-----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, FYdzsWBt2c5N4XkrxmpXO4cxM3VQCF4oO7iblVkUK6NWEpz0oBkEPZUfQmw5rhrc f9q84b7T/7hKbdb6oraARw== 0000950156-04-000293.txt : 20041230 0000950156-04-000293.hdr.sgml : 20041230 20041229175733 ACCESSION NUMBER: 0000950156-04-000293 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20041230 DATE AS OF CHANGE: 20041229 EFFECTIVENESS DATE: 20041230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIFUNDS TRUST I CENTRAL INDEX KEY: 0000744388 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-90518 FILM NUMBER: 041232146 BUSINESS ADDRESS: STREET 1: 125 BROAD ST 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2122292554 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIFUNDS TRUST I CENTRAL INDEX KEY: 0000744388 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04006 FILM NUMBER: 041232147 BUSINESS ADDRESS: STREET 1: 125 BROAD ST 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2122292554 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 485BPOS 1 d61912.txt CITIFUNDS TRUST I AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 29, 2004 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. 74 AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 75 CITIFUNDS TRUST I* (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) 125 BROAD STREET, NEW YORK, NEW YORK 10004 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 451-2010 ROBERT I. FRENKEL, Esq. 300 FIRST STAMFORD PLACE 4TH FLOOR STAMFORD, CONNECTICUT 06902 (NAME AND ADDRESS OF AGENT FOR SERVICE) COPY TO: ROGER P. JOSEPH, Esq. BINGHAM MCCUTCHEN LLP, 150 FEDERAL STREET BOSTON, MASSACHUSETTS 02110 ------------------- It is proposed that this filing will become effective on December 29, 2004 pursuant to paragraph (b) of Rule 485. *This filing relates solely to shares of the Trust's series Citi Institutional Money Reserves. Liquid Reserves Portfolio has also executed this Registration Statement. PROSPECTUS ---------- ---------------------------------------- CITI(SM) INSTITUTIONAL MONEY RESERVES CLASS A SHARES ---------------------------------------- December 31, 2004 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. [logo] CITIFUNDS(R) --------------------------- INSTITUTIONAL SERIES -------------------------------------------------------------------------- INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE -------------------------------------------------------------------------- TABLE OF CONTENTS FUND AT A GLANCE ...................................................... 3 Fund Goal ....................................................... 4 Main Investment Strategies ...................................... 4 Main Risks ...................................................... 4 FUND PERFORMANCE ...................................................... 5 FUND FEES AND EXPENSES ................................................ 6 Shareholder Fees ................................................ 6 Annual Fund Operating Expenses .................................. 6 Example ......................................................... 6 YOUR ACCOUNT .......................................................... 7 How To Buy Shares ............................................... 7 How The Price Of Your Shares Is Calculated ...................... 7 How To Sell Shares .............................................. 7 Exchanges ....................................................... 8 Frequent Purchases and Redemptions of Fund Shares ............... 8 Dividends ....................................................... 9 Tax Matters ..................................................... 9 MANAGEMENT OF THE FUND ................................................ 10 Management ...................................................... 10 Management Fees ................................................. 10 Distribution Arrangements ....................................... 10 Recent Developments ............................................. 11 MORE ABOUT THE FUND ................................................... 12 Principal Investment Strategies, Related Risks and Disclosure of Portfolio Holdings ............................... 12 FUND AT A GLANCE Citi Institutional Money Reserves is a money market fund. Money market funds must follow strict rules about the quality, maturity and other features of securities they purchase. The Fund tries to maintain a share price of $1.00 while paying income to shareholders. However, no money market fund guarantees that you will receive your money back. CITI INSTITUTIONAL MONEY RESERVES This summary briefly describes Citi Institutional Money Reserves and the principal risks of investing in it. For more information, see MORE ABOUT THE FUND on page 12. FUND GOAL The Fund's goal is to provide shareholders with liquidity and as high a level of current income as is consistent with preservation of capital. Of course, there is no assurance that the Fund will achieve its goal. MAIN INVESTMENT STRATEGIES The Fund invests only in high quality, short-term money market instruments denominated in U.S. dollars. These may include: o obligations of U.S. and non-U.S. banks; o commercial paper and asset backed securities; o short-term obligations of the U.S. government and its agencies and instrumentalities, and repurchase agreements for these obligations; and o obligations issued or guaranteed by the governments of Western Europe, Australia, Japan and Canada. The Fund may invest more than 25% of its assets in bank obligations, such as certificates of deposit, fixed time deposits and bankers' acceptances. Please note that the Fund invests in securities through an underlying mutual fund. MAIN RISKS Investing in a mutual fund involves risk. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this Fund. Please remember that an investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The principal risks of investing in the Fund are described below. Please note that there are many other factors that could adversely affect your investment, and that could prevent the Fund from achieving its goal; these other factors are not described here. More information about risks appears in the Fund's Statement of Additional Information. Before investing, you should carefully consider the risks that you will assume. YIELD FLUCTUATION. The Fund invests in short-term money market instruments. As a result, the amount of income paid to you by the Fund will go up or down depending on day-to-day variations in short-term interest rates. Investing in high quality, short-term instruments may result in a lower yield (the income on your investment) than investing in lower quality or longer-term instruments. When interest rates are very low, as they have been recently, the Fund's expenses could absorb all or a significant portion of the Fund's income. CREDIT RISK. The Fund invests in debt securities that are rated, when the Fund buys them, in the highest short-term rating category by nationally recognized rating agencies or, if unrated, in the Manager's opinion are of comparable quality. However, it is possible that some issuers will be unable to make the required payments on debt securities held by the Fund. Debt securities also go up or down in value based on the perceived creditworthiness of issuers. A default on an investment held by the Fund could cause the value of your investment in the Fund to decline. INTEREST RATE AND MARKET RISK. A major change in interest rates or a significant decline in the market value of a Fund investment, or other market event, could cause the value of your investment in the Fund, or its yield, to decline. FOREIGN SECURITIES. You should be aware that investments in foreign securities involve risks relating to political, social and economic developments abroad, as well as risks resulting from the differences between the regulations to which U.S. and non-U.S. issuers and markets are subject. These risks may include expropriation of assets, confiscatory taxation, withholding taxes on dividends and interest paid on fund investments, fluctuations in currency exchange rates, currency exchange controls and other limitations on the use or transfer of assets by the Fund or issuers of securities, and political or social instability. In addition, foreign companies may not be subject to accounting standards or governmental supervision comparable to U.S. companies, and there may be less public information about their operations. Foreign markets may be less liquid and more volatile than U.S. markets. As a result, there may be rapid changes in the value of foreign securities. Foreign markets also may offer less protection to investors, such as the Fund. CONCENTRATION IN THE BANKING INDUSTRY. The Fund may concentrate in bank obligations. This means that an investment in the Fund may be particularly susceptible to adverse events affecting the banking industry. Banks are highly regulated. Decisions by regulators may limit the loans banks make and the interest rates and fees they charge, and may reduce bank profitability. Banks also depend on being able to obtain funds at reasonable costs to finance their lending operations. This makes them sensitive to changes in money market and general economic conditions. When a bank's borrowers get in financial trouble, their failure to repay the bank will also affect the bank's financial situation. FUND PERFORMANCE Because the Fund is a new fund, performance information for the Fund is not included in this Prospectus. FUND FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold Class A shares of the Fund. FEE TABLE SHAREHOLDER FEES - Fees Paid Directly From Your Investment - ------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases None Maximum Deferred Sales Charge (Load) None ANNUAL FUND OPERATING EXPENSES(1) Expenses That Are Deducted From Fund Assets - ------------------------------------------------------------------------------- Management Fees 0.25% Distribution (12b-1) Fees (includes service fees) 0.10% Other Expenses(2) 0.08% - ------------------------------------------------------------------------------- Total Annual Operating Expenses* 0.43% - ------------------------------------------------------------------------------- * Because of voluntary waivers and/or reimbursements actual total operating expenses are expected to be: 0.20% These fee waivers and reimbursements may be reduced or terminated at any time. (1) The Fund invests in securities through an underlying mutual fund, Liquid Reserves Portfolio (formerly Cash Reserves Portfolio). This table reflects the expenses of both the Fund and Liquid Reserves Portfolio. (2) The amount set forth in "Other Expenses" has been estimated based on expenses the Fund expects to incur during its current fiscal year. - ------------------------------------------------------------------------------- EXAMPLE - ------------------------------------------------------------------------------- This example helps you compare the costs of investing in the Fund with the costs of investing in other mutual funds. Your actual costs may be higher or lower. The example assumes that: o you invest $10,000 in the 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 the Fund's future performance; and o the Fund's operating expenses as shown in the table remain the same -- the example does not include voluntary waivers and reimbursements. Although your actual costs may be higher or lower, based on these assumptions your costs would be: CITI INSTITUTIONAL MONEY RESERVES 1 YEAR 3 YEARS - ------------------------------------------------------------------------------- Class A Shares $44 $138 - ------------------------------------------------------------------------------- YOUR ACCOUNT HOW TO BUY SHARES Shares of the Fund are offered continuously and purchases may be made Monday through Friday, except on certain holidays. Class A shares may be purchased from the Fund's distributor, or from financial institutions, such as federal or state-chartered banks, trust companies, savings and loan associations or savings banks, or broker-dealers that have entered into a service agreement with the distributor concerning the Fund (called Service Agents). For more information, or to purchase Class A shares directly from the Fund, please call the Fund at 1-800-331-1792, toll-free. Shares are purchased at net asset value (normally $1.00 per share) the next time it is calculated after your order and the purchase price in federal or other immediately available funds are received in proper form by the Fund. If you pay by check, your order is effective when the check clears. The Fund does not impose any minimum initial or subsequent investment requirements but your Service Agent may. The Fund and the distributor have the right to reject any purchase order or cease offering Fund shares at any time. If you hold your shares through a Service Agent, your Service Agent will establish and maintain your account and be the shareholder of record. In the event that the Fund holds a shareholder meeting, your Service Agent, as record holder, will vote your shares in accordance with your instructions. If you do not give your Service Agent voting instructions, your Service Agent may vote your shares proportionately in accordance with the votes cast by other shareholders for whom your Service Agent acts. If you wish to transfer your account, you may transfer it to another financial institution that acts as a Service Agent, or you may set up an account directly with the Fund's sub-transfer agent. HOW THE PRICE OF YOUR SHARES IS CALCULATED The Fund calculates its net asset value (NAV) at 4:00 p.m. Eastern time every day the New York Stock Exchange is open for trading. On days when the financial markets in which the Fund invests close early, NAV may be calculated as of the earlier close of those markets. The Fund's securities are valued at amortized cost, which is approximately equal to market value. 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 Fund's sub- 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. All redemption requests must be in proper form, as determined by the sub-transfer agent. Your Service Agent is responsible for promptly submitting redemption requests to the Fund's sub- transfer agent. For your protection, the Fund may request documentation for large redemptions or other unusual activity in your account. The price of any redemption of Fund shares will be the NAV (normally $1.00 per share) the next time it is calculated after your redemption request has been received by the sub-transfer agent. Fund shares are redeemed without a sales charge. You will receive your redemption proceeds in federal funds normally on the business day on which you sell your shares, or if your redemption request is received by the sub-transfer agent after 4:00 p.m., on the next business day. If Fedwire or the applicable Federal Reserve Bank is closed on the day your redemption proceeds would otherwise be paid, payment of the redemption proceeds may be delayed one additional business day. Your redemption proceeds also may 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. The 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. Your Service Agent may impose a minimum account balance requirement. If so, your Service Agent reserves the right to close your account if it falls below the required minimum amount. You will have 60 days to make an additional investment. If you do not increase your balance, your Service Agent may close your account and send the proceeds to you. Your shares will be sold at net asset value (normally $1.00 per share) on the day your account was closed. Please consult your Service Agent for more information. The Fund may adopt other policies from time to time requiring mandatory redemption of shares in certain circumstances. EXCHANGES Shares may be exchanged for shares of any other Fund offered in the no-load family of CitiFunds(R) (mainly other money market funds). You may place exchange orders through the sub-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 sub-transfer agent or your Service Agent can provide you with more information. There is no sales charge on 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. FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES Money market funds are often used by investors for short term investments, in place of bank checking or saving accounts, or for cash management purposes. Investors value the ability to add and withdraw their funds quickly, without restriction. For this reason the Board of Trustees of the Fund has not adopted policies and procedures, or imposed restrictions such as minimum holding periods, in order to deter frequent purchases and redemptions of money market fund shares. The Board also believes that money market funds, such as the Fund, are not typically targets of abusive trading practices, because money market funds seek to maintain a $1.00 per share price and typically do not fluctuate in value based on market prices. However, some investors may seek to take advantage of a short term disparity between the Fund's yield and current market yields, which could have the effect of reducing the Fund's yield. In addition, frequent purchases and redemptions of the Fund's shares could increase the Fund's portfolio transaction costs and may interfere with the efficient management of the portfolio by the Manager, which could detract from the Fund's performance. DIVIDENDS The Fund calculates its net income each business day when it calculates its NAV, and declares dividends for all of its shareholders of record. Shares begin to accrue dividends on the day your purchase order is effective. You will not receive dividends for the day on which your redemption order becomes effective. Dividends are distributed once a month, on or before the last business day of the month. Unless you choose to receive your dividends in cash, you will receive them as full and fractional additional Fund shares. TAX MATTERS This discussion of taxes is for general information only. You should consult your own tax adviser about your particular situation. TAXATION OF DISTRIBUTIONS: You normally will have to pay federal income tax on any distributions you receive from the Fund, whether you take distributions in cash or reinvest them in shares. Distributions designated as capital gain dividends are taxable as long-term capital gains. Other distributions are generally taxable as ordinary income. The Fund does not expect any distributions to be treated as "qualified dividend income," which is taxed at reduced rates. Some dividends paid in January may be taxable as if they had been paid the previous December. STATE AND LOCAL TAXES: Generally, you will have to pay state or local taxes on Fund dividends and other distributions, although distributions derived from interest on U.S. government obligations (but not distributions of gain from the sale of such obligations) may be exempt from certain state and local taxes. TAXATION OF TRANSACTIONS: If you sell your shares of the 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. FOREIGN SHAREHOLDERS: The Fund will withhold U.S. federal income tax payments at the rate of 30% on taxable dividends and other payments subject to withholding taxes that are made to persons who are neither citizens nor residents of the United States. You may be able to arrange for a lower withholding rate under an applicable tax treaty if you supply the appropriate documentation required by the Fund. The Fund will not withhold with respect to dividends designated as interest-related dividends or short-term capital gain dividends. The Fund anticipates that substantially all distributions will be designated as interest-related dividends. Distributions received from the Fund by non-U.S. persons also may be subject to tax under the laws of their own jurisdictions. 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 backup withholding for failing to report income to the IRS. The Fund may be required to withhold (and pay over to the IRS for your credit) a percentage of certain distributions it pays you if you fail to provide this information or otherwise violate IRS regulations. The backup withholding rate is scheduled to be 28% during 2005. Backup withholding will not, however, be applied to payments that have been subject to the withholding tax described in the preceding paragraph. MANAGEMENT OF THE FUND MANAGEMENT The Fund's investment manager is Citi Fund Management Inc., 100 First Stamford Place, Stamford, Connecticut 06902. The Manager selects the Fund's investments, oversees its operations, and provides administrative services. The Manager is an affiliate of Citigroup Inc. Citigroup businesses provide 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. A team of individuals employed by the Manager manages the day-to-day operations of the Fund. Citi Fund Management Inc. was established in 2001 to take over the mutual fund-related investment advisory operations of Citibank, N.A. and, together with Citibank affiliates in New York, London, Frankfurt, Tokyo and Hong Kong, provides a broad range of fixed income and equity investment services to individuals and institutional clients throughout the world. Citigroup affiliates, including their directors, officers or employees, may have banking and investment banking relationships with the issuers of securities that are held in the Fund. They may also own the securities of these issuers. However, in making investment decisions for the Fund, the Manager does not obtain or use material inside information acquired by any division, department or affiliate of Citigroup in the course of those relationships. To the extent the Fund acquires securities from an issuer that has a borrowing or other relationship with Citigroup or its affiliates, the proceeds of the purchase may be used to repay such borrowing or otherwise benefit Citigroup and/or its affiliates. MANAGEMENT FEES For its services, the Fund's Manager receives a monthly fee at an annual rate of 0.25% of the Fund's average daily net assets. DISTRIBUTION ARRANGEMENTS The Fund may in the future offer other classes of shares with different expense levels. Only Class A shares are offered in this prospectus. The Fund does not charge any sales loads, deferred sales loads or other fees in connection with the purchase of Fund shares. The Fund has adopted a service plan for Class A shares under rule 12b-1 under the Investment Company Act of 1940. The service plan allows the Fund to pay a monthly fee at an annual rate not to exceed 0.10% of the average daily net assets represented by Class A shares. This fee may be used to make payments to the distributor and to Service Agents or others as compensation for the sale of Fund shares, and to make payments for advertising, marketing or other promotional activity, or for providing personal service or the maintenance of shareholder accounts. The Distributor is, and the Service Agents may be, affiliates of the Fund's Manager. Because fees under the plan are paid out of Fund assets, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. In addition, the Distributor and/or its affiliates may make payments for distribution and/or shareholder servicing activities out of their 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. The payments described above are often referred to as "revenue sharing payments." The recipients of such payments may include the Fund's Distributor and other affiliates of the Manager, broker-dealers, financial institutions and other financial intermediaries through which investors may purchase shares of a fund. In some circumstances, such payments may create an incentive for an intermediary or its employees or associated persons to recommend or sell shares of a fund to you. Please contact your financial intermediary for details about revenue sharing payments it may receive. RECENT DEVELOPMENTS In connection with an investigation previously disclosed by Citigroup, the Staff of the Securities and Exchange Commission (SEC) has notified Citigroup Asset Management (CAM), the Citigroup business unit that includes the Fund's Manager and other investment advisory companies; Citicorp Trust Bank (CTB), an affiliate of CAM; Thomas W. Jones, the former CEO of CAM; and three other individuals, one of whom is an employee and the other two of whom are former employees of CAM, that the SEC Staff is considering recommending a civil injunctive action and/or an administrative proceeding against each of them relating to the creation and operation of an internal transfer agent unit to serve various CAM-managed funds. In 1999, CTB entered the transfer agent business. CTB hired an unaffiliated subcontractor to perform some of the transfer agent services. The subcontractor, in exchange, had signed a separate agreement with CAM in 1998 that guaranteed investment management revenue to CAM and investment banking revenue to a CAM affiliate. The subcontractor's business was later taken over by PFPC Inc., and at that time the revenue guarantee was eliminated and a one- time payment was made by the subcontractor to a CAM affiliate. CAM did not disclose the revenue guarantee when the boards of various CAM- managed funds hired CTB as transfer agent. Nor did CAM disclose to the boards of the various CAM-managed funds the one-time payment received by the CAM affiliate when it was made. In addition, the SEC Staff has indicated that it is considering recommending action based on the adequacy of the disclosures made to the fund boards that approved the transfer agency arrangement, CAM's initiation and operation of, and compensation for, the transfer agent business and CAM's retention of, and agreements with, the subcontractor. Citigroup is cooperating fully in the investigation and will seek to resolve the matter in discussions with the SEC Staff. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the funds. As previously disclosed, CAM has already agreed to pay the applicable funds, primarily through fee waivers, a total of approximately $17 million (plus interest) that is the amount of the revenue received by Citigroup relating to the revenue guarantee.It is not expected that the Fund will receive any portion of such payment. CTB is the Fund's transfer agent. State Street Bank and Trust Company is the sub-transfer agent. MORE ABOUT THE FUND The Fund's goals, principal investments and risks are summarized in FUND AT A GLANCE. More information on investments, investment strategies and disclosure of portfolio holdings appears below. PRINCIPAL INVESTMENT STRATEGIES The Fund's principal investment strategies are strategies that, in the opinion of the Manager, are most likely to be important in trying to achieve the Fund's investment goals. Of course, there can be no assurance that the Fund will achieve its goals. Please note that the Fund may also use strategies and invest in securities that are described in the Statement of Additional Information. The Fund may not use all of the strategies and techniques or invest in all of the types of securities described in the Prospectus or in the Statement of Additional Information. The Fund has specific investment policies and procedures designed to maintain a constant net asset value of $1.00 per share. The Fund also complies with industry regulations that apply to money market funds. These regulations require that the Fund's investments mature or be deemed to mature within 397 days from the date purchased and that the average maturity of the Fund's investments (on a dollar-weighted basis) be 90 days or less. In addition, the regulations require that all of the Fund's investments be in U.S. dollar- denominated high quality securities which have been determined by the Manager to present minimal credit risk. To be considered high quality under the regulations, a security (or its issuer) must be rated in one of the two highest short-term ratings categories by nationally recognized ratings agencies, such as Moody's or Standard & Poor's, or, if unrated, in the Manager's opinion, be of comparable quality. The Fund has adopted investment policies that are more restrictive than the regulations. The investment policies require that all of the Fund's investments be in U.S. dollar- denominated "first-tier" securities which have been determined by the Manager to present minimal credit risks. To be a "first-tier" security, a security (or its issuer) must be rated in the highest short-term rating category by nationally recognized rating agencies, or, if unrated, in the Manager's opinion be of comparable quality. Investors should note that within this rating category there may be sub-categories or gradations indicating relative quality. If the credit quality of a security deteriorates after the Fund buys it, the Manager will decide whether the security should be held or sold. Money market instruments in which the Fund may invest include instruments specifically structured so that they are eligible for purchase by money market funds, including securities that have demand, tender or put features, or interest rate reset features, and may take the form of participation interests or receipts in an underlying security, in some cases backed by a financial institution serving as a liquidity provider. Some of these instruments may have an interest rate swap feature which substitutes a floating or variable interest rate for the fixed interest rate on an underlying security, or may represent the right to receive only the interest or principal component on the underlying security. These instruments may be considered to be derivatives. - ------------------------------------------------------------------------------- WHAT ARE MONEY MARKET INSTRUMENTS? Money market instruments are short-term IOUs issued by banks or other issuers, the U.S. or a foreign government, or state or local governments. Money market instruments generally have maturity dates of 13 months or less. Money market instruments may include CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES, VARIABLE RATE DEMAND NOTES (where the interest rate is reset periodically and the holder may demand payment from the issuer at any time), FIXED-TERM OBLIGATIONS, COMMERCIAL PAPER (short term unsecured debt), ASSET- BACKED SECURITIES (which are backed by pools of accounts receivable such as car installment loans or credit card receivables) and REPURCHASE AGREEMENTS. In a repurchase agreement, the seller sells a security and agrees to buy it back at a later date (usually within seven days) and at a higher price, which reflects an agreed upon interest rate. - ------------------------------------------------------------------------------- The Fund invests in high quality U.S. dollar-denominated money market instruments of U.S. and non-U.S. issuers. These obligations include U.S. government obligations, obligations of U.S. and non-U.S. banks, obligations issued or guaranteed by the governments of Western Europe, Australia, Japan and Canada, commercial paper, asset backed securities and repurchase agreements. The Fund's U.S. government obligations may include U.S. Treasury bills, bonds and notes and obligations of U.S. government agencies and instrumentalities that may, but need not, be backed by the full faith and credit of the United States. The Fund may invest more than 25% of its assets in bank obligations, including certificates of deposit, fixed time deposits and bankers' acceptances. The Fund's investment goals and policies may be changed without a shareholder vote. $1.00 NET ASSET VALUE. In order to maintain a $1.00 per share net asset value, the Fund could reduce the number of its outstanding shares. For example, the Fund could do this if there were a default on an investment held by the Fund, if expenses were to exceed the Fund's income, or if an investment declined significantly in value. If this happened, you would own fewer shares. By investing in the Fund, you agree to this reduction should it become necessary. INVESTMENT STRUCTURE. The Fund does not invest directly in securities but instead invests through an underlying mutual fund having the same goals and strategies. Unless otherwise indicated, references to the Fund in this Prospectus include the underlying fund. The Fund may stop investing in its corresponding underlying fund at any time, and will do so if the Fund's Trustees believe that to be in the shareholders' best interests. The Fund could then invest in one or more other mutual funds or pooled investment vehicles, or could invest directly in securities. Investors should note that other funds invest in the same underlying mutual fund. These other funds may have lower expenses, and correspondingly higher performance, than Class A shares of Citi Institutional Money Reserves. MANAGEMENT STYLE. Managers of mutual funds use different styles when selecting securities to purchase. The Fund's Manager uses a "top-down" approach when selecting securities for the Fund. When using a "top-down" approach, the Manager looks first at broad economic factors and market conditions, such as prevailing and anticipated interest rates. On the basis of those factors and conditions, the Manager selects optimal interest rates and maturities and chooses certain sectors or industries within the overall market. The Manager then looks at individual companies within those sectors or industries to select securities for the investment portfolio. Since the Fund maintains a weighted average maturity of no more than 90 days, many of its investments are held until maturity. The Manager may sell a security before maturity when it is necessary to do so to meet redemption requests. The Manager may also sell a security if the Manager believes the issuer is no longer as creditworthy, or in order to adjust the average weighted maturity of the Fund's portfolio (for example, to reflect changes in the Manager's expectations concerning interest rates), or when the Manager believes there is superior value in other market sectors or industries. DISCLOSURE OF PORTFOLIO HOLDINGS. A description of the Fund's policies and procedures with respect to the disclosure of the Fund's portfolio holdings is available in the Fund's SAI. The Statement of Additional Information (SAI) provides more details about the Fund and its policies. The SAI is incorporated by reference into this Prospectus and is legally part of it. Additional information about the Fund's investments is available in the Fund's Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual Report, you will find a discussion of the market conditions and investment strategies that significantly affected Fund performance during its last fiscal year. Because the Fund is new, it has not, as of the date of this Prospectus, issued any shareholder reports. To obtain free copies of the SAI or to make other inquiries, please call 1-800-331-1792, toll-free, or your account representative. The SAI and other information about the Fund are also available on the EDGAR Database on the SEC Internet site at http:/www.sec.gov. Information about the Fund (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 1-202-942-8090. 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 20549-6009. SEC File Number: 811-6740 FD 12/03 Statement of Additional Information December 31, 2004 CITI(SM) INSTITUTIONAL MONEY RESERVES This Statement of Additional Information sets forth information which may be of interest to investors but which is not necessarily included in the Prospectus, dated December 31, 2004, for Citi(SM) Institutional Money Reserves (the "Fund"). This Statement of Additional Information should be read in conjunction with the Prospectus. An investor may obtain copies of the Fund's Prospectus without charge by calling 1-800-331-1792 toll-free. Because this Fund is new, it has not issued any Annual or Semi- Annual Reports as of the date of this Statement of Additional Information. The Fund is a separate series of CitiFunds(SM) Trust I (the "Trust"). The address and telephone number of the Fund are 125 Broad Street, New York, New York 10004, 1-800-331-1792. The Fund invests all of its investable assets in Liquid Reserves Portfolio. The address and telephone number of Liquid Reserves Portfolio are 125 Broad Street, New York, New York 10004, 1-800-331-1792. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. TABLE OF CONTENTS PAGE 1. The Fund ............................................................ 2 2. Investment Objective, Policies and Restrictions ..................... 3 3. Determination of Net Asset Value .................................... 8 4. Additional Information on the Purchase and Sale of Fund Shares ...... 9 5. Management .......................................................... 10 6. Dealer Commissions and Concessions .................................. 22 7. Portfolio Transactions .............................................. 23 8. Disclosure of Portfolio Holdings .................................... 23 9. Description of Shares, Voting Rights and Liabilities ................ 24 10. Certain Additional Tax Matters ...................................... 26 11. Independent Registered Public Accounting Firm and Financial Statements .......................................................... 26 12. Appendix A -- Proxy Voting Policies and Procedures .................. A-1 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 FUND Citi(SM) Institutional Money Reserves is a no-load, open-end management investment company that is a series of a business trust organized under the laws of the Commonwealth of Massachusetts on August 23, 1984. Prior to August 1998, the Trust was called CitiFunds Trust 1, and prior to February 1998, the Trust was called Landmark Funds I. Shares of the Trust are divided into three separate series, one of which is Citi Institutional Money Reserves. References in this Statement of Additional Information to the Prospectus are to the Prospectus, dated December 31, 2004, of the Fund. The Fund is a type of mutual fund commonly referred to as a "money market fund." The net asset value of the Fund's shares is expected to remain constant at $1.00, although there can be no assurance that this will be so on a continuing basis. (See "Determination of Net Asset Value.") The Fund utilizes a master/feeder structure by investing all of its investable assets in Liquid Reserves Portfolio (the "Portfolio"), which was formerly called Cash Reserves Portfolio. The Portfolio is diversified, open- end management investment company and has the same investment objectives and policies as the Fund. The Board of Trustees believes that the aggregate per share expenses of the Fund and the Portfolio will be less than or approximately equal to the expenses that the Fund would incur if the assets of the Fund were invested directly in the types of securities held by the Portfolio. The Fund may withdraw its investment in the Portfolio at any time, and will do so if the Fund's Trustees believe it to be in the best interest of the Fund's shareholders. If the Fund were to withdraw its investment in the Portfolio, the Fund could either invest directly in securities in accordance with the investment policies described below or invest in one or more other mutual funds or pooled investment vehicles having similar investment objectives and policies. If the Fund were to withdraw, the Fund could receive securities from the Portfolio instead of cash, causing the Fund to incur brokerage, tax and other charges or leaving it with securities that may or may not be readily marketable or widely diversified. The Portfolio may change its investment objective and certain of its investment policies and restrictions without approval by its investors, but the Portfolio will notify the Fund (which in turn will notify its shareholders) and its other investors at least 30 days (or, when required by law, at least 60 days) before implementing any change in its investment objective. A change in investment objective, policies or restrictions may cause the Fund to withdraw its investment in the Portfolio. The Portfolio, as a New York trust, is not required to hold and has no intention of holding annual meetings of investors. However, when the Portfolio is required to do so by law, or in the judgment of its Trustees it is necessary or desirable to do so, the Portfolio will submit matters to its investors for a vote. When the Fund is asked to vote on matters concerning the Portfolio (other than a vote to continue the Portfolio following the withdrawal of an investor), the Fund will either hold a shareholder meeting and vote in accordance with shareholder instructions, or otherwise act in accordance with applicable law. See "Description of Shares, Voting Rights and Liabilities." Of course, the Fund could be outvoted, or otherwise adversely affected, by other investors in the Portfolio. The Portfolio sells interests to investors in addition to the Fund, including mutual funds which offer shares to their shareholders with different costs and expenses than the Fund. Therefore, the investment returns for all investors in funds investing in the Portfolio may not be the same. These differences in returns are also present in other mutual fund structures. Information about other holders of interests in the Portfolio is available from the Fund's distributor, Citigroup Global Markets, Inc. ("Citigroup Global Markets" or the "Distributor"), 388 Greenwich Street, 23rd Floor, New York, New York 10013, 1-800-451-2010. The Fund may, in the future, convert to a fund of funds structure. In a fund of funds structure, the Fund invests all or a portion of its assets in multiple investment companies. Citi Funds Management Inc. (the "Manager") is the investment manager to the Fund and the Portfolio. The Manager manages the investments of the Portfolio from day to day in accordance with the investment objectives and policies of the Portfolio. The selection of investments for the Portfolio, and the way it is managed, depends on the conditions and trends in the economy and the financial marketplaces. The Manager provides certain administrative services to the Fund and Portfolio. The Board of Trustees provides broad supervision over the affairs of the Fund. Shares of the Fund are continuously offered by the Distributor. Shares may be purchased from the Distributor, or from financial institutions, such as federal or state-chartered banks, trust companies, savings and loan associations or savings banks, investment advisers or broker-dealers that have entered into agreements with the Distributor (called "Service Agents"). Shares are sold at net asset value. Although shares of the Fund are sold without a sales load, the Distributor and Service Agents may receive fees from the Fund pursuant to Service Plans adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"). The Manager and/ or affiliates of the Manager currently serve as the Service Agents for the Fund. 2. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS INVESTMENT OBJECTIVE The investment objective of the Fund is to provide shareholders with liquidity and as high a level of current income as is consistent with the preservation of capital. The investment objective of the Fund may be changed without approval by shareholders. Of course, there can be no assurance that the Fund will achieve its investment objective. INVESTMENT POLICIES The Fund seeks to achieve its investment objective by investing all of its investable assets in the Portfolio which has the same investment objectives and policies as the Fund. The Prospectus contains a discussion of the principal investment strategies of the Fund and certain risks of investing in the Fund. The following supplements the information contained in the Prospectus concerning the investment objectives, policies and techniques of the Fund and Portfolio, and contains more information about the various types of securities in which the Fund and Portfolio may invest and the risks involved in such investments. Since the investment characteristics of the Fund will correspond directly to those of the Portfolio in which it invests, the following applies to both Fund and Portfolio, as applicable. The Fund may withdraw its investment from the Portfolio at any time, if the Board of Trustees determines that it is in the best interests of the Fund to do so. If the Fund were to then invest directly in securities, the Fund's assets would be invested in accordance with the investment policies described below. The approval of the Fund's shareholders would not be required to change any of its investment policies. The Portfolio seeks to achieve its investment objective through investments in high quality U.S. dollar-denominated money market instruments. All investments by Liquid Reserves Portfolio mature or are deemed to mature within 397 days from the date of acquisition, and the average maturity of the investments held by the Portfolio (on a dollar-weighted basis) is 90 days or less. All investments by the Portfolio are in "first tier" securities (i.e., securities rated in the highest rating category for short-term obligations by at least two nationally recognized statistical rating organizations (each, an "NRSRO") assigning a rating to the security or issuer or, if only one NRSRO assigns a rating, that NRSRO or, in the case of an investment which is not rated, of comparable quality as determined by the Manager under procedures approved by the Board of Trustees, and are determined by the Manager under procedures approved by the Board of Trustees to present minimal credit risks. Investments in high quality, short-term instruments may, in many circumstances, result in a lower yield than would be available from investments in instruments with a lower quality or a longer term. The Portfolio may hold uninvested cash reserves pending investment. Under the 1940 Act, the Fund and the Portfolio are each classified as "diversified," although in the case of the Fund, all of its assets are invested in the Portfolio. A "diversified investment company" must invest at least 75% of its assets in cash and cash items, U.S. government securities, investment company securities and other securities limited as to any one issuer to not more than 5% of the total assets of the investment company and not more than 10% of the voting securities of the issuer. The Portfolio invests, under normal circumstances, in: (1) Bank obligations. The Portfolio may from time to time invest up to 100% of its assets in bank obligations, such as certificates of deposit, fixed time deposits, and bankers' acceptances. Up to 25% of the Portfolio's assets may be invested at any time in dollar-denominated obligations of foreign banks, and all of the Portfolio's assets may be invested at any time in obligations of domestic banks, as that term has been interpreted by the Securities and Exchange Commission (the "SEC"). Under SEC interpretations, a U.S branch of a foreign bank may be considered a domestic bank if the U.S. branch of the foreign bank is subject to the same regulation as a U.S. bank. Likewise, a non-U.S. branch of a U.S. bank may be considered a domestic bank if the investment risk associated with investing in instruments issued by the non-U.S. branch is the same, in the opinion of the Manager, as that of investing in instruments issued by the branch's domestic parent. The Portfolio limits its investments in U.S. bank obligations (including, for these purposes, their non-U.S. branches) to banks having total assets in excess of $1 billion and which are subject to regulation by an agency of the U.S. government. The Portfolio may also invest in certificates of deposit issued by banks the deposits in which are insured by the Federal Deposit Insurance Corporation ("FDIC"), having total assets of less than $1 billion, provided that the Portfolio at no time owns more than $100,000 principal amount of certificates of deposit (or any higher principal amount which in the future may be fully insured by FDIC insurance) of any one of those issuers. Certificates of deposit are savings certificates generally issued by commercial banks that bear a maturity date and a specified interest rate, and can be issued in any denomination. Fixed time deposits are obligations which are payable at a stated maturity date and bear a fixed rate of interest. Generally, fixed time deposits may be withdrawn on demand by the Portfolio, but they may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. Although fixed time deposits do not have a market, there are no contractual restrictions on the Portfolio's right to transfer a beneficial interest in the deposit to a third party. A bankers' acceptance is a draft drawn on and accepted by a bank that orders payment to a third party at a later date. Bankers' acceptances generally act as a negotiable time draft for financing imports, exports, or other transactions in goods. U.S. banks organized under federal law are supervised and examined by the Comptroller of the Currency and are required to be members of the Federal Reserve System and to be insured by the FDIC. U.S. banks organized under state law are supervised and examined by state banking authorities and are members of the Federal Reserve System only if they elect to join. However, state banks which are insured by the FDIC are subject to federal examination and to a substantial body of federal law and regulation. As a result of federal and state laws and regulations, U.S. branches of U.S. banks, among other things, are generally required to maintain specified levels of reserves, and are subject to other supervision and regulation designed to promote financial soundness. The Portfolio limits its investments in "non-U.S. bank obligations" to U.S. dollar-denominated obligations of banks that at the time of investment are non-U.S. branches or subsidiaries of U.S. banks which meet the criteria in the preceding paragraphs or are U.S. or non-U.S. branches of non-U.S. banks that (i) have more than $10 billion, or the equivalent in other currencies, in total assets; (ii) in terms of assets are among the 75 largest non-U.S. banks in the world; (iii) have branches or agencies in the United States; and (iv) in the opinion of the Manager, are of an investment quality comparable with obligations of U.S. banks which may be purchased by the Portfolio. These obligations may be general obligations of the parent bank, in addition to the issuing branch or subsidiary, but the parent bank's obligations may be limited by the terms of the specific obligation or by governmental regulation. The Portfolio also limits its investments in non-U.S. bank obligations to banks, branches and subsidiaries located in Western Europe (United Kingdom, France, Germany, Belgium, the Netherlands, Italy, Switzerland, Denmark, Norway, Sweden), Australia, Japan, the Cayman Islands, the Bahamas and Canada. Liquid Reserves Portfolio does not purchase any bank obligation of any affiliate of the Manager. Since the Portfolio may hold investments in non-U.S. bank obligations, an investment in the Fund involves certain additional risks. Such investment risks include future political and economic developments, the possible imposition of non-U.S. withholding taxes on interest income payable on such obligations held by the Portfolio, the possible seizure or nationalization of non-U.S. deposits and the possible establishment of exchange controls or other non-U.S. governmental laws or restrictions applicable to the payment of the principal of and interest on certificates of deposit or time deposits that might affect adversely such payment on such obligations held by the Portfolio. In addition, there may be less publicly-available information about a non-U.S. branch or subsidiary of a U.S. bank or a U.S. or non-U.S. branch of a non-U.S. bank than about a U.S. bank, and such branches and subsidiaries may not be subject to the same or similar regulatory requirements that apply to U.S. banks, such as mandatory reserve requirements, loan limitations and accounting, auditing and financial record-keeping standards and requirements. The provisions of federal law governing the establishment and operation of U.S. branches do not apply to non-U.S. branches of U.S. banks. However, the Portfolio may purchase obligations only of those non- U.S. branches of U.S. banks which were established with the approval of the Board of Governors of the Federal Reserve System (the "Board of Governors"). As a result of such approval, these branches are subject to examination by the Board of Governors and the Comptroller of the Currency. In addition, such non-U.S. branches of U.S. banks are subject to the supervision of the U.S. bank and creditors of the non-U.S. branch are considered general creditors of the U.S. bank subject to whatever defenses may be available under the governing non-U.S. law and to the terms of the specific obligation. Nonetheless, the Portfolio generally will be subject to whatever risk may exist that the non-U.S. country may impose restrictions on payment of certificates of deposit or time deposits. U.S. branches of non-U.S. banks are subject to the laws of the state in which the branch is located or to the laws of the United States. Such branches are therefore subject to many of the regulations, including reserve requirements, to which U.S. banks are subject. In addition, the Portfolio may purchase obligations only of those U.S. branches of non-U.S. banks which are located in states which impose the additional requirement that the branch pledge to a designated bank within the state an amount of its assets equal to 5% of its total liabilities. Non-U.S. banks in whose obligations the Portfolio may invest may not be subject to the laws and regulations referred to in the preceding two paragraphs. (2) Obligations of, or guaranteed by, non-U.S. governments. The Portfolio limits its investments in non-U.S. government obligations to obligations issued or guaranteed by the governments of Western Europe (United Kingdom, France, Germany, Belgium, the Netherlands, Italy, Switzerland, Denmark, Norway, Sweden), Australia, Japan and Canada. Generally, such obligations may be subject to the additional risks described in subsection (1) above in connection with the purchase of non- U.S. bank obligations. (3) Commercial paper rated Prime-1 by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings Group ("Standard & Poor's") or, if not rated, determined to be of comparable quality by the Manager under procedures approved by the Board of Trustees, such as unrated commercial paper issued by corporations having an outstanding unsecured debt issue currently rated Aaa by Moody's or AAA by Standard & Poor's. Commercial paper is unsecured debt of corporations usually maturing in 270 days or less from its date of issuance. (4) Obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities. These include issues of the U.S. Treasury, such as bills, certificates of indebtedness, notes, bonds and Treasury Receipts, which are unmatured interest coupons of U.S. Treasury bonds and notes which have been separated and resold in a custodial receipt program administered by the U.S. Treasury, and issues of agencies and instrumentalities established under the authority of an Act of Congress. Some of the latter category of obligations are supported by the full faith and credit of the United States, others are supported by the right of the issuer to borrow from the U.S. Treasury, and still others are supported only by the credit of the agency or instrumentality. Examples of each of the three types of obligations described in the preceding sentence are (i) obligations guaranteed by the Export-Import Bank of the United States, (ii) obligations of the Federal Home Loan Mortgage Corporation, and (iii) obligations of the Student Loan Marketing Association, respectively. (5) Repurchase agreements, providing for resale within 397 days or less, covering obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities which may have maturities in excess of 397 days. The Portfolio may invest its assets in repurchase agreements only with member banks of the Federal Reserve System or "primary dealers" (as designated by the Federal Reserve Bank of New York) in U.S. government securities. Under the terms of a typical repurchase agreement, the Portfolio would acquire an underlying debt instrument (an obligation of, or guaranteed by, the U.S. government, its agencies, or instrumentalities) for a relatively short period (usually not more than one week) subject to an obligation of the seller to repurchase and the Portfolio to resell the instrument at a fixed price and time, thereby determining the yield during the Portfolio's holding period. This results in a fixed rate of return insulated from market fluctuations during such period. A repurchase agreement is subject to the risk that the seller may fail to repurchase the security. Repurchase agreements may be deemed to be loans under the 1940 Act. All repurchase agreements entered into by the Portfolio shall be fully collateralized at all times during the period of the agreement in that the value of the underlying security shall be at least equal to the amount of the loan, including the accrued interest thereon, and the Portfolio or its custodian or subcustodian shall have control of the collateral, which the Manager believes will give it a valid, perfected security interest in the collateral. Whether a repurchase agreement is the purchase and sale of a security or a collateralized loan has not been definitively established. This might become an issue in the event of the bankruptcy of the other party to the transaction. In the event of default by the seller under a repurchase agreement construed to be a collateralized loan, the underlying securities are not owned by the Portfolio but only constitute collateral for the seller's obligation to pay the repurchase price. Therefore, the Portfolio may suffer time delays and incur costs in connection with the disposition of the collateral. The Manager believes that the collateral underlying repurchase agreements may be more susceptible to claims of the seller's creditors than would be the case with securities owned by the Portfolio. The Portfolio will not invest in a repurchase agreement maturing in more than seven days if any such investment together with illiquid securities held by the Portfolio exceed 10% of the Fund's total net assets. (6) Asset-backed securities, that represent fractional interests in pools of retail installment loans, both secured, such as certificates for automobile receivables ("CARS"), and unsecured, or leases or fractional interests in pools of revolving credit card receivables ("CARDS"), both secured and unsecured, as well as other asset-backed securities. These assets are generally held by a trust and payments of principal and interest or interest only are passed through monthly or quarterly to certificate holders and may be guaranteed up to certain amounts by letters of credit issued by a financial institution affiliated or unaffiliated with the trustee or originator of the trust. Underlying automobile sales contracts, leases or credit card receivables are subject to prepayment, which may reduce the overall return to certificate holders. Prepayment rates vary widely and may be affected by changes in market interest rates. It is not possible to accurately predict the average life of a particular pool of loans or receivables and reinvestment of principal may occur at higher or lower rates than the original yield. Therefore, the actual maturity and realized yield on asset-backed securities will vary based upon the prepayment experience of the underlying pool of loans or receivables. Prepayment of principal during periods of declining interest rates may reduce the yield of the Fund, since the Fund may be forced to reinvest any pre-paid principal in lower yielding securities. Certificate holders may also experience delays in payment on the certificates or losses if the full amounts due on underlying loans, leases or receivables are not realized because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral (usually automobiles) securing certain contracts, or other factors. If consistent with its investment objectives and policies, the Portfolio may invest in other asset-backed securities. (7) Structured instruments which are money market instruments that have been structured to meet the regulatory requirements for investment by money market funds, typically by a bank, broker-dealer or other financial institution. They generally consist of a trust or partnership through which a fund holds an interest in one or more underlying bonds or other debt obligations coupled with a conditional right to sell ("put") the fund's interest in the underlying bonds at par plus accrued interest to a financial institution (a "Liquidity Provider"). With respect to tax-exempt instruments, the instrument is typically structured as a trust or partnership which provides for pass-through tax-exempt income. Structured instruments in which the Portfolio may invest include: (1) "Tender Option Bonds", which are instruments which grant the holder thereof the right to put an underlying bond at par plus accrued interest at specified intervals to a Liquidity Provider; (2) "Swap Products", in which the trust or partnership swaps the payments due on an underlying bond with a swap counterparty who agrees to pay a floating money market interest rate; and (3) "Partnerships", which allocate to the partners income, expenses, capital gains and losses in accordance with a governing partnership agreement. Structured instruments may be considered to be derivatives. Derivatives raise certain tax, legal, regulatory and accounting issues which may not be presented by direct investments in debt obligations. There is some risk that certain issues could be resolved in a manner that could adversely impact the performance of the Fund or Portfolio. For example, with respect to tax-exempt instruments, the tax-exempt treatment of the interest paid to the Fund or Portfolio is premised on the legal conclusion that the holders of such instruments have an ownership interest in the underlying bonds. While the Fund or Portfolio may rely on an opinion of legal counsel to the effect that the income from each such instrument is tax-exempt to the same extent as the underlying bond, the Internal Revenue Service (the "IRS") has not issued a ruling on this subject. Were the IRS to issue an adverse ruling, there is a risk that the interest paid on such derivative products would be deemed taxable. The Portfolio does not purchase securities which the Portfolio believes, at the time of purchase, will be subject to exchange controls or non-U.S. withholding taxes; however, there can be no assurance that such laws may not become applicable to certain of the Portfolio's investments. In the event exchange controls or non-U.S. withholding taxes are imposed with respect to any of the Portfolio's investments, the effect may be to reduce the income received by the Portfolio on such investments or to prevent the Portfolio from receiving any value in U.S. dollars from its investment in non-U.S. securities. LENDING OF SECURITIES Consistent with applicable regulatory requirements and in order to generate income, the Portfolio may lend its securities to broker-dealers and other institutional borrowers. Such loans will usually be made only to member banks of the U.S. Federal Reserve System and to member firms of the New York Stock Exchange ("NYSE") (and subsidiaries thereof). Loans of securities would be secured continuously by collateral in cash, cash equivalents, or U.S. Treasury obligations maintained on a current basis at an amount at least equal to the market value of the securities loaned. The cash collateral received by the Portfolio would be invested in high quality short-term instruments. Either party has the right to terminate a loan at any time on customary industry settlement notice (which will not usually exceed three business days). During the existence of a loan, the Portfolio would continue to receive the equivalent of the interest or dividends paid by the issuer on the securities loaned and with respect to cash collateral would also receive any income generated by the Portfolio's investment of the collateral (subject to a rebate payable to the borrower). Where the borrower provides the Portfolio with collateral consisting of U.S. Treasury obligations, the borrower is also obligated to pay the Portfolio a fee for use of the borrowed securities. The Portfolio would not have the right to vote any securities having voting rights during the existence of the loan, but would call the loan in anticipation of an important vote to be taken among holders of the securities or of the giving or withholding of their consent on a material matter affecting the investment. As with other extensions of credit, there are risks of delay in recovery or even loss of rights in the collateral should the borrower fail financially. However, the loans would be made only to entities deemed by the Manager to be of good standing, and when, in the judgment of the Manager, the consideration which can be earned currently from loans of this type justifies the attendant risk. In addition, the Portfolio could suffer loss if the borrower terminates the loan and the Portfolio is forced to liquidate investments in order to return the cash collateral to the buyer. If the Manager determines to make loans, it is not intended that the value of the securities loaned by a Fund or Portfolio would exceed 333.-31/3% of the value of its net assets. PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS The Portfolio may invest up to 10% of its net assets in securities for which there is no readily available market. These illiquid securities may include privately placed restricted securities for which no institutional market exists. The absence of a trading market can make it difficult to ascertain a market value for illiquid investments. Disposing of illiquid investments may involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Portfolio to sell them promptly at an acceptable price. INVESTMENT RESTRICTIONS The Fund and the Portfolio have adopted the following policies which may not be changed with respect to the Fund or the Portfolio, as the case may be, without approval by holders of a majority of the outstanding voting securities of the Fund or Portfolio, which as used in this Statement of Additional Information means the vote of the lesser of (i) voting securities representing 67% or more of the voting power of the Fund or Portfolio present at a meeting at which the holders of voting securities representing more than 50% of the voting power of the Fund or Portfolio are present or represented by proxy, or (ii) voting securities representing more than 50% of the voting power of the Fund or Portfolio. The term "voting securities" as used in this paragraph has the same meaning as in the 1940 Act. Whenever the Fund is requested to vote on a change in the investment restrictions or fundamental policies of the Portfolio, the Fund will generally call a meeting of its shareholders and will vote its shares in the Portfolio in accordance with instructions it receives from its shareholders. To the extent it does not receive instructions from its shareholders, the Fund will vote its shares in the Portfolio in the same proportion as the vote of shareholders who are giving instructions. Alternatively, without seeking instructions from its shareholders, the Fund could vote its shares in the Portfolio in the same proportion as the vote of all other investors in the Portfolio. THE FUND OR PORTFOLIO MAY NOT: (1) borrow money except to the extent such borrowing is not prohibited by the 1940 Act and exemptive orders granted under such Act. (2) underwrite securities issued by other persons, except that all or any portion of the assets of the Fund or Portfolio may be invested in one or more investment companies, to the extent not prohibited by the 1940 Act and exemptive orders granted under such Act, and except insofar as the Fund or Portfolio may technically be deemed an underwriter under the Securities Act of 1933, as amended, in selling a Portfolio security. (3) purchase or sell real estate (excluding securities secured by real estate or interests therein and securities of companies, such as real estate investment trusts, which deal in real estate or interests therein), interests in oil, gas or mineral leases, commodities or commodity contracts (excluding currencies and any type of option, futures contracts and forward contracts) in the ordinary course of its business. The Fund or Portfolio reserves the freedom of action to hold and to sell real estate, mineral leases, commodities or commodity contracts (including currencies and any type of option, futures contracts and forward contracts) acquired as a result of the ownership of securities. (4) issue any senior securities except to the extent not prohibited by the 1940 Act and exemptive orders granted under such Act. For purposes of this restriction, collateral arrangements with respect to any type of swap, option, forward contract and futures contract and collateral arrangements with respect to initial and variation margin are not deemed to be the issuance of a senior security. (5) make loans except to the extent not prohibited by the 1940 Act and exemptive orders granted under such Act. (6) purchase any securities of an issuer in a particular industry if as a result 25% or more of its total assets (taken at market value at the time of purchase) would be invested in securities of issuers whose principal business activities are in the same industry, except that each of the Fund or Portfolio may invest at least 25% of its assets in bank obligations issued by domestic banks. PERCENTAGE AND RATING RESTRICTIONS If a percentage restriction or a rating restriction (other than a restriction as to borrowing) on investment or utilization of assets set forth above or referred to in the Prospectus is adhered to at the time an investment is made or assets are so utilized, a later change in circumstances is not considered a violation of policy. 3. DETERMINATION OF NET ASSET VALUE The net asset value of each class of the shares of the Fund is determined on each day on which the NYSE is open for trading. This determination is made once during each such day as of 4:00 p.m. by dividing the value of the Fund's net assets (i.e., the value of its assets attributable to a class, including its investment in the Portfolio, less its liabilities, including expenses payable or accrued) by the number of the shares of the class outstanding at the time the determination is made. On days when the financial markets in which the Fund invests close early, the Fund's net asset value may be determined as of the earlier close. As of the date of this Statement of Additional Information, the NYSE is normally open for trading every weekday except in the event of an emergency or 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. It is anticipated that the net asset value of each share of the Fund will remain constant at $1.00 and, although no assurance can be given that it will be able to do so on a continuing basis, as described below, the Fund and Portfolio employ specific investment policies and procedures to accomplish this result. The value of the Portfolio's net assets (i.e., the value of its securities and other assets less its liabilities, including expenses payable or accrued) is determined at the same time and on the same days as the net asset value per share of the Fund is determined. The net asset value of the Fund's investment in the Portfolio is equal to the Fund's pro rata share of the total investment of the Fund and of other investors in the Portfolio less the Fund's pro rata share of the Portfolio's liabilities. The securities held by the Fund or Portfolio are valued at their amortized cost. Amortized cost valuation involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If fluctuating interest rates cause the market value of the securities held by the Fund or Portfolio to deviate more than 1/2 of 1% from their value determined on the basis of amortized cost, the Board of Trustees will consider whether any action should be initiated, as described in the following paragraph. Although the amortized cost method provides certainty in valuation, it may result in periods during which the stated value of an instrument is higher or lower than the price the Fund or Portfolio would receive if the instrument were sold. Pursuant to the rules of the SEC, the Fund's and the Portfolio's Trustees have established procedures to stabilize the value of the Fund's and Portfolio's net assets within 1/2 of 1% of the value determined on the basis of amortized cost. These procedures include a review of the extent of any such deviation of net asset value, based on available market rates. Should that deviation exceed 1/2 of 1% for the Fund or Portfolio, the Trustees will consider whether any action should be initiated to eliminate or reduce material dilution or other unfair results to the investors in the Fund or Portfolio. Such action may include withdrawal in kind, selling securities prior to maturity and utilizing a net asset value as determined by using available market quotations. The Fund and Portfolio maintain a dollar-weighted average maturity of 90 days or less, do not purchase any instrument with a remaining maturity greater than 397 days or subject to a repurchase agreement having a duration of greater than 397 days, limit their investments, including repurchase agreements, to those U.S. dollar-denominated instruments that are determined by the Manager to present minimal credit risks and comply with certain reporting and recordkeeping procedures. The Fund and Portfolio also have established procedures to ensure that securities purchased meet high quality criteria. (See "Investment Objective, Policies and Restrictions -- Investment Policies.") It is expected that the Fund (and each class of the Fund) will have a positive net income at the time of each determination thereof. If for any reason the Fund's or a class' net income is a negative amount, which could occur, for instance, upon default by an issuer of a portfolio security, or if the Fund's expenses exceeded its income, the Fund would first offset the negative amount with respect to each shareholder account in the Fund or class from the dividends declared during the month with respect to those accounts. If and to the extent that negative net income exceeds declared dividends at the end of the month, the Fund would reduce the number of outstanding shares of the Fund or class by treating each shareholder as having contributed to the capital of the Fund that number of full and fractional shares in the shareholder's account which represents the shareholder's share of the amount of such excess. Each shareholder would be deemed to have agreed to such contribution in these circumstances by investment in the Fund. Because of the short-term maturities of the portfolio investments of the Fund, the Fund does not expect to realize any material long-term capital gains or losses. Any net realized short-term capital gains will be declared and distributed to the Fund's shareholders annually after the close of the Fund's fiscal year. Distributions of short-term capital gains are taxable to shareholders as described in "Certain Additional Tax Matters." Any realized short-term capital losses will be offset against short-term capital gains or, to the extent possible, utilized as capital loss carryover. The Fund may distribute short-term capital gains more frequently than annually, reduce shares to reflect capital losses or make distributions of capital if necessary in order to maintain the Fund's net asset value of $1.00 per share. 4. ADDITIONAL INFORMATION ON THE PURCHASE AND SALE OF FUND SHARES Each class of shares of the Fund represents an interest in the same portfolio of investments. Each class is identical in all respects except that each class bears its own class expenses, including distribution and service fees, and each class has exclusive voting rights with respect to any distribution or service plan applicable to its shares. As a result of the differences in the expenses borne by each class of shares, net income per share, dividends per share and net asset value per share will vary for each class of shares. There are no conversion, preemptive or other subscription rights. Shareholders of each class will share expenses proportionately for services that are received equally by all shareholders. A particular class of shares will bear only those expenses that are directly attributable to that class, where the type or amount of services received by a class varies from one class to another. The expenses that may be borne by specific classes of shares may include (i) transfer agency fees attributable to a specific class of shares, (ii) printing and postage expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current shareholders of a specific class of shares, (iii) SEC and state securities registration fees incurred by a specific class, (iv) the expense of administrative personnel and services required to support the shareholders of a specific class of shares, (v) litigation or other legal expenses relating to a specific class of shares, (vi) accounting expenses relating to a specific class of shares and (vii) any additional incremental expenses subsequently identified and determined to be properly allocated to one or more classes of shares. The Trustees may cause a shareholder's shares to be redeemed under certain circumstances including in order to eliminate small accounts for administrative efficiencies and cost savings, to protect the tax status of the Fund if necessary and to eliminate ownership of shares by a particular shareholder when the Trustees determine, pursuant to adopted policies, that the particular shareholder's ownership is not in the best interests of the other shareholders of the Fund (for example, in the case of a market timer). SALE OF SHARES Subject to compliance with applicable regulations, the Fund and the Portfolio have reserved the right to pay the redemption price of shares of the Fund or beneficial interests in the Portfolio, 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 or beneficial interests being sold. If a holder of shares or beneficial interests received a distribution in kind, such holder could incur brokerage or other charges in converting the securities to cash. Shareholders may redeem Fund shares by sending written instructions in proper form to the Fund's sub-transfer agent, or if they hold their shares through a Service Agent, to the Service Agent. Shareholders are responsible for ensuring that a request for redemption is in proper form. Shareholders may redeem or exchange Fund shares by telephone, if their account applications so permit, by calling the sub-transfer agent or, if they are customers of a Service Agent, their Service Agent. During periods of drastic economic or market changes or severe weather or other emergencies, shareholders may experience difficulties implementing a telephone exchange or redemption. In such an event, another method of instruction, such as a written request sent via an overnight delivery service, should be considered. The Fund, the sub-transfer agent and each Service Agent will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. These procedures may include recording of the telephone instructions and verification of a caller's identity by asking for the shareholder's name, address, telephone number, Social Security number or taxpayer identification number, and account number. If these or other reasonable procedures are not followed, the Fund, the sub-transfer agent or the Service 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. The Fund and the Portfolio may suspend the right of redemption or postpone the date of payment for shares of the Fund or beneficial interests in a Portfolio more than seven days during any period when (a) trading in the markets the Fund or Portfolio normally utilizes is restricted, or an emergency, as defined by the rules and regulations of the SEC, exists making disposal of the Fund's or Portfolio's investments or determination of its net asset value not reasonably practicable; (b) the NYSE is closed (other than customary weekend and holiday closings); or (c) the SEC has by order permitted such suspension. INVOLUNTARY REDEMPTION OF SHARES The Trustees may cause a shareholder's shares to be redeemed under certain circumstances including in order to eliminate small accounts for administrative efficiencies and cost savings, to protect the tax status of the Fund if necessary and to eliminate ownership of shares by a particular shareholder when the Trustees determine, pursuant to adopted policies, that the particular shareholder's ownership is not in the best interests of the other shareholders of the Fund (for example, in the case of a market timer). 5. MANAGEMENT The Fund and Portfolio are each supervised by a Board of Trustees, at least 75% of whom are not affiliated with the Manager. The Trustees and officers of the Fund and Portfolio, their ages, their principal occupations during the past five years (their titles may have varied during that period), the number of investment companies associated with Citigroup Inc. ("Citigroup") the Trustees oversee, and other directorships they hold are set forth below. Each Trustee and officer holds office until that individual resigns, retires, or is otherwise removed. An asterisk in the table below identifies those Trustees and officers who are "interested persons" of the Trust and the Portfolio as defined in the 1940 Act. Each Trustee and officer of the Trust and the Portfolio noted as an interested person is interested by virtue of that individual's position with Citigroup or its affiliates described in the table below.
NUMBER OF OTHER BOARD PORTFOLIOS IN MEMBERSHIPS POSITION(s) LENGTH FUND COMPLEX HELD BY NAME, ADDRESS AND HELD WITH OF TIME PRINCIPAL OCCUPATION(s) OVERSEEN BY TRUSTEE DURING DATE OF BIRTH FUND SERVED DURING PAST FIVE YEARS TRUSTEE PAST FIVE YEARS - ------------- ----------- ------- ----------------------- ------------- --------------- NON-INTERESTED TRUSTEES: Elliott J. Berv Trustee Since 2001 Executive Vice President 37 Board Member, American c/o R. Jay Gerken and Chief Operations Identity Corp. (doing Citigroup Asset Management Officer, DigiGym Systems business as Morpheus 399 Park Avenue (on-line personal training Technologies) (biometric New York, NY 10022 systems) (since 2001); information management) Born April 30, 1943 Consultant, Catalyst (since 2001; consultant (consulting) (since 1984); since 1999); Director, Director, Alzheimer's Lapoint Industries Association (New England (industrial filter Chapter) (since 1998); company) (since 2002). Board Member, Savannah Music Festival. Donald M. Carlton Trustee Since 2001 Consultant, URS 32 Director, Temple-Inland c/o R. Jay Gerken Corporation (engineering) (forest products) (since Citigroup Asset Management (since 1999); former Chief 2003); Director, 399 Park Avenue Executive Officer, Radian American Electric Power New York, NY 10022 International L.L.C. Co. (electric utility) Born July 20, 1937 (engineering) (from 1996 (since 1999); Director, to 1998); Member of the National Instruments Management Committee, Corp. (technology) Signature Science (since 1994); former (research and development) Director, Valero Energy (since 2000); Director, (petroleum refining) Crystatech, Inc. (from 1999 to 2003). (pollution control technology) (since 2001). A. Benton Cocanougher Trustee Since 2001 Dean Emeritus and Wiley 32 Former Director, Randall c/o R. Jay Gerken Professor of Business, Foods, Inc. (from 1990 Citigroup Asset Management former Interim Chancellor, to 1999); former 399 Park Avenue Texas A&M University Director, First American New York, NY 10022 System (from 2003 to Bank, Texas (from 1994 Born July 6, 1938 2004); former Special to 1999); former Advisor to the President, Director, Petrolon, Inc. Texas A&M University (from (from 1991 to 1994); 2002 to 2003); former Dean former Director, First and Professor of City Bank, Bryan, Texas Marketing, Mays Graduate (from 1988 to 1992). School of Business of Texas A&M University (from 1987 to 2001). Mark T. Finn Trustee Since 2001 Chairman, Chief Executive 37 Former President and c/o R. Jay Gerken Officer and Owner, Vantage Director, Delta Citigroup Asset Management Consulting Group, Inc. Financial, Inc. 399 Park Avenue (investment advisory and (investment advisory New York, NY 10022 consulting firm) (since firm) (from 1983 to Born May 16, 1943 1988; Consultant prior to 1999). 1988); Adjunct Professor, College of William & Mary (since 2002); Principal/ Member, Balvan Partners (investment management) (since 2002); former Vice Chairman and Chief Operating Officer, Lindner Asset Management Company (mutual fund company) (from 1999 to 2001); former General Partner and Shareholder, Greenwich Ventures LLC (investment partnership) (from 1996 to 2001); former President, Secretary, and Owner, Phoenix Trading Co. (commodity trading advisory firm) (from 1997 to 2000). Stephen Randolph Gross Trustee Since 2001 Chief Executive Officer, 32 Director, Andersen c/o R. Jay Gerken HLB Gross Collins, PC Calhoun (assisted Citigroup Asset Management (accounting firm) (since living) (since 1987); 399 Park Avenue 1979); Treasurer, Coventry former Director, Yu New York, NY 10022 Limited, Inc. (since Save, Inc. (internet Born October 8, 1947 1985); former Managing company) (from 1998 to Director, Fountainhead 2000); former Director, Ventures, L.L.C. Hotpalm.com, Inc. (consulting) (1998 to (wireless applications) 2003); former Treasurer, (from 1998 to 2000); Hank Aaron Enterprises former Director, United (fast food franchise) Telesis, Inc. (from 1985 to 2001); (telecommunications) former Partner, Capital (from 1997 to 2002); Investment Advisory former Director, Partners (consulting) ebank.com, Inc. (from (from 2000 to 2002); 1997 to 2004). former Secretary, Carint N.A. (manufacturing) (from 1998 to 2002); former Chief Operating Officer, General Media Communications, Inc. (from March 2003 to August 2003). Diana R. Harrington Trustee Since 1992 Professor, Babson College 37 None. c/o R. Jay Gerken (since 1993). Citigroup Asset Management 399 Park Avenue New York, NY 10022 Born March 25, 1940 Susan B. Kerley Trustee Since 1992 Consultant, Strategic 37 Lead Independent c/o R. Jay Gerken Management Advisors, LLC Director, Mainstay Funds Citigroup Asset Management (investment consulting) (formerly Eclipse Funds) 399 Park Avenue (since 1990). (currently supervises 12 New York, NY 10022 investment companies in Born August 12, 1951 fund complex) (since 1990). Alan G. Merten Trustee Since 2001 President, George Mason 32 Director, Xybernaut c/o R. Jay Gerken University (since 1996). Corporation (since Citigroup Asset Management 2004); Director, 399 Park Avenue Brainbench, Inc. (since New York, NY 10022 2004); Director, Born December 27, 1941 Comshare, Inc. (information technology) (from 1985 to 2003). R. Richardson Pettit Trustee Since 2001 John Duncan Professor of 32 None. c/o R. Jay Gerken Finance, University of Citigroup Asset Management Houston (since 1977); 399 Park Avenue Independent Consultant. New York, NY 10022 Born July 6, 1942 INTERESTED TRUSTEE: R. Jay Gerken, CFA* Chairman, Since 2002 Managing Director of Chairman of N/A Citigroup Asset Management President and Citigroup Global Markets the Board, 399 Park Avenue Chief Inc. ("CGM"); Chairman, Trustee or New York, NY 10022 Executive President and Chief Director of Born April 5, 1951 Officer Executive Officer of SBFM, 222 funds in Travelers Investment the Citigroup Adviser, Inc. ("TIA") and fund complex Citi Fund Management Inc. ("CFM"); President and Chief Executive Officer of certain mutual funds associated with Citigroup Inc. ("Citigroup"); formerly, Portfolio Manager of Smith Barney Allocation Series Inc. (from 1996 to 2001) and Smith Barney Growth and Income Fund (from 1996 to 2001). OFFICERS: Andrew Shoup* Senior Vice Since 2003 Director of Citigroup N/A N/A Citigroup Asset President and Asset Management ("CAM"); Management Chief Chief Administrative 125 Broad Street Administra- Officer of certain mutual New York, NY 10004 tive Officer funds associated with Born August 1, 1956 Citigroup Inc.; Head of International Funds Administration of Citigroup Asset Management (from 2001 to 2003); Director of Global Funds Administration of Citigroup Asset Management (from 2000 to 2001); Head of U.S. Citibank Funds Administration of Citigroup Asset Management (from 1998 to 2000). Frances Guggino* Chief Since 2002 Vice President of CAM; N/A N/A Citigroup Asset Financial Treasurer and/or Management Officer and Controller of certain 125 Broad Street Treasurer mutual funds associated New York, NY 10004 with Citigroup (since Born September 8, 1957 1991). Wendy S. Setnicka* Controller Since 2004 Vice President of CGM N/A N/A Citigroup Asset Management (since 1997); Controller 125 Broad Street of certain mutual funds New York, NY 10004 associated with Citigroup; Born June 30, 1964 Assistant Controller of CAM (from 2002 to 2004) Robert I. Frenkel* Secretary Since 2000 Managing Director and N/A N/A Citigroup Asset Management Chief Legal Since 2003 General Counsel, Global 300 First Stamford Place Officer Mutual Funds for CAM Stamford, CT 06902 (since 1994); Secretary of Born December 12, 1954 Citi Fund Management Inc.; Secretary of certain mutual funds associated with Citigroup; Chief Legal Officer of certain mutual funds associated with Citigroup. Andrew Beagley* Chief Since 2004 Chief Anti-Money N/A N/A Citigroup Asset Management Compliance Laundering Compliance 399 Park Avenue Officer Officer and Chief New York, NY 10022 Chief Anti- Since 2002 Compliance Officer of Born October 9, 1962 Money certain mutual funds Laundering associated with Citigroup; Compliance Director, Citigroup Global Officer Markets (since 2000); Director of Compliance, North America, of CAM (since 2000); Director of Compliance, Europe, the Middle East and Africa, of CAM (from 1999 to 2000); Compliance Officer, Salomon Brothers Asset Management Limited, Smith Barney Global Capital Management Inc., Salomon Brothers Asset Management Asia Pacific Limited (from 1997 to 1999). Thomas C. Mandia* Assistant Since 2000 Director and Deputy N/A N/A Citigroup Asset Management Secretary General Counsel of CAM 300 First Stamford Place (since 1992); Assistant Stamford, CT 06902 Secretary of certain Born February 27, 1962 mutual funds associated with Citigroup. Rosemary D. Emmens* Assistant Since 2000 Vice President and N/A N/A Citigroup Asset Management Secretary Associate General Counsel 300 First Stamford Place of CAM (since 1998); Stamford, CT 06902 Assistant Secretary of Born October 28, 1969 certain mutual funds associated with Citigroup. Harris Goldblat* Assistant Since 2000 Associate General Counsel N/A N/A Citigroup Asset Management Secretary of CAM (since 2000); 300 First Stamford Place Assistant Secretary of Stamford, CT 06902 certain mutual funds Born November 4, 1969 associated with Citigroup; Associate, Stroock & Stroock & Lavan LLP (from 1997 to 2000). Joseph Volpe* Assistant Since 2004 Vice President of CAM N/A N/A Citigroup Asset Management Treasurer (since 1992); Assistant 300 First Stamford Place Treasurer of certain Stamford, CT 06902 mutual funds associated Born April 16, 1962 with Citigroup; Assistant Controller of certain mutual funds associated with Citigroup. (from 2002 to 2004) Kaprel Ozsolak* Assistant Since 2004 Vice President of CGM; N/A N/A Citigroup Asset Management Treasurer Assistant Treasurer of 125 Broad Street certain mutual funds New York, NY 10004 associated with Citigroup. Born October 26, 1965 Susan C. Curry* Assistant Since 2004 Director of Tax - US Funds N/A N/A Citigroup Asset Management Treasurer Administration of CAM 125 Broad Street (since 2004); Assistant New York, NY 10004 Treasurer of certain Born December 30, 1966 mutual funds associated with Citigroup; Partner (from 2001 to 2004) and Senior Manager (from 1997 to 2004) with Deloitte & Touche LLP Matthew Plastina* Assistant Since 2004 Assistant Vice President N/A N/A Citigroup Asset Management Controller of CAM (since 1999); 125 Broad Street Manager then Assistant New York, NY 10004 Controller of certain Born June 9, 1970 mutual funds associated with Citigroup Kim Daly* Assistant Since 2004 Assistant Vice President N/A N/A Citigroup Asset Management Controller of CAM (since 1996); 125 Broad Street Manager then Assistant New York, NY 10004 Controller of certain Born November 16, 1966 mutual funds associated with Citigroup. Marisel Class* Assistant Since 2004 Vice President of CAM N/A N/A Citigroup Asset Management Controller (since 1999); Manager then 125 Broad Street Assistant Controller of New York, NY 10004 certain mutual funds Born June 28, 1961 associated with Citigroup.
The business affairs of the Fund are managed by or under the direction of the Board of Trustees. The Board of Trustees has a standing Audit Committee comprised of all of the Trustees who are not "interested persons" of the Fund, within the meaning of the 1940 Act. The Audit Committee oversees the scope of the Fund's audit, the Fund's accounting and financial reporting policies and practices and its internal controls. The Audit committee approves, and recommends to the Non-Interested Trustees for their ratification, the selection, appointment, retention or termination of the Fund's independent registered public accounting firm and approves the compensation of the independent registered public accounting firm. The Audit Committee also approves all audit and permissible non-audit services provided to the Fund by the independent registered public accounting firm and all permissible non-audit services provided by the Fund's independent registered public accounting firm to its Manager and any affiliated service providers if the engagement related directly to the Fund's operations and financial reporting. During the most recent fiscal year, the Audit Committee met 5 times; however, neither the Fund nor the two other series of the Trust had any outstanding shares during that period. The Board of Trustees also has a standing Governance Committee. All Trustees who are not "interested persons" of the Fund are members of the Governance Committee. The Governance Committee is responsible for, among other things, recommending candidates to fill vacancies on the board. The Governance Committee met 4 times during the most recent fiscal year. The Governance Committee does not have a procedure to consider nominees recommended by shareholders. The following table shows the amount of equity securities owned by the Trustees in other investment companies associated with Citigroup (the "Fund Complex") supervised by the Trustees as of December 31, 2003. Because the Fund is newly organized, it did not have shareholders as of that date. AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL INVESTMENT COMPANIES ASSOCIATED WITH CITIGROUP NAME OF DIRECTOR OVERSEEN BY THE TRUSTEE - ---------------- ----------------------------------- DISINTERESTED TRUSTEES: Elliott J. Berv $50,001-$100,000 Donald M. Carlton Over $100,000 A. Benton Cocanougher $1-$10,000 Mark T. Finn $1-$10,000 Stephen Randolph Gross None Diana Harrington $1-$10,000 Susan B. Kerley $1-$10,000 Alan G. Merten $1-$10,000 R. Richardson Pettit $10,001-$50,000 INTERESTED TRUSTEE: R. Jay Gerken Over $100,000 Neither the disinterested Trustees nor their family members had any interest in the Manager, the Distributor or any person directly or indirectly controlling, controlled by, or under common control with the Manager or the Distributor as of December 31, 2003. Information regarding compensation paid to the Trustees for the fiscal year ended August 31, 2004 is set forth below. Mr. Gerken is not compensated for his service as Trustee because of his affiliation with the Manager. Each Fund in the Citigroup Fund complex pays a pro rata share of Trustee fees based upon asset size. The Fund currently pays each of the Trustees who is not a director, officer or employee of the Manager or any of its affiliates its pro rata share of: an annual fee of $45,000 plus $7,500 for each Board of Trustees meeting attended, $2,500 for each special Board meeting attended, and $100 for each telephonic Board meeting in which that Trustee participates. In addition, each Trustee who is not a director, officer or employer of the Manager or any of its affiliates and who acts as Chairman of any Committee of the Board of Trustees receives an additional $5,000 for acting as Chairman of such Committee. The Funds will reimburse Trustees for travel and out-of-pocket expenses incurred in connection with Board of Trustees meetings. TRUSTEES COMPENSATION TABLE
TOTAL NUMBER OF COMPENSATION FUNDS IN PENSION OR FROM FUNDS COMPLEX AGGREGATE RETIREMENT BENEFITS AND FUND UPON WHICH COMPENSATION PAID AS PART OF COMPLEX THE TRUSTEES TRUSTEE FROM FUND(1) FUND EXPENSES(3) PAID TO TRUSTEES(4) SERVED(4)(5) - ------- ------------ ------------------- ------------------- ------------ DISINTERESTED TRUSTEES: Elliott J. Berv ................................ (1) None $80,000 37 Donald M. Carlton .............................. (1) None $82,600 32 A. Benton Conanougher .......................... (1) None $86,200 32 Mark T. Finn ................................... (1) None $84,450 37 Stephen Randolph Gross ......................... (1) None $81,350 37 Diana R. Harrington ............................ (1) None $80,200 37 Susan B. Kerley ................................ (1) None $80,300 37 Alan G. Merten ................................. (1) None $77,800 32 C. Oscar Morong, Jr.(2)......................... (1) None $80,300 37 R. Richardson Pettit............................ (1) None $82,700 32 Walter E. Robb, III(2) ......................... (1) None $80,600 37 INTERESTED TRUSTEE: R. Jay Gerken .................................. $0 None $0 222 - ------------ (1) The Fund had no outstanding shares as of August 31, 2004 and paid no Trustee fees during the fiscal year ended August 31, 2004. For the current fiscal year, the Fund will pay its pro-rata share of the Trustee fees based upon its asset size. Because this asset size is not yet known, the Fund's share of Trustee fees is not currently determinable. (2) Messrs. Morong and Robb retired as Trustees of the Funds as of December 31, 2003. (3) Information is for the fiscal year ended August 31, 2004. (4) Information is for the calendar year ended December 31, 2003. (5) Two of the funds in the Fund Complex were not operational during the calendar year ended December 31, 2003.
The Trustees of the Fund have adopted a Retirement Plan for all Trustees who are not "interested persons" of the Fund, within the meaning of the 1940 Act. Under the Plan, all Trustees are required to retire from the Board as of the last day of the calendar year in which the applicable Trustee attains age 75. Trustees may retire under the Plan before attaining the mandatory retirement age. Trustees who have served as Trustee of the Trust or any of the investment companies associated with Citigroup for at least ten years and who have attained at least the age of 67 when they retire are eligible to receive the maximum retirement benefit under the Plan. The maximum retirement benefit is an amount equal to five times the amount of retainer and regular meeting fees payable to a Trustee during the calendar year ending on or immediately prior to the applicable Trustee's retirement. Trustees are first eligible to receive the minimum retirement benefit under the Plan (50% of the maximum benefit) after five years of service and attainment of at least the age of 67. Retirement benefit eligibility increases proportionately with each additional year of service until eligibility for the maximum benefit has been attained. Amounts under the Plan may be paid in twenty equal quarterly installments or in a lump sum (discounted to present value). Benefits under the Plan are unfunded. The following table shows the estimated retirement benefit that would be payable under the Plan upon retirement at the specified compensation and years-of-service classifications.
AVERAGE COMPENSATION IN YEARS OF SERVICE LAST YEAR ------------------------------------------------------------------------------------- OF SERVICE 5 6 7 8 9 10 YEARS YEARS YEARS YEARS YEARS YEARS OR MORE $ 50,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $ 60,000 $150,000 $180,000 $210,000 $240,000 $270,000 $300,000 $ 70,000 $175,000 $210,000 $245,000 $280,000 $315,000 $350,000 $ 80,000 $200,000 $240,000 $280,000 $320,000 $360,000 $400,000 $ 90,000 $225,000 $270,000 $315,000 $360,000 $405,000 $450,000 $100,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000
Assuming continuous service as a Trustee of the Funds until the age of mandatory retirement under the Plan, each disinterested Trustee will have achieved at least ten credited years of service and will be eligible for the maximum retirement benefit under the Plan. During the fiscal year ended August 31, 2004, former Trustees of the Funds received the following retirement benefits under the Plan: Mr. Riley C. Gilley, an aggregate of $70,000 in four quarterly installment payments; Mr. E. Kirby Warren, an aggregate of $70,000 in 4 quarterly installment payments; Mr. William Woods, an aggregate of $60,000 in 4 quarterly installment payments; and each of Mr. C. Oscar Morong, Jr., and Mr. Walter E. Robb, III, a lump sum payment of $325,300. As of the date of this Statement of Additional Information, there are no shareholders of the Fund. 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 investors, 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 (as opposed to a full trial type inquiry), 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. Rights to indemnification or insurance cannot be limited retroactively. Officers receive no compensation from the Fund although they may be reimbursed for reasonable travel expenses for attending meetings of the Board of Trustees. MANAGER The Manager acts as the investment manager to the Portfolio and the Fund pursuant in each case to management agreements (each a "Management Agreement"). Subject to such policies as the Board of Trustees of the Portfolio or the Fund, as applicable, may determine, the Manager manages the securities of and makes investment decisions for the Portfolio. Currently, advisory services for the Fund are provided through the Portfolio, but the Manager may, if requested by the Trustees, provide advisory services directly to the Fund. In addition, the Manager provides certain administrative services to the Fund and the Portfolio under the Management Agreements. The Manager furnishes at its own expense all services, facilities and personnel necessary in connection with managing investments and effecting securities transactions for the Fund and the Portfolio. The Management Agreement provides that the Manager may delegate the daily management of the securities of the Fund or the Portfolio to one or more subadvisers. Unless otherwise terminated, the Management Agreement with respect to the Fund will continue in effect for an initial two-year period and thereafter will continue annually as long as such continuance is specifically approved at least annually by the Fund's Trustees or by a vote of a majority of the outstanding voting securities of the Fund, and, in either case, by a majority of the Trustees 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. Unless otherwise terminated, the Management Agreement with respect to the Portfolio will continue in effect for an initial two-year period and thereafter will continue indefinitely as long as such continuance is specifically approved at least annually by the Portfolio's Trustees or by a vote of a majority of the outstanding voting securities of the Portfolio, and, in either case, by a majority of the Trustees of the Portfolio 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. The Manager provides the Fund and Portfolio with general office facilities and supervises the overall administration of the Fund and Portfolio, including, among other responsibilities, the negotiation of contracts and fees with, and the monitoring of performance and billings of, the Fund's and Portfolio's independent contractors and agents; the preparation and filing of all documents required for compliance by the Fund and Portfolio with applicable laws and regulations; and arranging for the maintenance of books and records of the Fund and Portfolio. Trustees, officers, and investors in the Fund and Portfolio are or may be or may become interested in the Manager, as directors, officers, employees, or otherwise and directors, officers and employees of the Manager are or may become similarly interested in the Fund and Portfolio. Each Management Agreement provides that the Manager 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 Fund and Portfolio when authorized either by a vote of a majority of the outstanding voting securities of the Fund or Portfolio or by a vote of a majority of the Fund's or Portfolio's Board of Trustees, or by the Manager 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 provides that neither the Manager nor its personnel shall 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 security transactions for the applicable Portfolio or Fund, except for willful misfeasance, bad faith or gross negligence or reckless disregard of its or their obligations and duties under the Management Agreement. The Prospectuses for the Fund contain a description of the fees payable to the Manager for services under the Management Agreement with respect to the Fund. The Manager may reimburse the Fund or Portfolio or waive all or a portion of its management fees. In approving the continuation of the Management Agreement with respect to the Fund, the Board, including the independent Trustees, considered the reasonableness of the advisory fee in light of the extent and quality of the advisory and administrative services provided and any additional benefits received by the Manager or its affiliates in connection with providing services to the Fund. Given the Fund's lack of operating history, the Board based its approval on the competitive fee information that had been provided to the Board at the times of the initial approval of the Management Agreement and on the assessment that additional time was required to analyze performance and other factors. The Independent Trustees were advised by separate independent legal counsel throughout the process. Citigroup affiliates may have deposit, loan and other relationships with the issuers of securities purchased on behalf of the Fund, including outstanding loans to such issuers which may be repaid in whole or in part with the proceeds of securities so purchased. The Manager has informed the Fund that, in making its investment decisions, it does not obtain or use material inside information in the possession of any Citigroup affiliate. The Fund uses the name "Citi" by agreement with Citi Fund Management. If the Manager, or its assignee, ceases to serve as the Manager of the Fund, the Fund will change its name so as to delete the word "Citi." The Fund has not paid management fees as of the date of this Statement of Additional Information. DISTRIBUTOR The Distributor, located at 388 Greenwich Street, New York, New York 10013 serves as the Fund's distributor pursuant to a written agreement with respect to each class of shares of the Fund (the "Distribution Agreements") which was approved by the Fund's Board of Trustees, including a majority of the independent Trustees. The Distribution Agreement is terminable with or without cause, without penalty, on 60 days' notice by the Trustees or by vote of holders of a majority of the Fund's outstanding voting securities, or on 90 days' notice by the Distributor. Unless otherwise terminated, the Distribution Agreement shall continue for successive annual periods so long as such continuance is specifically approved at least annually by (a) the Trustees, or (b) by a vote of a majority (as defined in the 1940 Act) of the Fund's outstanding voting securities, provided that in either event the continuance is also approved by a majority of the Trustees who are not interested persons (as defined in the 1940 Act) of any party to the Distribution Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. Each Distribution Agreement will terminate automatically in the event of its assignment, as defined in the 1940 Act and the rules and regulations thereunder. The Fund has adopted a Service Plan (the "Service Plan") with respect to Class A shares in accordance with Rule 12b-1 under the 1940 Act. Under the Service Plan, the Fund may pay monthly fees at an annual rate not to exceed 0.10% of the average daily net assets represented by Class A shares. Such fees may be used to make payments to the Distributor for distribution services, to Service Agents in respect of the sale of shares of the Fund, and to other parties in respect of the sale of shares of the Fund, and to make payments for advertising, marketing or other promotional activity, and payments for preparation, printing, and distribution of prospectuses, statements of additional information and reports for recipients other than regulators and existing shareholders. The Fund also may make payments to the Distributor, Service Agents and others for providing personal service or the maintenance of shareholder accounts. The amounts paid by the Distributor to each recipient may vary based upon certain factors, including, among other things, the levels of sales of Fund shares and/or shareholder services provided. The Service Plan also provides that the Distributor and Service Agents may receive any applicable sales charge paid by investors as partial compensation for their services in connection with the sale of shares. The Service Plan provides that the Distributor and Service Agents may receive all or a portion of any applicable deferred sales charges paid by investors. The Fund currently does not impose any sales charges. The Service Plan permits the Fund 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 the expenses incurred exceed the fees provided for by the Plan, the Fund will not be obligated to pay more than those fees and, if the expenses incurred are less than the fees paid to the Distributor and others, they will realize a profit. The 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. The Service Plan also recognizes that various service providers to the Fund, such as its Manager, may make payments for distribution related expenses out of their own resources, including past profits, or payments received from the Fund for other purposes, such as management fees, and that the Fund's Distributor or service agents may from time to time use their own resources for distribution related services, in addition to the fees paid under the Plan. The Service Plan specifically provides that, to the extent that such payments might be deemed to be indirect financing of any activity primarily intended to result in the sale of shares of the Fund within the context of Rule 12b-1, then the payments are deemed to be authorized by the Plan. The Service Plan continues in effect if such continuance is specifically approved at least annually by a vote of both a majority of the Fund's Trustees and a majority of the Trustees who are not "interested persons" of the Fund 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 Fund and the Distributor provide to the Trustees, and the 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 Class A shares of the Fund at any time by a vote of a majority of the qualified Trustees or by a vote of a majority of the outstanding voting securities of that class. The Service Plan may not be amended to increase materially the amount of the permitted expenses of the Class A shares without the approval of a majority of the outstanding securities of that class 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. As contemplated by the Service Plans, the Distributor acts as agent of the Fund in connection with the offering of shares of the Fund pursuant to the Distribution Agreement. The Fund has not paid any amounts to the Distributor as of the date of this Statement of Additional Information. CODE OF ETHICS The Fund, the Manager and the Distributor each have adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended. Each code of ethics permits personnel subject to such code to invest in securities, including securities that may be purchased or held by the 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 Fund. 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. PROXY VOTING POLICIES & PROCEDURES Although individual Trustees may not agree with particular policies or votes by the Manager, the Board of the Fund has approved delegating proxy voting discretion to the Manager believing that the Manager should be responsible for voting because it is a matter relating to the investment decision making process. Non-equity securities, such as debt obligations and money market instruments are not usually considered to be voting securities, and proxy voting, if any, is typically limited to the solicitation of consents to changes in or waivers of features of debt securities, or plans of reorganization involving the issuer of the security. In the rare event that proxies are solicited with respect to any of these securities the Manager would vote the proxy in accordance with the principals set forth in the Manager's proxy voting policies and procedures, including the procedures that the Manager uses when a vote presents a conflict between the interests of fund shareholders, on the one hand, and those of the Manager or any affiliated person of a fund or the Manager, on the other. A summary of the Manager's policies and procedures with respect to proxy voting is attached as Appendix A to this SAI. This summary gives a general indication as to how the Manager will vote proxies relating to portfolio securities on each issue listed. However, the policies and procedures do not address all potential voting issues or the intricacies that may surround individual proxy votes. For that reason there may be instances in which votes may vary from the policies and procedures presented. Notwithstanding the foregoing, the Manager always endeavors to vote proxies relating to portfolio securities in accordance with a fund's investment objectives. Information on how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 is available on the Manager's website, http://www.citigroupam.com, or on the Securities and Exchange Commission's website at http://www.sec.gov. TRANSFER AGENT AND CUSTODIAN The Fund has entered into a Transfer Agency and Service Agreement with Citicorp Trust Bank, fsb ("Citicorp Trust"), an affiliate of CGM, pursuant to which Citicorp Trust acts as transfer agent for the Fund. Under the Transfer Agency and Service Agreement, Citicorp Trust maintains the shareholder account records for the Fund, handles certain communications between shareholders and the Fund and distributes dividends and distributions payable by the Fund. For these services, Citicorp Trust receives a monthly fee computed on the basis of the number of shareholder accounts it maintains for the Fund during the month and is reimbursed for out-of-pocket expenses. The Fund had no outstanding shares as of August 31, 2004 and did not pay any fees under the Transfer Agency and Services Agreement as of the fiscal year ended August 31, 2004. The principal business address of Citicorp Trust is 125 Broad Street, New York, New York 10004. The Fund has entered into a Transfer Agency and Service Agreement with State Street Bank and Trust Company ("State Street"), pursuant to which State Street acts as sub-transfer agent for the Fund. The Fund also has entered into a Custodian Agreement with State Street, pursuant to which custodial and fund accounting services are provided for the Fund. Securities may be held by a sub-custodian bank approved by the Trustees. The address of State Street is 225 Franklin Street, Boston, Massachusetts 02110. 6. DEALER COMMISSIONS AND CONCESSIONS From time to time, the Fund's Distributor or Manager, 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 Fund's Distributor or Manager may include financial assistance to dealers in connection with preapproved 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 Fund, and/or other dealer-sponsored events. From time to time, the Fund's Distributor or Manager 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. 7. PORTFOLIO TRANSACTIONS The Portfolio's purchases and sales of portfolio securities usually are principal transactions. Portfolio securities are normally purchased directly from the issuer or from an underwriter or market maker for the securities. There usually are no brokerage commissions paid for such purchases. The Portfolio does not anticipate paying brokerage commissions and did not pay any brokerage commissions during the three fiscal year period ended August 31, 2004. Any transaction for which the Portfolio pays a brokerage commission will be effected at the best execution available. Purchases from underwriters of portfolio securities include a commission or concession paid by the issuer to the underwriter, and purchases from dealers serving as market makers include the spread between the bid and asked price. Allocation of transactions, including their frequency, to various dealers is determined by the Manager in its best judgment and in a manner deemed to be in the best interest of investors in the Fund rather than by any formula. The primary consideration is prompt execution of orders in an effective manner at the most favorable price. Investment decisions for the Portfolio will be made independently from those for any other account, series or investment company that is or may in the future become managed by the Manager or its affiliates. If, however, the Portfolio and other investment companies, series or accounts managed by the Manager are contemporaneously engaged in the purchase or sale of the same security, the transactions may be averaged as to price and allocated equitably to each account. In some cases, this policy might adversely affect the price paid or received by the Portfolio or the size of the position obtainable for the Portfolio. In addition, when purchases or sales of the same security for the Fund and for other investment companies or series managed by the Manager occur contemporaneously, the purchase or sale orders may be aggregated in order to obtain any price advantages available to large denomination purchases or sales. Portfolio transactions may be executed with the Manager, or with any affiliate of the Manager, acting either as principal or as broker, subject to applicable law. No commissions on portfolio transactions were paid by the Portfolio during the fiscal year ended August 31, 2004 to the Manager or any affiliate of the Manager. The Board has approved procedures in conformity with Rule 10f-3 under the 1940 Act whereby the Portfolio may purchase securities that are offered in underwritings in which a Citigroup affiliate participates. These procedures prohibit the Portfolio from directly or indirectly benefiting a Citigroup affiliate in connection with such underwritings. In addition, for underwritings where a Citigroup affiliate participates as a principal underwriter, certain restrictions may apply that could, among other things, limit the amount of securities that the Portfolio could purchase in the underwritings. 8. DISCLOSURE OF PORTFOLIO HOLDINGS The Fund's Board of Trustees has approved policies and procedures developed by Citigroup Asset Management ("CAM"), the Citigroup business unit that includes the Fund's investment manager, with respect to the disclosure of the Fund's portfolio securities and any ongoing arrangements to make available information about the Fund's portfolio securities. The policy requires that disclosure of information about the Fund's portfolio holdings be in the best interests of the Fund's shareholders, and that any conflicts of interest between the interests of the Fund's shareholders and those of Citi Fund Management Inc. or CGM or their affiliates, be addressed in a manner that places the interests of Fund shareholders first. The policy provides that information regarding the Fund's portfolio holdings may never be shared with non-CAM employees, with investors and potential investors (whether individual or institutional), and with third parties unless it is done for legitimate Fund business purposes and in accordance with the policy. CAM's policy generally provides for the release of details of securities positions once they are considered "stale." Data is considered stale once it is 25 calendar days old following quarter-end. This passage of time prevents a third party from benefiting from an investment decision made by the Fund that has not been fully reflected by the market. The Fund's complete list of holdings (including the size of each position) may be made available to investors, potential investors, third parties and non-CAM employees no sooner than the time of the filing of Form N-Q or Form N-CSR in accordance with SEC rules, provided that such filings may not be made until 25 days following quarter-end. Subject to the provisions relating to "ongoing arrangements," the Fund's holdings may also be released with simultaneous public disclosure at least 25 days after quarter end. Typically, simultaneous public disclosure is achieved by posting the information to a CAM or the Fund's internet site that is accessible by the public, or through public release by a third party vendor. For the purposes of the policy, the term "ongoing arrangement" is interpreted to include any arrangement, whether oral or in writing, to provide portfolio holdings information to any person or entity more than once, but excluding any arrangement to provide such information following the filing of Form N-Q or Form N-CSR. CAM may release limited portfolio holdings information that is not yet considered stale in the following circumstances, subject to the provisions relating to "ongoing arrangements": 1. The Fund's top ten securities, current as of quarter-end, and the individual size of each such security position may be released at any time following quarter end with simultaneous public disclosure. 2. The Fund's (i) top ten securities positions (including the aggregate but not individual size of such positions), (ii) sector weightings, (iii) yield and duration and (iv) the Fund's performance attribution (e.g., analysis of the Fund's outperformance or underperformance of its benchmark based on its portfolio holdings) may be released at any time with simultaneous public disclosure. 3. A list of securities (that may include fund holdings together with other securities) followed by the Fund's portfolio manager (without position sizes or identification of particular funds) may be disclosed to sell-side brokers at any time for the purpose of obtaining research and/or market information from such brokers. 4. A trade in process may be discussed only with counterparties, potential counterparties and others involved in the transaction (i.e., brokers and custodians). Under the policy, if portfolio holdings are released pursuant to an ongoing arrangement with any party, the Fund must have a legitimate business purpose for the release of the information, the release of the information must be subject to trading restrictions and confidential treatment to prohibit the entity from sharing with an unauthorized source or trading upon the information provided by CAM on behalf of the Fund and neither the Fund, CAM or any other affiliated party may receive compensation or any other consideration in connection with such arrangements. The approval of the Fund's Chief Compliance Officer, or designee, must be obtained before entering into any new ongoing arrangement or altering any existing ongoing arrangement to make available portfolio holdings information, or with respect to any exceptions to the policy. Exceptions are granted only after a thorough examination and consultation with CAM's legal department, as necessary. Any exceptions to the policies must be reported to the Fund's Board at its next regularly scheduled meeting. All ongoing arrangements to make available information about the Fund's portfolio securities will be reviewed by the Fund's Board no less frequently than quarterly. Currently, funds in the fund complex disclose their portfolio holdings approximately 25 days after calendar quarter end on their website [www.citigroupam.com]. The Citi money market funds, including the Fund, do not currently post their portfolio holdings, or otherwise publicly disclose their portfolio holdings other than in required regulatory filings and reports, but may in the future do so. Set forth below is a list, as of December 31, 2004, of those parties with whom CAM has authorized ongoing arrangements that include the release of portfolio holdings information, as well as the frequency of the release under such arrangements, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed. Not all of the ongoing arrangements described below may be applicable to the Fund. The Fund's auditor also has access from time to time to the Fund's portfolio holdings in connection with performing the audit and related functions.
RECIPIENT (HOLDINGS) FREQUENCY DELAY BEFORE DISSEMINATION State Street Bank & Trust Co. Daily None (Fund Custodian and Accounting Agent) Institutional Shareholders As necessary None Services (Proxy Voting Services) Bloomberg Quarterly 25 Calendar days after Quarter End Lipper Quarterly 25 Calendar days after Quarter End S&P Quarterly 25 Calendar days after Quarter End Morningstar Quarterly 25 Calendar days after Quarter End Vestek Daily None S&P (Rating Agency) Weekly Tuesday Night 1 day Moody's (Rating Agency) Weekly Tuesday Night 1 day Factset Daily None Frank Russell Monthly 1 day Callan Quarterly 25 Days after Quarter End Mercer Quarterly 25 Days after Quarter End eVestment Alliance Quarterly 25 Days after Quarter End CRA RogersCasey Quarterly 25 Days after Quarter End Cambridge Associates Quarterly 25 Days after Quarter End Marco Consulting Quarterly 25 Days after Quarter End Wilshire Quarterly 25 Days after Quarter End Informa Investment Services Quarterly 25 Days after Quarter End (Efron) CheckFree (Mobius) Quarterly 25 Days after Quarter End Nelsons Information Quarterly 25 Days after Quarter End Investor Tools Daily None Advent Daily None BARRA Daily None Plexus Quarterly (Calendar) Sent the 1-3 business day following the end of a Quarter Elkins/McSherry Quarterly (Calendar) Sent the first business day following the end of a Quarter Quantitative Services Group Daily None
With respect to each such arrangement , the Fund has a legitimate business purpose for the release of information. The release of the information is subject to trading restrictions and/or confidential treatment to prohibit the entity from sharing with an unauthorized source or trading upon the information provided by CAM on behalf of the Fund. Neither the Fund, CAM or any other affiliated party receives compensation or any other consideration in connection with such arrangements. 9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES The Fund is a series of CitiFunds Trust I and is governed by a Declaration of Trust. The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (par value $0.00001 per share) of each series and 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. In addition to the Fund, there are currently two other series of the Trust: Salomon Brothers All Cap Growth Fund and Salomon Brothers Emerging Growth Fund. The Trust has reserved the right to create and issue additional series and classes of shares or to classify or reclassify outstanding shares. Each share of each class of the Fund represents an equal proportional interest in the Fund with each other share of that class. The Trust also reserves the right to modify the preferences, voting powers, right and privileges of shares of each class without shareholder approval. Shares of each series of the Trust participate equally in the earnings, dividends and distribution of net assets of the particular series upon liquidation or dissolution (except for any differences among classes of shares of a series). Shareholders of all series of the Trust generally will vote together on all matters except when the Trustees determine that only shareholders of particular series or classes are affected by a particular matter or when applicable law requires shareholders to vote separately by series or class. The Fund may involuntarily redeem a shareholder's shares at any time for any reason the Trustees deem appropriate, including for the following reasons: (i) in order to eliminate small accounts for administrative efficiencies and cost savings, (ii) the failure of a shareholder to supply a tax identification number or other information if required to do so, (iii) to protect the tax status of the Fund if necessary, (iv) failure of a shareholder to meet or maintain the qualifications for ownership of a particular class of shares, (v) the failure of a shareholder to pay when due for the purchase of shares and (vi) to eliminate ownership of shares by a particular shareholder when the Trustees determine that the particular shareholder's ownership is not in the best interests of the other shareholders of the Fund. The exercise of the power granted to the Fund under the Declaration to involuntarily redeem shares is subject to any applicable provisions under the 1940 Act or the rules adopted thereunder. The staff of the Securities and Exchange Commission takes the position that the 1940 Act prohibits involuntary redemptions; however, the staff has granted enforcement no-action relief for involuntary redemptions in limited circumstances. The holders of shares are required to disclose information on direct or indirect ownership of Fund shares as may be required to comply with various laws applicable to the Fund, and ownership of Fund shares may be disclosed by the Fund if so required by law or regulation. Each shareholder of the Fund is entitled to one vote for each dollar of net asset value (number of shares of the Fund owned times net asset value per share) of the Fund, on each matter on which the shareholder is entitled to vote. Each fractional dollar amount is entitled to a proportionate fractional vote. Except when a larger vote is required by applicable law or the Declaration of Trust, a majority of the voting power of the shares voted in person or by proxy on a matter will decide that matter and a plurality of the voting power of the shares voted in person or by proxy will elect a Trustee. Shareholders do not have cumulative voting rights. The Fund is not required to hold and has no present intention of holding annual meetings of shareholders, but will hold special shareholder meetings 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. Except in limited circumstances, the Trustees may, without any shareholder vote, amend or otherwise supplement the Declaration of Trust. The Declaration of Trust provides that, at any meeting of shareholders, a Service Agent may vote any shares of which it is the holder of record, and for which it does not receive voting instructions, proportionately in accordance with the votes cast by holders of all shares otherwise represented at the meeting in person or by proxy as to which such Service Agent is the agent of record. Shares have no preference, pre-emptive, conversion or similar rights. Shares, when issued, are fully paid and non- assessable, except as set forth below. The Fund, a class or the Trust may merge or consolidate or may sell, lease or exchange all or substantially all of its assets if authorized at any meeting of shareholders representing a majority of the voting power of the Fund, such class or the Trust, voting as a single class, or by written consent, without a meeting, of the holders of shares representing a majority of the voting power of the outstanding shares of the Fund, such class or the Trust, voting as a single class. The Fund, a class or the Trust, may reincorporate or reorganize (but not with another operating entity) without any shareholder vote. The Trust may be terminated at any time by a vote of a majority of the voting power of the Trust or by the Trustees by written notice to the shareholders. The Fund may be terminated at any time by a vote of a majority of the outstanding voting power of the Fund, or by the Trustees by written notice to the shareholders of the Fund. If not so terminated, the Trust will continue indefinitely. The Fund is a series of 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 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 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, Trustees Emeritus, 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 Declaration of Trust further provides that obligations of the Fund or the Trust are not binding upon the Trustees individually but only upon the property of the Fund or the Trust and that the Trustees will not be liable for any action or failure to act, but nothing in the Declaration of 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. The Fund's Declaration of Trust provides that shareholders may not bring suit on behalf of the Fund without first requesting that the Trustees bring such suit unless there would be irreparable injury to the Fund or if a majority of the Trustees have a personal financial interest in the action. Trustees are not considered to have a personal financial interest by virtue of being compensated for their services as Trustees or as trustees of funds with the same or an affiliated investment adviser or distributor or the amount of such compensation. The Fund's Declaration of Trust provides that by becoming a shareholder of the Fund, each shareholder shall be expressly held to have assented to and agreed to be bound by the provisions of the Declaration. The Portfolio in which the Fund invests is a New York trust and is also governed by a Declaration of Trust similar to the Fund's Declaration of Trust. Whenever a vote is submitted to the Portfolio's investors, the Fund will generally call a meeting of its own shareholders. To the extent it does not receive instructions from its shareholders, the Fund will vote its shares in the Portfolio in the same proportion as the vote of shareholders who do give voting instructions. Alternatively, without seeking instructions from its shareholders, the Fund could vote its shares in the Portfolio in proportion to the vote of all the other investors in the Portfolio. The Fund may add to or reduce its investment in the Portfolio on each business day. At 4:00 p.m., Eastern time, on each such business day, the value of each investor's interest in the Portfolio is determined by multiplying the net asset value of the Portfolio by the percentage representing that investor's share of the aggregate beneficial interests in the Portfolio effective for that day. Any additions or withdrawals, which are to be effected on that day, are then effected. The investor's percentage of the aggregate beneficial interests in the Portfolio is then re-computed as the percentage equal to the fraction (i) the numerator of which is the value of such investor's investment in the Portfolio as of 4:00 p.m., on such day plus or minus, as the case may be, the amount of any additions to or withdrawals from the investor's investment in the Portfolio effected on such day, and (ii) the denominator of which is the aggregate net asset value of the Portfolio as of 4:00 p.m., Eastern time, on such day plus or minus, as the case may be, the amount of the net additions to or withdrawals from the aggregate investments in the Portfolio by all investors in the Portfolio. The percentage so determined is then applied to determine the value of the investor's interest in the Portfolio as of 4:00 p.m., Eastern time, on the following business day of the Portfolio. 10. CERTAIN ADDITIONAL TAX MATTERS The Fund has elected to be treated and intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended (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 and all of the Fund's net investment income and realized capital gains are distributed to shareholders in accordance with the timing requirements imposed by the Code, no federal or Massachusetts income or excise taxes will be required to be paid by the Fund. If the Fund should fail to qualify as a regulated investment company for any year, the Fund would incur federal and Massachusetts taxes upon its taxable income and Fund distributions would generally be taxable as ordinary dividend income to shareholders and would generally be subject to withholding at the rate of 30% in the case of shareholders who are neither citizens nor residents of the United States. Because the Fund expects to earn primarily interest income, it is expected that no Fund distributions will qualify for the dividends-received deduction for corporations. For the same reason, the Fund does not expect any distributions to be treated as "qualified dividend income," which is taxed at reduced rates. Investment income received by the Fund from non-U.S. investments may be subject to foreign income taxes withheld at the source; the Fund does not expect to be able to pass through to shareholders any foreign tax credits with respect to those foreign taxes. The United States has entered into tax treaties with many foreign countries that may entitle the Fund to a reduced rate of tax or an exemption from tax on these investments. It is not possible to determine the Fund's effective rate of foreign tax in advance since that rate depends upon the proportion of the Fund's assets ultimately invested within various countries. 11. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND FINANCIAL STATEMENTS PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, NY 10017, is the independent registered public accounting firm for the Fund and the Portfolio, providing audit services, assistance and consultation with respect to the preparation of filings with the SEC. The Fund is newly offered and has not issued financial statements as of the date of this Statement of Additional Information. APPENDIX A PROXY VOTING POLICIES AND PROCEDURES The Board of Directors of the Fund has delegated the authority to develop policies and procedures relating to proxy voting to Salomon Brothers Asset Management Inc (the "Investment Manager"). The Investment Manager is part of Citigroup Asset Management ("CAM"), a group of investment adviser affiliates of Citigroup, Inc. ("Citigroup"). Along with the other investment advisers that comprise CAM, the Investment Manager has adopted a set of proxy voting policies and procedures (the "Policies") to ensure that it votes proxies relating to equity securities in the best interest of clients. In voting proxies, the Investment Manager is guided by general fiduciary principles and seeks to act prudently and solely in the best interest of clients. The Investment Manager attempts to consider all factors that could affect the value of the investment and will vote proxies in the manner that it believes will be consistent with efforts to maximize shareholder values. The Investment Manager may utilize an external service provider to provide it with information and/or a recommendation with regard to proxy votes. However, such recommendations do not relieve the Investment Manager of its responsibility for the proxy vote. In the case of a proxy issue for which there is a stated position in the Policies, the Investment Manager generally votes in accordance with such stated position. In the case of a proxy issue for which there is a list of factors set forth in the Policies that CAM considers in voting on such issue, CAM votes on a case-by-case basis in accordance with the general principles set forth above and considering such enumerated factors. In the case of a proxy issue for which there is no stated position or list of factors that CAM considers in voting on such issue, CAM votes on a case-by-case basis in accordance with the general principles set forth above. Issues for which there is a stated position set forth in the Policies or for which there is a list of factors set forth in the Policies that CAM considers in voting on such issues fall into a variety of categories, including election of directors, ratification of auditors, proxy and tender offer defenses, capital structure issues, executive and director compensation, mergers and corporate restructurings, and social and environmental issues. The stated position on an issue set forth in the Policies can always be superseded, subject to the duty to act solely in the best interest of the beneficial owners of accounts, by the investment management professionals responsible for the account whose shares are being voted. Issues applicable to a particular industry may cause CAM to abandon a policy that would have otherwise applied to issuers generally. As a result of the independent investment advisory services provided by distinct CAM business units, there may be occasions when different business units or different portfolio managers within the same business unit vote differently on the same issue. In furtherance of the Investment Manager's goal to vote proxies in the best interest of clients, the Investment Manager follows procedures designed to identify and address material conflicts that may arise between the Investment Manager's interests and those of its clients before voting proxies on behalf of such clients. To seek to identify conflicts of interest, CAM periodically notifies CAM employees (including employees of the Investment Manager) in writing that they are under an obligation (i) to be aware of the potential for conflicts of interest with respect to voting proxies on behalf of client accounts both as a result of their personal relationships and due to special circumstances that may arise during the conduct of CAM's and the Investment Manager's business, and (ii) to bring conflicts of interest of which they become aware to the attention of compliance personnel. The Investment Manager also maintains and considers a list of significant relationships that could present a conflict of interest for the Investment Manager in voting proxies. The Investment Manager is also sensitive to the fact that a significant, publicized relationship between an issuer and a non- CAM affiliate might appear to the public to influence the manner in which the Investment Manager decides to vote a proxy with respect to such issuer. Absent special circumstances or a significant, publicized non-CAM affiliate relationship that CAM or the Investment Manager for prudential reasons treats as a potential conflict of interest because such relationship might appear to the public to influence the manner in which the Investment Manager decides to vote a proxy, the Investment Manager generally takes the position that non-CAM relationships between Citigroup and an issuer (e.g. investment banking or banking) do not present a conflict of interest for the Investment Manager in voting proxies with respect to such issuer. Such position is based on the fact that the Investment Manager is operated as an independent business unit from other Citigroup business units as well as on the existence of information barriers between the Investment Manager and certain other Citigroup business units. CAM maintains a Proxy Voting Committee, of which the Investment Manager personnel are members, to review and address conflicts of interest brought to its attention by compliance personnel. A proxy issue that will be voted in accordance with a stated position on an issue or in accordance with the recommendation of an independent third party is not brought to the attention of the Proxy Voting Committee for a conflict of interest review because the Investment Manager's position is that to the extent a conflict of interest issue exists, it is resolved by voting in accordance with a pre-determined policy or in accordance with the recommendation of an independent third party. With respect to a conflict of interest brought to its attention, the Proxy Voting Committee first determines whether such conflict of interest is material. A conflict of interest is considered material to the extent that it is determined that such conflict is likely to influence, or appear to influence, the Investment Manager's decision-making in voting proxies. If it is determined by the Proxy Voting Committee that a conflict of interest is not material, the Investment Manager may vote proxies notwithstanding the existence of the conflict. If it is determined by the Proxy Voting Committee that a conflict of interest is material, the Proxy Voting Committee is responsible for determining an appropriate method to resolve such conflict of interest before the proxy affected by the conflict of interest is voted. Such determination is based on the particular facts and circumstances, including the importance of the proxy issue and the nature of the conflict of interest. Methods of resolving a material conflict of interest may include, but are not limited to, disclosing the conflict to clients and obtaining their consent before voting, or suggesting to clients that they engage another party to vote the proxy on their behalf. CITI(SM) INSTITUTIONAL MONEY RESERVES - ------------------------------------------------------ INVESTMENT MANAGER Citi Fund Management Inc. 100 First Stamford Place, Stamford, CT 06902 DISTRIBUTOR Citigroup Global Markets Inc. 388 Greenwich Street, New York, NY 10013 (800) 451-2010 SUB-TRANSFER AGENT AND CUSTODIAN State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 TRANSFER AGENT Citicorp Trust Bank, fsb. 125 Broad Street, New York, NY 10004 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 300 Madison Avenue, New York, NY 10017 LEGAL COUNSEL Bingham McCutchen LLP 150 Federal Street, Boston, MA 02110 - ------------------------------------------------------ CITIBANK SERVICE AGENTS FOR PRIVATE BANKING CLIENTS: Citibank, N.A. The Citigroup Private Bank 153 East 53rd Street, New York, NY 10043 Call Your Citigroup Private Banking Account Officer or Registered Representative FOR CITIGROUP ASSET MANAGEMENT CLIENTS: Citigroup Asset Management 100 First Stamford Place, Stamford, CT 06902 FOR CITIBANK NORTH AMERICAN INVESTOR SERVICES CLIENTS: Citibank, N.A. 111 Wall Street, New York, NY 10043 Call Your Account Manager FOR CITIBANK CASH MANAGEMENT CLIENTS: Citibank Cash Management One Penns Way, New Castle, DE 19720 PART C ITEM 23. EXHIBITS. + a(1) Amended and Restated Declaration of Trust of the Registrant +++ a(2) Certificate of Amendment to the Amended and Restated Declaration of Trust ++++ a(3) Certificate of Amendment to the Amended and Restated Declaration of Trust ~~~~ a(4) Certificate of Amendment to the Amended and Restated Declaration of Trust Filed a(5) Certificate of Amendment to the Amended and Restated herewith Declaration of Trust + b(1) Amended and Restated By-Laws of the Registrant +++++ d(1) Form of Management Agreement between the Registrant, and CitiFund Management, Inc. as the manager ~ e(1) Distribution Agreement between the Registrant and Citigroup Global Markets Inc. (formerly Salomon Smith Barney, Inc.) Filed e(2) Form of Letter Agreement amending Appendix A to Distribution herewith Agreement between the Registrant and Citigroup Global Markets Inc. (formerly Salomon Smith Barney, Inc.) * g(1) Custodian Contract between the Registrant and State Street Bank and Trust Company (`State Street'), as custodian Filed g(2) Form of Letter Agreement adding Smith Barney Emerging herewith Markets Equity Fund to the Custodian Contract between the Registrant and State Street ^ h(1) Transfer Agency Agreement with Citicorp Trust Bank, fsb (f/k/a Citi Fiduciary Trust Company), as transfer agent Filed h(2) Form of Letter Agreement adding the Smith Barney Emerging herewith Markets Equity Fund to the Transfer Agency and Servicing Agreement with Citicorp Trust Bank, fsb (f/k/a Citi Fiduciary Trust Company), as transfer agent ~~~~ h(3) Form of Sub-Transfer Agency and Services Agreement between Citicorp Trust Bank, fsb (f/k/a Citi Fiduciary Trust Company) and PFPC Inc. (f/k/a First Data Investor Services Group, Inc.) Filed h(4) Form of Letter Agreement adding the Smith Barney Emerging herewith Markets Equity Fund to the Sub-Transfer Agency and Services Agreement ++ h(5) Retirement Plan of the Registrant ~~~~ I Opinion and consent of counsel Filed m(1) Form of Service Plan for Class A shares of Smith Barney herewith Emerging Markets Equity Fund Filed m(2) Form of Service Plan for Class B shares of Smith Barney herewith Emerging Markets Equity Fund Filed m(3) Form of Service Plan for Class C shares of Smith Barney herewith Emerging Markets Equity Fund ~~~ o Amended and Restated Multiple Class Plan of the Registrant Filed p(1) Revised Code of Ethics for the Registrant and SBAM and herewith Citi Fund Management Inc. *** and **** p(2) Code of Ethics for the Distributor ++ q(1) Powers of Attorney for the Trustees of the Registrant ++ and +++++ q(2) Powers of Attorney for certain officers of the Registrant ~~ q(3) Powers of Attorney for certain officers of the Registrant * 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. 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. 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. ^ Incorporated by reference to Post -Effective Amendment No. 40 to the Registrant's Registration Statement on Form N1-A (File No. 2-90518) as filed with the Securities and Exchange Commission on June 16, 2000. **** Incorporated herein by reference to Post-Effective Amendment No. 42 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on September 11, 2000. + Incorporated herein by reference to Post-Effective Amendment No. 47 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on December 5, 2001. ++ Incorporated herein by reference to Post-Effective Amendment No. 54 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on February 19, 2003. +++ Incorporated herein by reference to Post-Effective Amendment No. 56 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, 2003. ++++ Incorporated herein by reference to Post-Effective Amendment No. 59 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on October 31, 2003. +++++ Incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on December 24, 2003. ~ Incorporated herein by reference to Post-Effective Amendment No. 62 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on February 3, 2004. ~~ Incorporated herein by reference to Post-Effective Amendment No. 64 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on April 2, 2004. ~~~ Incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on November 19, 2004. ~~~~ Incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrant's Registration Statement on Form N-1A (File No. 2-90518) as filed with the Securities and Exchange Commission on December 3, 2004. 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 Amended and Restated Declaration of Trust, incorporated herein by reference as an Exhibit to Post-Effective Amendment No. 47 to its Registration Statement on Form N-1A; (b) Section 6 of the Distribution Agreements between the Registrant and Citigroup Global Markets Inc. (formerly, Salomon Smith Barney, Inc.) incorporated herein by reference as Exhibits to Post-Effective Amendment No. 40 to its Registration Statement on Form N-1A; 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 manager 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 - Citi Fund Management Inc. ("Citi Fund Management"). Citi Fund Management was incorporated in January, 2001 under the laws of the State of Delaware. Citi Fund Management is a wholly owned subsidiary of Smith Barney Fund Management LLC, which in turn is an indirect wholly owned subsidiary of Citigroup Inc. Citi Fund Management is registered as an investment adviser under the Investment Advisers Act of 1940. The list required by this Item 26 of officers and directors of Citi Fund Management 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 Part One of Form ADV filed by Citi Fund Management pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-60004). ITEM 27. PRINCIPAL UNDERWRITERS. (a) Citigroup Global Markets Inc. ("CGM") (formerly Salomon Smith Barney Inc.),the Registrant's distributor, is the distributor for Smith Barney Trust II, CitiFunds Trust III, CitiFunds Premium Trust and CitiFunds Institutional Trust. CGM is the placement agent for Institutional Portfolio, U.S. Treasury Reserves Portfolio, Tax Free Reserves Portfolio and Liquid Reserves Portfolio. CGM is also the distributor for the following funds: Salomon Funds Trust, Smith Barney Allocation Series Inc., Smith Barney Trust II, Smith Barney Investment Series, Consulting Group Capital Markets Funds, High Income Opportunity Fund Inc., Intermediate Municipal Fund, Inc., Smith Barney Small Cap Core Fund, Inc., Smith Barney Investment Trust, Real Estate Income Fund Inc., Managed High Income Portfolio Inc., Managed Municipals Portfolio Inc., Municipal High Income Fund Inc., Citigroup Investments Corporate Loan Fund Inc., Zenix Income Fund Inc., Salomon Brothers Capital Fund Inc., Salomon Brothers Investors Value Fund Inc., Salomon Brothers Fund, Salomon Brothers Institutional Series Fund Inc., Salomon Brothers Series Funds Inc., Salomon Brothers Variable Series Funds Inc., Salomon Brothers Opportunity Fund Inc., Salomon Brothers 2008 Worldwide Government Term Trust, Salomon Brothers High Income Fund, Salomon Brothers High Income Fund II, Salomon Brothers Emerging Markets Income Fund Inc., Salomon Brothers Emerging Markets Income Fund II Inc., Salomon Brothers Emerging Markets Floating Rate Fund Inc., Salomon Brothers Global High Income Fund Inc., Salomon Brothers Global Partners Income Fund Inc., Salomon Brothers Emerging Markets Debt Fund Inc., Salomon Brothers Municipal Partners Fund Inc., Salomon Brothers Municipal Partners Fund II Inc., Greenwich Street Series Fund, SB Adjustable Rate 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 Equity Funds, Smith Barney Fundamental Value Fund Inc., Smith Barney Funds, Inc., Smith Barney Income Funds, Smith Barney Institutional Cash Management Fund, Inc., Smith Barney Investment Funds, Inc., Smith Barney Managed Governments Fund Inc., Smith Barney Managed Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund, Smith Barney Money Funds, Inc., Smith Barney Muni Funds, Smith Barney Municipal Money Market Fund, Inc., Smith Barney New Jersey Municipals Fund Inc., Smith Barney Oregon Municipals Fund, Smith Barney Principal Return Fund, Smith Barney Sector Series Inc., Smith Barney Telecommunications Trust, Smith Barney World Funds, Inc., Travelers Series Fund Inc., and various series of unit investment trusts. (b) The information required by this Item 27 with respect to each director, officer and partner of CGM is incorporated by reference to Schedule A of Form BD filed by CGM pursuant to the Securities Exchange Act of 1934 (SEC File No. 8-8177). (c) Not applicable. ITEM 28. LOCATION OF ACCOUNTS AND RECORDS. NAME/ADDRESS 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 Citigroup Global Markets Inc. 388 Greenwich Street (formerly Salomon Smith Barney Inc.) New York, NY 10013 (distributor) State Street Bank and Trust Company 225 Franklin Street (custodian and fund accounting agent) Boston, MA 02110 Citicorp Trust Bank, fsb 125 Broad Street (transfer agent) New York, NY 10004 Citi Fund Management Inc. 100 First Stamford Place (investment adviser) Stamford, CT 06902 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 certifies that it meets all requirements for effectiveness of this Post-Effective Amendment to the Registration Statement pursuant to Rule 485(b) under the Securities Act and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford and State of Connecticut on the 29th day of December, 2004. CITIFUNDS TRUST I, on behalf of its series Citi Institutional Money Reserves By: /s/ Rosemary D. Emmens ------------------ Rosemary D. Emmens Assistant Secretary 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 December 29, 2004. SIGNATURE TITLE - --------- ----- R. JAY GERKEN* President, Principal Executive - ----------------------- Officer and Trustee R. JAY GERKEN ANDREW B. SHOUP* Principal Financial Officer - ----------------------- and Principal Accounting Officer ANDREW B. SHOUP ELLIOTT J. BERV* Trustee - ----------------------- ELLIOTT J. BERV DONALD M. CARLTON* Trustee - ----------------------- DONALD M. CARLTON A. BENTON COCANOUGHER* Trustee - ----------------------- A. BENTON COCANOUGHER MARK T. FINN* Trustee - ----------------------- MARK T. FINN STEPHEN RANDOLPH GROSS* Trustee - ----------------------- STEPHEN RANDOLPH GROSS DIANA R. HARRINGTON* Trustee - ----------------------- DIANA R. HARRINGTON SUSAN B. KERLEY* Trustee - ----------------------- SUSAN B. KERLEY ALAN G. MERTEN* Trustee - ----------------------- ALAN G. MERTEN R. RICHARDSON PETTIT* Trustee - ----------------------- R. RICHARDSON PETTIT *By: /s/ Rosemary D. Emmens ------------------------ ROSEMARY D. EMMENS EXECUTED BY ROSEMARY D. EMMENS ON BEHALF OF THOSE INDICATED PURSUANT TO POWERS OF ATTORNEY SIGNATURES Liquid Reserves Portfolio has duly caused this Post-Effective Amendment to the Registration Statement on Form N-lA of CitiFunds Trust I to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford and the State of Connecticut on the 29th day of December, 2004. LIQUID RESERVES PORTFOLIO By: /s/Rosemary D. Emmens ---------------------------- Rosemary D. Emmens Assistant Secretary This Post-Effective Amendment to the Registration Statement on Form N-lA of CitiFunds Trust I has been signed below by the following persons in the capacities indicated below on December 29, 2004. Signature Title R. Jay Gerken* President, Principal Executive - ----------------------- Officer and Trustee R. Jay Gerken Andrew B. Shoup* Principal Financial Officer and - ----------------------- Principal Accounting Officer Andrew B. Shoup Elliott J. Berv* Trustee - ----------------------- Elliott J. Berv Donald M. Carlton* Trustee - ----------------------- Donald M. Carlton A. Benton Cocanougher* Trustee - ----------------------- A. Benton Cocanougher Mark T. Finn* Trustee - ----------------------- Mark T. Finn Stephen Randolph Gross* Trustee - ----------------------- Stephen Randolph Gross Diana R. Harrington* Trustee - ----------------------- Diana R. Harrington Susan B. Kerley* Trustee - ----------------------- Susan B. Kerley Alan G. Merten* Trustee - ----------------------- Alan G. Merten R. Richardson Pettit* Trustee - ----------------------- R. Richardson Pettit *By: /s/Rosemary D. Emmens ----------------------- Rosemary D. Emmens Executed by Rosemary D. Emmens on behalf of those indicated pursuant to Powers of Attorney EXHIBIT INDEX a(5) Certificate of Amendment to the Amended and Restated Declaration of Trust e(2) Form of Letter Agreement amending Appendix A to Distribution Agreement between the Registrant and Citigroup Global Markets Inc. (formerly Salomon Smith Barney, Inc.) g(2) Form of Letter Agreement adding Smith Barney Emerging Markets Equity Fund to the Custodian Contract between the Registrant and State Street h(2) Form of Letter Agreement adding Smith Barney Emerging Markets Equity Fund to the Transfer Agency and Services Agreement with Citicorp Trust Bank, fsb (flkla Citi Fiduciary Trust Company), as transfer agent h(4) Form of Letter Agreement adding Smith Barney Emerging Markets Equity Fund to the Sub-Transfer Agency and Services Agreement j Consent of Independent Auditors m(1) Form of Service Plan for Class A shares of Smith Barney Emerging Markets Equity Fund m(2) Form of Service Plan for Class B shares of Smith Barney Emerging Markets Equity Fund m(3) Form of Service Plan for Class C shares of Smith Barney Emerging Markets Equity Fund p(1) Revised Code of Ethics for the Registrant and SBAM and Citi Fund Management, Inc. EX-99.A(5) 2 ex99_a5-61912.txt CERTIFICATE OF AMENDMENT Exhibit a(5) CITIFUNDS TRUST I Certificate of Amendment The undersigned, being the Assistant Secretary of CitiFunds Trust I (the "Trust"), a trust with transferable shares of the type commonly called a Massachusetts business trust, DOES HEREBY CERTIFY that, in accordance with the authority conferred upon the Trustees of the Trust by the Trust's Declaration of Trust as currently in effect (the "Declaration of Trust"), and by the affirmative vote of a majority of the Trustees of the Trust dated as of November 9, 2004, paragraph 3 of the Establishment and Designation of Classes of the Trust has been amended to read as set forth in Exhibit A attached to this Certificate, effective November 9, 2004. IN WITNESS WHEREOF, the undersigned has set his hand this 23rd day of November, 2004. /s/ Rosemary Emmens ---------------------------- Rosemary D. Emmens Assistant Secretary Exhibit A CITIFUNDS INSTITUTIONAL TRUST CITIFUNDS TRUST I CITIFUNDS TRUST III SMITH BARNEY INVESTMENT SERIES SMITH BARNEY TRUST II Amendment to Declaration of Trust THE UNDERSIGNED, CONSTITUTING AT LEAST A MAJORITY OF THE TRUSTEES OF EACH TRUST NAMED ABOVE AND ACTING PURSUANT TO EACH TRUST'S DECLARATION OF TRUST AS CURRENTLY IN EFFECT (EACH, A "DECLARATION OF TRUST"), DO HEREBY CERTIFY THAT IN ACCORDANCE WITH THE PROVISIONS OF THE SECOND SENTENCE OF SECTION 9.3(A) OF EACH DECLARATION OF TRUST, THE FOLLOWING AMENDMENT TO EACH DECLARATION OF TRUST HAS BEEN DULY ADOPTED BY AT LEAST A MAJORITY OF THE TRUSTEES OF EACH TRUST, EFFECTIVE AS OF NOVEMBER 9, 2004: Paragraph 3 of the Establishment and Designation of Classes of each Trust is hereby amended in its entirety to read as follows: 3. For Shares of each class, the purchase price, the method of determination of the net asset value, the price, the terms and manner of redemption, any conversion feature, the relative dividend rights of holders thereof, and any other rights, privileges, features or qualifications, shall be as determined from time to time by the Trustees of the Trust in accordance with the Declaration as set forth in the current prospectus and statement of additional information of the Trust or any series thereof relating to the class, as amended from time to time, contained in the Trust's registration statement under the Securities Act of 1933, as amended, and other offering documents filed with the Securities and Exchange Commission. [Signature page follows] IN WITNESS WHEREOF, the undersigned have executed this Amendment this 9th day of November, 2004. /s/ Elliot J. Berv /s/ Donald M. Carlton - ---------------------------------- ---------------------------------- Elliott J. Berv, as Trustee Donald M. Carlton, as Trustee and not individually and not individually /s/ A. Benton Cocanougher /s/ Mark T. Finn - ---------------------------------- ---------------------------------- A. Benton Cocanougher, as Trustee Mark T. Finn, as Trustee and not individually and not individually /s/ R. Jay Gerken /s/ Stephen R. Gross - ---------------------------------- ---------------------------------- R. Jay Gerken, as Trustee Stephen Randolph Gross, as Trustee and not individually and not individually /s/ Diana R. Harrington /s/ Susan B. Kerley - ---------------------------------- ---------------------------------- Diana R. Harrington, as Trustee Susan B. Kerley, as Trustee and not individually and not individually /s/ Alan G. Merten /s/ R. Richardson Pettit - ---------------------------------- ---------------------------------- Alan G. Merten, as Trustee R. Richardson Pettit, as Trustee and not individually and not individually EX-99.E(2) 3 ex99_e2-61912.txt DISTRIBUTION AGREEMENT exhibit e(2) ______ __, 2004 Citigroup Global Markets Inc. 388 Greenwich Street New York, New York 10013 RE: DISTRIBUTION AGREEMENT DATED AS OF SEPTEMBER 5, 2000 Ladies and Gentlemen: We refer to that certain Distribution Agreement dated as of September 5, 2000 (the "Agreement"), among Citigroup Global Markets Inc. (formerly Salomon Smith Barney Inc.) and the trusts named below. Please sign below to confirm your agreement that Exhibit A to the Agreement is hereby replaced in its entirety with the attached Exhibit A, and that the Agreement as so amended remains in full force and effect. CITIFUNDS TRUST I SMITH BARNEY TRUST II (f/k/a CitiFunds Trust II) CITIFUNDS TRUST III CITIFUNDS TAX FREE RESERVES CITIFUNDS FIXED INCOME TRUST CITIFUNDS MULTI-STATE TAX FREE TRUST SALOMON FUNDS TRUST (f/k/a CitiFunds Tax Free Income Trust) CITIFUNDS INTERNATIONAL TRUST CITIFUNDS PREMIUM TRUST CITIFUNDS INSTITUTIONAL TRUSt VARIABLE ANNUITY PORTFOLIOS, each on behalf of its series listed on Exhibit A attached hereto By: ----------------------------------- Title: ----------------------------------- Agreed: CITIGROUP GLOBAL MARKETS INC. By: --------------------------------- Title: --------------------------------- EXHIBIT A TRUST AND FUND CLASSES OF SHARES EFFECTIVE DATE - -------------- ----------------- -------------- CITIFUNDS TRUST I Citi Institutional Money Reserves Class A* March 27, 2003 Salomon Brothers Aggressive Growth Fund Class A* April 2, 2004 Class B* April 2, 2004 Class C* April 2, 2004 Class O April 2, 2004 Class Y April 2, 2004 Smith Barney Emerging Markets Equity Fund Class A* Class B* Class C* Class Y SMITH BARNEY TRUST II (FORMERLY CITIFUNDS TRUST II) Smith Barney Small Cap Growth Opportunities Fund Class A* September 11, 2000 Class B* September 11, 2000 Class L* September 11, 2000 Class Y September 11, 2000 Smith Barney International Large Cap Fund Class A* April 30, 2002 Class B* April 30, 2002 Class L* April 30, 2002 Class Y April 30, 2002 Smith Barney Capital Preservation Fund Class A* March 29, 2002 Class B* March 29, 2002 Class L* March 29, 2002 Smith Barney Capital Preservation Class A* September 17, 2002 Fund II Class B* September 17, 2002 Class L* September 17, 2002 Smith Barney Short Duration Municipal Income Fund Class A* March 3, 2003 Class B* March 3, 2003 Class L* March 3, 2003 Class Y March 3, 2003 CITIFUNDS TRUST III Citi Cash Reserves Class N* January 1, 2001 Citi U.S. Treasury Reserves Class N* January 1, 2001 Citi California Tax Free Reserves Class N* December 7, 2001 Citi Connecticut Tax Free Reserves Class N* December 7, 2001 Smith Barney Connecticut Money Market Portfolio - Class A* Smith Barney December 7, 2001 Connecticut Money Market Portfolio - Class Y December 7, 2001 Citi New York Tax Free Reserves Class N* December 7, 2001 Citi Tax Free Reserves Class N* December 7, 2001 SALOMON FUNDS TRUST (FORMERLY CITIFUNDS TAX FREE INCOME TRUST) Salomon Brothers Mid Cap Fund Class A* June 19, 2001 Class B* Class O Class 2* Salomon Brothers National Tax Free Class A* September 5, 2000 Income Fund Class B* Class O Class 2* Salomon Brothers California Tax Free Class A* September 5, 2000 Income Fund Class B* Class O Class 2* Salomon Brothers New York Tax Free Class A* September 5, 2000 Income Fund Class B* Class O Class 2* CITIFUNDS PREMIUM TRUST Citi Premium Liquid Reserves* N/A January 1, 2001 Citi Premium U.S. Treasury Reserves* N/A January 1, 2001 CITIFUNDS INSTITUTIONAL TRUST Citi Institutional Liquid Reserves Class A* January 1, 2001 SVB Securities January 1, 2001 Liquid Reserves Shares* SVB Securities April 27, 2001 Institutional Liquid Reserves Shares* Citi Institutional U.S. Treasury Class A Shares January 1, 2001 Reserves (all shares of the Fund were designated class A shares as of January 1, 2003)* SVB Securities March 26, 2003 Institutional U.S. Treasury Reserves Shares* Citi Institutional Tax Free Reserves N/A* January 1, 2001 Citi Institutional Cash Reserves Class I* January 1, 2001 Class L* January 1, 2001 Class O* January 1, 2001 Class S* January 1, 2001 SVB Securities April 27, 2001 Horizon Shares* Citi Institutional Enhanced Income Fund Class I* August 17, 2002 Class Y* August 17, 2002 SVB Securities August 17, 2002 Enhanced Income Shares* VARIABLE ANNUITY PORTFOLIOS Smith Barney Small Cap Growth September 5, 2000 Opportunities Portfolio * Denotes Distribution and/or Service Plan under Rule 12b-1 under the Investment Company Act of 1940, as amended. EX-99.G(2) 4 ex99_g2-61912.txt CUSTODIAN CONTRACT exhibit g(2) CitiFunds Trust I 125 Broad Street New York, New York 10004 ________ __, 2004 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 (as amended, the "Contract"), between CitiFunds Trust I (formerly known as Landmark Funds I) (the "Trust") and State Street Bank and Trust Company (the "Custodian"), we hereby request that Smith Barney Emerging Markets Equity Fund (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 under the Contract. CITIFUNDS TRUST I By: ---------------------------- Title: ---------------------------- Agreed: STATE STREET BANK AND TRUST COMPANY By: ------------------------------ Title: ------------------------------ EX-99.H(2) 5 ex99_h2-61912.txt LETTER RE: TA Exhibit h(2) CitiFunds Trust I 21 Milk Street, 5th Floor Boston, Massachusetts 02109 __________ __, 2004 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 Smith Barney Emerging Markets Equity Fund (the "Series") is 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.H(4) 6 ex99_h4-61912.txt LETTER RE:SUB-TA exhibit h(4) Citifunds Trust I 125 Broad Street New York, New York 10004 _________ ___, 2004 Primerica Shareholder Services P.O. Box 9662, Providence Rhode Island 02940-9662 Re: Smith Barney Emerging Markets Equity Fund - Sub-Transfer Agency and Services Agreement Ladies and Gentlemen: In accordance with the terms of the Sub-Transfer Agency and Services Agreement, dated as of October 1, 1999 (the "Agreement"), between Citigroup Trust Bank, fsb (f/k/a Smith Barney Private Trust Company) and PFPC Inc. (f/k/a First Data Investor Services Group, Inc.) (the "Sub-Transfer Agent"), we hereby request that Smith Barney Emerging Markets Equity Fund (the "Series") be added to the list of series of Citifunds Trust I to which the Sub-Transfer Agent renders services as sub-transfer agent under the terms of the Agreement. Please sign below to evidence your agreement to render such services as transfer agent on behalf of the Series as a beneficiary under the Agreement. CITIFUNDS TRUST I By: ------------------------------- Title: ------------------------------- Agreed: PFPC INC. By: ------------------------------ Title: ------------------------------ EX-99.J 7 ex99-j_61912.txt AUDITORS' CONSENT Exhibit j CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the reference to us under the heading "Independent Registered Public Accounting Firm and Financial Statements" in the Registration Statement on Form N-1A (the " Registration Statement") of CitiFunds Trust I. PricewaterhouseCoopers LLP New York, New York December 21, 2004 EX-99.M(1) 8 ex99_m1-61912.txt AMENDED MULTIPLE CLASS PLAN EXHIBIT M(1) SERVICE PLAN SERVICE PLAN, dated as of ________ ___, 2004 of CitiFunds Trust I, a Massachusetts business trust (the "Trust"), with respect to its class of shares of beneficial interest designated Class A shares, as such shares may be reclassified or redesignated by the Trustees from time to time (the "Shares"). 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 (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, each such series being listed on Schedule A hereto (collectively with any series that may hereafter be established, except for any series which elects not to adopt this Plan, the "Series"); WHEREAS, the Trust's shares of beneficial interest are divided into classes, including the Shares; WHEREAS, the Trust intends to distribute the 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 "Non-Interested 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 holders of the Shares, have approved this Plan by votes cast at a meeting called for the purpose of voting hereon and on any agreements related hereto; WHEREAS, an initial sales charge may be paid by investors who purchase the Shares, and any distributor that enters into a Distribution Agreement with respect to the Shares (the "Distributor"), broker-dealers, banks and other financial intermediaries may receive such sales charge as full or partial compensation for their services in connection with the sale of Shares; WHEREAS, each Series or the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by such Series, and the Series may pay to the Distributor, dealers and others, or the Series may permit such persons to retain, as the case may be, all or any portion of such deferred sales charges; 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, which activities may include, but are not limited to (i) payments to the Distributor for distribution services, (ii) payments to broker-dealers, financial intermediaries (which may include banks) and others in respect of the sale of Shares, (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 Distributor, broker-dealers, financial intermediaries (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. Sales Charges. It is understood that, under certain circumstances, an initial sales charge may be paid by investors who purchase Shares of a Series, and the Series may pay to the Distributor, broker-dealers, financial intermediaries (including banks) and others, or the Series may permit such persons to retain, as the case may be, such sales charge as full or partial compensation for their services in connection with the sale of Shares. It is also understood that, under certain circumstances, a Series or the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares of such Series, and the Series may pay to the Distributor, securities dealers, financial institutions (including banks) and others, or the Series may permit such persons to retain, as the case may be, all or any portion of such deferred sales charges. 3. 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 made pursuant to paragraph 1 above exceed an amount calculated at the rate of 0.25% per annum of the average daily net assets represented by the Shares of each Series. Payments pursuant to this Plan may be made directly by the Trust to the Distributor 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 such average daily net assets shall be computed in the manner specified in the applicable Series' then-current prospectus and statement of additional information with respect to such Shares. 4. Trust's Expenses. The Trust shall pay all expenses of its operations, including the following, and such expenses shall not be subject to the limitation set forth in paragraph 3 above: organization costs of each Series; compensation of Trustees; 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 manager or investment adviser, transfer agent, 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 the Trustees and 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. It is recognized that the manager or investment adviser to a Series may, from time to time, use its management fee revenues as well as past profits or its resources from any other source, to make payments to the Distributor or other parties with respect to any expenses incurred in connection with the distribution of the Shares of the Series, including the activities described in paragraph 1 above, and further that any Distributor, shareholder servicing agent or service agent may use its past profits or its resources from any other source, to make payments with respect to the distribution of the Shares of a Series, including the activities described in paragraph 1 above, and any such payments by such manager, investment adviser, Distributor, shareholder servicing agent or service agent shall not constitute expenditures made pursuant to this Plan and shall not be subject to the limitation set forth in paragraph 3 above. Notwithstanding the foregoing, to the extent that any payments made by a Series to any manager or investment adviser or any affiliate thereof, including payments made from such manager's or adviser's management or advisory fee, should be deemed to be indirect financing of any activity primarily intended to result in the sale of the Shares of such Series within the context of Rule 12b-1, then such payments shall be deemed to be authorized by this Plan but shall not be subject to the limitation set forth in paragraph 3 above. 5. Term and Termination. (a) Unless terminated as herein provided, this Plan shall continue in effect with respect to the Shares of a Series for a period of one year from its effectiveness with respect to such Series as set forth on Schedule A hereto and shall continue in effect for such Series for successive periods of one year, 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 the Shares of any Series by a vote of a majority of the Non-Interested 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. 6. Amendments. This Plan may not be amended to increase materially the maximum expenditures permitted by Section 3 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 continuance of this Plan in Section 5(a) hereof. 7. 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. 8. 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. 9. Recordkeeping. The Trust shall preserve copies of this Plan and any related agreement and all reports made pursuant to Section 8 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. 10. 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. Schedule A Fund Effective Date ---- -------------- Smith Barney Emerging Markets Equity Fund Salomon Brothers Aggressive Growth Fund Salomon Brothers All Cap Growth Fund EX-99.M(2) 9 ex99_m2-61912.txt AMENDED MULTIPLE CLASS PLA EXHIBIT M(2) SERVICE PLAN SERVICE PLAN, dated as of __________ ___, 2004 of CitiFunds Trust I a Massachusetts business trust (the "Trust"), with respect to its class of shares of beneficial interest designated Class B shares, as such shares may be reclassified or redesignated by the Trustees from time to time (the "Shares"). 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 (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, each such series being listed on Schedule A hereto (collectively with any series that may hereafter be established, except for any series which elects not to adopt this Plan, the "Series"); WHEREAS, the Trust's shares of beneficial interest are divided into classes, including the Shares; WHEREAS, the Trust intends to distribute the 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 "Non-Interested 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 holders of the Shares, have approved this Plan by votes cast at a meeting called for the purpose of voting hereon and on any agreements related hereto; WHEREAS, an initial sales charge may be paid by investors who purchase the Shares, and any distributor that enters into a Distribution Agreement with respect to the Shares (the "Distributor"), broker-dealers, banks and other financial intermediaries may receive such sales charge as full or partial compensation for their services in connection with the sale of Shares; WHEREAS, each Series or the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by such Series, and the Series may pay to the Distributor, dealers and others, or the Series may permit such persons to retain, as the case may be, all or any portion of such deferred sales charges; 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, which activities may include, but are not limited to (i) payments to the Distributor for distribution services, (ii) payments to broker-dealers, financial intermediaries (which may include banks) and others in respect of the sale of Shares, (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 Distributor, broker-dealers, financial intermediaries (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. Sales Charges. It is understood that, under certain circumstances, an initial sales charge may be paid by investors who purchase Shares of a Series, and the Series may pay to the Distributor, broker-dealers, financial intermediaries (including banks) and others, or the Series may permit such persons to retain, as the case may be, such sales charge as full or partial compensation for their services in connection with the sale of Shares. It is also understood that, under certain circumstances, a Series or the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares of such Series, and the Series may pay to the Distributor, securities dealers, financial institutions (including banks) and others, or the Series may permit such persons to retain, as the case may be, all or any portion of such deferred sales charges. 3. 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 made pursuant to paragraph 1 above exceed an amount calculated at the rate of 1.00% per annum of the average daily net assets represented by the Shares of each Series. Payments pursuant to this Plan may be made directly by the Trust to the Distributor 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 such average daily net assets shall be computed in the manner specified in the applicable Series' then-current prospectus and statement of additional information with respect to such Shares. 4. Trust's Expenses. The Trust shall pay all expenses of its operations, including the following, and such expenses shall not be subject to the limitation set forth in paragraph 3 above: organization costs of each Series; compensation of Trustees; 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 manager or investment adviser, transfer agent, 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 the Trustees and 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. It is recognized that the manager or investment adviser to a Series may, from time to time, use its management fee revenues as well as past profits or its resources from any other source, to make payments to the Distributor or other parties with respect to any expenses incurred in connection with the distribution of the Shares of the Series, including the activities described in paragraph 1 above, and further that any Distributor, shareholder servicing agent or service agent may use its past profits or its resources from any other source, to make payments with respect to the distribution of the Shares of a Series, including the activities described in paragraph 1 above, and any such payments by such manager, investment adviser, Distributor, shareholder servicing agent or service agent shall not constitute expenditures made pursuant to this Plan and shall not be subject to the limitation set forth in paragraph 3 above. Notwithstanding the foregoing, to the extent that any payments made by a Series to any manager or investment adviser or any affiliate thereof, including payments made from such manager's or adviser's management or advisory fee, should be deemed to be indirect financing of any activity primarily intended to result in the sale of the Shares of such Series within the context of Rule 12b-1, then such payments shall be deemed to be authorized by this Plan but shall not be subject to the limitation set forth in paragraph 3 above. 5. Term and Termination. (a) Unless terminated as herein provided, this Plan shall continue in effect with respect to the Shares of a Series for a period of one year from its effectiveness with respect to such Series as set forth on Schedule A hereto and shall continue in effect for such Series for successive periods of one year, 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 the Shares of any Series by a vote of a majority of the Non-Interested 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. 6. Amendments. This Plan may not be amended to increase materially the maximum expenditures permitted by Section 3 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 continuance of this Plan in Section 5(a) hereof. 7. 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. 8. 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. 9. Recordkeeping. The Trust shall preserve copies of this Plan and any related agreement and all reports made pursuant to Section 8 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. 10. 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. Schedule A Fund Effective Date ---- -------------- Smith Barney Emerging Markets Equity Fund Salomon Brothers Aggressive Growth Fund Salomon Brothers All Cap Growth Fund EX-99.M(3) 10 ex99_m3-61912.txt AMENDED MULTIPLE CLASS PLA EXHIBIT M(3) SERVICE PLAN SERVICE PLAN, dated as of _________ __, 2004 of CitiFunds Trust I, a Massachusetts business trust (the "Trust"), with respect to its class of shares of beneficial interest designated Class C shares, as such shares may be reclassified or redesignated by the Trustees from time to time (the "Shares"). 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 (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, each such series being listed on Schedule A hereto (collectively with any series that may hereafter be established, except for any series which elects not to adopt this Plan, the "Series"); WHEREAS, the Trust's shares of beneficial interest are divided into classes, including the Shares; WHEREAS, the Trust intends to distribute the 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 "Non-Interested 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 holders of the Shares, have approved this Plan by votes cast at a meeting called for the purpose of voting hereon and on any agreements related hereto; WHEREAS, an initial sales charge may be paid by investors who purchase the Shares, and any distributor that enters into a Distribution Agreement with respect to the Shares (the "Distributor"), broker-dealers, banks and other financial intermediaries may receive such sales charge as full or partial compensation for their services in connection with the sale of Shares; WHEREAS, each Series or the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares by such Series, and the Series may pay to the Distributor, dealers and others, or the Series may permit such persons to retain, as the case may be, all or any portion of such deferred sales charges; 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, which activities may include, but are not limited to (i) payments to the Distributor for distribution services, (ii) payments to broker-dealers, financial intermediaries (which may include banks) and others in respect of the sale of Shares, (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 Distributor, broker-dealers, financial intermediaries (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. Sales Charges. It is understood that, under certain circumstances, an initial sales charge may be paid by investors who purchase Shares of a Series, and the Series may pay to the Distributor, broker-dealers, financial intermediaries (including banks) and others, or the Series may permit such persons to retain, as the case may be, such sales charge as full or partial compensation for their services in connection with the sale of Shares. It is also understood that, under certain circumstances, a Series or the Distributor may impose certain deferred sales charges in connection with the repurchase of Shares of such Series, and the Series may pay to the Distributor, securities dealers, financial institutions (including banks) and others, or the Series may permit such persons to retain, as the case may be, all or any portion of such deferred sales charges. 3. 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 made pursuant to paragraph 1 above exceed an amount calculated at the rate of 1.00% per annum of the average daily net assets represented by the Shares of each Series. Payments pursuant to this Plan may be made directly by the Trust to the Distributor 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 such average daily net assets shall be computed in the manner specified in the applicable Series' then-current prospectus and statement of additional information with respect to such Shares. 4. Trust's Expenses. The Trust shall pay all expenses of its operations, including the following, and such expenses shall not be subject to the limitation set forth in paragraph 3 above: organization costs of each Series; compensation of Trustees; 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 manager or investment adviser, transfer agent, 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 the Trustees and 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. It is recognized that the manager or investment adviser to a Series may, from time to time, use its management fee revenues as well as past profits or its resources from any other source, to make payments to the Distributor or other parties with respect to any expenses incurred in connection with the distribution of the Shares of the Series, including the activities described in paragraph 1 above, and further that any Distributor, shareholder servicing agent or service agent may use its past profits or its resources from any other source, to make payments with respect to the distribution of the Shares of a Series, including the activities described in paragraph 1 above, and any such payments by such manager, investment adviser, Distributor, shareholder servicing agent or service agent shall not constitute expenditures made pursuant to this Plan and shall not be subject to the limitation set forth in paragraph 3 above. Notwithstanding the foregoing, to the extent that any payments made by a Series to any manager or investment adviser or any affiliate thereof, including payments made from such manager's or adviser's management or advisory fee, should be deemed to be indirect financing of any activity primarily intended to result in the sale of the Shares of such Series within the context of Rule 12b-1, then such payments shall be deemed to be authorized by this Plan but shall not be subject to the limitation set forth in paragraph 3 above. 5. Term and Termination. (a) Unless terminated as herein provided, this Plan shall continue in effect with respect to the Shares of a Series for a period of one year from its effectiveness with respect to such Series as set forth on Schedule A hereto and shall continue in effect for such Series for successive periods of one year, 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 the Shares of any Series by a vote of a majority of the Non-Interested 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. 6. Amendments. This Plan may not be amended to increase materially the maximum expenditures permitted by Section 3 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 continuance of this Plan in Section 5(a) hereof. 7. 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. 8. 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. 9. Recordkeeping. The Trust shall preserve copies of this Plan and any related agreement and all reports made pursuant to Section 8 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. 10. 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. Schedule A Fund Effective Date ---- -------------- Smith Barney Emerging Markets Equity Fund Salomon Brothers Aggressive Growth Fund Salomon Brothers All Cap Growth Fund EX-99.P(1) 11 ex99-p1_61912.txt REVISED CODE OF ETHICS Exhibit p(1) PERSONAL INVESTMENT POLICY CITIGROUP ASSET MANAGEMENT - NORTH AMERICA AND CERTAIN REGISTERED INVESTMENT COMPANIES Citigroup Asset Management ("CAM")(1), and those U.S.-registered investment companies advised, managed or sponsored by CAM that have adopted this policy ("Funds"), have adopted this policy on securities transactions in order to accomplish two goals: first, to minimize conflicts and potential conflicts of interest between employees of CAM and CAM's clients (including the Funds), and between Fund directors or trustees and their Funds, and second, to provide policies and procedures consistent with applicable law, including Rule 17j-1 under the Investment Company Act of 1940, to prevent fraudulent or manipulative practices with respect to purchases or sales of securities held or to be acquired by client accounts. ALL U.S. EMPLOYEES OF CAM, INCLUDING EMPLOYEES WHO SERVE AS FUND OFFICERS OR DIRECTORS, AND ALL DIRECTORS OR TRUSTEES ("DIRECTORS") OF EACH FUND, ARE COVERED PERSONS UNDER THIS POLICY. THE APPLICATION OF THIS POLICY IS DESCRIBED IN SECTION II BELOW. I. STATEMENT OF PRINCIPLES - All CAM employees owe a fiduciary duty to CAM's clients when conducting their personal investment transactions. Employees must place the interests of clients first and avoid activities, interests and relationships that might interfere with the duty to make decisions in the best interests of the clients. All Fund directors owe a fiduciary duty to each Fund of which they are a director and to that Fund's shareholders when conducting their personal investment transactions. At all times and in all matters Fund directors shall place the interests of their Funds before their personal interests. The fundamental standard to be followed in personal securities transactions is that Covered Persons may not take inappropriate advantage of their positions. All personal securities transactions by Covered Persons, including certain transactions in the firm's 401(k) Plan, shall adhere to the requirements of this policy and shall be conducted in such a manner as to avoid any actual or potential conflict of interest, the appearance of such a conflict, or the abuse of the person's position of trust and responsibility. While the CAM Personal Investment Policy is designed to address both identified conflicts and potential conflicts, it cannot possibly be written broadly enough to cover all potential situations. In this regard, Covered Persons are expected to adhere not only to the letter, but also the spirit of the policies contained herein. Employees are reminded that they also are subject to other Citigroup policies, including policies on insider trading, the purchase and sale of securities listed on any applicable CAM restricted list, the receipt of gifts and service as a director of a publicly traded company. Employees must never trade in a security or commodity (including shares of a proprietary open-end mutual fund) while in possession of material, non-public information about the issuer or the market for those securities or commodities, even if the employee has satisfied all other requirements of this policy. From time to time the Compliance Department may notify employees who are deemed to be in possession of material non-public information that they are restricted from trading certain securities, which may include mutual funds, for a period of time determined by the Compliance Department. Where such a restriction applies to a money market fund, the restriction would extend to check writing, where such a facility is available. II. COVERED PERSONS - This policy applies to the following persons: 1. CAM U.S. Employees: Each permanent employee, including employees who serve as Fund officers and, generally, temporary personnel and consultants working in any CAM business, must comply with all of the provisions of the policy applicable to CAM employees unless otherwise indicated. Certain employees (i.e., portfolio managers, traders and research analysts (and each of their assistants) are subject to certain additional restrictions outlined in the policy. All other employees of CAM are considered to be "Advisory Personnel." The personal investment policies, procedures and restrictions referred to herein also apply to an employee's spouse, significant other and minor children. The policies also apply to any other account over which the employee is deemed to have beneficial ownership. This includes accounts of any immediate family members sharing the same household as the employee; accounts of persons or other third parties for whom the employee exercises investment discretion or gives investment advice; a legal vehicle in which the employee has a direct or indirect beneficial interest and has power over investment decisions; accounts for the benefit of a third party (e.g., a charity) which may be directed by the employee (other than in the capacity of an employee); and any account over which the employee may be deemed to have control. For a more detailed description of beneficial ownership, see Exhibit A attached hereto. 2. Fund Directors: All Fund directors, including independent directors, must adhere at all times to the standards set out in the Statement of Principles section above. In addition, a Fund director who is also a CAM employee is subject to all provisions of this policy. 3. CAM Senior Executives: Certain CAM senior executives, in addition to this policy, are also Covered Persons under the Citigroup Personal Trading Policy (CPTP). Additional requirements of the CPTP are described in Sections VIII and XIII of this policy. III. ENFORCEMENT - It is the responsibility of each Covered Person to act in accordance with a high standard of conduct and to comply with the policies and procedures set forth in this document. CAM takes seriously its obligation to monitor the personal investment activities of its employees. Any violation of this policy by employees will be considered serious, and may result in disciplinary action, which may include the unwinding of trades, disgorgement of profits, monetary fine or censure, and suspension or termination of employment. Any violation of this policy is reported by the Compliance Department to the person's supervisor and, periodically, to the Funds' Boards of Directors. IV. OPENING AND MAINTAINING EMPLOYEE ACCOUNTS - All employee brokerage accounts, including spouse accounts, accounts for which the employee is deemed to have beneficial ownership, and any other accounts over which the employee and/or spouse exercise control, must be maintained either at Smith Barney ("SB") or at Citicorp Investment Services ("CIS"). For spouses or other persons who, by reason of their employment, are required to conduct their securities, commodities or other financial transactions in a manner inconsistent with this policy, or in other exceptional circumstances, employees may submit a written request for an exemption to the Compliance Department. If approval is granted, copies of trade confirmations and monthly statements must be sent to the Compliance Department. In addition, all other provisions of this policy will apply. V. ACCOUNTS AND TRANSACTIONS COVERED BY THIS POLICY - The following types of securities are covered by this policy: 1. Stocks, notes, bonds, closed-end mutual funds, debentures, and other evidences of indebtedness, including senior debt, subordinated debt, investment contracts, commodity contracts, futures and all derivative instruments such as options, warrants and indexed instruments, or, in general, any interest or instrument commonly known as a "security." All provisions of this policy cover transactions in these securities. 2. Proprietary open-end mutual funds (with the exception of money market funds) are subject to the provisions of this policy as follows: (i) shares must be held in an account maintained at SB or CIS (in accordance with Section IV above); and (ii) shares must be held for a period of at least 90 calendar days (in accordance with Section VII below). Shares in the firm's 401(k) Plan must also be held for a period of at least 90 calendar days (in accordance with Section VII below). VI. EXCLUDED ACCOUNTS AND TRANSACTIONS - The following types of accounts and transactions need not be maintained at SB or CIS, nor are they subject to the other restrictions of this policy: 1. Accounts at non-proprietary mutual fund companies that hold only shares of open-end funds purchased directly from that fund company. Note: transactions relating to closed-end funds are subject to the pre-clearance, blackout period and other restrictions of this policy; 2. Estate or trust accounts in which an employee or related person has a beneficial interest, but no power to affect investment decisions. There must be no communication between the account(s) and the employee with regard to investment decisions prior to execution. The employee must direct the trustee/bank to furnish copies of confirmations and statements to the Compliance Department; 3. Fully discretionary accounts managed by either an internal or external registered investment adviser are permitted and may be custodied away from SB and CIS if (i) the employee receives permission from the Regional Director of Compliance and the unit's Chief Investment Officer, and (ii) there is no communication between the manager and the employee with regard to investment decisions prior to execution. The employee must designate that copies of trade confirmations and monthly statements be sent to the Compliance Department; 4. Employees may participate in direct investment programs that allow the purchase of securities directly from the issuer without the intermediation of a broker/dealer provided that the timing and size of the purchases are established by a pre-arranged, regularized schedule (e.g., dividend reinvestment plans). Employees must pre-clear the transaction at the time that the dividend reinvestment plan is being set up. Employees also must provide documentation of these arrangements and direct periodic (monthly or quarterly) statements to the Compliance Department; and 5. In addition to the foregoing, the following types of securities are exempted from pre-clearance, blackout periods, reporting and short-term trading requirements: proprietary money market funds, non-proprietary open-end mutual funds; open-end unit investment trusts; U.S. Treasury bills, bonds and notes; mortgage pass-throughs (e.g. Ginnie Maes) that are direct obligations of the U.S. government; bankers acceptances; bank certificates of deposit; commercial paper; and high quality short-term debt instruments (meaning any instrument that has a maturity at issuance of less than 366 days and that is rated in one of the two highest rating categories by a nationally recognized statistical rating organization, such as S&P or Moody's), including repurchase agreements. VII. SECURITIES HOLDING PERIOD/SHORT-TERM TRADING - Securities transactions must be for investment purposes rather than for speculation. Consequently: 1. Proprietary open-end mutual fund shares, including shares held in the firm's 401(k) Plan, may not be redeemed or exchanged within 90 calendar days of purchase or prior exchange. A redemption or exchange of shares in a fund cannot be made within 90 calendar days of the latest purchase of shares from that fund. Please note, depending upon the circumstances, the sale or exchange of shares in a proprietary open-end mutual fund, even beyond the expiry of 90 calendar days, could raise "short-term" trading concerns. The following situations are not subject to the 90 calendar day holding period: (i) redemptions or exchanges from a systematic purchase plan; (ii) dividend reinvestments; and (iii) changes to investment fund options to prospective contributions into the firm's 401(k) Plan. 2. For all securities other than shares in proprietary open-end mutual funds, securities may not be sold within 60 calendar days, calculated on a First In, First Out ("FIFO") basis. 3. Citigroup securities received as part of an employee's compensation are not subject to the 60-day holding period 4. All profits from short-term trades, including exchanges of proprietary open-end mutual funds, are subject to disgorgement. VIII. PRE-CLEARANCE/NOTIFICATION - All Covered Persons must pre-clear all personal securities transactions as set out below (see Section VI for a listing of accounts, transactions and securities that do not require pre-clearance). A copy of the pre-clearance/notification form is attached as Exhibit B. 1. For all securities other than shares in proprietary open-end mutual funds, a transaction must not be executed until the employee has received the necessary approval from the Compliance Department. Pre-clearance is valid only on the day it is given. If a transaction is not executed on the day pre-clearance is granted, it is required that pre-clearance be sought again on a subsequent day (i.e., open orders, such as limit orders, good until cancelled orders and stop-loss orders, must be pre-cleared each day until the transaction is effected). In connection with obtaining approval for any personal securities transaction, employees must describe in detail any factors that might be relevant to an analysis of the possibility of a conflict of interest. 2. Purchases, redemptions and exchanges of proprietary open-end mutual funds must not be executed until a notification has been sent to and acknowledged by the Compliance Department. A notification is valid only on the day that it is sent. 3. Contributions, redemptions and exchanges of proprietary open-end mutual funds in the firm's 401(k) Plan are not subject to pre-clearance or notification requirements. 4. Any trade that violates the pre-clearance/notification process may be unwound at the employee's expense, and the employee will be required to absorb any resulting loss and to disgorge any resulting profit. 5. Covered Persons are prohibited from engaging in more than 20 transactions (not including purchases, redemptions or exchanges of shares in proprietary or non-proprietary mutual funds) in any calendar month, except with prior written approval from their Chief Investment Officer, or designee. 6. CAM employees subject to the CPTP (as referenced in Section II above) must obtain pre-clearance to make a charitable gift of securities (including a charitable gift of Citigroup securities). 7. In addition to the foregoing, the Global Chief Investment Officer, or his designee, must approve all personal securities transactions for members of the CAM Research Department prior to pre-clearance from the Compliance Department as set forth in this section. Pre-approval by the Global Chief Investment Officer, or his designee, is in addition to and does not replace the requirement for the pre-clearance of all personal securities transactions. IX. BLACKOUT PERIODS - No Covered Person shall purchase or sell, directly or indirectly, any security in which he/she has, or by reason of the transaction acquires, any direct or indirect beneficial ownership if he/she has knowledge at the time of such transaction that the security is being purchased or sold, or is being considered for purchase or sale, by a managed fund, UIT or client account or in the case of a Fund director, by the director's Fund. In addition, the following Blackout Periods apply to the categories of CAM employees listed below: 1. Portfolio Managers and Portfolio Manager Assistants - may not buy or sell any securities for personal accounts seven calendar days before or after managed funds or client accounts he/she manages trade in that security. 2. Traders and Trader Assistants - may not buy or sell any securities for personal accounts three calendar days before or seven calendar days after managed funds, UITs or client accounts he/she executes trades for trade in that security. 3. Research Analysts and Research Assistants - may not buy or sell any securities for personal accounts: seven calendar days before or after the issuance of or a change in any recommendation; or seven calendar days before or after any managed fund, UIT or client account about which the employee is likely to have trading or portfolio information (as determined by the Compliance Department) trades in that security. 4. Advisory Personnel (see Section II for details) - may not buy or sell any securities for personal accounts on the same day that a managed fund, UIT or client account about which the employee is likely to have trading or portfolio information (as determined by the Compliance Department) trades in that security. 5. UIT Personnel - all employees assigned to the Unit Trust Department are prohibited from transacting in any security when a CAM-sponsored UIT portfolio is buying the same (or a related) security, until seven business days after the later of the completion of the accumulation period or the public announcement of the trust portfolio. Similarly, all UIT employees are prohibited from transacting in any security held in a UIT (or a related security) seven business days prior to the liquidation period of the trust. Employees in the above categories may also be considered Advisory Personnel for other accounts about which the employee is likely to have trading or portfolio information (as determined by the Compliance Department). Blackout period requirements shall not apply to any purchase or sale, or series of related transactions involving the same or related securities, involving 500 or fewer shares in the aggregate if the issuer has a market capitalization (outstanding shares multiplied by the current price per share) greater than $10 billion and is listed on a U.S. Stock Exchange or NASDAQ. Note: Pre-clearance is still required. Under certain circumstances, the Compliance Department may determine that an employee may not rely upon this "Large Cap/De Minimis" exemption. In such a case, the employee will be notified prior to or at the time the pre-clearance request is made. X. PROHIBITED TRANSACTIONS - The following transactions by CAM employees are prohibited without the prior written approval from the Chief Investment Officer, or designee, and the Regional Compliance Director: 1. The purchase of private placements; and 2. The acquisition of any securities in an initial public offering (new issues of municipal debt securities may be acquired subject to the other requirements of this policy (e.g., pre-clearance).) 3. The commitment of capital including loans for investment or business purposes. XI. TRANSACTIONS IN OPTIONS AND FUTURES - CAM employees may buy or sell derivative instruments such as individual stock options, options and futures on indexes and options and futures on fixed-income securities, and may buy or sell physical commodities and futures and forwards on such commodities. These transactions must comply with all of the policies and restrictions described in this policy, including pre-clearance, blackout periods, transactions in Citigroup securities and the 60-day holding period. However, the 60-day holding period does not apply to individual stock options that are part of a hedged position where the underlying stock has been held for more than 60 days and the entire position (including the underlying security) is closed out. XII. PROHIBITED RECOMMENDATIONS - No Covered Person shall recommend or execute any securities transaction by any managed fund, UIT or client account, or, in the case of a Fund director, by the director's Fund, without having disclosed, in writing, to their Chief Investment Officer, or designee, any direct or indirect interest in such securities or issuers, except for those securities purchased pursuant to the "Large Cap/De Minimis" exemption described in Section VIII above. Prior written approval of such recommendation or execution also must be received from their Chief Investment Officer, or designee. The interest in personal accounts could be in the form of: 1. Any direct or indirect beneficial ownership of any securities of such issuer; 2. Any contemplated transaction by the person in such securities; 3. Any position with such issuer or its affiliates; or 4. Any present or proposed business relationship between such issuer or its affiliates and the person or any party in which such person has a significant interest. XIII. TRANSACTIONS IN CITIGROUP SECURITIES - Unless a CAM employee is subject to the provisions of the CPTP (as referenced in Section II above), or is otherwise notified to the contrary, the employee may trade in Citigroup securities without restriction (other than the pre-clearance and other requirements of this policy), subject to the limitations set forth below: 1. Employees whose jobs are such that they know about Citigroup's quarterly earnings prior to release may not engage in any transactions in Citigroup securities during the "blackout periods" which begin on the first day of the last month of each calendar quarter and ends 24 hours after Citigroup earnings are released to the public. . CAM employees subject to the CPTP (as referenced in Section II above), members of the CAM Management Committee and certain other Management Committee attendees are subject to these blackout periods. Charitable gifts of Citigroup securities are not subject to this blackout period, but must still be pre-cleared. 2. Stock option exercises are permitted during a blackout period (but the simultaneous exercise of an option and sale of the underlying stock is prohibited). With regard to exchange traded options, no transactions in Citigroup options are permitted except to close or roll an option position that expires during a blackout period. Charitable contributions of Citigroup securities may be made during the blackout period, but an individual's private foundation may not sell donated Citigroup common stock during the blackout period. "Good `til cancelled" orders on Citigroup stock must be cancelled before entering a blackout period and no such orders may be entered during a blackout period. 3. No employee may engage at any time in any personal transactions in Citigroup securities while in possession of material non-public information. Investments in Citigroup securities must be made with a long-term orientation rather than for speculation or for the generation of short-term trading profits. In addition, please note that employees may not engage in the following transactions: o Short sales of Citigroup securities; o Purchases or sales of options ("puts" or "calls") on Citigroup securities, except writing a covered call at a time when the securities could have been sold under this policy; o Purchases or sales of futures on Citigroup securities; or o Any transactions relating to Citigroup securities that might reasonably appear speculative. 4. The number of Citigroup shares an employee is entitled to in the Citigroup Stock Purchase Plan is not treated as a long stock position until such time as the employee has given instructions to purchase the shares of Citigroup. Thus, employees are not permitted to use options to hedge their financial interest in the Citigroup Stock Purchase Plan. 5. Contributions into the firm's 401(k) Plan are not subject to the restrictions and prohibitions described in this policy. XIV. ACKNOWLEDGEMENT AND REPORTING REQUIREMENTS - CAM Employees - All new CAM employees must certify that they have received a copy of this policy, and have read and understood its provisions. In addition, all CAM employees must: 1. Acknowledge receipt of the policy and any modifications thereof, in writing (see Exhibit C for the form of Acknowledgement); 2. Within 10 days of becoming a CAM employee, disclose in writing all information with respect to all securities beneficially owned and any existing personal brokerage relationships (employees must also disclose any new brokerage relationships whenever established). Such information should be provided on the form attached as Exhibit D; 3. Direct their brokers to supply, on a timely basis, duplicate copies of confirmations of all personal securities transactions (Note: this requirement may be satisfied through the transmission of automated feeds); 4. Within 10 days after the end of each calendar quarter, provide information relating to securities transactions executed during the previous quarter for all securities accounts (Note: this requirement may be satisfied through the transmission of automated feeds); 5. Submit an annual holdings report containing similar information that must be current as of a date no more than 30 days before the report is submitted, and confirm at least annually all brokerage relationships and any and all outside business affiliations (Note: this requirement may be satisfied through the transmission of automated feeds or the regular receipt of monthly brokerage statements); and 6. Certify on an annual basis that he/she has read and understood the policy, complied with the requirements of the policy and that he/she has pre-cleared and disclosed or reported all personal securities transactions and securities accounts required to be disclosed or reported pursuant to the requirements of the policy. XV. HANDLING OF DISGORGED PROFITS - Any amounts that are paid/disgorged by an employee under this policy shall be donated by CAM to one or more charities. Amounts donated may be aggregated by CAM and paid to such charity or charities at the end of each year. XVI. CONFIDENTIALITY - All information obtained from any Covered Person pursuant to this policy shall be kept in strict confidence, except that such information will be made available to the Securities and Exchange Commission or any other regulatory or self-regulatory organization or to the Fund Boards of Directors to the extent required by law, regulation or this policy. XVII. OTHER LAWS, RULES AND STATEMENTS OF POLICY - Nothing contained in this policy shall be interpreted as relieving any person subject to the policy from acting in accordance with the provision of any applicable law, rule or regulation or, in the case of CAM employees, any statement of policy or procedure governing the conduct of such person adopted by Citigroup, its affiliates and subsidiaries. XVIII. RETENTION OF RECORDS - All records relating to personal securities transactions hereunder and other records meeting the requirements of applicable law, including a copy of this policy and any other policies covering the subject matter hereof, shall be maintained in the manner and to the extent required by applicable law, including Rule 17j-1 under the 1940 Act. The Compliance Department shall have the responsibility for maintaining records created under this policy. XIX. MONITORING - CAM takes seriously its obligation to monitor the personal investment activities of its employees and to review the periodic reports of all Covered Persons. Employee personal investment transaction activity will be monitored by the Compliance Department. All noted deviations from the policy requirements will be referred back to the employee for follow-up and resolution (with a copy to be supplied to the employee's supervisor). Any noted deviations by Fund directors will be reported to the Board of Directors of the applicable Fund for consideration and follow-up as contemplated by Section III above. XX. EXCEPTIONS TO THE POLICY - Any exceptions to this policy must have the prior written approval of both the Chief Investment Officer and the Regional Director of Compliance. Any questions about this policy should be directed to the Compliance Department. XXI. BOARD REVIEW - At least annually, a written report and certification meeting the requirements of Rule 17j-1 under the 1940 Act shall be prepared by CAM and presented to the Funds' Boards of Directors. XXII. OTHER CODES OF ETHICS - To the extent that any officer of any Fund is not a Covered Person hereunder, or an investment sub adviser of, sponsor or principal underwriter for any Fund or UIT and their respective access persons (as defined in Rule 17j-1) are not Covered Persons hereunder, those persons must be covered by separate codes of ethics which are approved in accordance with applicable law. XXIII. AMENDMENTS - This policy may be amended as to CAM employees from time to time by the Compliance Department. Any material amendment of this policy shall be submitted to the Board of Directors of each Fund for approval in accordance with Rule 17j-1 under the 1940 Act. January 15, 2004 - -------- 1 Investment advisory services provided by Salomon Brothers Asset Management Inc., Smith Barney Asset Management (a division of Citigroup Global Markets Inc.), Citibank Global Asset Management (a unit of Citibank N.A.) and affiliated advisory entities. EXHIBIT A EXPLANATION OF BENEFICIAL OWNERSHIP You are considered to have "Beneficial Ownership" of Securities if you have or share a direct or indirect "Pecuniary Interest" in the Securities. You have a "Pecuniary Interest" in Securities if you have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the Securities. The following are examples of an indirect Pecuniary Interest in Securities: 1. Securities held by members of your immediate family sharing the same household; however, this presumption may be rebutted by convincing evidence that profits derived from transactions in these Securities will not provide you with any economic benefit. "Immediate family" means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and includes any adoptive relationship. 2. Your interest as a general partner in Securities held by a general or limited partnership. 3. Your interest as a manager-member in the Securities held by a limited liability company. You do not have an indirect Pecuniary Interest in Securities held by a corporation, partnership, limited liability company or other entity in which you hold an equity interest, unless you are a controlling equity holder or you have or share investment control over the Securities held by the entity. The following circumstances constitute Beneficial Ownership by you of Securities held by a trust: 1. Your ownership of Securities as a trustee where either you or members of your immediate family have a vested interest in the principal or income of the trust. 2. Your ownership of a vested interest in a trust. 3. Your status as a settlor of a trust, unless the consent of all of the beneficiaries is required in order for you to revoke the trust. The foregoing is a summary of the meaning of "beneficial ownership". For purposes of the attached policy, "beneficial ownership" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder EXHIBIT B CITIGROUP ASSET MANAGEMENT ("CAM") EMPLOYEE TRADE PRE-APPROVAL/NOTIFICATION FORM (PAGE 1) INSTRUCTIONS: All employees are required to submit this form to the Compliance Department prior to placing a trade. The Compliance Department will notify the employee as to whether or not pre-approval is granted. Pre-approval or acknowledgment of notification is effective only on the date granted. THIS COMPLETED FORM SHOULD BE FAXED TO (203) 890-7102. EMPLOYEE INFORMATION - ------------------------------------------------------------------------------------------------------------------------------- Employee Name: Phone Number: - ------------------------------------------------------------------------------------------------------------------------------- Account Title: - ------------------------------------------------------------------------------------------------------------------------------- Account Number: - ------------------------------------------------------------------------------------------------------------------------------- Managed Account(s)/Mutual Fund(s) for which employee is a Covered Person: - ------------------------------------------------------------------------------------------------------------------------------- SECURITY INFORMATION IPO [ ] Yes [ ] No PRIVATE PLACEMENT [ ] Yes [ ] No - ------------------------- --------------------- --------- --------------------- -------------------- ---------- --------------- Security Name Security Type-e.g., Ticker Buy/Sell/ If Sale/Redemption No. Large Cap equity, mutual Redeem/Exchange /Exchange, Date Shares Stock?(2) fund, debt, etc. First Acquired(1) /Units - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- YOUR POSITION WITH THE FIRM: (Please check one of the following) [ ] Portfolio Manager / Portfolio Manager Assistant [ ] Research Analyst / Research Analyst Assistant [ ] Trader / Trader Assistant [ ] Unit Trust Personnel [ ] Other (Advisory Personnel) NOTE: o All PORTFOLIO MANAGERS must complete the reverse side of this form. o All FUNDAMENTAL RESEARCH ANALYSTS and THEIR ASSISTANTS must provide an additional form signed by ANDREW MOLOFF or one of his designees. CERTIFICATION I certify that I will not effect the transaction(s) described above unless and until pre-clearance approval is obtained from the Compliance Department, or when executing transactions in proprietary open-end mutual funds notification is acknowledged by the Compliance Department. I further certify that, except as described on an attached page, to the best of my knowledge, the proposed transaction(s) will not result in a conflict of interest with any account managed by CAM (including mutual funds managed by CAM). I further certify that, to the best of my knowledge, there are no pending orders for any security listed above or any related security for any Managed Accounts and/or Mutual Funds for which I am considered a Covered Person. The proposed transaction(s) are consistent with all firm policies regarding employee personal securities transactions. SIGNATURE DATE ----------------------------------------------- ------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------- FOR USE BY THE COMPLIANCE DEPARTMENT =============================================================================================================================== ------------------------- --------- ----------- --------------------------- ARE SECURITIES [ ] Yes [ ] No Pre-approval [ ] Yes [ ] No Reason not granted: RESTRICTED? Granted/Notification Acknowledged? - ------------------------------------------------------------------------------------------------------------------------------- COMPLIANCE DEPARTMENT SIGNATURE: Date: Time: - ------------------------------------------------------------------------------------------------------------------------------- 1. All securities sold must have been held for at least 60 days. All proprietary mutual fund shares redeemed or exchanged must have been held for at least 90 days. 2. For purposes of CAM's personal trading policies, a Large Cap Exemption applies to transactions involving 500 or fewer shares in aggregate and the stock is one that is listed on a U.S. stock exchange or NASDAQ and whose issuer has a market capitalization (outstanding shares multiplied by current price) of more than $10 billion.
CITIGROUP ASSET MANAGEMENT ("CAM") PAGE 2 - PORTFOLIO MANAGER CERTIFICATION All portfolio managers must answer the following questions in order to obtain pre-approval. All questions must be answered or the form will be returned. If a question is not applicable, please indicate "N/A". 1. Have your client accounts purchased or sold the securities (or related securities) in the past seven calendar days? Yes [ ] No [ ] 2. Do you intend to purchase or sell the securities (or related securities) for any client accounts in the next seven calendar days? Yes [ ] No [ ] 3. Do any of your client accounts currently own the securities (or related securities)? Yes [ ] No [ ] 3a. If yes, and you are selling the securities for your personal account, please explain why the sale of the securities was rejected for client accounts but is appropriate for your personal account: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 4. Have you, in the past 7 calendar days, considered purchasing the securities (or related securities) for your client accounts? Yes [ ] No [ ] 4a. If yes, and you are purchasing securities for your personal account, please explain why the purchase of the securities is appropriate for your account but has been rejected for your client accounts: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 4b. If no, and you are purchasing securities for your personal account, please explain why the purchase of the securities has not been considered for your client accounts: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CERTIFICATION I certify that I will not effect the transaction(s) described above unless and until pre-clearance approval is obtained from the Compliance Department. I further certify that, except as described on an attached page, to the best of my knowledge, the proposed transaction(s) will not result in a conflict of interest with any account managed by CAM (including mutual funds managed by CAM). I further certify that, to the best of my knowledge, there are no pending orders for any security listed above or any related securities for any Managed Accounts and/or Mutual Funds for which I am considered a Covered Person. The proposed transaction(s) are consistent with all firm policies regarding employee personal securities transactions. SIGNATURE DATE ------------------------------ -------------------- FOR USE BY THE COMPLIANCE DEPARTMENT =============================================================================================================================== ARE SECURITIES [ ] Yes [ ] No PRE-APPROVAL [ ] Yes [ ] No Reason not granted: RESTRICTED? GRANTED? - ------------------------------------------------------------------------------------------------------------------------------- COMPLIANCE DEPARTMENT SIGNATURE: Date: Time: - -------------------------------------------------------------------------------------------------------------------------------
EXHIBIT C PERSONAL INVESTMENT POLICY FOR CITIGROUP ASSET MANAGEMENT - NORTH AMERICA AND CERTAIN REGISTERED INVESTMENT COMPANIES ACKNOWLEDGMENT I acknowledge that I have received and read the Personal Investment Policy for Citigroup Asset Management - North America and Certain Registered Investment Companies dated January 15, 2004. I understand the provisions of the Personal Investment Policy as described therein and agree to abide by them. EMPLOYEE NAME (PRINT): ---------------------------------- SIGNATURE: ---------------------------------- DATE: ---------------------------------- ---------------------------------------------------------------------------- SOCIAL SECURITY NUMBER: DATE OF HIRE: ============================================================================ JOB FUNCTION & TITLE: SUPERVISOR: ---------------------------------------------------------------------------- LOCATION: ---------------------------------------------------------------------------- FLOOR AND/OR ZONE: TELEPHONE NUMBER: ---------------------------------------------------------------------------- NASD REGISTERED EMPLOYEE (Please check one) [ ] Yes [ ] No ---------------------------------------------------------------------------- If registered, list Registration \ License: ---------------------------------------------------------------------------- This Acknowledgment form must be completed and returned within 10 days of employment to the Citigroup Asset Management Compliance Department - 300 First Stamford Place 4th Floor, Stamford, CT 06902. EXHIBIT D CITIGROUP ASSET MANAGEMENT - NORTH AMERICA PERSONAL INVESTMENT POLICY FINANCIAL SERVICES FIRM DISCLOSURE AND INITIAL REPORT OF SECURITIES HOLDINGS THIS REPORT MUST BE SIGNED, DATED AND RETURNED WITHIN 10 DAYS OF EMPLOYMENT TO THE CITIGROUP ASSET MANAGEMENT COMPLIANCE DEPARTMENT - 300 FIRST STAMFORD PLACE 4TH FLOOR, STAMFORD, CT 06902 - ------------------------------------------------------------------------------- EMPLOYEE NAME: DATE OF EMPLOYMENT: -------------------------- ---------- - ------------------------------------------------------------------------------- BROKERAGE ACCOUNTS: [ ] I do not have a beneficial interest in any account(s) with any financial services firm. [ ] I maintain the following account(s) with the financial services firm(s) listed below (attach additional information if necessary-e.g., a brokerage statement). Please include the information required below for any broker, dealer or bank where an account is maintained which holds securities for your direct or indirect benefit as of the date you began your employment. - ------------------------------------------------------------------------------- Name of Financial Service(s) Firm and Address Account Title Account Number - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES HOLDINGS: Complete the following (or attach a copy of your most recent statement(s)) listing all of your securities holdings, with the exception of non-proprietary open-ended mutual funds and U.S Government securities if: o You own securities that are held by financial services firm(s) as described above. If you submit a copy of a statement, it must include all of the information set forth below. Please be sure to include any additional securities purchased since the date of the brokerage statement that is attached. Use additional sheets if necessary. o Your securities are not held with a financial service(s) firm (e.g., dividend reinvestment programs and private placements). - ------------------------------------------------------------------------------- Title of Ticker Number of Principal Held Financial Security Symbol Shares Amount Since Services Firm - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [ ] I have no securities holdings to report. I certify that I have received the CAM - North America Personal Investment Policy and have read it and understood its contents. I further certify that the above represents a complete and accurate description of my brokerage account(s) and securities holdings as of my date of employment. Signature: Date of Signature: ---------------------------------------- -------- -----END PRIVACY-ENHANCED MESSAGE-----