust"), and SSB Citi Fund Management LLC, a Delaware limited liability company ("SSB Citi" or the "Manager"). W I T N E S S E T H: WHEREAS, the Trust engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (collectively with the rules and regulations promulgated thereunder and any exemptive orders thereunder, the "1940 Act"), and WHEREAS, the Trust wishes to engage SSB Citi to provide certain management services for the series of the Trust designated as [Name of Series] (the "Fund"), and SSB Citi is willing to provide such management services for the Fund on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto as herein set forth, the parties covenant and agree as follows: 1. Duties of Manager. (a) SSB Citi shall act as the Manager for the Fund and as such shall furnish continuously an investment program and shall determine from time to time what securities shall be purchased, sold or exchanged and what portion of the assets of the Fund shall be held uninvested, subject always to the restrictions of the Trust's Declaration of Trust, dated as of April 23, 1984, and By-Laws, as each may be amended and restated from time to time (respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940 Act, and the then-current Registration Statement of the Trust with respect to the Fund. The Manager shall also make recommendations as to the manner in which voting rights, rights to consent to corporate action and any other rights pertaining to the Fund's portfolio securities shall be exercised. Should the Board of Trustees of the Trust at any time, however, make any definite determination as to investment policy applicable to the Fund and notify the Manager thereof in writing, the Manager shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked. The Manager shall take, on behalf of the Fund, all actions which it deems necessary to implement the investment policies determined as provided above, and in particular to place all orders for the purchase or sale of securities for the Fund's account with the brokers or dealers selected by it, and to that end the Manager is authorized as the agent of the Trust to give instructions to the custodian or any subcustodian of the Fund as to deliveries of securities and payments of cash for the account of the Fund. In connection with the selection of such brokers or dealers and the placing of such orders, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other accounts over which the Manager or its affiliates exercise investment discretion. The Manager is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Manager determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either that particular transaction or the overall responsibilities which the Manager and its affiliates have with respect to accounts over which they exercise investment discretion. In making purchases or sales of securities or other property for the account of the Fund, the Manager may deal with itself or with the Trustees of the Trust or the Trust's underwriter or distributor, to the extent such actions are permitted by the 1940 Act. In providing the services and assuming the obligations set forth herein, the Manager may employ, at its own expense, or may request that the Trust employ at the Fund's expense, one or more subadvisers; provided that in each case the Manager shall supervise the activities of each subadviser. Any agreement between the Manager and a subadviser shall be subject to the renewal, termination and amendment provisions applicable to this Agreement. Any agreement between the Trust on behalf of the Fund and a subadviser may be terminated by the Manager at any time on not more than 60 days' nor less than 30 days' written notice to the Trust and the subadviser. (b) Subject to the direction and control of the Board of Trustees of the Trust, SSB Citi shall perform such administrative and management services as may from time to time be reasonably requested by the Trust, which shall include without limitation: (i) providing office space, equipment and clerical personnel necessary for maintaining the organization of the Trust and for performing the administrative and management functions herein set forth; (ii) supervising the overall administration of the Trust, including negotiation of contracts and fees with and the monitoring of performance and billings of the Trust's transfer agent, shareholder servicing agents, custodian and other independent contractors or agents; (iii) preparing and, if applicable, filing all documents required for compliance by the Trust with applicable laws and regulations, including registration statements, prospectuses and statements of additional information, semi-annual and annual reports to shareholders, proxy statements and tax returns; (iv) preparation of agendas and supporting documents for and minutes of meetings of Trustees, committees of Trustees and shareholders; and (v) arranging for maintenance of books and records of the Trust. Notwithstanding the foregoing, SSB Citi shall not be deemed to have assumed any duties with respect to, and shall not be responsible for, the distribution of shares of beneficial interest in the Fund, nor shall Manager be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, fund accounting agent, custodian or shareholder servicing agent of the Trust or the Fund. In providing administrative and management services as set forth herein, Manager may, at its own expense, employ one or more subadministrators; provided that Manager shall remain fully responsible for the performance of all administrative and management duties set forth herein and shall supervise the activities of each subadministrator. 2. Allocation of Charges and Expenses. SSB Citi shall furnish at its own expense all necessary services, facilities and personnel in connection with its responsibilities under Section 1 above. Except as provided in the foregoing sentence, it is understood that the Trust will pay from the assets of the Fund all of its own expenses allocable to the Fund including, without limitation, organization costs of the Fund; compensation of Trustees who are not "affiliated persons" of SSB Citi; governmental fees; interest charges; loan commitment fees; taxes; membership dues in industry associations allocable to the Trust; fees and expenses of independent auditors, legal counsel and any transfer agent, distributor, shareholder servicing agent, registrar or dividend disbursing agent of the Trust; expenses of issuing and redeeming shares of beneficial interest and servicing shareholder accounts; expenses of preparing, typesetting, printing and mailing prospectuses, statements of additional information, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to existing shareholders of the Fund; expenses connected with the execution, recording and settlement of security transactions; insurance premiums; fees and expenses of the custodian for all services to the Fund, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of the Fund (including but not limited to the fees of independent pricing services); expenses of meetings of the Fund's shareholders; expenses relating to the registration and qualification of shares of the Fund; and such nonrecurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust on behalf of the Fund may be a party and the legal obligation which the Trust may have to indemnify its Trustees and officers with respect thereto. 3. Compensation of Manager. For the services to be rendered and the facilities to be provided by the Manager hereunder, the Trust shall pay to the Manager from the assets of the Fund a management fee computed daily and paid monthly at an annual rate equal to the lesser of (i) [Insert Management Fee] of the Fund's average daily net assets for the Fund's then-current fiscal year, and (ii) the difference between [Insert Management Fee] of the Fund's average daily net assets for the Fund's then-current fiscal year and the aggregate investment management fees allocated to the Fund for the Fund's then-current fiscal year from the portfolios in which it invests of which SSB Citi is the manager. If the Manager provides services hereunder for less than the whole of any period specified in this Section 3, the compensation to Manager shall be accordingly adjusted and prorated. 4. Covenants of Manager. Manager agrees that it will not deal with itself, or with the Trustees of the Trust or the Trust's principal underwriter or distributor, as principals in making purchases or sales of securities or other property for the account of the Fund, except as permitted by the 1940 Act, will not take a long or short position in shares of beneficial interest in the Fund except as permitted by the Declaration, and will comply with all other provisions of the Declaration and By-Laws and the then-current Registration Statement applicable to the Fund relative to Manager and its directors and officers. 5. Limitation of Liability of Manager. Manager shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution of securities transactions for the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder. As used in this Section 5, the term "SSB Citi" shall include directors, officers and employees of Manager as well as Manager itself. 6. Activities of Manager. The services of Manager to the Fund are not to be deemed to be exclusive, Manager being free to render investment advisory, administrative and/or other services to others. It is understood that Trustees, officers, and shareholders of the Trust are or may be or may become interested in Manager, as directors, officers, employees, or otherwise and that directors, officers and employees of Manager are or may become similarly interested in the Trust and that Manager may be or may become interested in the Trust as a shareholder or otherwise. 7. Duration, Termination and Amendments of this Agreement. This Agreement shall become effective as of the day and year first above written, shall govern the relations between the parties hereto thereafter and shall remain in force until June __, 2002, on which date it will terminate unless its continuance after June __, 2002 is "specifically approved at least annually" (a) by the vote of a majority of the Trustees of the Trust who are not "interested persons" of the Trust or of SSB Citi at a meeting specifically called for the purpose of voting on such approval, and (b) by the Board of Trustees of the Trust or by "vote of a majority of the outstanding voting securities" of the Fund. This Agreement may be terminated at any time without the payment of any penalty by the Trustees or by the "vote of a majority of the outstanding voting securities" of the Fund, or by Manager, in each case on not more than 60 days' nor less than 30 days' written notice to the other party. This Agreement shall automatically terminate in the event of its "assignment." This Agreement may be amended only if such amendment is approved by the "vote of a majority of the outstanding voting securities" of the Fund (except for any such amendment as may be effected in the absence of such approval without violating the 1940 Act). The terms "specifically approved at least annually," "vote of a majority of the outstanding voting securities," "assignment," "affiliated person," and "interested persons," when used in this Agreement, shall have the respective meanings specified in, and shall be construed in a manner consistent with, the 1940 Act, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act. Each party acknowledges and agrees that all obligations of the Trust under this Agreement are binding only with respect to the Fund; that any liability of the Trust under this Agreement, or in connection with the transactions contemplated herein, shall be discharged only out of the assets of the Fund; and that no other series of the Trust shall be liable with respect to this Agreement or in connection with the transactions contemplated herein. The undersigned officer of the Trust has executed this Agreement not individually, but as an officer under the Declaration and the obligations of this Agreement are not binding upon any of the Trustees, officers or shareholders of the Trust individually. 8. Licenses. The Trust hereby agrees, on behalf of the Fund, to reimburse Manager for any and all reasonable costs incurred by Manager relating to the acquisition and retention of licenses permitting the use, by the Fund, of the name(s) of index(es). 9. Governing Law. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts. 10. Use of Name. The Trust hereby acknowledges that any and all rights in or to the name "Citi" which exist on the date of this Agreement or which may arise hereafter are, and under any and all circumstances shall continue to be, the sole property of Manager; that Manager may assign any or all of such rights to another party or parties without the consent of the Trust; and that Manager may permit other parties, including other investment companies, to use the word "Citi" in their names. If Manager, or its assignee as the case may be, ceases to serve as the adviser to and administrator of the Trust, the Trust hereby agrees to take promptly any and all actions which are necessary or desirable to change its name so as to delete the word "Citi." IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered in their names and on their behalf by the undersigned, thereunto duly authorized, all as of the day and year first above written. CITIFUNDS TRUST I SSB CITI FUND on behalf of [Name of Series] MANAGEMENT LLC By:_________________________ By:________________________ Title:______________________ Title:_____________________ EX-99.E(1) 4 0004.txt FORM OF DISTRIBUTION AGREEMENT Exhibit e(1) FORM OF DISTRIBUTION AGREEMENT AGREEMENT , dated as of _____ __, 2000, by and between CitiFunds Trust I, a Massachusetts trust (the "Trust"), and [Distributor], a _________ corporation ("Distributor"). This Agreement relates solely to Shares of Beneficial Interest designated "Class A." WHEREAS, the Trust engages in business as an openend management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Trust's shares of beneficial interest ("Shares") are divided into separate series representing interests in separate funds of securities and other assets; WHEREAS, the Trust wishes to retain the services of a distributor for Shares of each of the Trust's series listed on Exhibit A hereto (the "Funds") and has registered the Shares of the Funds under the Securities Act of 1933, as amended (the "1933 Act"); WHEREAS, the Trust has adopted a Service Plan pursuant to Rule 12b-1 under the 1940 Act (the "Service Plan") and may enter into related agreements providing for the distribution and servicing of Shares of the Funds; WHEREAS, Distributor has agreed to act as distributor of the Class A Shares of the Funds for the period of this Agreement; NOW, THEREFORE, it is hereby agreed between the parties hereto as follows: 1. Appointment of Distributor. (a) The Trust hereby appoints Distributor its agent for the distribution of Shares of the Funds in jurisdictions wherein such Shares may be legally offered for sale; provided, however, that the Trust in its absolute discretion may issue Shares of the Funds in connection with (i) the payment or reinvestment of dividends or distributions; (ii) any merger or consolidation of the Trust or of the Funds with any other investment company or trust or any personal holding company, or the acquisition of the assets of any such entity or another Fund of the Trust; or (iii) any offer of exchange permitted by Section 11 of the 1940 Act. (b) Distributor hereby accepts such appointment as agent for the distribution of Shares of the Funds and agrees that it will sell the Shares as agent for the Trust at prices determined as hereinafter provided and on the terms hereinafter set forth, all according to the then-current prospectus and statement of additional information of each Fund (collectively, the "Prospectus" and the "Statement of Additional Information"), applicable laws, rules and regulations and the Declaration of Trust of the Trust. Distributor agrees to use its best efforts to solicit orders for the sale of Shares of the Funds, and agrees to transmit promptly to the Trust (or to the transfer agent of the Funds, if so instructed in writing by the Trust) any orders received by it for purchase or redemption of Shares. (c) Distributor may sell Shares of the Funds to or through qualified securities dealers, financial institutions or others. Distributor will require each dealer or other such party to conform to the provisions of this Agreement, the Prospectus, the Statement of Additional Information and applicable law; and neither Distributor nor any such dealers or others shall withhold the placing of purchase orders for Shares so as to make a profit thereby. (d) Distributor shall order Shares of the Funds from the Trust only to the extent that it shall have received unconditional purchase orders therefor. Distributor will not make, or authorize any dealers or others to make: (i) any short sales of Shares; or (ii) any sales of Shares to any Trustee or officer of the Trust, any officer or director of Distributor or any corporation or association furnishing investment advisory, managerial or supervisory services to the Trust, or to any such corporation or association, unless such sales are made in accordance with the Prospectus and the Statement of Additional Information. (e) Distributor is not authorized by the Trust to give any information or make any representations regarding Shares of the Funds, except such information or representations as are contained in the Prospectus, the Statement of Additional Information or advertisements and sales literature prepared by or on behalf of the Trust for Distributor's use. (f) The Trust agrees to execute any and all documents, to furnish any and all information and otherwise to take all actions which may be reasonably necessary in the discretion of the Trust's officers in connection with the qualification of Shares of each Fund for sale in such states as Distributor and the Trust agree. (g) No Shares of any Fund shall be offered by either Distributor or the Trust under this Agreement, and no orders for the purchase or sale of such Shares hereunder shall be accepted by the Trust, if and so long as the effectiveness of the Trust's then current registration statement as to Shares of that Fund or any necessary amendments thereto shall be suspended under any of the provisions of the 1933 Act, or if and so long as a current prospectus for Shares of that Fund as required by Section 10 of the 1933 Act is not on file with the Securities and Exchange Commission; provided, however, that nothing contained in this paragraph (g) shall in any way restrict the Trust's obligation to repurchase any Shares from any shareholder in accordance with the provisions of the applicable Fund's Prospectus or charter documents. (h) Notwithstanding any provision hereof, the Trust may terminate, suspend or withdraw the offering of Shares of any Fund whenever, in its sole discretion, it deems such action to be desirable. 2. Offering Price of Shares. All Fund Shares sold under this Agreement shall be sold at the public offering price per Share in effect at the time of the sale, as described in the Prospectus. The excess, if any, of the public offering price over the net asset value of the Shares sold by Distributor as agent, and any contingent deferred sales charge applicable to Shares of any class of any Fund as set forth in the applicable Fund's Prospectus, shall be retained by Distributor as a commission for its services hereunder. Out of such commission Distributor may allow commissions, concessions or agency fees to dealers or other financial institutions, including banks, and may allow them to others in its discretion in such amounts as Distributor shall determine from time to time. Except as may be otherwise determined by Distributor from time to time, such commissions, concessions or agency fees shall be uniform to all dealers and other financial institutions. At no time shall the Trust receive less than the full net asset value of the Shares of each Fund, determined in the manner set forth in the Prospectus and the Statement of Additional Information. Distributor also may receive such compensation under the Trust's Service Plan as may be authorized by the Trustees of the Trust from time to time. 3. Furnishing of Information. (a) The Trust shall furnish to Distributor copies of any information, financial statements and other documents that Distributor may reasonably request for use in connection with the sale of Shares of the Funds under this Agreement. The Trust shall also make available a sufficient number of copies of the Funds' Prospectus and Statement of Additional Information for use by the Distributor. (b) The Trust agrees to advise Distributor immediately in writing: (i) of any request by the Securities and Exchange Commission for amendments to any registration statement concerning a Fund or to a Prospectus or for additional information; (ii) in the event of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any such registration statement or Prospectus or the initiation of any proceeding for that purpose; (iii) of the happening of any event which makes untrue any statement of a material fact made in any such registration statement or Prospectus or which requires the making of a change in such registration statement or Prospectus in order to make the statements therein not misleading; and (iv) of all actions of the Securities and Exchange Commission with respect to any amendments to any such registration statement or Prospectus which may from time to time be filed with the Securities and Exchange Commission. 4. Expenses. (a) The Trust will pay or cause to be paid the following expenses: organization costs of the Funds; compensation of Trustees who are not "affiliated persons" of the Distributor; governmental fees; interest charges; loan commitment fees; taxes; membership dues in industry associations allocable to the Trust; fees and expenses of independent auditors, legal counsel and any transfer agent, distributor, shareholder servicing agent, registrar or dividend disbursing agent of the Trust; expenses of issuing and redeeming shares of beneficial interest and servicing shareholder accounts; expenses of preparing, typesetting, printing and mailing prospectuses, statements of additional information, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to existing shareholders of the Funds; expenses connected with the execution, recording and settlement of security transactions; insurance premiums; fees and expenses of the custodian for all services to the Funds, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of the Funds (including but not limited to the fees of independent pricing services); expenses of meetings of shareholders; expenses relating to the issuance, registration and qualification of shares; and such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust may be a party and the legal obligation which the Trust may have to indemnify its Trustees and officers with respect thereto. (b) Except as otherwise provided in this Agreement and except to the extent such expenses are borne by the Trust pursuant to the Service Plan, Distributor will pay or cause to be paid all expenses connected with its own qualification as a dealer under state and federal laws and all other expenses incurred by Distributor in connection with the sale of Shares of each Fund as contemplated by this Agreement. (c) Distributor shall prepare and deliver reports to the Trustees of the Trust on a regular basis, at least quarterly, showing the expenditures with respect to each Fund pursuant to the Service Plan and the purposes therefor, as well as any supplemental reports that the Trustees of the Trust, from time to time, may reasonably request. 5. Repurchase of Shares. Distributor as agent and for the account of the Trust may repurchase Shares of the Funds offered for resale to it and redeem such Shares at their net asset value. 6. Indemnification by the Trust. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of Distributor, the Trust agrees to indemnify Distributor, its officers and directors, and any person which controls Distributor within the meaning of the 1933 Act against any and all claims, demands, liabilities and expenses that any such indemnified party may incur under the 1933 Act, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in the registration statement for any Fund, any Prospectus or Statement of Additional Information, or any advertisements or sales literature prepared by or on behalf of the Trust for Distributor's use, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, unless such statement or omission was made in reliance upon and in conformity with information furnished to the Trust in connection therewith by or on behalf of Distributor. Nothing herein contained shall require the Trust to take any action contrary to any provision of its Declaration of Trust or any applicable statute or regulation. 7. Indemnification by Distributor. Distributor agrees to indemnify the Trust, its officers and Trustees and any person which controls the Trust within the meaning of the 1933 Act against any and all claims, demands, liabilities and expenses that any such indemnified party may incur under the 1933 Act, or common law or otherwise, arising out of or based upon (i) any alleged untrue statement of a material fact contained in the registration statement for any Fund, any Prospectus or Statement of Additional Information, or any advertisements or sales literature prepared by or on behalf of the Trust for Distributor's use, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to the Trust in connection therewith by or on behalf of Distributor; and (ii) any act or deed of Distributor or its sales representatives that has not been authorized by the Trust in any Prospectus or Statement of Additional Information or by this Agreement. 8. Term and Termination. (a) Unless terminated as herein provided, this Agreement shall continue in effect as to each Fund until June __, 2001 and shall continue in effect for successive periods of one year thereafter, but only so long as each such continuance is specifically approved by votes of a majority of both the Trustees of the Trust and the Trustees of the Trust who are not parties to this Agreement or interested persons (as defined in the 1940 Act) of any such party and who have no direct or indirect financial interest in this Agreement or in the operation of the Service Plan or in any agreement related thereto ("Independent Trustees"), cast in person at a meeting called for the purpose of voting on such approval. (b) This Agreement may be terminated as to any Fund on not less than thirty days' nor more than sixty days' written notice to the other party. (c) This Agreement shall automatically terminate in the event of its assignment (as defined in the 1940 Act). 9. Limitation of Liability. The obligations of the Trust hereunder shall not be binding upon any of the Trustees, officers or shareholders of the Trust personally, but shall bind only the assets and property of the particular Fund or Funds in question, and not any other Fund or series of the Trust. The term "CitiFunds Trust I" means and refers to the Trustees from time to time serving under the Declaration of Trust of the Trust, a copy of which is on file with the Secretary of the Commonwealth of Massachusetts. The execution and delivery of this Agreement has been authorized by the Trustees, and this Agreement has been signed on behalf of the Trust by an authorized officer of the Trust, acting as such and not individually, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Trust as provided in the Declaration of Trust. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts and the provisions of the 1940 Act. IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above. CITIFUNDS TRUST I By:______________________________ [DISTRIBUTOR] By:______________________________ EXHIBIT A Citi 1000 Index Portfolio Citi Small Cap Index Portfolio Citi Global Titans Index Portfolio Citi Nasdaq 100 Portfolio Citi U.S. Bond Index Portfolio Citi Financial Services Portfolio Citi Health Sciences Portfolio Citi Technology Portfolio EX-99.E(2) 5 0005.txt FORM OF DISTRIBUTION AGREEMENT Exhibit e(2) FORM OF DISTRIBUTION AGREEMENT AGREEMENT , dated as of _____ __, 2000, by and between CitiFunds Trust I, a Massachusetts trust (the "Trust"), and [Distributor], a __________ corporation ("Distributor"). This Agreement relates solely to Shares of Beneficial Interest designated "Class D." WHEREAS, the Trust engages in business as an openend management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Trust's shares of beneficial interest ("Shares") are divided into separate series representing interests in separate funds of securities and other assets; WHEREAS, the Trust wishes to retain the services of a distributor for Shares of each of the Trust's series listed on Exhibit A hereto (the "Funds") and has registered the Shares of the Funds under the Securities Act of 1933, as amended (the "1933 Act"); WHEREAS, Distributor has agreed to act as distributor of the Class D Shares of the Funds for the period of this Agreement; NOW, THEREFORE, it is hereby agreed between the parties hereto as follows: 1. Appointment of Distributor. (a) The Trust hereby appoints Distributor its agent for the distribution of Shares of the Funds in jurisdictions wherein such Shares may be legally offered for sale; provided, however, that the Trust in its absolute discretion may issue Shares of the Funds in connection with (i) the payment or reinvestment of dividends or distributions; (ii) any merger or consolidation of the Trust or of the Funds with any other investment company or trust or any personal holding company, or the acquisition of the assets of any such entity or another Fund of the Trust; or (iii) any offer of exchange permitted by Section 11 of the 1940 Act. (b) Distributor hereby accepts such appointment as agent for the distribution of Shares of the Funds and agrees that it will sell the Shares as agent for the Trust at prices determined as hereinafter provided and on the terms hereinafter set forth, all according to the then-current prospectus and statement of additional information of each Fund (collectively, the "Prospectus" and the "Statement of Additional Information"), applicable laws, rules and regulations and the Declaration of Trust of the Trust. Distributor agrees to use its best efforts to solicit orders for the sale of Shares of the Funds, and agrees to transmit promptly to the Trust (or to the transfer agent of the Funds, if so instructed in writing by the Trust) any orders received by it for purchase or redemption of Shares. (c) Distributor may sell Shares of the Funds to or through qualified securities dealers, financial institutions or others. Distributor will require each dealer or other such party to conform to the provisions of this Agreement, the Prospectus, the Statement of Additional Information and applicable law; and neither Distributor nor any such dealers or others shall withhold the placing of purchase orders for Shares so as to make a profit thereby. (d) Distributor shall order Shares of the Funds from the Trust only to the extent that it shall have received unconditional purchase orders therefor. Distributor will not make, or authorize any dealers or others to make: (i) any short sales of Shares; or (ii) any sales of Shares to any Trustee or officer of the Trust, any officer or director of Distributor or any corporation or association furnishing investment advisory, managerial or supervisory services to the Trust, or to any such corporation or association, unless such sales are made in accordance with the Prospectus and the Statement of Additional Information. (e) Distributor is not authorized by the Trust to give any information or make any representations regarding Shares of the Funds, except such information or representations as are contained in the Prospectus, the Statement of Additional Information or advertisements and sales literature prepared by or on behalf of the Trust for Distributor's use. (f) The Trust agrees to execute any and all documents, to furnish any and all information and otherwise to take all actions which may be reasonably necessary in the discretion of the Trust's officers in connection with the qualification of Shares of each Fund for sale in such states as Distributor and the Trust agree. (g) No Shares of any Fund shall be offered by either Distributor or the Trust under this Agreement, and no orders for the purchase or sale of such Shares hereunder shall be accepted by the Trust, if and so long as the effectiveness of the Trust's then current registration statement as to Shares of that Fund or any necessary amendments thereto shall be suspended under any of the provisions of the 1933 Act, or if and so long as a current prospectus for Shares of that Fund as required by Section 10 of the 1933 Act is not on file with the Securities and Exchange Commission; provided, however, that nothing contained in this paragraph (g) shall in any way restrict the Trust's obligation to repurchase any Shares from any shareholder in accordance with the provisions of the applicable Fund's Prospectus or charter documents. (h) Notwithstanding any provision hereof, the Trust may terminate, suspend or withdraw the offering of Shares of any Fund whenever, in its sole discretion, it deems such action to be desirable. 2. Offering Price of Shares. All Fund Shares sold under this Agreement shall be sold at the public offering price per Share in effect at the time of the sale, as described in the Prospectus. The excess, if any, of the public offering price over the net asset value of the Shares sold by Distributor as agent, and any contingent deferred sales charge applicable to Shares of any class of any Fund as set forth in the applicable Fund's Prospectus, shall be retained by Distributor as a commission for its services hereunder. Out of such commission Distributor may allow commissions, concessions or agency fees to dealers or other financial institutions, including banks, and may allow them to others in its discretion in such amounts as Distributor shall determine from time to time. Except as may be otherwise determined by Distributor from time to time, such commissions, concessions or agency fees shall be uniform to all dealers and other financial institutions. At no time shall the Trust receive less than the full net asset value of the Shares of each Fund, determined in the manner set forth in the Prospectus and the Statement of Additional Information. 3. Furnishing of Information. (a) The Trust shall furnish to Distributor copies of any information, financial statements and other documents that Distributor may reasonably request for use in connection with the sale of Shares of the Funds under this Agreement. The Trust shall also make available a sufficient number of copies of the Funds' Prospectus and Statement of Additional Information for use by the Distributor. (b) The Trust agrees to advise Distributor immediately in writing: (i) of any request by the Securities and Exchange Commission for amendments to any registration statement concerning a Fund or to a Prospectus or for additional information; (ii) in the event of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any such registration statement or Prospectus or the initiation of any proceeding for that purpose; (iii) of the happening of any event which makes untrue any statement of a material fact made in any such registration statement or Prospectus or which requires the making of a change in such registration statement or Prospectus in order to make the statements therein not misleading; and (iv) of all actions of the Securities and Exchange Commission with respect to any amendments to any such registration statement or Prospectus which may from time to time be filed with the Securities and Exchange Commission. 4. Expenses. (a) The Trust will pay or cause to be paid the following expenses: organization costs of the Funds; compensation of Trustees who are not "affiliated persons" of the Distributor; governmental fees; interest charges; loan commitment fees; taxes; membership dues in industry associations allocable to the Trust; fees and expenses of independent auditors, legal counsel and any transfer agent, distributor, shareholder servicing agent, registrar or dividend disbursing agent of the Trust; expenses of issuing and redeeming shares of beneficial interest and servicing shareholder accounts; expenses of preparing, typesetting, printing and mailing prospectuses, statements of additional information, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to existing shareholders of the Funds; expenses connected with the execution, recording and settlement of security transactions; insurance premiums; fees and expenses of the custodian for all services to the Funds, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of the Funds (including but not limited to the fees of independent pricing services); expenses of meetings of shareholders; expenses relating to the issuance, registration and qualification of shares; and such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust may be a party and the legal obligation which the Trust may have to indemnify its Trustees and officers with respect thereto. (b) Except as otherwise provided in this Agreement, Distributor will pay or cause to be paid all expenses connected with its own qualification as a dealer under state and federal laws and all other expenses of the sale of Shares of each Fund as contemplated by this Agreement, including, without limitation, (i) payments to securities dealers, financial institutions (which may include banks) and others in respect of the sale of Shares of the Funds, (ii) payments for advertising, marketing or other promotional activity, and (iii) payments for preparation, printing, and distribution of prospectuses and statements of additional information and reports of the Trust for recipients other than regulators and existing shareholders of the Trust. 5. Repurchase of Shares. Distributor as agent and for the account of the Trust may repurchase Shares of the Funds offered for resale to it and redeem such Shares at their net asset value. 6. Indemnification by the Trust. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of Distributor, the Trust agrees to indemnify Distributor, its officers and directors, and any person which controls Distributor within the meaning of the 1933 Act against any and all claims, demands, liabilities and expenses that any such indemnified party may incur under the 1933 Act, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in the registration statement for any Fund, any Prospectus or Statement of Additional Information, or any advertisements or sales literature prepared by or on behalf of the Trust for Distributor's use, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, unless such statement or omission was made in reliance upon and in conformity with information furnished to the Trust in connection therewith by or on behalf of Distributor. Nothing herein contained shall require the Trust to take any action contrary to any provision of its Declaration of Trust or any applicable statute or regulation. 7. Indemnification by Distributor. Distributor agrees to indemnify the Trust, its officers and Trustees and any person which controls the Trust within the meaning of the 1933 Act against any and all claims, demands, liabilities and expenses that any such indemnified party may incur under the 1933 Act, or common law or otherwise, arising out of or based upon (i) any alleged untrue statement of a material fact contained in the registration statement for any Fund, any Prospectus or Statement of Additional Information, or any advertisements or sales literature prepared by or on behalf of the Trust for Distributor's use, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to the Trust in connection therewith by or on behalf of Distributor; and (ii) any act or deed of Distributor or its sales representatives that has not been authorized by the Trust in any Prospectus or Statement of Additional Information or by this Agreement. 8. Term and Termination. (a) Unless terminated as herein provided, this Agreement shall continue in effect as to each Fund until June __, 2001 and shall continue in effect for successive periods of one year thereafter, but only so long as each such continuance is specifically approved (i) by either the Trustees of the Trust or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the particular Fund, or (ii) by vote of a majority of the Trustees of the Trust who are not parties to this Agreement or interested persons (as defined in the 1940 Act) of any such party and who have no direct or indirect financial interest in this Agreement or in any agreement related thereto ("Independent Trustees"), cast at a meeting called for the purpose of voting on such approval. (b) This Agreement may be terminated as to any Fund on not less than thirty days' nor more than sixty days' written notice to the other party. (c) This Agreement shall automatically terminate in the event of its assignment (as defined in the 1940 Act). 9. Limitation of Liability. The obligations of the Trust hereunder shall not be binding upon any of the Trustees, officers or shareholders of the Trust personally, but shall bind only the assets and property of the particular Fund or Funds in question, and not any other Fund or series of the Trust. The term "CitiFunds Trust I" means and refers to the Trustees from time to time serving under the Declaration of Trust of the Trust, a copy of which is on file with the Secretary of the Commonwealth of Massachusetts. The execution and delivery of this Agreement has been authorized by the Trustees, and this Agreement has been signed on behalf of the Trust by an authorized officer of the Trust, acting as such and not individually, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Trust as provided in the Declaration of Trust. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts and the provisions of the 1940 Act. IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above. CITIFUNDS TRUST I By:__________________________ [DISTRIBUTOR] By:__________________________ EXHIBIT A Citi 1000 Index Portfolio Citi Small Cap Index Portfolio Citi Global Titans Index Portfolio Citi Nasdaq 100 Portfolio Citi U.S. Bond Index Portfolio Citi Financial Services Portfolio Citi Health Sciences Portfolio Citi Technology Portfolio EX-99.G(2) 6 0006.txt CUSTODIAN LTR AGMT. Exhibit g(2) CitiFunds Trust I 21 Milk Street, 5th Floor Boston, Massachusetts 02109 __________ __, 2000 State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 Re: CitiFunds Trust I - Custodian Contract Ladies and Gentlemen: Pursuant to Section 17 of the Custodian Contract dated as of June 17, 1996 (the "Contract"), between CitiFunds Trust I (the "Trust") and State Street Bank and Trust Company (the "Custodian"), we hereby request that Citi 1000 Index Portfolio, Citi Small Cap Index Portfolio, Citi Global Titans Index Portfolio, Citi Nasdaq 100 Portfolio, Citi U.S. Bond Index Portfolio, Citi Financial Services Portfolio, Citi Health Sciences Portfolio and Citi Technology Portfolio (collectively, the "Series") be added to the list of series of the Trust to which the Custodian renders services as custodian under the terms of the Contract. Please sign below to evidence your agreement to render such services as custodian on behalf of the Series as beneficiaries under the Contract. CITIFUNDS TRUST I By:_________________________ Title:______________________ Agreed: STATE STREET BANK AND TRUST COMPANY By:________________________ Title:_____________________ EX-99.H(1) 7 0007.txt TRANSFER AGENCY AND SERVICES AGREEMENT Exhibit h(1) TRANSFER AGENCY AND SERVICES AGREEMENT AGREEMENT, dated as of October 1, 1999 by and between each of the investment companies listed on Schedule A hereto, as amended from time to time (each a "Fund" and collectively the "Funds") and each having its principal place of business at 388 Greenwich Street, New York, New York 10413 and SMITH BARNEY PRIVATE TRUST COMPANY ("Private Trust"), a New York corporation with principal offices at 388 Greenwich Street, New York, New York 10013. WITNESSETH WHEREAS, each Fund desires to appoint Private Trust as its transfer agent, dividend disbursing agent and shareholder servicing agent and Private Trust desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, each Fund and Private Trust agree as follows: Article 1 Definitions 1.1 Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: (a) "Articles of Incorporation" shall mean the Articles of Incorporation, Declaration of Trust, or other similar organizational document as the case may be, of a Fund as the same may be amended from time to time. (b) "Authorized Person" shall be deemed to include (i) any authorized officer of a Fund; (ii) or any person, whether or not such person is an officer or employee of a Fund, duly authorized to give Oral Instructions or Written Instructions on behalf of the Fund as indicated in writing to Private Trust from time to time. (c) "Board Members" shall mean the Directors or Trustees of the governing body of the Fund, as the case may be. (d) "Board of Directors" shall mean the Board of Directors or Board of Trustees of the Fund, as the case may be. (e) "Commission" shall mean the Securities and Exchange Commission. (f) "Custodian" refers to any custodian or subcustodian of securities and other property which a Fund may from time to time deposit, or cause to be deposited or held under the name or account of such a custodian pursuant to a Custodian Agreement. (g) "1934 Act" shall mean the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, all as amended from time to time. (h) "1940 Act" shall mean the Investment Company Act of 1940 and the rules and regulations promulgated thereunder, all as amended from time to time. (i) "Oral Instructions" shall mean instructions, other than Written Instructions, actually received by Private Trust from a person reasonably believed by Private Trust to be an Authorized Person. (j) "Prospectus" shall mean the most recently dated Fund Prospectus and Statement of Additional Information, including any supplements thereto if any, which has become effective under the Securities Act of 1933 and the 1940 Act. (k) "Shares" refers collectively to such shares of capital stock or beneficial interest, as the case may be, or class thereof, of a Fund as may be issued from time to time. (l) "Shareholder" shall mean a holder of Shares of a Fund. (m) "Written Instructions" shall mean a written communication signed by a person reasonably believed by Private Trust to be an Authorized Person and actually received by Private Trust. Written Instructions shall include manually executed originals and authorized electronic transmissions, including telefacsimile of a manually executed original or other process. Article 2 Appointment of Private Trust 2.1 The Fund hereby appoints and constitutes Private Trust as transfer agent, registrar and dividend disbursing agent for Shares of the Funds and as shareholder servicing agent for the Funds. Private Trust accepts such appointment and agrees to perform the duties hereinafter set forth. Article 3 Duties of Private Trust 3.1 Private Trust shall be responsible for: (a) Administering and/or performing the customary services of a transfer agent; acting as service agent in connection with dividend and distribution functions; and for performing shareholder account and administrative agent functions in connection with the issuance, transfer and redemption or repurchase (including coordination with the Custodian) of Shares of each Fund, as more fully described in the written schedule of Duties of Private Trust annexed hereto as Schedule B and incorporated herein, and in accordance with the terms of the Prospectus of each Fund, applicable law and the procedures established from time to time between the Funds and Private Trust. (b) Recording the issuance of Shares and maintaining pursuant to Rule 17Ad10(e) of the 1934 Act a record of the total number of Shares of each Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. Private Trust shall provide each Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Fund. (c) Notwithstanding any of the foregoing provisions of this Agreement, Private Trust shall be under no duty or obligation to inquire into, and shall not be liable for: (i) the legality of the issuance or sale of any Shares or the sufficiency of the amount to be received therefor; (ii) the legality of the redemption of any Shares, or the propriety of the amount to be paid therefor; (iii) the legality of the declaration of any dividend by a Fund's Board of Directors, or the legality of the issuance of any Shares in payment of any dividend; or, (iv) the legality of any recapitalization or readjustment of the Shares. 3.2 In addition, each Fund shall (i) identify to Private Trust in writing or by transmission those transactions and assets to be treated as exempt from blue sky reporting for each State and (ii) verify the establishment of transactions for each State on the system prior to activation and thereafter monitor the daily activity for each State. The responsibility of Private Trust for the Fund's blue sky State registration status is solely limited to the initial establishment of transactions subject to blue sky compliance by the Funds and the reporting of such transactions to the Funds as provided above. 3.3 In addition to the duties set forth in Schedule B, Private Trust shall perform such other duties and functions, and shall be paid such amounts therefor, as may from time to time be agreed upon in writing between the Fund and the Transfer Agent. The compensation for such other duties and functions shall be reflected in a written amendment to Schedule C and the duties and functions shall be reflected in an amendment to Schedule B, both dated and signed by authorized persons of the parties hereto. Article 4 Delegation of Responsibilities 4.1 With respect to any Fund, Private Trust may delegate some or all of its duties under this Agreement to other parties that after reasonable inquiry Private Trust deems to be competent to assume such duties. In the event of any such delegation, Private Trust shall enter into a written agreement with the delegatee in which the delegatee will, among other things: (a) agree to provide the services delegated to it in accordance with a written schedule of Performance Standards developed by Private Trust; and (b) represent and warrant that it is duly registered as required under all federal and state securities laws. Article 5 Recordkeeping and Other Information 5.1 Private Trust shall create and maintain all records required of it pursuant to its duties hereunder and as set forth in Schedule B in accordance with all applicable laws, rules and regulations, including records required by Section 31(a) of the 1940 Act. Where applicable, such records shall be maintained by Private Trust for the period and in the places required by Rule 31a-2 under the 1940 Act. 5.2 To the extent required by Section 31 of the 1940 Act, Private Trust agrees that all such records prepared or maintained by Private Trust relating to the services to be performed by Private Trust hereunder, are the property of the Funds and will be preserved, maintained and made available in accordance with, such, section, and will be surrendered promptly to the Funds on and in accordance with the Funds' request. 5.3 In case of any requests. or demands for the inspection of Shareholder records of a Fund, Private Trust will endeavor to notify the Fund of such request and secure Written Instructions as to the handling of such request. Private Trust reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to comply with such request. Article 6 Fund Instructions 6.1 Private Trust will have no liability when acting upon Written or Oral Instructions believed to have been executed or orally communicated by an Authorized Person and will not be held to have any notice of any change of authority of any person until receipt of a Written Instruction thereof from a Fund. Private Trust will also have no liability when processing Share certificates which it reasonably believes to bear the proper manual or facsimile signatures of the officers of a Fund and the proper countersignature of Private Trust. 6.2 At any time, Private Trust may request Written Instructions from a Fund and may seek advice from legal counsel for the Fund, or its own legal counsel, with respect to any matter arising in connection with this Agreement, and it shall not be liable for any action taken or not taken or suffered by it in good faith in accordance with such Written Instructions or in accordance with the opinion of counsel for the Fund or for Private Trust. Written Instructions requested by Private Trust will be provided by a Fund within a reasonable period of time. 6.3 Private Trust, its officers, agents or employees, shall accept Oral Instructions or Written Instructions given to them by any person representing or acting on behalf of a Fund only if said representative is an Authorized Person. Each Fund agrees that all Oral Instructions shall be followed within one business day by confirming Written Instructions, and that the Fund's failure to so confirm shall not impair in any respect Private Trust's right to rely on Oral Instructions. Article 7 Compensation 7.1 The Funds will compensate or cause Private Trust to be compensated for the performance of its obligations hereunder in accordance with the fees set forth in the written schedule of fees annexed hereto as Schedule C and incorporated herein. Private Trust will transmit an invoice to the Fund as soon as practicable after the end of each calendar month which will be detailed in accordance with Schedule C, and the Fund will pay to Private Trust the amount of such invoice within thirty (30) days after the Fund's receipt of the invoice. 7.2 In addition, the Funds agree to pay, and will be billed separately for, reasonable outofpocket expenses incurred by Private Trust in the performance of its duties hereunder. Outofpocket expenses shall include, but shall not be limited to, the items specified in the written schedule of outofpocket charges annexed hereto as Schedule D and incorporated herein. Schedule D may be modified by written agreement between the parties. Unspecified outofpocket expenses shall be limited to those outofpocket expenses reasonably incurred by Private Trust in the performance of its obligations hereunder. 7.3 Any compensation agreed to hereunder may be adjusted from time to time by attaching to Schedule C, a revised fee schedule executed and dated by the parties hereto. Article 8 Representations and Warranties 8.1 Each Fund represents and warrants to Private Trust that: (a) it is duly organized, existing and in good standing under the laws of the jurisdiction in which it is organized; (b) it is empowered under applicable laws and by its Articles of Incorporation, Bylaws to enter into this Agreement; (c) all corporate proceedings required by said Articles of Incorporation, Bylaws and applicable laws have been taken to authorize it to enter into this Agreement; (d) a registration statement under the Securities Act of 1933, as amended, and the 1940 Act on behalf of the Fund is currently effective and will remain effective, and all appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale; and (e) all outstanding Shares are validly issued, fully paid and nonassessable and when Shares are hereafter issued in accordance with the terms of the Fund's Articles of Incorporation and its Prospectus, such Shares shall be validly issued, fully paid and nonassessable. 8.2 Private Trust represents and warrants to each Fund that: (a) it is duly organized, existing and in good standing under the laws of the state of New York; (b) it is empowered under applicable laws and by its Articles of Incorporation and Bylaws to enter into and perform this Agreement; (c) all corporate proceedings required by said Articles of Incorporation, Bylaws and applicable laws have been taken to authorize it to enter into this Agreement; and (d) it is duly registered with its appropriate regulatory agency as a transfer agent and such registration will remain in effect for the duration of this Agreement; and (e) it has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. Article 9 Indemnification 9.1 Each party hereto (the "Indemnifying Party") will indemnify the other party (the "Indemnified Party") against and hold it harmless from any and all losses, claims, damages, liabilities or expenses of any sort or kind (including seasonable counsel fees and expenses) resulting from any claim, demand, action or suit or other proceeding (a "Claim") unless such Claim has resulted from a negligent failure to act or omission to act or bad faith of the Indemnified Party in the performance of its duties hereunder. In addition, each Fund will indemnify Private Trust against and hold it harmless from any Claim, damages, liabilities or expenses (including reasonable counsel fees) that is a result of (i) any action taken in accordance with Written or Oral Instructions, or any other instructions, or share certificates reasonably believed by Private Trust to be genuine and to be signed, countersigned or executed, or orally communicated by an Authorized Person; (ii) any action taken in accordance with written or oral advice reasonably believed by Private Trust to have been given by counsel for the Fund or its own counsel; (iii) any action taken as a result of any error or omission in any record (including but not limited to magnetic tapes, computer printouts, hard copies and microfilm copies) delivered, or caused to be delivered by the Fund to Private Trust in connection with this Agreement; or (iv) the offer or sale of Shares in violation of any requirement under the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any state with respect to the offer or sale of such shares in such state. 9.2 In any case in which the Indemnifying Party may be asked to indemnify or hold the Indemnified Party harmless, the Indemnifying Party shall be advised of all pertinent facts concerning the situation in question. The Indemnified Party will notify the Indemnifying Party promptly after identifying any situation which it believes presents or appears likely to present a claim for indemnification against the Indemnifying Party although the failure to do so shall not prevent recovery by the Indemnified Party. The Indemnifying Party shall have the option to defend the Indemnified Party against any Claim which may be the subject of this indemnification, and, in the event that the Indemnifying Party so elects, such defense shall be conducted by counsel chosen by the Indemnifying Party and satisfactory to the Indemnified Party, and thereupon the Indemnifying Party shall take over complete defense of the Claim and the Indemnified Party shall sustain no further legal or other expenses in respect of such Claim. The Indemnified Party will not confess any Claim or make any compromise in any case in which the Indemnifying Party will be asked to provide indemnification, except with the Indemnifying Party's prior written consent. The obligations of the parties hereto under this Section shall survive the termination of this Agreement. 9.3 Except for remedies that cannot be waived as a matter of law (and injunctive or provisional relief), the provisions of this Article 9 shall be a party's sole and exclusive remedy for claims or other actions or proceedings to which the other party's indemnification obligations pursuant to this Article 9 may apply. Article 10 Standard of Care 10.1 Private Trust shall provide its services as transfer agent in accordance with the applicable provisions of Section 17A of the 1934 Act. Private Trust shall at all times act in good faith and agrees to use its best efforts within commercially reasonable limits to ensure the accuracy of all services performed under this Agreement, but assumes no responsibility for loss or damage to the Funds unless said errors are caused by Private Trust's own negligence, bad faith, willful misconduct or that of its employees or knowing violations of applicable law pertaining to the manner in which transfer agency services are to be performed by Private Trust. Article 11 Consequential Damages NOTWITSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY UNDER THIS AGREEMENT, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE TO THE OTHER PARTY UNDER ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER ANY PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. Article 12 Term and Termination 12.1 This Agreement shall be effective on the date first written above and shall continue until October 1, 2000, and thereafter shall automatically continue for successive annual periods ending on the anniversary of the date first written above, provided that it may be terminated by either party upon written notice given at least 90 days prior to termination. 12.2 In the event a termination notice is given by a Fund, it shall be accompanied by a resolution of the Board of Directors, certified by the Secretary of the Fund, designating a successor transfer agent or transfer agents. Upon such termination and at the expense of the Fund, Private Trust will deliver to such successor a certified list of shareholders of the Fund (with names and addresses), and all other relevant books, records, correspondence and other Fund records or data in the possession of Private Trust, and Private Trust will cooperate with the Fund and any successor transfer agent or agents in the substitution process. Article 13 Confidentiality 13.1 The parties agree that any non public information obtained hereunder concerning the other party is confidential and may not be disclosed to any other person without the consent of the other party, except as may be required by applicable law or at the request of the Commission or other governmental agency. The parties further agree that a breach of this provision would irreparably damage the other party and accordingly agree that each of them is entitled, without bond or other security, to an injunction or injunctions to prevent breaches of this provision. Article 14 Force Majeure 14.1 No party shall be liable for any default or delay in the performance of its obligations under this Agreement if and to the extent such default or delay is caused, directly or indirectly, by (i) fire, flood, elements of nature or other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or civil disorders in any country; (iii) any act or omission of the other party or any governmental authority; (iv) any labor disputes beyond the reasonable control of such party; or (v) nonperformance by a third party or any similar cause beyond the reasonable control of such party, including without limitation, failures or fluctuations in telecommunications or other equipment. Except to the extent that the nonperforming party shall have failed to use its reasonable best efforts to minimize the likelihood of occurrence of such circumstances or to mitigate any loss or damage to the other party caused by such circumstances. In any such event, the nonperforming party shall be excused from any further performance and observance of the obligations so affected only for as long as such circumstances prevail and such party continues to use commercially reasonable efforts to recommence performance or observance as soon as practicable. Article 15 Assignment and Subcontracting 15.1 This Agreement may not be assigned or otherwise transferred by Private Trust, without the prior written consent of the Funds, which consent shall not be unreasonably withheld; provided, however, that Private Trust may, in its sole discretion, assign all its right, title and interest in this Agreement to an affiliate, parent or subsidiary of Private Trust who is qualified to act under the 1940 Act. The Funds agree that Private Trust may, in its sole discretion, engage subcontractors to perform any of the obligations in this Agreement to be performed by Private Trust. Article 16 Notices 16.1 Any notice or other instrument authorized or required by this Agreement to be given in writing to a Fund or Private Trust, shall be sufficiently given if addressed to that party and received by it at its office set forth below or at such other place as it may from time to time designate in writing. To the Funds: Smith Barney Mutual Funds 388 Greenwich Street, 22nd Floor New York, NY 10013 Attention: Heath B. McLendon To Private Trust: Smith Barney Private Trust Company 388 Greenwich Street, 22nd Floor New York, NY 10013 Attention: George Betzios Article 17 Governing Law/Venue 17.1 The laws of the State of New York, excluding the laws on conflicts of laws, shall govern the interpretation, validity, and enforcement of this agreement. Article 18 Counterparts 18.1 This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts shall, together, constitute only one instrument. Article 19 Captions 19.1 The captions of this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. Article 20 Publicity 20.1 Neither a Fund nor Private Trust shall release or publish news releases, public announcements, advertising or other publicity relating to this Agreement or to the transactions contemplated by it without the prior review and written approval of the other party; provided, however, that either party may make such disclosures as are required by legal, accounting or regulatory requirements after making reasonable efforts in the circumstances to consult in advance with the other party. Article 21 Relationship of Parties 21.1 The parties agree that they are independent contractors and not partners or coventurers and nothing contained herein shall be interpreted or construed otherwise. Article 22 Entire Agreement; Severability 22.1 This Agreement, including Schedules and Exhibits hereto, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous proposals, agreements, contracts, representations, and understandings, whether written or oral, between the parties with respect to the subject matter hereof. No change, termination, modification, or waiver of any term or condition of the Agreement shall be valid unless in writing signed by the party affected. A party's waiver of a breach of any term or condition in the Agreement shall not be deemed a waiver of any subsequent breach of the same or another term or condition. 22.2 The parties intend every provision of this Agreement to be severable. If a court of competent jurisdiction determines that any term or provision is illegal or invalid for any reason, the illegality or invalidity shall not affect the validity of the remainder of this Agreement. In such case, the parties shall in good faith modify or substitute such provision consistent with the original intent of the parties. Without limiting the generality of this paragraph, if a court determines that any remedy stated in this Agreement has failed of its essential purpose, then all other provisions of this Agreement, including the limitations on liability and exclusion of damages, shall remain fully effective. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers, as of the day and year first above written. Each of the Investment Companies Listed On Schedule A Hereto, Each of Which Is Acting On Its Own Behalf And Not On Behalf Of Any Other Investment Company By:_______________________________________ Heath B. McLendon Chairman of the Boards of Directors SMITH BARNEY PRIVATE TRUST COMPANY By:___________________________ George Betzios Director-Transfer Agency Operations SCHEDULE A SALOMON SMITH BARNEY FUNDS CONCERT INVESTMENT SERIES Emerging Growth Fund Government Fund Growth Fund Growth and Income Fund International Equity Fund Municipal Fund CONSULTING GROUP CAPITAL MARKETS FUNDS Balanced Investment Emerging Market Equity Investment Government Money Investments High Yield Investments Intermediate Fixed Income Investments International Equity Investments International Fixed Income Investments Large Capitalization Growth Investments Large Capitalization Value Equity Investments Long-Term Bond Investments Mortgage Backed Investments Municipal Bond Investments Small Capitalization Growth Investments Small Capitalization Value Equity Investments GREENWICH STREET SERIES FUND (VARIABLE ANNUITY) Appreciation Portfolio Diversified Strategic Income Portfolio Emerging Growth Portfolio Equity Income Portfolio Equity Index Portfolio Growth & Income Portfolio Intermediate High Grade Bond Portfolio International Equity Portfolio Money Market Portfolio Total Return Portfolio SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND SMITH BARNEY AGGRESSIVE GROWTH FUND INC. SMITH BARNEY APPRECIATION FUND INC SMITH BARNEY ARIZONA MUNICIPALS FUND INC. SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC SMITH BARNEY CONCERT ALLOCATION SERIES, INC. Balanced Portfolio Conservative Portfolio Growth Portfolio High Growth Portfolio Income Portfolio Global Portfolio Select Balanced Portfolio (variable annuity) Select Conservative Portfolio (variable annuity) Select Growth Portfolio (variable annuity) Select High Growth Portfolio (variable annuity) Select Income Portfolio (variable annuity) SMITH BARNEY EQUITY FUNDS Concert Social Awareness Fund Smith Barney Large Cap Blend Fund SMITH BARNEY FUNDAMENTAL VALUE FUND INC SMITH BARNEY FUNDS, INC Large Cap Value Fund ShortTerm High Grade Bond Fund US Government Securities Fund SMITH BARNEY INCOME FUNDS Smith Barney Balanced Fund Smith Barney Convertible Fund Smith Barney Diversified Strategic Income Fund Smith Barney Exchange Reserve Fund Smith Barney High Income Fund Smith Barney Municipal High Income Fund Smith Barney Premium Total Return Fund Smith Barney Total Return Bond Fund SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND, INC Cash Portfolio Government Portfolio Municipal Portfolio SMITH BARNEY INVESTMENT FUNDS INC. Concert Peachtree Growth Fund Smith Barney Contrarian Fund Smith Barney Government Securities Fund Smith Barney Hansberger Global Small Cap Value Fund Smith Barney Hansberger Global Value Fund Smith Barney Investment Grade Bond Fund Smith Barney Special Equities Fund SMITH BARNEY INVESTMENT TRUST Smith Barney Intermediate Maturity California Municipals Fund Smith Barney Intermediate Maturity New York Municipals Fund Smith Barney Large Capitalization Growth Fund Smith Barney S&P Index Fund Smith Barney Mid Cap Blend Fund SMITH BARNEY MANAGED GOVERNMENTS FUND INC. SMITH BARNEY MANAGED MUNICIPALS FUND INC. SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND INC. SMITH BARNEY MONEY FUNDS, INC. Cash Portfolio Government Portfolio Retirement Portfolio SMITH BARNEY MUNI FUNDS California Money Market Portfolio Florida Portfolio Georgia Portfolio Limited Term Portfolio National Portfolio New York Money Market Portfolio New York Portfolio Pennsylvania Portfolio SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. SMITH BARNEY NATURAL RESOURCES FUND INC. SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC. SMITH BARNEY OREGON MUNICIPALS FUND SMITH BARNEY PRINCIPAL RETURN FUND Zeros Plus Emerging Growth Series 2000 Smith Barney Security and Growth Fund 2005 SMITH BARNEY SMALL CAP BLEND FUND, INC SMITH BARNEY TELECOMMUNICATIONS TRUST Smith Barney Telecommunications Income Fund SMITH BARNEY VARIABLE ACCOUNT FUNDS (VARIABLE ANNUITY) Income and Growth Portfolio Reserve Account Portfolio U.S. Government/High Quality Securities Portfolio SMITH BARNEY WORLD FUNDS, INC. Emerging Markets Portfolio European Portfolio Global Government Bond Portfolio International Balanced Portfolio International Equity Portfolio Pacific Portfolio TRAVELERS SERIES FUND (VARIABLE ANNUITY) AIM Capital Appreciation Portfolio Alliance Growth Portfolio GT Global Strategic Income Portfolio WS Total Return Portfolio Putnam Diversified Income Portfolio Smith Barney High Income Portfolio Smith Barney Large Cap Value Portfolio Smith Barney International Equity Portfolio Smith Barney Large Capitalization Growth Portfolio Smith Barney Money Market Portfolio Smith Barney Pacific Basin Portfolio TBC Managed Income Portfolio Van Kampen American Capital Enterprise Portfolio FEDERATED HIGH YIELD PORTFOLIO (VARIABLE ANNUITY) FEDERATED STOCK PORTFOlIO (VARIABLE ANNUITY) LAZARD INTERNATIONAL EQUITY PORTFOLIO (VARIABLE ANNUITY) MFS EMERGING GROWTH PORTfOLIO (VARIABLE ANNUITY) TRAVELERS SERIES TRUST (VARIABLE ANNUITY) Travelers 0 Coupon Bond FD 1998 Travelers 0 Coupon Bond FD 2000 Travelers 0 Coupon Bond FD 2005 Social Awareness Stock Portfolio US Government Securities Portfolio Utilities Portfolio Convertible Bond Portfolio Disciplined Small Cap Stock Portfolio Strategic Stock Portfolio MFS Research Portfolio MFS Mid Cap Growth Portfolio NWQ Large Cap Portfolio Juriak & Voyles Core Equity Portfolio TRAVELERS FUNDS (VARIABLE ANNUITY) Capital Appreciation Fund Money Market Portfolio High Yield Bond Trust Mid Cap Disciplined Equity Fund Managed Assets Trust TRAVELERS QUALITY BOND PORTFOLIO (VARIABLE ANNUITY) THE FUND FOR STABLE VALUE INVESTMENTS SCHEDULE B DUTIES OF PRIVATE TRUST 1. Shareholder Information. Private Trust or its agent shall maintain a record of the number of Shares held by each holder of record which shall include name, address, taxpayer identification and which shall indicate whether such Shares are held in certificates or uncertificated form. 2. Shareholder Services: Private Trust or its agent will investigate all inquiries from shareholders of a Fund relating to Shareholder accounts and will respond to all communications from Shareholders and others relating to its duties hereunder and such other correspondence as may from time to time be mutually agreed upon between Private Trust and a Fund. Private Trust shall provide the Fund with reports concerning shareholder inquires and the responses thereto by Private Trust, in such form and at such times as are agreed to by the Fund and Private Trust. 3. Share Certificates. (a) At the expense of each Fund, Private Trust or its agent shall be supplied with an adequate supply of blank share certificates to meet Private Trust or its agent's requirements therefor. Such Share certificates shall be properly signed by facsimile. Each Fund agrees that, notwithstanding the death, resignation, or removal of any officer of the Fund whose signature appears on such certificates, Private Trust or its agent may continue to countersign certificates which bear such signatures until otherwise directed by Written Instructions. (b) With respect to each Fund, Private Trust or its agent shall issue replacement Share certificates in lieu of certificates which have been lost, stolen or destroyed, upon receipt by Private Trust or its agent of properly executed affidavits and lost certificate bonds, in form satisfactory to Private Trust or its agent, with the Fund and Private Trust or its agent as obligees under the bond. (c) With respect to each Fund, Private Trust or its agent shall also maintain a record of each certificate issued, the number of Shares represented thereby and the holder of record. With respect to Shares held in open accounts or uncertificated form, i.e., no certificate being issued with respect thereto, Private Trust or its agent shall maintain comparable records of the record holders thereof, including their names, addresses and taxpayer identification. Private Trust or its agent shall further maintain a stop transfer record on lost and/or replaced certificates. 4. Mailing Communications to Shareholders: Proxy Materials. Private Trust or its agent will address and mail to Shareholders of the Funds, all reports to Shareholders, dividend and distribution notices and proxy material for the Fund's meetings of Shareholders. In connection with meetings of Shareholders, Private Trust or its agent will prepare Shareholder lists, mail and certify as to the mailing of proxy materials, process and tabulate returned proxy cards, report on proxies voted prior to meetings, act as inspector of election at meetings and certify Shares voted at meetings. 5. Sales of Shares (a) Suspension of Sale of Shares. Private Trust or its agent shall not be required to issue any Shares of a Fund where it has received a Written Instruction from the Fund or official notice from any appropriate authority that the sale of the Shares of the Fund has been suspended or discontinued. The existence of such Written Instructions or such official notice shall be conclusive evidence of the right of Private Trust or its agent to rely on such Written Instructions or official notice. (b) Returned Checks. In the event that any check or other order for the payment of money is returned unpaid for any reason, Private Trust or its agent will: (i) give prompt notice of such return to the Fund or its designee; (ii) place a stop transfer order against all Shares issued as a result of such check or order; and (iii) take such actions as Private Trust may from time to time deem appropriate. 6. Transfer and Repurchase (a) Private Trust or its agent shall process all requests to transfer or redeem Shares in accordance with the transfer or repurchase procedures set forth in each Fund's Prospectus. (b) Private Trust or its agent will transfer or repurchase Shares upon receipt of Oral or Written Instructions or otherwise pursuant to the Prospectus and Share certificates, if any, properly endorsed for transfer or redemption, accompanied by such documents as Private Trust or its agent reasonably may deem necessary. (c) Private Trust or its agent reserves the right to refuse to transfer or repurchase Shares until it is satisfied that the endorsement on the instructions is valid and genuine. Private Trust or its agent also reserves the right to refuse to transfer or repurchase Shares until it is satisfied that the requested transfer or repurchase is legally authorized, and it shall incur no liability for the refusal, in good faith, to make transfers or repurchases which Private Trust or its agent, in its good judgement, deems improper or unauthorized, or until it is reasonably satisfied that there is no basis to any claims adverse to such transfer or repurchase. (d) When Shares are redeemed, Private Trust or its agent shall, upon receipt of the instructions and documents in proper form, deliver to the Custodian and each Fund or its designee a notification setting forth the number of Shares to be repurchased. Such repurchased shares shall be reflected on appropriate accounts maintained by Private Trust or its agent reflecting outstanding Shares of each Fund and Shares attributed to individual accounts. (e) Private Trust or is agent shall, upon receipt of the moneys paid to it by the Custodian for the repurchase of Shares, pay such moneys as are received from the Custodian, all in accordance with the procedures described in the written instruction received by Private Trust or its agent from the Fund. (f) Private Trust or its agent shall not process or effect any repurchase with respect to Shares of a Fund after receipt by Private Trust or its agent of notification of the suspension of the determination of the net asset value of the Fund. 7. Dividends (a) Upon the declaration of each dividend and each capital gains distribution by the Board of Directors of a Fund with respect to Shares of the Fund, the Fund shall furnish or cause to be furnished to Private Trust or its agent a copy of a resolution of the Fund's Board of Directors certified by the Secretary of the Fund setting forth the date of the declaration of such dividend or distribution, the exdividend date; the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined; the amount payable per Share to the shareholders of record as of that date, the total amount payable to Private Trust or its agent on the payment date and whether such dividend or distribution is to be paid in Shares of such class at net asset value. (b) On or before the payment date specified in such resolution of the Board of Directors, a Fund will provide Private Trust with sufficient cash to make payment to the Shareholders of record as of such payment date. (c) If Private Trust or its agent does not receive sufficient cash from a Fund to make total dividend and/or distribution payments to all shareholders of the Fund as of the record date, Private Trust or its agent will, upon notifying the Fund, withhold payment to all Shareholders of record as of the record date until sufficient cash is provided to Private Trust or its agent. 8. Cash Management Services. Funds received by Private Trust in the course of performing its services hereunder will be held in demand deposit bank accounts or money market fund accounts in the name of Private Trust (or its nominee) as agent for the Funds. Private Trust shall be entitled to retain any interest, dividends, balance credits or fee reductions or other concessions or benefits earned or generated by or associated with such accounts or made available by the institution with which such accounts are maintained. 9. Lost Shareholders. Private Trust shall perform such services as are required in order to comply with Rules 17a24 and 17Ad17 of the 1934 Act (the "Lost Shareholder Rules"), including, but not limited to those set forth below. Private Trust may, in its sole discretion, use the services of a third party to perform some or all of such services. (a) documentation of electronic search policies and procedures; (b) execution of required searches; (c) creation and mailing of confirmation letters; (d) taking receipt of returned verification forms; (e) providing confirmed address corrections in batch via electronic media; (f) tracking results and maintaining data sufficient to comply with the Lost Shareholder Rules; and (g) preparation and submission of data required under the Lost Shareholder Rules. 10. Miscellaneous. In addition to and neither in lieu nor in contravention of the services set forth above, Private Trust shall: (i) perform all the customary services of a transfer agent, registrar, dividend disbursing agent and agent of the dividend reinvestment and cash purchase plan as described herein consistent with those requirements set forth as at the date of this Agreement; (ii) require proper forms of instructions, signatures and signature guarantees and any necessary documents supporting the opening of shareholder accounts, transfers and redemptions and other shareholder account transactions, all in conformance with Private Trust's present procedures with such changes or deviations therefrom as may be from time to time required or approved by a Fund, or the Fund's counsel or Private Trust's counsel and the rejection of orders or instructions not in good order in accordance with the applicable Fund prospectus; (iii) provide to the person designated by the Funds daily Blue Sky reports generated by Private Trust; (iv) provide to the Funds escheatment reports as reasonably requested by the Funds with respect to the status of the Funds' accounts and outstanding checks; and (v) maintain a current, duplicate set of the Funds' essential records at a secure separate location in a form available and usable forthwith in the event of any breakdown or disaster disruption of Private Trust's main operation. The detailed definition, frequency, limitations and associated costs (if any) set out in the attached fee schedule, include but are not limited to: maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies, tabulating proxies, mailing Shareholder reports to current Shareholders, withholding taxes on U.S. resident and nonresident alien accounts where applicable, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders. 11. Print/Mail Services. Private Trust shall perform print/mail services on behalf of the Funds with respect to the following items: (a) Daily, Monthly Quarterly and Annual Output Confirmations -Brokerage SB money market fund SWEEP transactions -Direct Accounts (nonbrokerage) all transactions -New account and Change of Allocation Welcome letters Checks: -Dividend -ACW -Commission -Daily Redemption Statements: -All Non Brokerage Accounts -Shareholder Statements -Dealer Statements -Dealer Statements (nonTransfer Agent) -Commission Statements Y/E Tax Forms -Nonbrokerage Accounts -Non-networked Accounts (b) Special Mailings (includes 6700, proxy except NSCC NT3) Report Mailings (quarterly, annual and semiannual) Prospectus Fulfillment & Mailings Shareholder/Information Letters SCHEDULE C FEE SCHEDULE 1. Standard Fees (a) Fees: See attached Exhibit I of Schedule C (c) An annual fee cap will apply to the following funds based on the fee schedule currently in place: Money Market Funds $13.00 Per Account All Other Funds Class A Shares $13.00 Per Account All Other Funds Class B & L Shares $14.50 Per Account 2. Print Mail Fees. (a) Standard Print Mail Services: DAILY WORK (CONFIRMS): HAND: $55/K with $75.00 minimum (includes 1 insert, other than prospectuses) $0.07/each additional insert MACHINE: $32/K with $50.00 minimum (includes 1 insert, other than prospectuses) DAILY CHECKS: HAND: $55/K with $75.00 minimum daily (includes 1 insert) $0.06/each additional insert MACHINE: $32/K with $50.00 minimum (includes 1 insert) $0.01/each additional insert * There is a $2.50 charge for each 3606 Form sent. STATEMENTS: HAND: $60/K with $50.00 minimum (includes 1 insert) $0.06/each additional insert $125/K for intelligent inserting MACHINE: $40/K with $50.00 minimum (includes 1 insert) $0.01 each additional insert $45/K for intelligent inserting PERIODIC CHECKS: HAND: $60/K with $75.00 minimum (includes 1 insert) $0.06/each additional insert MACHINE: $40/K with $75.00 minimum (includes 1 insert) $0.01/each additional insert LISTBILLS: $60/K with $50.00 minimum PRINTING CHARGES: $0.06/per confirm/statement/page $0.08/per check FOLDING ASSOCIATED WITH PREPRINTED OR CREATED COLLATERAL: Folding (Machine): $14/K Folding (Hand): $.09 each PRESORT CHARGE: $0.277 postage rate $0.035 per piece Fast Forward $0.20 / hit COURIER CHARGE: $15.00 for each on call courier trip/or actual cost for on demand OVERNIGHT CHARGE: $2.50 per package service charge plus Federal Express/Airborne charge INVENTORY STORAGE: $15.00 for each inventory location as of the 15th of the month INVENTORY RECEIPT: $20.00 for each SKU /Shipment HOURLY WORK; SPECIAL PROJECTS, OPENING ENVELOPES, ETC ...: $24.00 per hour SPECIAL PULLS: $2.50 per account pull BOXES/ENVELOPES: Shipping boxes $0.85 each Oversized Envelopes $0.45 each Cutting Charges: $10.00/K (b) Special Mailings. This pricing is based on appropriate notification (standard of 30 day notification) and scheduling for special mailings. Scheduling requirements include having collateral arrive at agreed upon times in advance of deadlines. TAPE WORK: $125.00 to create an admark tape $8.00/K to zip + 4 data enhance with $125.00 minimum $75.00/hr for any data manipulation $6.00/K combo charge ADMARK & MACHINE INSERT #10, #11, 6x9: $56/K to admark envelope and machine insert 1 piece, with $125.00 min $2.50/K for each additional insert $34/K to admark only with $75.00 minimum $25.00/K hand sort 9x12: $125/K to admark envelope and machine insert 1 piece, with $125.00 min $5.00/K for each additional insert $38/K to admark only with $75.00 minimum $0.08 for each hand insert ADMARK & HAND INSERT #10, #11, 6x9: $0.08 for each hand insert $25.00/K hand sort 9x12: $0.09 for each hand insert $25.00/K hand sort PRESSURE/SENSITIVE LABELS: $0.26 each to create, affix and hand insert 1 piece, with a $75.00 minimum $0.06 for each hand insert $0.10 to affix labels only $0.10 to create labels only LEGAL DROP: $150.00 / compliant legal drop per job and processing fees CREATE MAILING LIST: $0.40 per entry with $75.00 minimum PRESORT FEE: $0.027 per piece 3. Miscellaneous Service Charges. (a) NSCC/Networking $.15 per transaction $.10 per same day trade NSCC Asset Allocation: Setup of $25,000 plus: $.25 per trade (b) Regulatory Fiduciary Processing Fees* IRA Accounts: $10 one-time setup fee $10 per fund account capped at $15 per annum 403(b)(7), Keough, 401(k) accounts: $10 one-time setup fee $15 per account, per annum Average Cost: $.15 per eligible account per month *current pricing for existing Funds (c) ACH/COPS Processing: OOP's (d) Remote Third Party Access: CompuServe OOP's Fixed Line OOP's SCHEDULE D OUT-OF-POCKET EXPENSES 1. Out-of-Pockets. Each Fund shall reimburse Private Trust monthly for applicable outofpocket expenses, including, but not limited to the following items: Microfiche/microfilm. production Magnetic media tapes and freight Postage-direct pass through to the Fund Telephone and telecommunication costs, including all lease, maintenance and line costs Proxy solicitations, mailings, tabulations and reports relating thereto Shipping, Certified and Overnight mail and insurance Terminals, communication lines, printers and other equipment and any expenses incurred in connection with such terminals and lines Duplicating services Courier services Federal Reserve charges for check clearance Overtime Temporary staff Travel, as approved in advance by the Fund Record retention, retrieval and destruction costs, including, but not limited to exit fees charged by third party record keeping vendors Such other miscellaneous expenses reasonably incurred by Private Trust in performing its duties and responsibilities under this Agreement. Each Fund shall pay postage and mailing expenses on the day of or prior to mailing as agreed with Private Trust. In addition, each Fund will promptly reimburse Private Trust for any other unscheduled expenses incurred by Private Trust whenever the Fund and Private Trust mutually agree that such expenses are not otherwise properly borne by Private Trust as part of its duties and obligations under the Agreement. 2. Other Charges. Pre-Printed Stock, including business forms, certificates, envelopes, checks and stationery. COLD Storage Digital Recording Incoming and outgoing wire charges
EXHIBIT I OF SCHEDULE C SMITH BARNEY FUNDS FEE SCHEDULE ------------------------ Per Acct Fees FUND Class CONCERT INVESTMENT SERIES 1 A B ------------------------ Emerging Growth Fund 11.00 11.00 12.50 Government Fund 11.00 11.00 12.50 Growth Fund 11.00 11.00 12.50 Growth and Income Fund 11.00 11.00 12.50 International Equity Fund 11.00 11.00 12.50 Municipal Fund 11.00 11.00 12.50 --------------------------------------------- ----------------------------- 401K Fees Per Acct Per Acct Fees Basis Points --------------------------------------------- Class Class 1 A B L O Y Z Other A B L O Other --------------------------------------------- ----------------------------- CONSULTING GROUP CAPITAL MARKETS FUNDS Balanced Investment 8.50 Emerging Market Equity Investment 8.50 Government Money Investments 10.25 High Yield Investments 8.50 Intermediate Fixed Income Investments 8.50 International Equity Investments 8.50 International Fixed Income Investments 8.50 Large Capitalization Growth Investments 8.50 Long-Term Bond Investments 8.50 Mortgage Backed Investments 8.50 Municipal Bond Investments 8.50 Small Capitalization Growth Investments 8.50 Small Capitalization Value Equity Investments 8.50 GREENWICH STREET SERIES FUND (VARIABLE ANNUITY) Appreciation Portfolio 5,000/yr Flat Fee Diversified Strategic Income Portfolio 5,000/yr Flat Fee Emerging Growth Portfolio 5,000/yr Flat Fee Equity Income Portfolio 5,000/yr Flat Fee Equity Index Portfolio 5,000/yr Flat Fee Growth & Income Portfolio 5,000/yr Flat Fee Intermediate High Grade Bond Portfolio 5,000/yr Flat Fee International Equity Portfolio 5,000/yr Flat Fee Money Market Portfolio 5,000/yr Flat Fee Total Return Portfolio 5,000/yr Flat Fee SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND 11.00 12.50 0.0320% 0.0400% 0.0650% SMITH BARNEY AGGRESSIVE GROWTH FUND INC. 11.00 12.50 12.50 9.50 8.50 0.0970% 0.1530% 0.1030% SMITH BARNEY APPRECIATION FUND INC. 11.00 12.50 12.50 9.50 8.50 0.0960% 0.1310% 0.1300% SMITH BARNEY ARIZONA MUNICIPALS FUND INC. 9.50 0.0220% 0.0320% 0.0180% SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC. 9.50 0.0170% 0.0310% 0.0290% --------------------------------------------- ----------------------------- 401K Fees Per Acct Per Acct Fees Basis Points --------------------------------------------- Class Class 1 A B L O Y Z Other A B L O Other --------------------------------------------- ----------------------------- SMITH BARNEY CONCERT ALLOCATION SERIES, INC. Balanced Portfolio 11.00 12.50 12.50 9.50 8.50 0.1000% 0.1000% 0.1000% Conservative Portfolio 11.00 12.50 12.50 9.50 8.50 0.0650% 0.0650% 0.0650% Growth Portfolio 11.00 12.50 12.50 9.50 8.50 0.1000% 0.1000% 0.1000% High Growth Portfolio 11.00 12.50 12.50 9.50 8.50 0.1000% 0.1000% 0.1000% Income Portfolio 11.00 12.50 12.50 9.50 8.50 0.0650% 0.0650% 0.0650% Global Portfolio 11.00 12.50 12.50 9.50 0.1000% 0.1000% 0.1000% Select Balanced Portfolio (variable annuity) 5,000/yr Flat Fee Select Conservative Portfolio (variable annuity) 5,000/yr Flat Fee Select Growth Portfolio (variable annuity) 5,000/yr Flat Fee Select High Growth Portfolio (variable annuity) 5,000/yr Flat Fee Select Income Portfolio (variable annuity) 5,000/yr Flat Fee SMITH BARNEY EQUITY FUNDS Concert Social Awareness Fund 11.00 12.50 12.50 9.50 0.1100% 0.1130% 0.1140% Smith Barney Large Cap Blend Fund 11.00 12.50 12.50 12.50 9.50 0.1200% 0.1220% 0.1000% 0.1210% SMITH BARNEY FUNDAMENTAL VALUE FUND INC. 11.00 12.50 12.50 9.50 0.0990% 0.1230% 0.1280% SMITH BARNEY FUNDS, INC. Large Cap Value Fund 11.00 12.50 12.50 9.50 8.50 0.0660% 0.1090% 0.0930% Short-Term High Grade Bond Fund 11.00 9.50 0.0630% US Government Securities Fund 11.00 12.50 12.50 9.50 8.50 0.0390% 0.0450% 0.0550% SMITH BARNEY INCOME FUNDS Smith Barney Balanced Fund 11.00 12.50 12.50 12.50 9.50 8.50 0.1200% 0.0900% 0.1000% 0.0950% Smith Barney Convertible Fund 11.00 12.50 12.50 12.50 9.50 0.1260% 0.0220% 0.1000% 0.1470% Smith Barney Diversified Strategic Income Fund 11.00 12.50 12.50 9.50 8.50 0.0900% 0.0620% 0.0720% Smith Barney Exchange Reserve Fund 12.50 12.50 0.0700% 0.0950% Smith Barney High Income Fund 11.00 12.50 12.50 9.50 8.50 0.0780% 0.0720% 0.0550% Smith Barney Municipal High Income Fund 9.50 0.0390% 0.0330% 0.0670% Smith Barney Premium Total Return Fund 11.00 12.50 12.50 12.50 9.50 0.0900% 0.0830% 0.1000% 0.1040% Smith Barney Total Return Bond Fund 11.00 12.50 12.50 9.50 0.0650% 0.0650% 0.0650% SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND, INC. Cash Portfolio 0.0175% 0.0175% Government Portfolio 0.0175% 0.0175% Municipal Portfolio 0.0175% 0.0175% SMITH BARNEY INVESTMENT FUNDS INC. Concert Peachtree Growth Fund 11.00 12.50 12.50 9.50 0.1740% 0.2070% 0.0990% Smith Barney Contrarian Fund 11.00 12.50 12.50 9.50 8.50 0.0960% 0.1150% 0.0990% Smith Barney Government Securities Fund 11.00 12.50 12.50 9.50 0.7050% 0.0920% 0.1050% Smith Barney Hansberger Global Small Cap Value Fund 11.00 12.50 12.50 9.50 0.1000% 0.1000% 0.1000% Smith Barney Hansberger Global Value Fund 11.00 12.50 12.50 9.50 0.1000% 0.1000% 0.1000% Smith Barney Investment Grade Bond Fund 11.00 12.50 12.50 9.50 0.0760% 0.0720% 0.0640% Smith Barney Special Equities Fund 11.00 12.50 12.50 9.50 8.50 0.1200% 0.1120% 0.1220% SMITH BARNEY INVESTMENT TRUST Smith Barney Intermediate Maturity 9.50 0.0340% 0.0450% California Municipals Fund Smith Barney Intermediate Maturity New York 9.50 0.0370% 0.0600% Municipals Fund Smith Barney Large Capitalization Growth Fund 11.00 12.50 12.50 9.50 0.1000% 0.1000% 0.1000% Smith Barney S&P Index Fund 11.00 12.50 12.50 8.50 0.1000% Smith Barney Mid Cap Blend Fund 11.00 12.50 12.50 9.50 0.1000% 0.1000% 0.1000% SMITH BARNEY MANAGED GOVERNMENTS FUND INC. 11.00 12.50 12.50 9.50 0.0680% 0.0850% 0.0710% SMITH BARNEY MANAGED MUNICIPALS FUND INC. 9.50 0.0205% 0.0375% 0.0370% SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND INC. 9.50 0.0270% 0.0370% 0.0170% --------------------------------------------- ----------------------------- 401K Fees Per Acct Per Acct Fees Basis Points --------------------------------------------- Class Class 1 A B L O Y Z Other A B L O Other --------------------------------------------- ----------------------------- SMITH BARNEY MONEY FUNDS, INC. Cash Portfolio 12.50 10.25 10.25 10.25 0.1020% 0.0510% Government Portfolio 12.50 10.25 10.25 10.25 0.0620% 0.0420% Retirement Portfolio 0.1220% SMITH BARNEY MINI FUNDS California Money Market Portfolio 10.25 0.0260% Florida Portfolio 9.50 0.0200% 0.0270% 0.0490% Georgia Portfolio 9.50 0.0240% 0.0450% 0.0380% Limited Term Portfolio 9.50 0.0200% 0.0350% National Portfolio 9.50 0.0220% 0.0210% 0.0420% New York Money Market Portfolio 10.25 0.0350% New York Portfolio 9.50 0.0320% 0.0510% 0.0480% Pennsylvania Portfolio 9.50 0.0210% 0.0360% 0.0430% SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. 10.25 0.0340% SMITH BARNEY NATURAL RESOURCES FUND INC. 11.00 12.50 12.50 9.50 0.2710% 0.1950% 0.1090% SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC. 9.50 0.0270% 0.0410% 0.0420% SMITH BARNEY OREGON MUNICIPALS FUND 9.50 0.0320% 0.0460% 0.0360% SMITH BARNEY PRINCIPAL RETURN FUND Zeros Plus Emerging Growth Series 2000 0.1040% Smith Barney Security and Growth Fund 2005 0.1120% SMITH BARNEY SMALL CAP BLEND FUND, INC. 11.00 12.50 12.50 9.50 0.1000% 0.1000% 0.1000% SMITH BARNEY TELECOMMUNICATIONS TRUST Smith Barney Telecommunications Income Fund 11.00 0.0290% GREENWICH STREET SERIES FUND (VARIABLE ANNUITY) Income and Growth Portfolio 5,000/yr Flat Fee Reserve Account Portfolio 5,000/yr Flat Fee U.S. Government/High Quality Securities Portfolio 5,000/yr Flat Fee SMITH BARNEY WORLD FUNDS, INC. Emerging Markets Portfolio 11.00 12.50 12.50 9.50 0.1168% 0.1162% 0.1183% European Portfolio 11.00 12.50 12.50 9.50 0.1655% 0.1635% 0.1450% Global Government Bond Portfolio 11.00 12.50 12.50 9.50 0.0920% 0.1215% 0.0941% International Balanced Portfolio 11.00 12.50 12.50 9.50 0.0972% 0.1161% 0.1330% International Equity Portfolio 11.00 12.50 12.50 9.50 8.50 0.1005% 0.1367% 0.1406% Pacific Portfolio 11.00 12.50 12.50 9.50 0.0990% 0.1580% 0.2000% TRAVELERS SERIES FUND (VARIABLE ANNUITY) AIM Capital Appreciation Portfolio 5,000/yr Flat Fee Alliance Growth Portfolio 5,000/yr Flat Fee GT Global Strategic Income Portfolio 5,000/yr Flat Fee MFS Total Return Portfolio 5,000/yr Flat Fee Putnam Diversified Income Portfolio 5,000/yr Flat Fee Smith Barney High Income Portfolio 5,000/yr Flat Fee Smith Barney Large Cap Value Portfolio 5,000/yr Flat Fee Smith Barney International Equity Portfolio 5,000/yr Flat Fee Smith Barney Large Capitalization Growth Portfolio 5,000/yr Flat Fee Smith Barney Money Market Portfolio 5,000/yr Flat Fee Smith Barney Pacific Basin Portfolio 5,000/yr Flat Fee TBC Managed Income Portfolio 5,000/yr Flat Fee Van Kampen American Capital Enterprise Portfolio 5,000/yr Flat Fee FEDERATED HIGH YIELD PORTFOLIO (VARIABLE ANNUITY) 5,000/yr Flat Fee FEDERATED STOCK PORTFOLIO (VARIABLE ANNUITY) 5,000/yr Flat Fee LAZARD INTERNATIONAL EQUITY PORTFOLIO (VARIABLE ANNUITY) 5,000/yr Flat Fee MFS EMERGING GROWTH PORTFOLIO (VARIABLE ANNUITY) 5,000/yr Flat Fee TRAVELERS SERIES TRUST (VARIABLE ANNUITY) Travelers O Coupon Bond FD 1998 5,000/yr Flat Fee Travelers O Coupon Bond FD 2000 5,000/yr Flat Fee Travelers O Coupon Bond FD 2005 5,000/yr Flat Fee Social Awareness Stock Portfolio 5,000/yr Flat Fee US Government Securities Portfolio 5,000/yr Flat Fee Utilities Portfolio 5,000/yr Flat Fee Convertible Bond Portfolio 5,000/yr Flat Fee Disciplined Small Cap Stock Portfolio 5,000/yr Flat Fee Strategic Stock Portfolio 5,000/yr Flat Fee MFS Research Portfolio 5,000/yr Flat Fee MFS Mid Cap Growth Portfolio 5,000/yr Flat Fee NWQ Large Cap Portfolio 5,000/yr Flat Fee Juriak & Voyles Core Equity Portfolio 5,000/yr Flat Fee TRAVELERS FUNDS (VARIABLE ANNUITY) Capital Appreciation Fund 5,000/yr Flat Fee Money Market Portfolio 5,000/yr Flat Fee High Yield Bond Trust 5,000/yr Flat Fee Mid Cap Disciplined Equity Fund 5,000/yr Flat Fee Managed Assets Trust 5,000/yr Flat Fee TRAVELERS QUALITY BOND PORTFOLIO (VARIABLE ANNUITY) 5,000/yr Flat Fee THE FUND FOR STABLE VALUE INVESTMENTS 8.50
EX-99.H(2) 8 0008.txt TRANSFER AGENCY LTR. AGMT. Exhibit h(2) CitiFunds Trust I 21 Milk Street, 5th Floor Boston, Massachusetts 02109 __________ __, 2000 Citi Fiduciary Trust Company 388 Greenwich Street New York, New York 10013 Re: CitiFunds Trust I - Transfer Agency and Service Agreement Ladies and Gentlemen: This letter serves as notice that Citi 1000 Index Portfolio, Citi Small Cap Index Portfolio, Citi Global Titans Index Portfolio, Citi Nasdaq 100 Portfolio, Citi U.S. Bond Index Portfolio, Citi Financial Services Portfolio, Citi Health Sciences Portfolio and Citi Technology Portfolio (collectively, the "Series"), are added to the list of series to which Citi Fiduciary Trust Company ("Citi Fiduciary") renders services as transfer agent pursuant to the terms of the Transfer Agency and Service Agreement dated as of October 1, 1999 (the "Agreement") between each of the investment companies listed on Schedule A thereto and Citi Fiduciary (formerly known as, "Smith Barney Private Trust Company"). Please sign below to acknowledge your receipt of this notice adding the Series as beneficiaries under the Agreement. CITIFUNDS TRUST I By:___________________________ Title:________________________ Acknowledgment: CITI FIDUCIARY TRUST COMPANY By:__________________________ Title:_______________________ EX-99.I 9 0009.txt OPINION OF COUNSEL Exhibit i DRAFT ________ __, 2000 CitiFundsSM Trust I 25 Milk Street Boston, Massachusetts 02109 Ladies and Gentlemen: We have acted as counsel to CitiFunds Trust I, a Massachusetts business trust (the "Trust"), in connection with Post-Effective Amendment Number 40 to the Trust's Registration Statement filed with the Securities and Exchange Commission on June __, 2000 (the "Amendment"), with respect to the Trust's series Citi Financial Services Portfolio, Citi Health Sciences Portfolio, and Citi Technology Portfolio (collectively, the "Funds"). In connection with this opinion, we have examined the following described documents: (a) the Amendment; (b) a certificate of the Secretary of State of the Commonwealth of Massachusetts as to the existence of the Trust; (c) copies, certified by the Secretary of State of the Commonwealth of Massachusetts, of the Trust's Declaration of Trust and of all amendments thereto on file in the office of the Secretary of State; and (d) a certificate executed by the President of the Trust, certifying as to, and attaching copies of, the Trust's By-Laws and certain votes of the Trustees of the Trust authorizing the issuance of shares of the Funds. In such examination, we have assumed the genuineness of all signatures, the conformity to the originals of all of the documents reviewed by us as copies, the authenticity and completeness of all documents reviewed by us in original or copy form and the legal competence of each individual executing any document. This opinion is based entirely on our review of the documents listed above. We have made no other review or investigation of any kind whatsoever, and we have assumed, without independent inquiry, the accuracy of the information set forth in such documents. This opinion is limited solely to the laws of the Commonwealth of Massachusetts (other than the Massachusetts Uniform Securities Act, as to which we express no opinion) as applied by courts in such Commonwealth to the extent such laws may apply to or govern the matters covered by this opinion. We understand that all of the foregoing assumptions and limitations are acceptable to you. Based upon and subject to the foregoing, please be advised that it is our opinion that the shares of the Funds, when issued and sold in accordance with the Amendment and the Trust's Declaration of Trust and By-laws, will be legally issued, fully paid and non-assessable, except that, as set forth in the Amendment, shareholders of the Funds may under certain circumstances be held personally liable for the Trust's obligations. We hereby consent to the filing of this opinion as an exhibit to the Amendment. Very truly yours, BINGHAM DANA LLP EX-99.M 10 0010.txt FORM OF SERVICE PLAN Exhibit m FORM OF SERVICE PLAN SERVICE PLAN, dated as of ________ __, 2000, of CitiFunds Trust I, a Massachusetts trust (the "Trust"), with respect to shares of beneficial interest of its series Citi 1000 Index Portfolio, Citi Small Cap Index Portfolio, Citi Global Titans Index Portfolio, Citi Nasdaq 100 Portfolio and Citi U.S. Bond Index Portfolio (collectively, the "Index Series"); Citi Financial Services Portfolio, Citi Health Sciences Portfolio and Citi Technology Portfolio (collectively, the "Sector Series"); and any other series of the Trust adopting this plan (collectively, with the Index Series and the Sector Series, the "Series"). This Plan relates solely to the shares of beneficial interest of each Series which are designated "Class A" ("Shares"). WHEREAS, the Trust engages in business as an openend management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Trust's shares of beneficial interest are divided into separate series representing interests in separate funds of securities and other assets; WHEREAS, the Trust intends to distribute Shares in accordance with Rule 12b-1 under the 1940 Act, and wishes to adopt this Plan as a plan of distribution pursuant to Rule 12b-1; WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not interested persons of the Trust (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of this Plan or in any agreement relating hereto (the "NonInterested Trustees"), having determined, in the exercise of reasonable business judgment and in light of their fiduciary duties under state law and under Section 36(a) and (b) of the 1940 Act, that there is a reasonable likelihood that this Plan will benefit the Trust and the shareholders of the Series, have approved this Plan by votes cast at a meeting called for the purpose of voting hereon and on any agreements related hereto; NOW, THEREFORE, the Trust hereby adopts this Plan as a plan of distribution in accordance with Rule 12b-1 under the 1940 Act, with the terms of the Plan being as follows: 1. Distribution and Servicing Activities. Subject to the supervision of the Trustees of the Trust, the Trust may: (a) engage, directly or indirectly, in any activities primarily intended to result in the sale of Shares of the Series, which activities may include, but are not limited to (i) payments to the Trust's Distributor for distribution services, (ii) payments to securities dealers, financial institutions (which may include banks) and others in respect of the sale of Shares of the Series, (iii) payments for advertising, marketing or other promotional activity, and (iv) payments for preparation, printing, and distribution of prospectuses and statements of additional information and reports of the Trust for recipients other than regulators and existing shareholders of the Trust; and (b) make payments, directly or indirectly, to the Trust's Distributor, securities dealers, financial institutions (which may include banks) and others for providing personal service and/or the maintenance of shareholder accounts. The Trust is authorized to engage in the activities listed above either directly or through other persons with which the Trust has entered into agreements related to this Plan. 2. Maximum Expenditures. The expenditures to be made by the Trust pursuant to this Plan and the basis upon which payment of such expenditures will be made shall be determined by the Trustees of the Trust, but in no event may such expenditures exceed an amount calculated at the rate of 0.20% per annum of the average daily net assets attributable to the Shares of each Index Series or the rate of 0.25% per annum of the average daily net assets attributable to the Shares of each Sector Series. Payments pursuant to this Plan may be made directly by the Trust or to other persons with which the Trust has entered into agreements related to this Plan. For purposes of determining the fees payable under this Plan, the value of each Series' average daily net assets attributable to Shares shall be computed in the manner specified in the applicable Series' then-current prospectus and statement of additional information. 3. Trust's Expenses. The Trust shall pay all expenses of its operations, including the following, and such expenses shall not constitute expenditures under this Plan: organization costs of each Series; compensation of Trustees who are not "interested persons" of the Trust; governmental fees; interest charges; loan commitment fees; taxes; membership dues in industry associations allocable to the Trust; fees and expenses of independent auditors, legal counsel and any transfer agent, distributor, shareholder servicing agent, registrar or dividend disbursing agent of the Trust; expenses of issuing and redeeming shares of beneficial interest and servicing shareholder accounts; expenses of preparing, typesetting, printing and mailing prospectuses, statements of additional information, shareholder reports, notices, proxy statements and reports to governmental officers and commissions and to existing shareholders of the Series; expenses connected with the execution, recording and settlement of security transactions; insurance premiums; fees and expenses of the custodian for all services to the Series, including safekeeping of funds and securities and maintaining required books and accounts; expenses of calculating the net asset value of the Series (including but not limited to the fees of independent pricing services); expenses of meetings of shareholders; expenses relating to the issuance, registration and qualification of shares; and such non-recurring or extraordinary expenses as may arise, including those relating to actions, suits or proceedings to which the Trust may be a party and the legal obligation which the Trust may have to indemnify its Trustees and officers with respect thereto. 4. Term and Termination. (a) This Plan shall become effective as to a Series upon (i) approval by a vote of at least a majority of the outstanding voting securities (as defined in the 1940 Act) of Shares of the particular Series, and (ii) approval by a majority of the Trustees of the Trust and a majority of the Non-Interested Trustees cast in person at a meeting called for the purpose of voting on this Plan. Unless terminated as herein provided, this Plan shall continue in effect for one year from the date hereof and shall continue in effect for successive periods of one year thereafter, but only so long as each such continuance is specifically approved by votes of a majority of both the Trustees of the Trust and the Non-Interested Trustees, cast in person at a meeting called for the purpose of voting on such approval. (b) This Plan may be terminated at any time with respect to any Series by a vote of a majority of the NonInterested Trustees or by a vote of a majority of the outstanding voting securities, as defined in the 1940 Act, of Shares of the applicable Series. 5. Amendments. This Plan may not be amended to increase materially the maximum expenditures permitted by Section 2 hereof unless such amendment is approved by a vote of the majority of the outstanding voting securities, as defined in the 1940 Act, of Shares of the applicable Series, and no material amendment to this Plan shall be made unless approved in the manner provided for annual renewal of this Plan in Section 4(a) hereof. 6. Selection and Nomination of Trustees. While this Plan is in effect, the selection and nomination of the Non-Interested Trustees of the Trust shall be committed to the discretion of such Non-Interested Trustees. 7. Quarterly Reports. The Treasurer of the Trust shall provide to the Trustees of the Trust and the Trustees shall review quarterly a written report of the amounts expended pursuant to this Plan and any related agreement and the purposes for which such expenditures were made. 8. Recordkeeping. The Trust shall preserve copies of this Plan and any related agreement and all reports made pursuant to Section 7 hereof, for a period of not less than six years from the date of this Plan. Any such related agreement or such reports for the first two years will be maintained in an easily accessible place. 9. Governing Law. This Plan shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts and the provisions of the 1940 Act. -----END PRIVACY-ENHANCED MESSAGE-----