<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Variable Annuity Portfolios
(with respect to CitiSelect VIP Folio 200,
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CitiSelect VIP Folio 300,
- --------------------------------------------------------------------------------
CitiSelect VIP Folio 400,
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CitiSelect VIP Folio 500 and
CitiFunds Small Cap Growth VIP Portfolio)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Lea Anne Copenhefer
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
CITISELECT(R) VIP FOLIO 200, CITISELECT(R) VIP FOLIO 300,
CITISELECT(R) VIP FOLIO 400, CITISELECT(R) VIP FOLIO 500
AND CITIFUNDS(SM) SMALL CAP GROWTH VIP PORTFOLIO
21 Milk Street
Boston, Massachusetts 02109
February 18, 1999
Dear Shareholder:
The accompanying materials relate to a Special Meeting of Shareholders of
CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP
Folio 400, CitiSelect(R) VIP Folio 500 and CitiFunds(SM) Small Cap Growth VIP
Portfolio. The Meeting will be held on Friday, April 9, 1999 at 3:00 p.m.,
Eastern time.
YOUR PARTICIPATION AT THIS MEETING IS VERY IMPORTANT IN ORDER TO ACCOMPLISH
PROPOSED ACTIONS THAT YOUR BOARD OF TRUSTEES HAS DETERMINED ARE FAIR AND
REASONABLE AND IN YOUR BEST INTERESTS.
If you cannot attend the Meeting, you may participate by proxy. As a
shareholder, you cast one vote for each share that you own. Please take a few
moments to read the enclosed materials and then cast your vote on the enclosed
proxy card.
VOTING TAKES ONLY A FEW MINUTES. EACH SHAREHOLDER'S VOTE IS IMPORTANT. YOUR
PROMPT RESPONSE WILL BE MUCH APPRECIATED.
Shareholders of the CitiSelect VIP Folios are being asked to vote on three
new subadvisers for their Funds. Shareholders of all of the Funds are being
asked to vote on proposals to restructure the Funds to take advantage of
recent amendments to federal law which, among other things, would allow the
Funds to be managed in a more cost-efficient and administratively simpler
manner. Importantly, the Funds' expense ratios will not increase as a result
of the proposed restructuring.
Shareholders also are being asked to vote on certain changes to the Funds'
investment restrictions and governing documents, as well as certain other
matters, to permit the restructuring described above. In addition,
shareholders are being asked to elect a new trustee, to authorize the
selection of subadvisers by the Board of Trustees, to authorize certain other
technical amendments to the Funds' investment restrictions and to approve the
selection of the Funds' accountants.
After you have voted on the proposals, please be sure to SIGN YOUR PROXY
CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
We appreciate your participation in this important Meeting. Thank you.
Sincerely,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
<PAGE>
CITICORP LIFE INSURANCE COMPANY
800 Silver Lake Boulevard
P.O. Box 7031
Dover, Delaware 19903
February 17, 1999
Dear Contract Owner:
A Special Meeting of Shareholders of the series of Variable Annuity
Portfolios (Funds) will be held on Friday, April 9, 1999. At the Shareholders
Meeting, Citicorp Life Insurance Company (Citicorp Life) will vote all shares
of each Fund held in the Citicorp Life Variable Annuity Separate Account that
are attributable to the variable annuity contracts (Contracts) offered by
Citicorp Life in accordance with instructions received from Contract Owners.
You are now being asked how shares of each Fund that are deemed attributable
to your Contract on February 10, 1999, the record date for the Shareholders
Meeting, should be voted at the Meeting.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting as well as an Instruction Form. After
reviewing this material, please complete and execute the Instruction Form and
return it in the enclosed, postage-paid, self-addressed envelope. If you fail
to return an executed Instruction Form, shares of the Funds deemed
attributable to your Contract will be voted by Citicorp Life in proportion to
the voting instructions received from all other Citicorp Life Contract Owners
with respect to these matters.
We appreciate your participation in this important meeting. Thank you.
Sincerely,
/s/ Dan Forcade
Dan Forcade
President and Chief
Operating Officer
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
666 Fifth Avenue
3rd Floor
New York, New York 10103
February 17, 1999
Dear Contract Owner:
A Special Meeting of Shareholders of the series of Variable Annuity
Portfolios (Funds) will be held on Friday, April 9, 1999. At the Shareholders
Meeting, First Citicorp Life Insurance Company (First Citicorp Life) will vote
all shares of each Fund held in the First Citicorp Life Variable Annuity
Separate Account that are attributable to the variable annuity contracts
(Contracts) offered by First Citicorp Life in accordance with instructions
received from Contract Owners. You are now being asked how shares of each Fund
that are deemed attributable to your Contract on February 10, 1999, the record
date for the Shareholders Meeting, should be voted at the Meeting.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting as well as an Instruction Form. After
reviewing this material, please complete and execute the Instruction Form and
return it in the enclosed, postage-paid, self-addressed envelope. If you fail
to return an executed Instruction Form, shares of the Funds deemed
attributable to your Contract will be voted by First Citicorp Life in
proportion to the voting instructions received from all other First Citicorp
Life Contract Owners with respect to these matters.
We appreciate your participation in this important meeting. Thank you.
Sincerely,
/s/ Dan Forcade
Dan Forcade
President and Chief
Operating Officer
<PAGE>
CITISELECT(R) VIP FOLIO 200, CITISELECT(R) VIP FOLIO 300,
CITISELECT(R) VIP FOLIO 400, CITISELECT(R) VIP FOLIO 500
AND CITIFUNDS(SM) SMALL CAP GROWTH VIP PORTFOLIO
21 Milk Street
Boston, Massachusetts 02109
Telephone: (617) 423-1679
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
To be held Friday, April 9, 1999
A Special Meeting of Shareholders of CitiSelect(R) VIP Folio 200,
CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP
Folio 500 and CitiFunds(SM) Small Cap Growth VIP Portfolio will be held at
Citicorp Center, 153 East 53rd Street, 14th Floor, New York, New York, on
Friday, April 9, 1999 at 3:00 p.m., Eastern Time, for the following purposes:
ITEM 1. To vote on a Sub-Management Agreement between Mutual Management
Corp. and Variable Annuity Portfolios with respect to CitiSelect VIP
Folios 200-500.
ITEM 2. To vote on a Sub-Management Agreement between Salomon Brothers Asset
Management Limited and Variable Annuity Portfolios with respect to
CitiSelect VIP Folios 200-500.
ITEM 3. To vote on a Sub-Management Agreement between Salomon Brothers Asset
Management Inc and Variable Annuity Portfolios with respect to
CitiSelect VIP Folios 200-500.
ITEM 4. To vote on an amendment to the Funds' Declaration of Trust to allow
the assets of each Fund to be invested in one or more investment
companies to the extent not prohibited by the Investment Company Act
of 1940, the rules and regulations thereunder, and exemptive orders
granted under such Act.
ITEM 5. To vote on an amendment to the fundamental investment policies of
each Fund to allow the assets of that Fund to be invested in one or
more investment companies to the extent not prohibited by the 1940
Act.
ITEM 6. To vote on authorizing the Trustees to select and change investment
subadvisers and enter into investment subadvisory agreements without
obtaining the approval of shareholders.
ITEM 7. To vote on an amendment to the fundamental investment policies of
each Fund concerning that Fund's ability to make loans to other
persons and to buy or sell futures contracts and options on
futures.
ITEM 8. To elect Heath B. McLendon as a Trustee of the Funds.
ITEM 9. To vote on the selection of PricewaterhouseCoopers LLP as the
independent certified public accountants for each Fund.
ITEM 10. To transact such other business as may properly come before the
Special Meeting of Shareholders and any adjournments thereof.
THE BOARD OF TRUSTEES OF THE FUNDS RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH
OF ITEMS 1 THROUGH 9.
Only shareholders of record on February 10, 1999 will be entitled to vote at
the Special Meeting of Shareholders and at any adjournments thereof.
Linda T. Gibson, Secretary
February 18, 1999
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE OF
A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND
IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
CITISELECT(R) VIP FOLIO 200, CITISELECT(R) VIP FOLIO 300,
CITISELECT(R) VIP FOLIO 400, CITISELECT(R) VIP FOLIO 500 AND
CITIFUNDS(SM) SMALL CAP GROWTH VIP PORTFOLIO
21 Milk Street
Boston, Massachusetts 02109
Telephone: (617) 423-1679
PROXY STATEMENT
This Proxy Statement and Notice of Special Meeting with accompanying form of
proxy are being furnished in connection with the solicitation of proxies by
the Board of Trustees of CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio
300, CitiSelect (R) VIP Folio 400, CitiSelect(R) VIP Folio 500 and CitiFunds
(SM) Small Cap Growth VIP Portfolio for use at a Special Meeting of
Shareholders of these Funds, or any adjournment thereof, to be held at
Citicorp Center, 153 East 53rd Street, 14th Floor, New York, New York, on
Friday, April 9, 1999 at 3:00 p.m., Eastern Time, for the purposes set forth
in the accompanying Notice of Special Meeting.
The close of business on February 10, 1999 has been fixed as the Record Date
for the determination of shareholders entitled to notice of and to vote at the
Meeting. 1,295,730.435 shares of CitiSelect(R) VIP Folio 200, 1,996,194.885
shares of CitiSelect(R) VIP Folio 300, 1,283,515.977 shares of CitiSelect(R)
VIP Folio 400, 623,355.012 shares of CitiSelect(R) VIP Folio 500 and
207,716.685 shares of CitiFunds(SM) Small Cap Growth VIP Portfolio (par value
$0.00001 per share) were outstanding as of the close of business on the Record
Date. Shareholders of record at the close of business on the Record Date will
be entitled to one vote for each share held.
The Funds' most recent Annual Report, including audited financial
statements, and most recent Semi-Annual Report, have previously been sent to
shareholders and are available without charge by written request or by calling
Shareholder Communications Corporation at 1-800-790-7068.
This Proxy Statement and Notice of Special Meeting with accompanying form of
proxy are being mailed by the Board of Trustees on or about February 18, 1999.
MANNER OF VOTING PROXIES AND VOTE REQUIRED
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. Shareholders of CitiFunds Small Cap Growth VIP
Portfolio will not vote on Items 1, 2 and 3, and shareholders of all of the
Funds will vote together on the election of Mr. McLendon as a Trustee.
Otherwise, shareholders of each Fund will vote separately with respect to each
Item. IF NO INSTRUCTIONS ARE SPECIFIED, ALL SHARES OF CITIFUNDS SMALL CAP
GROWTH VIP PORTFOLIO WILL BE VOTED FOR EACH OF PROPOSED ITEMS 4 THROUGH 9, AND
ALL SHARES OF EACH OTHER FUND WILL BE VOTED FOR EACH OF PROPOSED ITEMS 1
THROUGH 9. If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked prior to its exercise by a signed writing delivered at
the Meeting or filed with the Secretary of the Funds.
If sufficient votes to approve the proposed Items 1 through 9 are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares voted at the
Meeting. When voting on a proposed adjournment, the persons named as proxies
will vote all shares that they are entitled to vote with respect to Items 1
through 9 for the proposed adjournment, unless directed to disapprove the
Item, in which case such shares will be voted against the proposed
adjournment.
With respect to each Fund, the presence in person or by proxy of the holders
of a majority of the outstanding shares of that Fund entitled to vote is
required to constitute a quorum at the Meeting for purposes of voting on Items
1 through 9, as applicable. For purposes of determining the presence of a
quorum for transacting business at the Meeting, abstentions and broker "non-
votes" (that is, proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. For this reason, abstentions
and broker "non-votes" will have the effect of a "no" vote for purposes of
obtaining the requisite approval of Items 1 through 9.
The rights accompanying shares of the Funds are legally vested in the
variable annuity contracts and variable life insurance products offered by the
separate accounts of participating life insurance companies. However, in
accordance with current law and interpretations thereof, participating
insurance companies will vote shares held in the separate accounts in a manner
consistent with timely voting instructions received from the holders of
variable annuity contracts and variable life insurance policies. Those persons
who have a voting interest at the close of business on February 10, 1999 will
be entitled to submit instructions to their participating insurance company.
Each participating insurance company will vote Fund shares held in separate
accounts for which no timely instructions are received from the holders of
variable annuity contracts and variable life insurance policies, as well as
shares it owns, in the same proportion as those shares for which voting
instructions are received.
Accordingly, if you wish to vote, you should complete the enclosed voting
instruction form as a holder of a variable annuity contract or variable life
insurance policy. All forms which are properly executed and received prior to
the Meeting, and which are not revoked, will be voted as described above. If
the enclosed voting instruction form is executed and returned, it may
nevertheless be revoked at any time prior to the Meeting by written
notification received by your participating insurance company, by execution of
a later-dated form received by your insurance company, or by attending the
Meeting and voting in person.
GENERAL BACKGROUND
The Funds are managed by Citibank, N.A. and serve as investment vehicles for
variable annuity contracts and variable life insurance policies offered by
separate accounts of participating insurance companies. The CitiSelect VIP
Folios are asset allocation funds. Each of these Funds invests in a mix of
equity, fixed income and money market securities that is designed by Citibank
to offer a different level of potential return with a different amount of
risk. These Funds employ investment subadvisers to manage certain types of
securities or to manage securities in particular investment styles. Citibank
monitors and supervises the subadvisers. Citibank itself manages the assets of
CitiFunds Small Cap Growth VIP Portfolio.
Shareholders of the CitiSelect VIP Folios are being asked to approve three
new subadvisers for their Funds. Approval of these subadvisers is covered by
Items 1, 2 and 3 below. These subadvisers will continue to manage the Funds'
assets after the implementation of the proposed restructuring described below.
CURRENT STRUCTURE AND SUBADVISERS
The Funds currently operate on a stand-alone basis; that is, each Fund
invests directly in investment securities in accordance with its investment
objective and policies.
The assets of CitiFunds Small Cap Growth VIP Portfolio are invested
primarily in small capitalization growth securities and currently are managed
directly by Citibank.
Citibank determines the asset allocations for CitiSelect VIP Folios 200-500.
The assets of these Funds currently are allocated among up to eight types of
securities, or asset classes. These asset classes are large capitalization
growth securities, large capitalization value securities, small capitalization
growth securities, small capitalization value securities, international equity
securities, U.S. fixed income securities, foreign government securities and
money market securities. Citibank has decided to add high yield securities as
an additional asset class for the Funds and to delete the money market
securities asset class. The addition or deletion of asset classes does not, by
itself, require shareholder approval, but hiring a subadviser for any new
asset class would require shareholder approval.
Citibank manages certain of the Funds' asset classes itself, and supervises
subadvisers for the remaining asset classes. Currently, Citibank manages the
large capitalization growth, small capitalization growth, U.S. fixed income
and money market asset classes. The following subadvisers currently manage the
asset classes indicated: large capitalization value securities, Mutual
Management Corp.; small capitalization value securities, Franklin Advisory
Services, Inc; foreign government securities, Salomon Brothers Asset
Management Limited (effective March 1, 1999); and international equity
securities, Hotchkis and Wiley. Mutual Management Corp. and Salomon Brothers
Asset Management Limited may act as subadvisers only for an interim period
unless their sub-management agreements are approved by Fund shareholders.
Also, Citibank is recommending that Salomon Brothers Asset Management Inc be
hired as a subadviser to manage the Funds' high yield securities. Salomon
Brothers Asset Management Inc cannot act as a subadviser until its sub-
management agreement is approved by Fund shareholders.
Under the CitiSelect VIP Folios' existing structure, Citibank and each
subadviser manage the assets in each asset class for each of CitiSelect VIP
Folios 200-500 and the assets of CitiFunds Small Cap Growth VIP Portfolio
separately. This means, for example, that Citibank currently manages five
pools of assets consisting of small capitalization growth securities, one for
each Fund. Because the assets of CitiSelect VIP Folios 200-500 currently are
allocated among up to eight types of securities, Citibank and the subadvisers
currently manage a total of 33 separate pools of assets, including the small
capitalization growth securities managed for CitiFunds Small Cap Growth VIP
Portfolio. This structure is administratively burdensome and expensive for the
Funds. In addition, because of the separate pools of assets, the Funds are
limited in their ability to take advantage of economies of scale of asset
management.
PROPOSED STRUCTURE AND SUBADVISERS
Until recently, mutual funds could not invest their assets in more than one
other registered investment company without obtaining exemptive relief from
the Securities and Exchange Commission. Recent amendments to the Investment
Company Act of 1940 now permit funds to invest their assets in multiple
registered investment companies so long as the investment companies hold
themselves out to investors as related companies for purposes of investment
and investor services.
In order to take advantage of this change in law and any future changes in
law on this topic, the Funds are proposing the following restructuring: eight
or more new investment companies (referred to as "New Portfolios"), each
corresponding to a particular asset class of the existing Funds or any new
asset class in which the Funds are permitted to invest, will be created. This
will permit all of the Funds' assets of a single type to be managed in a
single pool. Each of CitiSelect VIP Folios 200-500 will contribute each of its
securities to that New Portfolio representing the asset class for that
particular security (e.g., foreign bonds will be contributed to the New
Portfolio which will invest solely in foreign bonds and related investments).
CitiFunds Small Cap Growth VIP Portfolio will contribute its securities to
that New Portfolio which will invest solely in small capitalization growth
securities. In exchange, each Fund will receive an interest in the New
Portfolio to which the contribution was made. As a result, each Fund will
invest all of its investable assets in one or more of the New Portfolios.
After giving effect to the restructuring, Citibank will continue to perform
its asset allocation services at the Fund level for the CitiSelect VIP Folios.
Under this proposed structure, Citibank and the subadvisers described above
will manage the assets in each asset class in a single pool. This means, for
example, that Citibank will manage all small cap growth securities for all of
the Funds in a single New Portfolio. The restructuring is illustrated by the
chart below.
BEFORE RESTRUCTURING: EACH FUND IS A STAND-ALONE FUND CONTAINING ALL
APPLICABLE ASSET CLASSES.
[Description of Chart
(Page layout - landscape)
Five boxes across page. Each box contains the name of one Fund. The boxes
contain the following names (from left to right): CitiSelect VIP Folio 200,
CitiSelect VIP Folio 300, CitiSelect VIP Folio 400, CitiSelect VIP Folio 500 and
CitiFunds Small Cap Growth VIP Portfolio.]
AFTER RESTRUCTURING: EACH FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN ONE OR
MORE NEW PORTFOLIOS.
[Description of Chart
(Page layout - landscape)
Five boxes across page. Each box contains the name of one Fund. The boxes
contain the following names (from left to right): CitiSelect VIP Folio 200,
CitiSelect VIP Folio 300, CitiSelect VIP Folio 400, CitiSelect VIP Folio 500 and
CitiFunds Small Cap Growth VIP Portfolio. Eight boxes are placed across the page
under the five boxes containing the names of the Funds. Each of the eight boxes
contains the heading "New Portfolio." In each of the eight boxes under the "New
Portfolio" heading is the name of a portfolio. The names of the portfolios in
the boxes are (from left to right): Large Cap Growth Securities, Large Cap Value
Securities, Small Cap Value Securities, Intermediate Income Securities,
International Securities, Foreign Government Bonds, High Yield Securities and
Small Cap Growth Securities. Arrows connect the first four boxes containing the
names of the Funds to each of the eight boxes beneath them and connect the fifth
box containing the name of CitiFunds Small Cap Growth VIP Portfolio to the box
containing the caption, "New Portfolio Small Cap Growth Securities."]
THE FUNDS' EXPENSE RATIO WILL NOT INCREASE AS A RESULT OF THE RESTRUCTURING.
SHAREHOLDERS ALSO SHOULD NOTE THAT THE CONTRACTUAL LEVEL OF MANAGEMENT FEES
FOR FUND SHAREHOLDERS WILL NOT INCREASE. IT IS EXPECTED THAT THE SAME
PERSONNEL AT CITIBANK AND AT EACH SUBADVISER WHO CURRENTLY PROVIDE INVESTMENT
MANAGEMENT SERVICES WILL CONTINUE TO DO SO AFTER THE RESTRUCTURING, AND THE
NATURE, LEVEL AND QUALITY OF SERVICES TO THE FUNDS WILL NOT BE ADVERSELY
AFFECTED.
The restructuring is intended to be tax-free to Fund shareholders, and the
Funds intend to apply to the Internal Revenue Service for a private letter
ruling to that effect. The implementation of the restructuring will be
contingent upon the receipt of that private letter ruling or an opinion of
counsel to the same effect.
The Funds' Trustees believe that this restructuring is in the best interests
of Fund shareholders. Subject to receipt of the private letter ruling or
opinion of counsel described above, the Trustees will implement the
restructuring for each Fund if shareholders of that Fund and each other Fund
approve each of the proposals in Items 4 and 5 below. The proposal in Item 6
will permit the Trustees, subject to receiving exemptive relief from the
Securities and Exchange Commission, to hire new subadvisers for the New
Portfolios without Fund shareholder approval. The Trustees will implement the
restructuring whether or not Fund shareholders approve the proposals in this
Proxy Statement other than those in Items 4 and 5.
In the event that the proposals in Items 4 and 5 below do not receive the
requisite shareholder approval for any Fund, the Trustees will consider possible
alternatives, which might include resubmission of the proposals for approval by
shareholders of that Fund.
ITEM 1. TO VOTE ON A SUB-MANAGEMENT AGREEMENT BETWEEN MUTUAL MANAGEMENT
CORP. AND VARIABLE ANNUITY PORTFOLIOS WITH RESPECT TO CITISELECT VIP
FOLIOS 200-500.
ITEM 2. TO VOTE ON A SUB-MANAGEMENT AGREEMENT BETWEEN SALOMON BROTHERS ASSET
MANAGEMENT LIMITED AND VARIABLE ANNUITY PORTFOLIOS WITH RESPECT TO
CITISELECT VIP FOLIOS 200-500.
ITEM 3. TO VOTE ON A SUB-MANAGEMENT AGREEMENT BETWEEN SALOMON BROTHERS ASSET
MANAGEMENT INC AND VARIABLE ANNUITY PORTFOLIOS WITH RESPECT TO
CITISELECT VIP FOLIOS 200-500.
ONLY SHAREHOLDERS OF CITISELECT VIP FOLIOS 200-500 ARE BEING ASKED TO VOTE
ON ITEMS 1 THROUGH 3.
Citibank, N.A. currently manages the assets of the CitiSelect VIP Folios and
provides administrative services to the Funds pursuant to separate Management
Agreements, each dated November 8, 1996. Subject to the terms of each
Management Agreement, Citibank is responsible for the investment management of
the applicable Fund and selects, subject to the review and approval of the
Board of Trustees of the Funds, subadvisers to make the investment selections
with respect to certain types of securities of the Fund consistent with the
guidelines and directions set by Citibank and the Board of Trustees. Citibank
then reviews each subadviser's continued performance.
Miller Anderson & Sherrerd, LLP served as subadviser for the large cap value
securities of CitiSelect VIP Folios 200-500 from the Funds' inception through
January 21, 1999. Since January 22, 1999, Mutual Management Corp. (MMC), an
affiliate of Citibank, has managed the large cap value securities of
CitiSelect VIP Folios 200-500 that were previously managed by Miller Anderson.
Pacific Investment Management Company (PIMCO) has served as subadviser for
the foreign government securities of CitiSelect VIP Folios 200-500 from the
Funds' inception. Commencing March 1, 1999, Salomon Brothers Asset Management
Limited (SBAM), also an affiliate of Citibank, will manage the foreign
government securities that are currently managed by PIMCO.
As noted, it is proposed that Salomon Brothers Asset Management Inc
(SBAMInc) be hired as subadviser for high yield securities, a new asset class
for the CitiSelect VIP Folios. SBAMInc is also an affiliate of Citibank.
SBAMInc, a Delaware corporation, maintains its principal business office at 7
World Trade Center, New York, New York 10048. SBAMInc currently is not
managing any Fund assets.
MMC, a Delaware corporation, maintains its principal office at 388 Greenwich
Street, New York, New York 10013. MMC currently manages the large cap value
securities of CitiSelect VIP Folios 200-500 on an interim basis, with approval
of the Funds' Board of Trustees. Shareholder approval is necessary for MMC to
continue to serve as subadviser. If Item 1 is approved, MMC will continue to
be responsible for the daily management of the large cap value securities of
CitiSelect VIP Folios 200-500.
SBAM, a limited liability private company formed and domiciled in England
and Wales, maintains its principal office at Victoria Plaza, 111 Buckingham
Palace Road, London, England. SBAM is a U.S. registered investment adviser.
Commencing March 1, 1999, SBAM will manage the foreign government securities
of CitiSelect VIP Folios 200-500 on an interim basis, with approval of the
Funds' Board of Trustees. Shareholder approval is necessary for SBAM to
continue to serve as subadviser. If Item 2 is approved, SBAM will continue to
be responsible for the daily management of the foreign government securities
of CitiSelect VIP Folios 200-500.
The Board of Trustees terminated the Funds' Sub-Management Agreements with
Miller Anderson and PIMCO upon Citibank's recommendations. These
recommendations were based on Citibank's evaluation of the services provided
by these subadvisers, as well as the availability of appropriate asset
management capabilities and resources in its affiliates, MMC and SBAM.
In accordance with the requirements of the 1940 Act, each Sub-Management
Agreement must be approved by the shareholders of each of CitiSelect VIP
Folios 200-500. If the proposed restructuring takes place, MMC, SBAM and
SBAMInc will serve as subadvisers to the New Portfolios representing the large
cap value, foreign government and high yield asset classes, respectively.
THE SUB-MANAGEMENT AGREEMENTS
If the Sub-Management Agreements with MMC and SBAM are approved by the
required shareholders of CitiSelect VIP Folios 200-500, as described herein, MMC
and SBAM will continue to serve as subadvisers to each of CitiSelect VIP Folios
200-500. Similarly, if the Sub-Management Agreement with SBAMInc is approved by
the required shareholders of CitiSelect VIP Folios 200-500, as described herein,
SBAMInc will serve as subadviser to each of CitiSelect VIP Folios 200-500. Each
Sub-Management Agreement, if approved by a "Majority Shareholder Vote" (as
defined under "Vote Required" below) of the applicable Fund, will continue in
effect for a two-year period, and thereafter from year to year, subject to
approval annually in accordance with the 1940 Act. Each Sub-Management Agreement
may be terminated at any time without the payment of any penalty by the Board of
Trustees of the Funds or by a "Majority Shareholder Vote" of the applicable Fund
or by Citibank. Each Sub-Management Agreement may also be terminated by the
applicable subadviser upon 90 days' advance written notice to Citibank. Each
Sub-Management Agreement will also terminate automatically in the event of its
"assignment" (as defined in the 1940 Act).
Under each Sub-Management Agreement, MMC, SBAM or SBAMInc, as the case may
be, will furnish continuing portfolio management services with respect to the
large cap value, foreign government or high yield securities of CitiSelect VIP
Folios 200-500, subject always to the provisions of the 1940 Act and to the
investment objective, policies, procedures and restrictions imposed by the
then current Registration Statement under the 1940 Act with respect to the
applicable Fund. Each subadviser will also provide Citibank with such
investment advice and reports and data as are requested by Citibank.
Each Sub-Management Agreement provides that the subadviser will be
responsible for providing Citibank with such investment advice and supervision
as Citibank may from time to time consider necessary for the proper
supervision of such portion of a Fund's assets as Citibank may designate from
time to time; furnishing continuously an investment program and determining
from time to time what securities shall be purchased, sold or exchanged and
what portion of the assets of the portfolio allocated by Citibank to the
subadviser will be held uninvested, subject always to the restrictions of the
Funds' Declaration of Trust, dated October 18, 1996, and By-laws, as each may
be amended and restated from time to time, the provisions of the 1940 Act, the
then-current Registration Statement with respect to the applicable Fund, and
subject, further, to the applicable subadviser notifying Citibank in advance
of its intention to purchase any securities except insofar as the requirement
for such notification may be waived or limited by Citibank; making
recommendations to Citibank as to the manner in which proxies, voting rights,
rights to consent to corporate action and any other rights pertaining to the
Fund's portfolio securities shall be exercised; and taking, on behalf of the
Fund, all actions which the subadviser deems necessary to implement the
investment policies of the Fund, and in particular placing all orders for the
purchase or sale of securities for the Fund's account with the brokers or
dealers selected by it, and to that end each subadviser is authorized as agent
to give instructions to the custodian and any subcustodian of the Fund as to
deliveries of securities and payments of cash for the account of the Fund.
The subadvisers are not liable for any error of judgment or mistake of law
or for any loss suffered by any of CitiSelect VIP Folios 200-500 in connection
with the matters to which the applicable Sub-Management Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of their obligations and duties, or by reason of
reckless disregard of their obligations and duties under the applicable
Agreement.
Shareholders should refer to Exhibits A, B and C attached hereto for the
complete terms of the Sub-Management Agreements with MMC, SBAM and SBAMInc,
respectively. The description of each Sub-Management Agreement set forth
herein is qualified in its entirety by the provisions of the Sub-Management
Agreements as set forth in such Exhibits.
INVESTMENT ADVISORY FEES
Until shareholder approval of the MMC Sub-Management Agreement is obtained,
applicable rules under the 1940 Act do not permit MMC to be paid more than the
compensation Miller Anderson would have received under its Sub-Management
Agreement with the Funds. The fees payable under the Miller Anderson Sub-
Management Agreement were accrued daily and payable monthly and were equal to
the percentages specified below of the aggregate assets of the Funds allocated
to Miller Anderson:
FEES PREVIOUSLY PAYABLE TO MILLER ANDERSON
0.625% on the first $25 million;
0.375% on the next $75 million;
0.250% on the next $400 million; and
0.20% on assets in excess of $500 million.
Under the MMC Sub-Management Agreement, from and after shareholder approval,
the Funds will pay MMC for its services on the basis of the following annual
fee schedule:
MMC PROPOSED FEE SCHEDULE
0.65% on the first $10 million;
0.50% on the next $10 million;
0.40% on the next $10 million; and
0.30% on remaining assets.
Fees are accrued daily and payable monthly and are at the annual rates equal
to the percentages specified above of the aggregate assets of the Funds
allocated to MMC. Fees under the MMC Sub-Management Agreement will be higher
than those that would have been payable to Miller Anderson; however, the
Funds' overall management fee will remain the same. To the extent that MMC's
fees are higher than those that would have been payable to Miller Anderson,
Citibank's management fee will go down by the same amount. As a result, Fund
shareholders will not be affected by the increase.
During the Funds' fiscal years ended December 31, 1998, Miller Anderson
received $31,227 in advisory fees from the Funds. Had the proposed fees under
the MMC Sub-Management Agreement been in effect during this period, Miller
Anderson would have received $32,476 in advisory fees from the Funds, or 104% of
the fees that Miller Anderson actually received during this period.
Under the SBAM Sub-Management Agreement, the Funds will pay SBAM for its
services on the basis of the following annual fee schedule:
SBAM FEE SCHEDULE
0.30% on the first $200 million;
0.25% on assets over $200 million.
Fees are accrued daily and payable monthly and are at the annual rates equal
to the percentages specified above of the aggregate assets of the Funds
allocated to SBAM. Fees under the SBAM Sub-Management Agreement will be lower
than those that would have been payable to PIMCO; however, the Funds' overall
management fees paid by shareholders will remain the same. To the extent that
SBAM's fees are lower than those that would have been payable to PIMCO,
Citibank's management fee will increase by the same amount. As a result, Fund
shareholders will not be affected by the decrease.
The fees payable under the PIMCO Sub-Management Agreement were accrued daily
and payable monthly and were equal to the percentages specified below of the
aggregate assets of the Fund allocated to PIMCO:
FEES PREVIOUSLY PAYABLE TO PIMCO
0.35% on the first $200 million;
0.30% on remaining assets.
During the Funds' fiscal years ended December 31, 1998, PIMCO received
$36,239 in advisory fees from the Funds. Had the proposed fees under the new
SBAM Sub-Management Agreement been in effect during this period, PIMCO would
have received $31,062 in advisory fees from the Funds, or 85.71% of the fees
that PIMCO actually received during this period.
Under the SBAMInc Sub-Management Agreement, the Funds will pay SBAMInc for
its services on the basis of the following annual fee schedule:
SBAMINC FEE SCHEDULE
0.45% on the first $100 million;
0.40% on assets in excess of $100 million.
Fees will be accrued daily and payable monthly and will be at the annual
rates equal to the percentages specified above of the aggregate assets of the
Funds allocated to SBAMInc.
INFORMATION REGARDING MUTUAL MANAGEMENT CORP.
The following information regarding MMC has been provided by MMC.
MMC is a wholly-owned subsidiary of Salomon Smith Barney Holdings Inc, which
in turn is a wholly-owned subsidiary of Citigroup Inc. Citigroup businesses
produce 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
consumers and corporate managers to numerous investment companies having
aggregate assets as of the date of this Proxy Statement in excess of $290
billion. Citigroup's principal business address is 153 East 53rd Street, New
York, New York 10043.
Frances A. Root will manage the large cap value securities of CitiSelect VIP
Folios 200-500 allocated to MMC. Ms. Root is an Investment Officer of MMC and
a Senior Portfolio Manager. She joined Smith Barney Capital Management in
1992. Formerly, she was with Shearson Lehman Advisors as a Vice President and
Portfolio Manager for seven years; and prior to that, with E.F. Hutton &
Company, Inc. She is a Chartered Financial Analyst and a member of The New
York Society of Security Analysts. Ms. Root holds a BA degree from Sweet Briar
College.
The following table sets forth certain information concerning the principal
executive officers and directors of MMC. The address of each of the following
persons is 388 Greenwich Street, New York, New York 10013.
NAME PRINCIPAL OCCUPATION
---- --------------------
Heath B. McLendon .............. Chairman, President and Chief Executive
Officer of MMC; Managing Director of
Salomon Smith Barney and Chairman,
President and Chief Executive Officer of
58 investment companies sponsored by
Salomon Smith Barney.
Lewis E. Daidone ............... Director and Senior Vice President of MMC;
Managing Director of Salomon Smith Barney
and Senior Vice President and Treasurer of
58 investment companies sponsored by
Salomon Smith Barney
A. George Saks ................. Director of MMC and Executive Vice President
of Salomon Smith Barney
Michael J. Day ................. Treasurer of MMC and Managing Director of
Salomon Smith Barney
Christina T. Sydor ............. General Counsel and Secretary of MMC;
Managing Director of Salomon Smith Barney
and Secretary of the 58 investment
companies sponsored by Salomon Smith
Barney
The following table indicates the size of each investment company advised by
MMC with an investment objective that is similar to the objective for the
large cap value securities asset class and the advisory fee rates of these
investment companies.
NET ASSETS ON
DECEMBER 31, ANNUAL MANAGEMENT FEE
1998 PERCENT OF
FUND (IN THOUSANDS) AVERAGE NET ASSETS
---- -------------- ------------------
OPEN-END FUND
Smith Barney Funds, Inc. $1,227,783 0.60% to $500 million
Large Cap Value Fund 0.55% next $500
million; 0.50% after $1
billion.
VARIABLE ANNUITY FUNDS
Smith Barney Variable Account Funds
Income and Growth Portfolio $ 13,779 0.60%
Travelers Series Fund, Inc.
Smith Barney Large Cap Value
Portfolio $464,936 0.65%
INFORMATION REGARDING SALOMON BROTHERS ASSET MANAGEMENT LIMITED
The following information regarding SBAM has been provided by SBAM.
SBAM is a limited liability private company formed and domiciled in England
and Wales. It is a wholly owned subsidiary of Salomon Brothers Europe Limited,
Victoria Plaza, 111 Buckingham Palace Road, London SW1W OSB. Salomon Brothers
Europe Limited is owned by two wholly owned subsidiaries of Salomon Brothers
Holding Company Inc (388 Greenwich Street, New York, New York 10013), Salomon
(International) Finance AG (Schipfe 2, P.O. Box 4406, Zurich, Switzerland) and
Salomon International Limited (Victoria Plaza, 111 Buckingham Palace Road,
London SW1W OSB). Salomon Brothers Holding Company Inc is wholly owned by
Salomon Smith Barney Holdings Inc, which in turn is a wholly owned subsidiary
of Citigroup Inc. Citigroup's businesses are described above.
David J. Scott will manage the foreign government securities of CitiSelect VIP
Folios 200-500 allocated to SBAM. Mr. Scott is a Manager Director, Portfolio
Manager and Investment Policy Committee Member of SBAM. Mr. Scott joined SBAM
in April 1994 as Director and Head of Global Fixed Income responsible for their
global bond products. Prior to joining SBAM, Mr. Scott worked for four years at
JP Morgan Investment Management where he had responsibility for global and
non-dollar portfolios; and prior to that, for Mercury Asset Management. Mr.
Scott is a Fellow of the Institute of Actuaries. He received a B.Sc. in
Mathematics and Economics from Nottingham University.
The following table sets forth certain information concerning the principal
executive officers and directors of SBAM. The address of each of the following
persons is Victoria Plaza, 111 Buckingham Palace Road, London SW1W OSB,
England.
NAME PRINCIPAL OCCUPATION
---- --------------------
Vilas V. Gadkari Managing Director and Chief Investment
Officer of SBAM; Managing Director of
SBAMInc; Managing Director of Salomon Smith
Barney Inc.; and Managing Director Salomon
Brothers International Limited
David J. Scott Director of SBAM
David J. Griffiths Economist and Portfolio Manager of SBAM
Karolos Haggipavlou Portfolio Manager of SBAM
The following table indicates the size of each investment company advised by
SBAM with an investment objective that is similar to the objective for the
foreign government securities asset class and the advisory fee rates of these
investment companies.
NET ASSETS ON ANNUAL MANAGEMENT FEE
DECEMBER 31, PERCENT OF
FUND 1998 AVERAGE NET ASSETS
---- ---- ------------------
OPEN-END FUNDS
Salomon Brothers Global Bond Series $ 45,046,911 0.375% to $50 million;
of the JNL Series Trust 0.35% next $100 million;
0.30% next $350 million;
0.25% over $500 million.
Salomon Brothers Investment Series -- $117,747,606 0.75%
Strategic Bond Fund
Strategic Bond Opportunity Series of $ 95,200,414 0.35% to $50 million;
the American Growth Series 0.30% next $150 million;
0.25% next $300 million;
0.10% over $500 million.
Strategic Bond Trust for the NASL $441,725,216 0.35% to $50 million;
Series 0.30% next $150 million;
0.25% next $300 million;
0.20% over $500 million.
Strategic Income Fund of the North $ 79,754,865 0.35% to $50 million;
American Funds Series 0.30% next $150 million;
0.25% next $300 million;
0.20% over $500 million.
VARIABLE ANNUITY FUND
Salomon Brothers Variable Series Fund $ 10,390,056 0.75%
INFORMATION REGARDING SALOMON BROTHERS ASSET MANAGEMENT INC
The following information regarding SBAMInc has been provided by SBAMInc.
SBAMInc is a wholly owned subsidiary of Salomon Brothers Holding Company
Inc. Salomon Brothers Holding Company Inc is wholly owned by Salomon Smith
Barney Holdings Inc, which in turn is a wholly owned subsidiary of Citigroup
Inc. Citigroup's businesses are described above.
Beth A. Semmel will manage the high yield securities of CitiSelect VIP
Folios 200-500 allocated to SBAMInc. Ms. Semmel is a Managing Director of
SBAMInc and an Investment Policy Committee Member. She joined SBAMInc in May
1993. She is a Portfolio Manager and Senior Analyst responsible for
SBAMInc's high yield portfolios, for evaluating high yield securities and for
covering consumer-related industries. Formerly, Ms. Semmel was with Morgan
Stanley Asset Management as a high yield bond analyst; and prior to that, with
Kidder Peabody as an equity analyst. Ms. Semmel is a Chartered Financial
Analyst and a member of The New York Society of Security Analysts. She holds a
BA degree in Math and Computer Science from Colgate University.
The following table sets forth certain information concerning the principal
executive officers and directors of SBAMInc. The address of each of the
following persons other than Mr. Gadkari is 7 World Trade Center, New York,
New York, 10048. Mr. Gadkari's address is Victoria Plaza, 111 Buckingham
Palace Road, London SW1W OSB, England
NAME PRINCIPAL OCCUPATION
---- --------------------
Vilas V. Gadkari Managing Director of SBAMInc; Managing Director
and Chief Investment Officer of SBAM; Managing
Director of Salomon Smith Barney Inc; and
Managing Director of Salomon Brothers
International Limited
Mitchel E. Schulman Chief Operating Officer -- Portfolios, SBAMInc
Marcus A. Peckman Vice President and Chief Financial Officer of
SBAMInc
Michael F. Rosenbaum Chief Legal Officer of SBAMInc
Thomas W. Jasper Treasurer of SBAMInc
Andrew W. Alter Assistant Secretary of SBAMInc
Howard M. Darmstadter Assistant Secretary of SBAMInc
The following table indicates the size of each investment company advised by
SBAMInc with an investment objective that is similar to the objective for the
high yield securities asset class and the advisory fee rates of these
investment companies.
<TABLE>
<CAPTION>
NET ASSETS ON ANNUAL MANAGEMENT FEE
DECEMBER 31, PERCENT OF
FUND 1998 AVERAGE NET ASSETS
---- ---- ------------------
<S> <C> <C>
Salomon Brothers Series Funds Inc $569,771,993 0.75%*
Salomon Brothers High Yield Bond Fund
Salomon Brothers Variable Series Funds Inc $ 7,189,550 0.75%**
Salomon Brothers Variable High Yield Bond Fund
Salomon Brothers Institutional Series Funds $ 41,418,579 0.50%**
Inc
Salomon Brothers Institutional High Yield Bond
Fund
Salomon Brothers High Income Fund Inc $ 62,153,198 0.70%***
Salomon Brothers High Income Fund II Inc $881,476,410 1.00%***
Salomon Brothers/JNL Global Bond Series, an $ 52,040,000 0.375% first $150 million;
investment portfolio of JNL Series Trust 0.350% next $100 million;
0.300% next $350 million;
0.250% next $500 million.+
Heritage High Yield Bond Fund, an investment $ 54,365,000 .50%+++
portfolio of Heritage Income Trust
- ----------
* 0.67% after fee waivers.
** Entire amount of fee waived.
*** With respect to this fund the investment advisory or management fee is a percentage of average
weekly net assets.
+ With respect to this fund, SBAMInc serves as subadviser and, accordingly, the sponsoring
investment adviser pays SBAMInc a portion of the total advisory fee.
++ Amount paid is a percentage of the annual investment advisory fee paid to the manager, without
regard to any reduction in the fees paid to the manager as a result of any limitation of the
fund's expenses.
</TABLE>
THE EVALUATION BY THE BOARD OF TRUSTEES
At meetings held on February 4 and 5, 1999 the Trustees of the Funds
considered information with respect to whether each proposed Sub-Management
Agreement was in the best interests of CitiSelect VIP Folios 200-500 and their
shareholders. The Board of Trustees considered, among other factors,
representations by each subadviser regarding the nature and quality of services
provided or to be provided by the subadviser, and information regarding fees,
expense ratios and performance. In evaluating each subadviser's ability to
provide services to the Funds, the Trustees considered information as to the
subadviser's business organization, financial resources and personnel. The Board
of Trustees also considered the conflicts of interest inherent in Citibank's
recommendation that its affiliates be hired as subadvisers.
The Board of Trustees also considered that under circumstances in which best
price and execution may be obtained from more than one broker or dealer, each
subadviser may, in its discretion, purchase and sell securities through
dealers who provide research, statistical and other information to the
subadviser. Although certain research, market and statistical information from
brokers and dealers can be useful to the Funds and subadviser, each subadviser
has advised that such information is, in its opinion, only supplementary to
the subadviser's own research activities and the information must still be
analyzed, weighed and reviewed by the subadviser. It was noted that such
information may be useful to the subadvisers in providing services to clients
other than CitiSelect VIP Folios 200-500. Conversely, it was noted that
information provided to the subadvisers by brokers and dealers through whom
other clients of the subadvisers effect securities transactions may be useful
to the subadvisers in providing services to these Funds.
Based upon its review, the Board of Trustees of the Funds concluded that
each of the Sub-Management Agreements is reasonable, fair and in the best
interests of each of CitiSelect VIP Folios 200-500 and their respective
shareholders, and that the fees provided in each of the Sub-Management
Agreements are fair and reasonable in light of the usual and customary charges
made by others for services of the same nature and quality. Accordingly, after
consideration of the above factors, and such other factors and information as
it deemed relevant, the Board of Trustees of the Funds, including all of the
Independent Trustees, unanimously approved each of the Sub-Management
Agreements and voted to recommend their approval by the shareholders of each
of CitiSelect VIP Folios 200-500.
VOTE REQUIRED
A "Majority Shareholder Vote" of a Fund's shareholders is required for
approval of a Sub-Management Agreement with respect to that Fund. This
requires approval by the holders of 67% or more of the outstanding shares of
the Fund which are present at the Meeting if the holders of more than 50% of
such shares are present in person or by proxy, or more than 50% of the
outstanding shares of the Fund, whichever is less.
In the event that a Sub-Management Agreement does not receive the requisite
approval, Citibank would (a) manage all of the assets of the applicable Fund
itself, (b) negotiate a new investment subadvisory agreement with a different
advisory organization, or (c) make other appropriate arrangements, in the case
of alternative (b) or (c), subject to approval in accordance with the 1940
Act.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH OF CITISELECT VIP FOLIOS 200-500 VOTE FOR APPROVAL OF THE
SUB-MANAGEMENT AGREEMENT WITH MMC, FOR APPROVAL OF THE SUB-MANAGEMENT
AGREEMENT WITH SBAM AND FOR APPROVAL OF THE SUB-MANAGEMENT AGREEMENT WITH
SBAMINC.
ITEM 4. TO VOTE ON AN AMENDMENT TO THE FUNDS' DECLARATION OF TRUST TO ALLOW
THE ASSETS OF EACH FUND TO BE INVESTED IN ONE OR MORE INVESTMENT
COMPANIES TO THE EXTENT NOT PROHIBITED BY THE 1940 ACT.
It is proposed that the Funds' Declaration of Trust be amended to permit the
Funds to invest in other investment companies to the extent not prohibited by
the 1940 Act.
The Funds' Declaration of Trust presently permits each Fund to invest all of
its investable assets in a single investment company that is registered under
the 1940 Act. As described above, recent amendments to the 1940 Act permit
mutual funds to invest their investable assets in multiple registered
investment companies so long as certain conditions are met. There also may be
additional amendments to the 1940 Act in the future which affect mutual funds'
ability to invest in other funds.
The proposed amendments to the Funds' Declaration of Trust which appear below
will allow the Funds to take advantage of the recent changes in law, as well as
future changes in law or regulation on this topic. These amendments will also
permit the Funds to enter into the proposed restructuring described under
"General Background" above. The Funds' Board of Trustees believes that these
amendments will be to the Funds' advantage and are in the best interests of the
shareholders of each Fund. See "General Background" above. It is proposed that
Section 3.2(c) of the Declaration of Trust be amended by deleting the words
below that have been bracketed and adding the double bracketed words:
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by shareholders to either invest all or a portion of
the Trust Property, or sell all or a portion of such Trust Property and
invest the proceeds of such sales, in [another investment company that is
registered under the 1940 Act] [[one or more investment companies to the
extent not prohibited by the 1940 Act and exemptive orders granted under such
Act.]]
Under the Declaration of Trust, the 1940 Act is defined to include both that
Act itself and the rules and regulations under that Act; the amendment would
be based on that definition.
VOTE REQUIRED
A "Majority Shareholder Vote" (as defined under "Vote Required" in Items 1,
2 and 3 above) of the shareholders of a Fund is required for approval of the
amendment to the Declaration of Trust with respect to that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
DECLARATION OF TRUST.
ITEM 5. TO VOTE ON AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT POLICIES OF
EACH FUND TO ALLOW THE ASSETS OF THAT FUND TO BE INVESTED IN ONE OR
MORE INVESTMENT COMPANIES TO THE EXTENT NOT PROHIBITED BY THE 1940
ACT.
Each Fund has adopted certain fundamental investment restrictions which, as
a matter of law, cannot be changed without shareholder approval. Certain of
these fundamental investment restrictions currently permit each Fund to invest
its investable assets in a single investment company having the same
investment objectives and policies and substantially the same investment
restrictions as that Fund. As noted above, recent amendments to the 1940 Act
permit mutual funds to invest their investable assets in multiple investment
companies so long as certain conditions are met. There may be future
amendments to the 1940 Act affecting mutual funds' ability to invest in other
funds.
In order to take advantage of the flexibility of current and future
applicable law and regulation and to permit the Funds to enter into the
restructuring, it is proposed that each of the fundamental investment
restrictions listed in Exhibit D be amended as indicated in that Exhibit.
Shareholders also should review Item 7 for additional proposed changes to
these investment restrictions.
VOTE REQUIRED
Because the investment restrictions in Exhibit D are fundamental policies of
each Fund, approval of this proposal with respect to a Fund will require a
"Majority Shareholder Vote" (as defined under "Vote Required" in Items 1, 2
and 3 above) of the shareholders of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
FUNDS' FUNDAMENTAL INVESTMENT POLICIES, TO ALLOW THE ASSETS OF EACH FUND TO BE
INVESTED IN ONE OR MORE INVESTMENT COMPANIES TO THE EXTENT NOT PROHIBITED BY
THE 1940 ACT.
ITEM 6. TO VOTE ON AUTHORIZING THE TRUSTEES TO SELECT AND CHANGE INVESTMENT
SUBADVISERS AND ENTER INTO INVESTMENT SUBADVISORY AGREEMENTS WITHOUT
OBTAINING THE APPROVAL OF SHAREHOLDERS.
As discussed above, Citibank currently employs subadvisers for the
CitiSelect VIP Folios to perform the daily management of particular asset
classes. See "General Background." Citibank monitors and supervises the
activities of the subadvisers, and may terminate the services of any
subadviser at any time. However, retaining the services of a new subadviser,
and retaining the services of a replacement subadviser for longer than an
interim period, currently require Fund shareholder approval.
Citibank itself currently manages the assets of CitiFunds Small Cap Growth
VIP Portfolio, but Citibank may decide in the future that it may maximize the
Fund's chances of achieving its investment objective if one or more
subadvisers are hired. Retaining the services of a subadviser, and replacing
that subadviser, would require Fund shareholder approval.
The 1940 Act requires that all contracts pursuant to which persons serve as
investment advisers to investment companies be approved by shareholders. This
requirement would apply to the appointment of a new or replacement subadviser
to any Fund. (There is an exception to this requirement that permits, under
certain circumstances, entities to serve as replacement investment advisers or
subadvisers for an interim period without shareholder approval if their
contracts have been approved by fund directors or trustees. MMC and SBAM are
or will be serving as subadvisers to the CitiSelect VIP Folios pursuant to
this exception.) This requirement also would apply to the appointment of a new
or replacement subadviser to any New Portfolio following the proposed
restructuring and the organization of that New Portfolio. Absent exemptive
relief from the Securities and Exchange Commission, investors in a New
Portfolio (i.e., Funds) would be asked to approve the advisory contract for
the new subadviser. The Funds would then seek approval of the contract from
their shareholders. The Securities and Exchange Commission has previously
granted conditional exemptions from these shareholder vote requirements. If
the Funds were to obtain similar exemptive relief and this proposed Item 6 is
approved, the Board of Trustees would be able, without further shareholder
approval, to appoint additional or replacement subadvisers. The Trustees would
not, however, be able to replace Citibank as investment manager without
complying with the 1940 Act and applicable regulations governing shareholder
approval of advisory contracts.
This Item 6 is intended to facilitate the efficient supervision and
management of the CitiSelect VIP Folios' subadvisers by Citibank and the
Trustees, and to give Citibank flexibility in managing CitiFunds Small Cap
Growth VIP Portfolio in the future. Citibank continuously monitors the
performance of the subadvisers and, as is evidenced by Items 1 through 3 of
this Proxy Statement, may from time to time recommend that the Board of
Trustees replace one or more subadvisers or appoint additional subadvisers,
depending on Citibank's assessment of what combination of subadvisers it
believes will optimize each Fund's chances of achieving its investment
objective. As Items 1 through 3 show, Citibank currently is required to obtain
shareholder approval to add or replace a subadviser. If the Funds were to
obtain exemptive relief and shareholders were to approve this proposed Item 6,
the Trustees would no longer be required to call a Fund shareholder meeting
each time a new subadviser is appointed.
Shareholder meetings entail substantial costs which could diminish the
benefits of the current subadvisory arrangements. These costs must be weighed
against the benefits of shareholder scrutiny of proposed contracts with
additional or replacement subadvisers. However, even in the absence of
shareholder approval, any proposal to add or replace subadvisers would receive
careful review. First, Citibank would assess a Fund's needs and, if it
believed additional or replacement subadvisers could benefit the Fund, would
search for available investment subadvisers. Second, any recommendations made
by Citibank would have to be approved by a majority of the Trustees, including
a majority of the Trustees who are not "interested persons" within the meaning
of the 1940 Act. In selecting any new or replacement subadvisers, the Trustees
are required to determine that an investment management agreement with the
subadviser is reasonable, fair and in the best interests of a fund and its
shareholders, and that the fees provided in the agreement are fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. Finally, any further appointments of
additional or replacement subadvisers would have to comply with any conditions
contained in the Securities and Exchange Commission exemptive order, if such
order is granted.
The Trustees believe that the proposed authority to select and change
investment subadvisers and enter into investment subadvisory agreements
without obtaining the approval of shareholders is in the best interests of the
shareholders of each Fund.
VOTE REQUIRED
Approval of this proposal with respect to a Fund will require a "Majority
Shareholder Vote" (as defined under "Vote Required" in Items 1, 2 and 3 above)
of the shareholders of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR AUTHORIZING THE TRUSTEES TO SELECT AND
CHANGE INVESTMENT SUBADVISERS AND ENTER INTO INVESTMENT SUBADVISORY AGREEMENTS
WITHOUT OBTAINING THE APPROVAL OF SHAREHOLDERS.
ITEM 7. TO VOTE ON AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT POLICIES OF
EACH FUND CONCERNING THAT FUND'S ABILITY TO MAKE LOANS TO OTHER
PERSONS AND TO BUY OR SELL FUTURES CONTRACTS AND OPTIONS ON FUTURES.
As noted above in Item 5, each Fund has adopted certain fundamental
investment restrictions which, as a matter of law, cannot be changed without
shareholder approval. One of these fundamental investment restrictions
concerns each Fund's ability to make loans to other persons. The Funds are
proposing a technical amendment to this restriction to clarify that the use of
certain investment techniques and the entry into certain derivatives contracts
would not be a violation of this restriction. The proposed amendments will
clarify that each Fund's ability to use derivatives is consistent with that
described in that Fund's prospectus.
Certain other of the Funds' fundamental investment restrictions could be
construed to limit the Funds' ability to buy or sell futures contracts and
options on futures, and to utilize investment techniques such as mortgage
dollar rolls for purposes other than leverage. The Funds are proposing
technical amendments to these restrictions to clarify this point. The proposed
amendments will clarify that each Fund's ability to buy or sell futures
contracts and options on futures, and to utilize mortgage dollar rolls, is
consistent with that described in that Fund's prospectus.
CitiSelect VIP Folios 200-500 are proposing to delete language concerning
collateral arrangements with respect to futures contracts and options on
futures from their fundamental investment restriction concerning the issuance
of senior securities. The Funds believe that this language is not required as
a matter of law, and adds nothing to the investment restriction which does not
already appear therein. Even though the language will be deleted from the
investment restrictions, the Funds will continue to provide collateral with
respect to options, futures contracts and options on futures contracts to the
extent required by applicable rules and regulations.
To give effect to these technical amendments, it is proposed that each of
the fundamental investment restrictions listed in Exhibit E be amended as
indicated in that Exhibit. Shareholders should note that Exhibit E assumes
that Item 5 has been approved.
The Trustees believe that these proposed amendments to the fundamental
investment policies are in the best interests of the shareholders of each
Fund.
VOTE REQUIRED
Because the investment restrictions in Exhibit E are fundamental policies of
each Fund, approval of this proposal with respect to a Fund will require a
"Majority Shareholder Vote" (as defined under "Vote Required" in Items 1, 2
and 3 above) of the shareholders of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
FUNDS' FUNDAMENTAL INVESTMENT POLICIES CONCERNING THE FUNDS' ABILITY TO MAKE
LOANS TO OTHER PERSONS AND TO BUY OR SELL FUTURES CONTRACTS AND OPTIONS ON
FUTURES.
ITEM 8. TO ELECT HEATH B. MCLENDON AS A TRUSTEE OF THE FUNDS.
The Funds are proposing that Heath B. McLendon be elected as a Trustee of
the Funds, to hold office until his successors are chosen and qualified. Mr.
McLendon, Chairman, President and Chief Executive Officer of Mutual Management
Corp., the Citibank affiliate whose Sub-Management Agreement is being
submitted for shareholder approval in Item 1, was appointed by the Board in
February, 1999 and currently serves as a Trustee. Mr. McLendon has not been
elected by the Funds' shareholders. The remaining Trustees were previously
elected by shareholders. Mr. McLendon will continue to serve as a Trustee
whether or not shareholders of the CitiSelect VIP Folios approve Item 1.
The following information shows the Trustees and the executive officers of
the Funds and their principal occupations which, unless otherwise specified,
are of more than five years duration, although the titles held may have varied
during that period. Each Trustee and officer is also a Trustee or officer of
certain other funds for which CFBDS, Inc., the Funds' distributor, or an
affiliate, serves as the distributor or for which Citibank serves as
investment adviser. Asterisks indicate those Trustees and officers who are
"interested persons," as defined in the 1940 Act, of the Funds.
TRUSTEES OF THE FUNDS
ELLIOTT J. BERV (aged 55) -- Trustee (since November 1996); Chairman and
Director, Catalyst, Inc. (Management Consultants) (since June 1992);
President, Chief Operating Officer and Director, Deven International, Inc.
(International Consultants) (June 1991 to June 1992); President and Director,
Elliott J. Berv & Associates (Management Consultants) (since May 1984).
PHILIP W. COOLIDGE* (aged 47) -- Trustee (since November 1996); President of
the Funds; Chief Executive Officer and President, Signature Financial Group,
Inc. and CFBDS.
MARK T. FINN (aged 55) -- Trustee (since November 1996); President and
Director, Delta Financial, Inc. (since June 1983); Chairman of the Board and
Chief Executive Officer, FX 500 Ltd. (Commodity Trading Advisory Firm) (since
April 1990); General Partner and Shareholder, Greenwich Ventures LLC
(Investment Partnership) (since January 1996); President and Secretary,
Phoenix Trading Co. (Commodity Trading Advisory Firm) (since March 1997);
Director, Vantage Consulting Group, Inc. (since October 1988).
RILEY C. GILLEY (aged 72) -- Trustee (since November 1996); Vice President and
General Counsel, Corporate Property Investors (November 1988 to December
1991); Partner, Breed, Abbott & Morgan (Attorneys) (retired, December 1987).
DIANA R. HARRINGTON (aged 58) -- Trustee (since November 1996); Professor,
Babson College (since September 1993); Visiting Professor, Kellogg Graduate
School of Management, Northwestern University (September 1992 to September
1993); Professor, Darden Graduate School of Business, University of Virginia
(September 1978 to September 1993); Trustee, the Highland Family of Funds
(March 1997 to March 1998).
SUSAN B. KERLEY (aged 47) -- Trustee (since November 1996); President, Global
Research Associates, Inc. (Investment Research) (since August 1990); Manager,
Rockefeller & Co. (March 1988 to July 1990); Trustee, Mainstay Institutional
Funds (since December 1990).
HEATH B. MCLENDON* (aged 65) -- Trustee (since February 1999); Chairman,
President and Chief Executive Officer of Mutual Management Corp. (since March
1996); Managing Director of Salomon Smith Barney (since August 1993) and
Chairman, President and Chief Executive Officer of 58 investment companies
sponsored by Salomon Smith Barney.
C. OSCAR MORONG, JR. (aged 63) -- Trustee (since November 1996); Managing
Director, Morong Capital Management (since February 1993); Senior Vice
President and Investment Manager, CREF Investments, Teachers Insurance &
Annuity Association (retired January 1993); Director, Indonesia Fund;
Director, MAS Funds.
WALTER E. ROBB, III (aged 72) -- Trustee (since November 1996); President,
Benchmark Consulting Group, Inc. (since 1991); Principal, Robb Associates
(Corporate Financial Advisors) (since 1978); President, Benchmark Advisors,
Inc. (Corporate Financial Advisors) (since 1989); Trustee of certain
registered investment companies in the MFS Family of Funds.
E. KIRBY WARREN (aged 64) -- Trustee (since November 1996); Professor of
Management, Graduate School of Business, Columbia University (since 1987);
Samuel Bronfman Professor of Democratic Business Enterprise (1978 to 1987).
WILLIAM S. WOODS, JR. (aged 78) -- Trustee (since November 1996); Vice
President-Investments, Sun Company, Inc. (retired, April 1984).
OFFICERS OF THE FUNDS
PHILIP W. COOLIDGE* (aged 47) -- President of the Funds (since October 1996);
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
CHRISTINE A. DRAPEAU* (aged 28) -- Assistant Secretary and Assistant Treasurer
of the Funds (since October 1996); Vice President, Signature Financial Group,
Inc. (since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996).
TAMIE EBANKS-CUNNINGHAM* (aged 26) -- Assistant Secretary of the Funds (since
January 1998); Office Manager, Signature Financial Group, (Grand Cayman)
Limited (Since April 1995); Administrator, Cayman Islands Primary School
(prior to April 1995).
JOHN R. ELDER* (aged 50) -- Treasurer of the Funds (since October 1996); Vice
President, Signature Financial Group, Inc. (since April 1995); Assistant
Treasurer, CFBDS (since April 1995); Treasurer, the Phoenix Family of Mutual
Funds (Phoenix Home Life Mutual Insurance Company) (1983 to March 1995).
LINDA T. GIBSON* (aged 33) -- Secretary of the Funds (since October 1996);
Senior Vice President, Signature Financial Group, Inc.; Secretary, CFBDS.
JAMES E. HOOLAHAN* (aged 51) -- Vice President, Assistant Secretary and
Assistant Treasurer of the Funds (since October 1996); Senior Vice President,
Signature Financial Group, Inc.
SUSAN JAKUBOSKI* (aged 34) -- Vice President, Assistant Secretary and
Assistant Treasurer of the Funds (since October 1996); Vice President,
Signature Financial Group (Cayman) Ltd. (since August 1994); Fund Compliance
Administrator, Concord Financial Group (November 1990 to August 1994).
MOLLY S. MUGLER* (aged 47) -- Assistant Secretary and Assistant Treasurer of
the Funds (since October 1996); Vice President, Signature Financial Group,
Inc.; Assistant Secretary, CFBDS.
CLAIR TOMALIN* (aged 30) -- Assistant Secretary of the Funds (since January
1998); Office Manager, Signature Financial Group (Europe) Limited.
SHARON M. WHITSON* (aged 50) -- Assistant Secretary and Assistant Treasurer of
the Funds (since October 1996); Assistant Vice President, Signature Financial
Group, Inc.
JULIE J. WYETZNER* (aged 39) -- Vice President, Assistant Secretary and
Assistant Treasurer of the Funds (since October 1996); Vice President,
Signature Financial Group, Inc.
Trustees who serve on the boards of investment companies in the CitiFunds
family of funds are compensated for their services on a complex-wide basis.
Only those Trustees who are not affiliated with the Funds' distributor or
Citibank receive compensation from the CitiFunds (including the Funds). The
following table shows the compensation paid to the Trustees by the Funds and
the other CitiFunds during the fiscal years ended December 31, 1998.
COMPENSATION TABLE
The Funds' Trustees received the following remuneration from the Funds as a
whole during their fiscal years ended December 31, 1998:
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
RETIREMENT FROM REGISTRANT
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND
COMPENSATION FROM AS PART OF FUND BENEFITS UPON COMPLEX PAID TO
NAME OF PERSON, POSITION REGISTRANT (1) EXPENSES RETIREMENT TRUSTEES (1)
------------------------ -------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Elliott J. Berv $3,409.27 None None $53,750.00
Philip W. Coolidge None None None None
Mark T. Finn $3,389.53 None None $52,000.00
Riley C. Gilley $3,384.44 None None $41,500.00
Diana R. Harrington $3,545.56 None None $59,000.00
Susan B. Kerley $3,513.95 None None $55,000.00
C. Oscar Morong, Jr. $3,669.31 None None $71,000.00
Walter E. Robb, III $3,395.04 None None $50,000.00
E. Kirby Warren $3,483.71 None None $49,000.00
William S. Woods, Jr. $3,484.86 None None $54,000.00
- ----------
(1) Information relates to the fiscal years ended December 31, 1998. Messrs. Berv, Coolidge, Finn, Gilley,
Morong, Robb, Warren and Woods and Mses. Harrington and Kerley are trustees of 27, 49, 26, 33, 40, 30, 40,
26, 28 and 28 funds, respectively, in the family of open-end registered investment companies advised or
managed by Citibank.
</TABLE>
The Board of Trustees met 4 times during the period commencing January 1,
1998 and ending December 31, 1998. The Board has created a standing Audit
Committee, currently comprised of Ms. Kerley and Messrs. Gilley, Warren and
Woods, none of whom is an "interested person," as defined in the 1940 Act, of
the Funds or their administrator or distributor or of Citibank. The Audit
Committee met 4 times during the period commencing January 1, 1998 and ending
December 31, 1998 to review the internal and external accounting procedures of
the Funds and, among other things, to consider the selection of independent
certified public accountants for the Funds, to approve all significant
services proposed to be performed by its independent certified public
accountants and to consider the possible effect of such services on their
independence. The Board has also created a standing Performance & Review
Committee, currently comprised of Ms. Harrington and Messrs. Berv, Finn and
Robb, none of whom is an "interested person" of the Funds or their
administrator or distributor or of Citibank. The Performance & Review
Committee met 6 times during the period commencing January 1, 1998 and ending
December 31, 1998. Each Trustee attended at least 75% of all Board and
applicable committee meetings.
The Funds' Declaration of Trust provides that they will indemnify their
Trustees and officers against all liabilities and expenses incurred or paid in
connection with litigation in which they may be involved because of their
offices with the Funds, unless, with respect to liability to Fund
shareholders, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of 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 interest of the Funds.
In the case of settlement, such indemnification will not be provided unless it
has been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a
written opinion of independent counsel, that such Trustees or officers have
not engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their offices.
VOTE REQUIRED
Election of Mr. McLendon as a Trustee will require approval by the holders
of a majority of the outstanding shares of the Funds, taken together as a
single class, which are present at the Meeting in person or by proxy.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR THE ELECTION OF HEATH B. MCLENDON AS A
TRUSTEE OF THE FUNDS.
ITEM 9. TO VOTE ON THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR EACH FUND.
It is intended that proxies cast by each Fund's shareholders not limited to
the contrary will be voted in favor of ratifying the selection, by a majority
of the Trustees of the Funds who are not "interested persons" (as that term is
defined in the 1940 Act) of the Funds, of PricewaterhouseCoopers LLP under
Section 32(a) of the 1940 Act as independent public accountants, to certify
every financial statement of each Fund required by any law or regulation to be
certified by independent public accountants and filed with the Securities and
Exchange Commission in respect of all or any part of the fiscal year of the
Fund ending December 31, 1999. PricewaterhouseCoopers LLP has no direct or
material indirect interest in any Fund.
PricewaterhouseCoopers LLP has served as the Funds' independent certified
public accountants since their commencement of operations, providing audit
services and consultation with respect to the preparation of filings with the
Securities and Exchange Commission.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Meeting and are expected to be available to respond to appropriate
questions. Representatives of PricewaterhouseCoopers LLP are expected to have
the opportunity to make a statement if they desire to do so.
VOTE REQUIRED
Approval of this proposal with respect to a Fund will require approval by
the holders of a majority of the outstanding shares of that Fund which are
present at the Meeting in person or by proxy.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR EACH FUND.
ITEM 10. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING OF SHAREHOLDERS AND ANY ADJOURNMENTS THEREOF.
The management of the Funds knows of no other business to be presented at
the Meeting. If any additional matters should be properly presented, it is
intended that the enclosed proxy (if not limited to the contrary) will be
voted in accordance with the judgment of the persons named in the enclosed
form of proxy.
INTERESTS OF CERTAIN PERSONS
As of February 10, 1999, no Trustee or officer of the Funds owned
beneficially or had the right to vote any outstanding shares of the Funds.
As of February 10, 1999, to the best knowledge of the Funds, the following
persons owned of record 5% or more of the outstanding shares of the Funds:
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
------------------- --------- ---------
CitiSelect VIP Folio 200
First Citicorp Life Insurance Company 911,070.349 70.31%
Citicorp Life Insurance Company 384,660.086 29.69%
CitiSelect VIP Folio 300
First Citicorp Life Insurance Company 1,402,614.815 70.26%
Citicorp Life Insurance Company 593,580.070 29.74%
CitiSelect VIP Folio 400
First Citicorp Life Insurance Company 960,432.748 74.83%
Citicorp Life Insurance Company 323,083.229 25.17%
CitiSelect VIP Folio 500
First Citicorp Life Insurance Company 434,416.030 69.69%
Citicorp Life Insurance Company 188,918.982 30.31%
CitiFunds Small Cap Growth VIP Portfolio
First Citicorp Life Insurance Company 154,854.335 74.55%
Citicorp Life Insurance Company 52,862.350 25.45%
ADDITIONAL INFORMATION
Each Fund is a series of Variable Annuity Portfolios, a diversified, open-
end registered investment company organized as a Massachusetts business trust
under a Declaration of Trust dated October 18, 1996, as amended and restated
on October 25, 1996. The Funds were designated as separate series of the Trust
on October 18, 1996. The mailing address of the Trust is 21 Milk Street,
Boston, Massachusetts 02109.
The cost of soliciting proxies in the accompanying form, which is expected
to be approximately $75,000 including the fees of a proxy soliciting agent,
will be borne by Citibank. In addition to solicitation by mail, proxies may be
solicited by the Board of Trustees, officers, and regular employees and agents
of the Funds without compensation therefor. Citibank may reimburse brokerage
firms and others for their expenses in forwarding proxy materials to the
beneficial owners and soliciting them to execute the proxies.
The Funds' distributor is CFBDS, Inc., 21 Milk Street, Boston, Massachusetts
02109.
State Street Bank and Trust Company acts as transfer agent, dividend
disbursing agent and custodian for each Fund. The principal business address
of State Street is 225 Franklin Street, Boston, Massachusetts 02110.
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a Massachusetts business trust and as such is not required to
hold annual meetings of shareholders, although special meetings may be called
for the Funds, or for Variable Annuity Portfolios as a whole, for purposes
such as electing Trustees or removing Trustees, changing fundamental policies,
or approving an advisory contract. Shareholder proposals to be presented at
any subsequent meeting of shareholders must be received by the Trust at the
Trust's office within a reasonable time before the proxy solicitation is made.
NOTICE TO INSURANCE COMPANIES
Please advise the Trust, in care of Shareholders Communications Corporation,
17 State Street, New York, NY 10004, whether other persons are beneficial owners
of shares for which proxies are being solicited and, if so, the number of copies
of the Proxy Statement and Annual Reports you wish to receive in order to supply
copies to the variable contract owners of the respective shares.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Linda T. Gibson, Secretary
February 18, 1999
<PAGE>
EXHIBIT A
SUB-MANAGEMENT AGREEMENT
VARIABLE ANNUITY PORTFOLIOS
SUB-MANAGEMENT AGREEMENT, dated as of January 22, 1999, by and between
Variable Annuity Portfolios, a Massachusetts business trust (the "Trust"), and
Mutual Management Corp., a Delaware corporation (the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Manager") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400 and CitiSelect(R) VIP Folio 500 (each individually
a "Fund" and collectively the "Funds"), and
WHEREAS, the Trust engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"), and
WHEREAS, the Manager has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Funds, and the Subadviser
is willing to provide such investment advisory services for the Funds on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Manager (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser
with respect to each of the Funds for the period and on the terms set forth in
this Agreement. The Subadviser accepts such appointment and agrees to provide
an investment program with respect to the Funds for the compensation provided
by this Agreement.
2. Duties of the Subadviser. The Subadviser shall provide the Funds and the
Manager with such investment advice and supervision as the Manager may from
time to time consider necessary for the proper supervision of such portion of
each Fund's investment assets as the Manager may designate from time to time.
Notwithstanding any provision of this Agreement, the Manager shall retain all
rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment advisory activities relating to the Trust. The Subadviser
shall furnish continuously an investment program and shall determine from time
to time what securities shall be purchased, sold or exchanged and what portion
of the assets of a Fund allocated by the Manager to the Subadviser shall be
held uninvested, subject always to the restrictions of the Trust's Declaration
of Trust, dated October 25, 1996, and By-laws, as each may be amended from
time to time (respectively, the "Declaration" and the "By-Laws"), the
provisions of the 1940 Act, the then-current Registration Statement of the
Trust with respect to that Fund, and subject, further, to the Subadviser
notifying the Manager in advance of the Subadviser's intention to purchase any
securities except insofar as the requirement for such notification may be
waived or limited by the Manager, it being understood that the Subadviser
shall be responsible for compliance with any restrictions imposed in writing
by the Manager from time to time in order to facilitate compliance with the
above-mentioned restrictions and such other restrictions as the Manager may
determine. Further, the Manager or the Trustees of the Trust may at any time,
upon written notice to the Subadviser, suspend or restrict the right of the
Subadviser to determine what securities shall be purchased or sold on behalf
of a Fund and what portion, if any, of the assets of a Fund allocated by the
Manager to the Subadviser shall be held uninvested. The Subadviser shall also,
as requested, make recommendations to the Manager as to the manner in which
proxies, voting rights, rights to consent to corporate action and any other
rights pertaining to a Fund's portfolio securities shall be exercised. Should
the Board of Trustees of the Trust or the Manager at any time, however, make
any definite determination as to investment policy applicable to a Fund and
notify the Subadviser thereof in writing, the Subadviser shall be bound by
such determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
The Subadviser shall take, on behalf of each Fund, all actions which it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for each Fund's account with the brokers or dealers selected by it,
and to that end the Subadviser is authorized as the agent of the Trust to give
instructions to the custodian and any subcustodian of a Fund as to deliveries
of securities and payments of cash for the account of that Fund. The
Subadviser will advise the Manager on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to a Fund and/or the other
accounts over which the Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Trust shall periodically review the commissions paid by each Fund to determine
if the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Fund. In making purchases or sales of
securities or other property for the account of a Fund, the Subadviser may
deal with itself or with the Trustees of the Trust or the Trust's underwriter
or distributor, to the extent such actions are permitted by the 1940 Act. The
Board of Trustees of the Trust, in its discretion, may instruct the Subadviser
to effect all or a portion of its securities transactions with one or more
brokers and/or dealers selected by the Board of Trustees, if it determines
that the use of such brokers and/or dealers is in the best interest of the
Trust.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection
with its responsibilities under Section 2 above. Except as provided in the
foregoing sentence, it is understood that the Trust will pay from the assets
of each Fund all of its own expenses allocable to that Fund including, without
limitation, organization costs of the Fund; compensation of Trustees who are
not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations
allocable to the Trust; fees and expenses of independent auditors, legal
counsel and any transfer agent, distributor, registrar or dividend disbursing
agent of the Trust; expenses of issuing and redeeming shares of beneficial
interests and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to
shareholders in the Fund; expenses connected with the execution, recording and
settlement of security transactions; insurance premiums; fees and expenses of
the custodian for all services to the Fund, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Fund (including but not limited to the
fees of independent pricing services); expenses of meetings of the Fund's
shareholders; expenses relating to the issuance of shares of beneficial
interests in the Fund; and such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Trust on behalf of the Fund may be a party and the legal obligation which the
Trust may have to indemnify its Trustees and officers with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Funds pro rata an investment subadvisory fee, accrued daily and paid
monthly, at an annual rate equal to the percentages specified below of the
aggregate assets of all Funds allocated to the Subadviser:
0.65% on the first $10 million;
0.50% on the next $10 million;
0.40% on the next $10 million; and
0.30% on remaining assets.
If the Subadviser serves as investment subadviser for less than the whole of
any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
If in any fiscal year the aggregate expenses of a Fund and any fund
investing its assets therein (including fees pursuant to the Management
Agreement, but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
that Fund and any fund investing its assets therein, the Trust may deduct from
the fees to be paid hereunder, or the Subadviser will bear such excess expense
on a pro-rata basis with the Manager, in the proportion that the subadvisory
fee payable pursuant to this Agreement bears to the fee payable to the Manager
pursuant to the Management Agreement, to the extent required by state law. The
Subadviser's obligation pursuant hereto will be limited to the amount of its
fees hereunder. Such deduction or payment, if any, will be estimated daily,
and reconciled and effected or paid, as the case may be, on a monthly basis.
5. Covenants of the Subadviser. The Subadviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of a Fund, except as permitted by
the 1940 Act, will not take a long or short position in shares of beneficial
interests of a Fund except as permitted by the Declaration, and will comply
with all other provisions of the Declaration and By-Laws and the then-current
Registration Statement applicable to each Fund relative to the Subadviser and
its directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for a Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Subadviser" shall include directors, officers and employees of the
Subadviser as well as the Subadviser itself. The Manager is expressly made a
third party beneficiary of this Agreement, and may enforce any obligations of
the Subadviser under this Agreement and recover directly from the Subadviser
for any liability the Subadviser may have hereunder.
7. Activities of the Subadviser. The services of the Subadviser to the Funds
are not to be deemed to be exclusive, the Subadviser being free to render
investment advisory and/or other services to others, including accounts or
investment management companies with similar or identical investment
objectives to the Funds. It is understood that Trustees, officers, and
shareholders of the Trust or the Manager are or may be or may become
interested in the Subadviser, as directors, officers, employees, or otherwise
and that directors, officers, and employees of the Subadviser are or may
become similarly interested in the Trust or the Manager and that the
Subadviser may be or may become interested in the Trust as a shareholder or
otherwise.
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until January 22, 2001, on which date it will terminate unless its
continuance after January 22, 2001 is "specifically approved at least
annually" (a) by the vote of a majority of the Trustees of the Trust who are
not "interested persons" of the Trust or of the Manager or of the Subadviser
at a meeting specifically called for the purpose of voting on such approval,
and (b) by the Board of Trustees of the Trust or by "vote of a majority of the
outstanding voting securities" of each Fund.
This Agreement may be terminated as to any Fund at any time without the
payment of any penalty by (i) the Trustees, (ii) the "vote of a majority of
the outstanding voting securities" of that Fund, or (iii) the Manager, in each
case on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement may be terminated as to any Fund at any time
without the payment of any penalty by the Subadviser on not less than 90 days'
written notice to the Trust and the Manager. This Agreement shall
automatically terminate in the event of its "assignment." Termination of this
Agreement as to any Fund shall not terminate this Agreement as it applies to
the remaining Funds.
This Agreement constitutes the entire agreement between the parties and may
be amended as to any Fund only if such amendment is approved by the Subadviser
and the "vote of a majority of the outstanding voting securities" of that Fund
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act). Amendment of any term of this
Agreement with respect to any single Fund shall not, without more, amend such
term with respect to any other Fund.
The terms "specifically approved at least annually," "vote of a majority of
the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the particular Fund to which a
particular obligation relates; that any liability of the Trust under this
Agreement, or in connection with the transactions contemplated herein, shall
be discharged only out of the assets of the particular Fund to which a
particular obligation relates; and that no other Fund or other series of the
Trust shall be liable with respect to this Agreement or in connection with the
transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or shareholders of the Trust individually.
9. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
10. Override Provisions. Notwithstanding any other provision of this
Agreement, prior to this Agreement being approved by investors in the Funds in
accordance with the 1940 Act, in no event shall the compensation paid to the
Subadviser hereunder exceed the amount permitted by Rule 15a-4 under the 1940
Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
VARIABLE ANNUITY MUTUAL MANAGEMENT CORP.
PORTFOLIOS on behalf of
CitiSelect(R) VIP Folio 200,
CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400
and CitiSelect(R) VIP Folio 500 By: --------------------------------
By: ------------------------------------ Title: -----------------------------
Title: ---------------------------------
The foregoing is acknowledged:
Citibank, N.A.
By: ------------------------------------
Title: ---------------------------------
<PAGE>
EXHIBIT B
SUB-MANAGEMENT AGREEMENT
VARIABLE ANNUITY PORTFOLIOS
SUB-MANAGEMENT AGREEMENT, dated as of March 1, 1999, by and between Variable
Annuity Portfolios, a Massachusetts business trust (the "Trust"), and Salomon
Brothers Asset Management Limited, a British limited liability private
corporation (the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Manager") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400 and CitiSelect(R) VIP Folio 500 (each individually
a "Fund" and collectively the "Funds"), and
WHEREAS, the Trust engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"), and
WHEREAS, the Manager has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Funds, and the Subadviser
is willing to provide such investment advisory services for the Funds on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Manager (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser
with respect to each of the Funds for the period and on the terms set forth in
this Agreement. The Subadviser accepts such appointment and agrees to provide
an investment program with respect to the Funds for the compensation provided
by this Agreement.
2. Duties of the Subadviser. The Subadviser shall provide the Funds and the
Manager with such investment advice and supervision as the Manager may from
time to time consider necessary for the proper supervision of such portion of
each Fund's investment assets as the Manager may designate from time to time.
Notwithstanding any provision of this Agreement, the Manager shall retain all
rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment advisory activities relating to the Trust. The Subadviser
shall furnish continuously an investment program and shall determine from time
to time what securities shall be purchased, sold or exchanged and what portion
of the assets of a Fund allocated by the Manager to the Subadviser shall be
held uninvested, subject always to the restrictions of the Trust's Declaration
of Trust, dated October 18, 1996, and By-laws, as each may be amended and
restated from time to time (respectively, the "Declaration" and the "By-
Laws"), the provisions of the 1940 Act, the then-current Registration
Statement of the Trust with respect to that Fund, and subject, further, to the
Subadviser notifying the Manager in advance of the Subadviser's intention to
purchase any securities except insofar as the requirement for such
notification may be waived or limited by the Manager, it being understood that
the Subadviser shall be responsible for compliance with any restrictions
imposed in writing by the Manager from time to time in order to facilitate
compliance with the above-mentioned restrictions and such other restrictions
as the Manager may determine. Further, the Manager or the Trustees of the
Trust may at any time, upon written notice to the Subadviser, suspend or
restrict the right of the Subadviser to determine what securities shall be
purchased or sold on behalf of a Fund and what portion, if any, of the assets
of a Fund allocated by the Manager to the Subadviser shall be held uninvested.
The Subadviser shall also, as requested, make recommendations to the Manager
as to the manner in which proxies, voting rights, rights to consent to
corporate action and any other rights pertaining to a Fund's portfolio
securities shall be exercised. Should the Board of Trustees of the Trust or
the Manager at any time, however, make any definite determination as to
investment policy applicable to a Fund and notify the Subadviser thereof in
writing, the Subadviser shall be bound by such determination for the period,
if any, specified in such notice or until similarly notified that such
determination has been revoked.
The Subadviser shall take, on behalf of each Fund, all actions which it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for each Fund's account with the brokers or dealers selected by it,
and to that end the Subadviser is authorized as the agent of the Trust to give
instructions to the custodian and any subcustodian of a Fund as to deliveries
of securities and payments of cash for the account of that Fund. The
Subadviser will advise the Manager on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to a Fund and/or the other
accounts over which the Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Trust shall periodically review the commissions paid by each Fund to determine
if the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Fund. In making purchases or sales of
securities or other property for the account of a Fund, the Subadviser may
deal with itself or with the Trustees of the Trust or the Trust's underwriter
or distributor, to the extent such actions are permitted by the 1940 Act. The
Board of Trustees of the Trust, in its discretion, may instruct the Subadviser
to effect all or a portion of its securities transactions with one or more
brokers and/or dealers selected by the Board of Trustees, if it determines
that the use of such brokers and/or dealers is in the best interest of the
Trust.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection
with its responsibilities under Section 2 above. Except as provided in the
foregoing sentence, it is understood that the Trust will pay from the assets
of each Fund all of its own expenses allocable to that Fund including, without
limitation, organization costs of the Fund; compensation of Trustees who are
not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations
allocable to the Trust; fees and expenses of independent auditors, legal
counsel and any transfer agent, distributor, registrar or dividend disbursing
agent of the Trust; expenses of issuing and redeeming shares of beneficial
interests and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to
shareholders in the Fund; expenses connected with the execution, recording and
settlement of security transactions; insurance premiums; fees and expenses of
the custodian for all services to the Fund, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Fund (including but not limited to the
fees of independent pricing services); expenses of meetings of the Fund's
shareholders; expenses relating to the issuance of shares of beneficial
interests in the Fund; and such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Trust on behalf of the Fund may be a party and the legal obligation which the
Trust may have to indemnify its Trustees and officers with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Funds pro rata an investment subadvisory fee, accrued daily and paid
monthly, at an annual rate equal to the percentages specified below of the
aggregate assets of all Funds allocated to the Subadviser:
0.30% on the first $200 million;
0.25% on assets over $200 million.
If the Subadviser serves as investment subadviser for less than the whole of
any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
If in any fiscal year the aggregate expenses of a Fund and any fund
investing its assets therein (including fees pursuant to the Management
Agreement, but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
that Fund and any fund investing its assets therein, the Trust may deduct from
the fees to be paid hereunder, or the Subadviser will bear such excess expense
on a pro-rata basis with the Manager, in the proportion that the subadvisory
fee payable pursuant to this Agreement bears to the fee payable to the Manager
pursuant to the Management Agreement, to the extent required by state law. The
Subadviser's obligation pursuant hereto will be limited to the amount of its
fees hereunder. Such deduction or payment, if any, will be estimated daily,
and reconciled and effected or paid, as the case may be, on a monthly basis.
5. Covenants of the Subadviser. The Subadviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of a Fund, except as permitted by
the 1940 Act, will not take a long or short position in shares of beneficial
interests of a Fund except as permitted by the Declaration, and will comply
with all other provisions of the Declaration and By-Laws and the then-current
Registration Statement applicable to each Fund relative to the Subadviser and
its directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for a Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Subadviser" shall include directors, officers and employees of the
Subadviser as well as the Subadviser itself. The Manager is expressly made a
third party beneficiary of this Agreement, and may enforce any obligations of
the Subadviser under this Agreement and recover directly from the Subadviser
for any liability the Subadviser may have hereunder.
7. Activities of the Subadviser. The services of the Subadviser to the Funds
are not to be deemed to be exclusive, the Subadviser being free to render
investment advisory and/or other services to others, including accounts or
investment management companies with similar or identical investment
objectives to the Funds. It is understood that Trustees, officers, and
shareholders of the Trust or the Manager are or may be or may become
interested in the Subadviser, as directors, officers, employees, or otherwise
and that directors, officers, and employees of the Subadviser are or may
become similarly interested in the Trust or the Manager and that the
Subadviser may be or may become interested in the Trust as a shareholder or
otherwise.
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until March 1, 2001, on which date it will terminate unless its
continuance after March 1, 2001 is "specifically approved at least annually"
(a) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Manager or of the Subadviser at a
meeting specifically called for the purpose of voting on such approval, and
(b) by the Board of Trustees of the Trust or by "vote of a majority of the
outstanding voting securities" of each Fund.
This Agreement may be terminated as to any Fund at any time without the
payment of any penalty by (i) the Trustees, (ii) the "vote of a majority of
the outstanding voting securities" of that Fund, or (iii) the Manager, in each
case on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement may be terminated as to any Fund at any time
without the payment of any penalty by the Subadviser on not less than 90 days'
written notice to the Trust and the Manager. This Agreement shall
automatically terminate in the event of its "assignment." Termination of this
Agreement as to any Fund shall not terminate this Agreement as it applies to
the remaining Funds.
This Agreement constitutes the entire agreement between the parties and may
be amended as to any Fund only if such amendment is approved by the Subadviser
and the "vote of a majority of the outstanding voting securities" of that Fund
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act). Amendment of any term of this
Agreement with respect to any single Fund shall not, without more, amend such
term with respect to any other Fund.
The terms "specifically approved at least annually," "vote of a majority of
the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the particular Fund to which a
particular obligation relates; that any liability of the Trust under this
Agreement, or in connection with the transactions contemplated herein, shall
be discharged only out of the assets of the particular Fund to which a
particular obligation relates; and that no other Fund or other series of the
Trust shall be liable with respect to this Agreement or in connection with the
transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or shareholders of the Trust individually.
9. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
VARIABLE ANNUITY SALOMON BROTHERS ASSET MANAGEMENT
PORTFOLIOS on behalf of LIMITED
CitiSelect(R) VIP Folio 200,
CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400
and CitiSelect(R) VIP Folio 500
By: ------------------------------------ By: --------------------------------
Title: --------------------------------- Title: -----------------------------
The foregoing is acknowledged:
Citibank, N.A.
By: ------------------------------------
Title: ---------------------------------
<PAGE>
EXHIBIT C
SUB-MANAGEMENT AGREEMENT
VARIABLE ANNUITY PORTFOLIOS
SUB-MANAGEMENT AGREEMENT, dated as of , by and between Variable
Annuity Portfolios, a Massachusetts business trust (the "Trust"), and Salomon
Brothers Asset Management Inc, a Delaware corporation (the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Manager") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400 and CitiSelect(R) VIP Folio 500 (each
individually a "Fund" and collectively the "Funds"), and
WHEREAS, the Trust engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"), and
WHEREAS, the Manager has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Funds, and the Subadviser
is willing to provide such investment advisory services for the Funds on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Manager (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser
with respect to each of the Funds for the period and on the terms set forth in
this Agreement. The Subadviser accepts such appointment and agrees to provide
an investment program with respect to the Funds for the compensation provided
by this Agreement.
2. Duties of the Subadviser. The Subadviser shall provide the Funds and the
Manager with such investment advice and supervision as the Manager may from
time to time consider necessary for the proper supervision of such portion of
each Fund's investment assets as the Manager may designate from time to time.
Notwithstanding any provision of this Agreement, the Manager shall retain all
rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment advisory activities relating to the Trust. The Subadviser
shall furnish continuously an investment program and shall determine from time
to time what securities shall be purchased, sold or exchanged and what portion
of the assets of a Fund allocated by the Manager to the Subadviser shall be
held uninvested, subject always to the restrictions of the Trust's Declaration
of Trust, dated October 18, 1996, and By-laws, as each may be amended and
restated from time to time (respectively, the "Declaration" and the "By-
Laws"), the provisions of the 1940 Act, the then-current Registration
Statement of the Trust with respect to that Fund, and subject, further, to the
Subadviser notifying the Manager in advance of the Subadviser's intention to
purchase any securities except insofar as the requirement for such
notification may be waived or limited by the Manager, it being understood that
the Subadviser shall be responsible for compliance with any restrictions
imposed in writing by the Manager from time to time in order to facilitate
compliance with the above-mentioned restrictions and such other restrictions
as the Manager may determine. Further, the Manager or the Trustees of the
Trust may at any time, upon written notice to the Subadviser, suspend or
restrict the right of the Subadviser to determine what securities shall be
purchased or sold on behalf of a Fund and what portion, if any, of the assets
of a Fund allocated by the Manager to the Subadviser shall be held uninvested.
The Subadviser shall also, as requested, make recommendations to the Manager
as to the manner in which proxies, voting rights, rights to consent to
corporate action and any other rights pertaining to a Fund's portfolio
securities shall be exercised. Should the Board of Trustees of the Trust or
the Manager at any time, however, make any definite determination as to
investment policy applicable to a Fund and notify the Subadviser thereof in
writing, the Subadviser shall be bound by such determination for the period,
if any, specified in such notice or until similarly notified that such
determination has been revoked.
The Subadviser shall take, on behalf of each Fund, all actions which it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for each Fund's account with the brokers or dealers selected by it,
and to that end the Subadviser is authorized as the agent of the Trust to give
instructions to the custodian and any subcustodian of a Fund as to deliveries
of securities and payments of cash for the account of that Fund. The
Subadviser will advise the Manager on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to a Fund and/or the other
accounts over which the Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Trust shall periodically review the commissions paid by each Fund to determine
if the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Fund. In making purchases or sales of
securities or other property for the account of a Fund, the Subadviser may
deal with itself or with the Trustees of the Trust or the Trust's underwriter
or distributor, to the extent such actions are permitted by the 1940 Act. The
Board of Trustees of the Trust, in its discretion, may instruct the Subadviser
to effect all or a portion of its securities transactions with one or more
brokers and/or dealers selected by the Board of Trustees, if it determines
that the use of such brokers and/or dealers is in the best interest of the
Trust.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection
with its responsibilities under Section 2 above. Except as provided in the
foregoing sentence, it is understood that the Trust will pay from the assets
of each Fund all of its own expenses allocable to that Fund including, without
limitation, organization costs of the Fund; compensation of Trustees who are
not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations
allocable to the Trust; fees and expenses of independent auditors, legal
counsel and any transfer agent, distributor, registrar or dividend disbursing
agent of the Trust; expenses of issuing and redeeming shares of beneficial
interests and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to
shareholders in the Fund; expenses connected with the execution, recording and
settlement of security transactions; insurance premiums; fees and expenses of
the custodian for all services to the Fund, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Fund (including but not limited to the
fees of independent pricing services); expenses of meetings of the Fund's
shareholders; expenses relating to the issuance of shares of beneficial
interests in the Fund; and such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Trust on behalf of the Fund may be a party and the legal obligation which the
Trust may have to indemnify its Trustees and officers with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Funds pro rata an investment subadvisory fee, accrued daily and paid
monthly, at an annual rate equal to the percentages specified below of the
aggregate assets of all Funds allocated to the Subadviser:
0.45% on the first $100 million;
0.40% on assets in excess of $100 million.
If the Subadviser serves as investment subadviser for less than the whole of
any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
If in any fiscal year the aggregate expenses of a Fund and any fund
investing its assets therein (including fees pursuant to the Management
Agreement, but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
that Fund and any fund investing its assets therein, the Trust may deduct from
the fees to be paid hereunder, or the Subadviser will bear such excess expense
on a pro-rata basis with the Manager, in the proportion that the subadvisory
fee payable pursuant to this Agreement bears to the fee payable to the Manager
pursuant to the Management Agreement, to the extent required by state law. The
Subadviser's obligation pursuant hereto will be limited to the amount of its
fees hereunder. Such deduction or payment, if any, will be estimated daily,
and reconciled and effected or paid, as the case may be, on a monthly basis.
5. Covenants of the Subadviser. The Subadviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of a Fund, except as permitted by
the 1940 Act, will not take a long or short position in shares of beneficial
interests of a Fund except as permitted by the Declaration, and will comply
with all other provisions of the Declaration and By-Laws and the then-current
Registration Statement applicable to each Fund relative to the Subadviser and
its directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for a Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Subadviser" shall include directors, officers and employees of the
Subadviser as well as the Subadviser itself. The Manager is expressly made a
third party beneficiary of this Agreement, and may enforce any obligations of
the Subadviser under this Agreement and recover directly from the Subadviser
for any liability the Subadviser may have hereunder.
7. Activities of the Subadviser. The services of the Subadviser to the Funds
are not to be deemed to be exclusive, the Subadviser being free to render
investment advisory and/or other services to others, including accounts or
investment management companies with similar or identical investment
objectives to the Funds. It is understood that Trustees, officers, and
shareholders of the Trust or the Manager are or may be or may become
interested in the Subadviser, as directors, officers, employees, or otherwise
and that directors, officers, and employees of the Subadviser are or may
become similarly interested in the Trust or the Manager and that the
Subadviser may be or may become interested in the Trust as a shareholder or
otherwise.
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until , 2001, on which date it will terminate unless its continuance
after , 2001 is "specifically approved at least annually" (a) by the vote
of a majority of the Trustees of the Trust who are not "interested persons" of
the Trust or of the Manager or of the Subadviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of each Fund.
This Agreement may be terminated as to any Fund at any time without the
payment of any penalty by (i) the Trustees, (ii) the "vote of a majority of
the outstanding voting securities" of that Fund, or (iii) the Manager, in each
case on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement may be terminated as to any Fund at any time
without the payment of any penalty by the Subadviser on not less than 90 days'
written notice to the Trust and the Manager. This Agreement shall
automatically terminate in the event of its "assignment." Termination of this
Agreement as to any Fund shall not terminate this Agreement as it applies to
the remaining Funds.
This Agreement constitutes the entire agreement between the parties and may
be amended as to any Fund only if such amendment is approved by the Subadviser
and the "vote of a majority of the outstanding voting securities" of that Fund
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act). Amendment of any term of this
Agreement with respect to any single Fund shall not, without more, amend such
term with respect to any other Fund.
The terms "specifically approved at least annually," "vote of a majority of
the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the particular Fund to which a
particular obligation relates; that any liability of the Trust under this
Agreement, or in connection with the transactions contemplated herein, shall
be discharged only out of the assets of the particular Fund to which a
particular obligation relates; and that no other Fund or other series of the
Trust shall be liable with respect to this Agreement or in connection with the
transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or shareholders of the Trust individually.
9. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
VARIABLE ANNUITY SALOMON BROTHERS ASSET MANAGEMENT
PORTFOLIOS on behalf of INC
CitiSelect(R) VIP Folio 200,
CitiSelect(R) VIP Folio 300,
CitiSelect(R) VIP Folio 400
and CitiSelect(R) VIP Folio 500
By: ------------------------------------ By: --------------------------------
Title: --------------------------------- Title: -----------------------------
The foregoing is acknowledged:
Citibank, N.A.
By: ------------------------------------
Title: ---------------------------------
<PAGE>
EXHIBIT D
Deleted text is bracketed and added text is double bracketed.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE
AMENDED UNDER ITEM 5.
(3) Purchase securities of any issuer if such purchase at the time thereof
would cause with respect to 75% of the total assets of the Fund more than 10%
of the voting securities of such issuer to be held by the Fund, except that
the Fund may invest all or substantially all of its [investable] assets in
[another registered investment company having the same investment objective and
policies and substantially the same investment restrictions as those with
respect to the Fund (a "Qualifying Portfolio").] [[one or more investment
companies, to the extent not prohibited by the 1940 Act, the rules and
regulations thereunder, and exemptive orders granted under such Act.]]
(4) Purchase securities of any issuer if such purchase at the time thereof
would cause as to 75% of the Fund's total assets more than 5% of the Fund's
assets (taken at market value) to be invested in the securities of such issuer
(other than securities or obligations issued or guaranteed by the United
States, any state or political subdivision thereof, or any political
subdivision of any state, or any agency or instrumentality of the United
States or of any state or of any political subdivision of any state), except
that the Fund may invest all or substantially all of its investable assets in
[a Qualifying Portfolio.] [[one or more investment companies, to the extent not
prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act.]]
(6) Underwrite securities issued by other persons, except that all the assets
of the Fund may be invested in [a Qualifying Portfolio] [[one or more investment
companies, to the extent not prohibited by the 1940 Act, the rules and
regulations thereunder, and exemptive orders granted under such Act,]] and
except insofar as the Fund may technically be deemed an underwriter under the
Securities Act in selling a security.
<PAGE>
EXHIBIT E
Deleted text is bracketed and added text is double bracketed.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE
AMENDED UNDER ITEM 7.
(1) Borrow money, [except that as a temporary measure for extraordinary or
emergency purposes it may borrow in an amount not to exceed 1/3 of the current
value of its net assets, including the amount borrowed (nor purchase any
securities at any time at which borrowings exceed 5% of the total assets of
the Fund, taken at market value). It is intended that the Fund would borrow
money only from banks and only to accommodate requests for the repurchase of
shares of the Fund while effecting an orderly liquidation of portfolio
securities] [[if such borrowing is specifically prohibited by the 1940 Act or
the rules and regulations promulgated thereunder.]]
(2) Make loans to other persons [except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of the
Fund's total assets (taken at market value), (b) through the use of repurchase
agreements or the purchase of short-term obligations or (c) by purchasing all
or a portion of an issue of debt securities of types commonly distributed
privately to financial institutions. The purchase of short-term commercial
paper or a portion of an issue of debt securities which is part of an issue to
the public shall not be considered the making of a loan] [[if such loans are
specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder.]]
(3) Purchase securities of any issuer if such purchase at the time thereof
would cause with respect to 75% of the total assets of the Fund more than 10%
of the voting securities of such issuer to be held by the Fund, [except;]
[[provided that, for purposes of this restriction, the issuer of an option or
futures contract shall not be deemed to be the issuer of the security or
securities underlying such contract; and provided further]] that the Fund may
invest all or any portion of its assets in one or more investment companies,
to the extent not prohibited by the 1940 Act, the rules and regulations
thereunder, and exemptive orders granted under such Act.
(4) Purchase securities of any issuer if such purchase at the time thereof
would cause as to 75% of the Fund's total assets more than 5% of the Fund's
assets (taken at market value) to be invested in the securities of such issuer
(other than securities or obligations issued or guaranteed by the United
States, any state or political subdivision thereof, or any political
subdivision of any such state, or any agency or instrumentality of the United
States or of any state or of any political subdivision of any state), [except;]
[[provided that, for purposes of this restriction, the issuer of an option or
futures contract shall not be deemed to be the issuer of the security or
securities underlying such contract; and provided further]] that the Fund may
invest all or any portion of its assets in one or more investment companies,
to the extent not prohibited by the 1940 Act, the rules and regulations
thereunder, and exemptive orders granted under such Act.
(5) Concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of the Fund's investment objective, up
to 25% of its assets, at market value at the time of each investment, may be
invested in any one industry, [[except that positions in futures contracts shall
not be subject to this restriction.]]
(6) Underwrite securities issued by other persons, except that all or any
portion of the assets of the Fund may be invested in one or more investment
companies, to the extent not prohibited by the 1940 Act, the rules and
regulations thereunder, and exemptive orders granted under such Act, and
except insofar as the Fund may technically be deemed an underwriter under the
Securities Act in selling a security.
(7) Purchase or sell real estate (including limited partnership interests but
excluding securities secured by real estate or interests therein), interests
in oil, gas or mineral leases, commodities or commodity contracts in the
ordinary course of business ([the Fund] [[the foregoing shall not be deemed to
preclude the Fund from purchasing or selling futures contracts or options
thereon, and the Fund]] reserves the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities by the Fund).
For CitiFunds Small Cap Growth VIP Portfolio only:
(8) Issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder[, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above].
For CitiSelect VIP Folios 200-500 only:
(8) Issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder[, provided that collateral arrangements with
respect to options, futures contracts, and options on futures contracts,
including deposits of initial and variation margin, are not considered to be
the issuance of a senior security for purposes of this restriction and except
as appropriate to evidence a debt incurred without violating Investment
Restriction (1) above.]
<PAGE>
PROXY CARD PROXY CARD
CITISELECT(R) VIP FOLIO 200, CITISELECT(R) VIP FOLIO 300,
CITISELECT(R) VIP FOLIO 400, CITISELECT(R) VIP FOLIO 500 and
CITIFUNDSSM SMALL CAP GROWTH VIP PORTFOLIO
A PROXY FOR A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 9, 1999
The undersigned, revoking all Proxies heretofore given, hereby appoints
each of Susan Jakuboski and Christine Drapeau, or any of them, as Proxies of the
undersigned with full power of substitution, to vote on behalf of all of the
undersigned all shares in CitiSelect(R) VIP Folio 200, CitiSeleCt(R) VIP Folio
300, CitiSeLect(R) VIP Folio 400, CitiSelect(R) VIP Folio 500 and CitiFundsSM
Small Cap Growth VIP Portfolio which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Funds to be held at Citicorp Center, 153
East 53rd Street, 14th Floor, New York, New York, on Friday, April 9, 1999 at
3:00 p.m., Eastern Time, and at any adjournments thereof, as fully as the
undersigned would be entitled to vote if personally present, as follows:
PROXY SOLICITED ON BEHALF OF THE FUNDS' BOARD OF TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
<PAGE>
1. A Sub-Management Agreement between Mutual Management Corp. and Variable
Annuity Portfolios with respect to CitiSelect VIP Folios 200-500
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
2. A Sub-Management Agreement between Salomon Brothers Asset Management
Limited and Variable Annuity Portfolios with respect to CitiSelect VIP
Folios 200-500
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
3. A Sub-Management Agreement between Salomon Brothers Asset Management Inc
and Variable Annuity Portfolios with respect to CitiSelect VIP Folios
200-500
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
4. An amendment to the Funds' Declaration of Trust to allow the assets of
each Fund to be invested in one or more investment companies to the extent
not prohibited by the Investment Company Act of 1940, the rules and
regulations thereunder, and exemptive orders granted under such Act
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiFundsSM Small Cap Growth VIP Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
5. An amendment to the fundamental investment policies of each Fund to allow
the assets of that Fund to be invested in one or more investment companies
to the extent not prohibited by the 1940 Act
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiFundsSM Small Cap Growth VIP Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
6. Authorizing the Trustees to select and change investment subadvisers and
enter into investment subadvisory agreements without obtaining the
approval of shareholders
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiFundsSM Small Cap Growth VIP Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
7. An amendment to the fundamental investment policies of each Fund
concerning that Fund's ability to make loans to other persons and to buy
or sell futures contracts and options on futures
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiFundsSM Small Cap Growth VIP Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
8. The nominee for election as Trustee of Variable Annuity Portfolios, Heath
B. McLendon
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______VOTE FOR the nominee listed above ______VOTE WITHHELD
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______VOTE FOR the nominee listed above ______VOTE WITHHELD
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______VOTE FOR the nominee listed above ______VOTE WITHHELD
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______VOTE FOR the nominee listed above ______VOTE WITHHELD
I vote my shares in CitiFundsSM Small Cap Growth VIP Portfolio, if any:
______VOTE FOR the nominee listed above ______VOTE WITHHELD
9. The selection of PricewaterhouseCoopers LLP as the independent certified
public accountants for each Fund
I vote my shares in CitiSelect(R) VIP Folio 200, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 300, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 400, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiSelect(R) VIP Folio 500, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in CitiFundsSM Small Cap Growth VIP Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR ANY PROPOSALS
FOR WHICH NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Date:_______________
-----------------------------------
Signature
-----------------------------------
Signature of joint owner, if any
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners should
each sign this proxy. Please sign, date and return in the enclosed envelope.
<PAGE>
EVERY VOTE IS IMPORTANT!
VOTING INSTRUCTIONS - PLEASE SELECT ONE OF
THESE VOTING METHODS:
Vote by Paper Ballot: Please read your proxy
statement and read each of the following
proposals. Vote by filling in on the ballot
the appropriate box representing your vote on
each proposal. Sign and mail the instruction
form in the enclosed return envelope.
Vote by Telephone: Please read your
proxy statement and read each of the
following proposals. Dial our toll
free number 1-800-790-7068 where you
will use this ballot and the control
number listed below to vote on the
proposals applicable to the
portfolios in which you have
invested. Do not mail your
instruction form when you vote by
phone.
YOUR CONTROL NUMBER:
123 4567 8
PLEASE VOTE VIA PHONE OR SIGN, DATE AND PROMPTLY RETURN YOUR INSTRUCTION FORM IN
THE ENCLOSED ENVELOPE TODAY!
INSTRUCTION FORM INSTRUCTION FORM
[NAME OF FUND]
The undersigned, revoking previous proxies, hereby instructs Citicorp Life
Insurance Company (Citicorp Life), to vote all shares of the series of Variable
Annuity Portfolios (Funds), which are held in the account of the undersigned in
the Citicorp Life Variable Annuity Separate Account, at the Special Meeting of
shareholders of the Funds, to be held at Citicorp Center, 153 East 53rd Street,
14th floor, New York, New York, on Friday, April 9, 1999, at 3:00 p.m. Eastern
Time, and at any adjournments thereof. Citicorp Life is hereby instructed to
vote on the proposals described in the Proxy Statement as specified on the
reverse side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
VOTE THIS INSTRUCTION FORM TODAY! YOUR PROMPT RESPONSE WILL SAVE VARIABLE
ANNUITY PORTFOLIOS THE EXPENSE OF ADDITIONAL MAILINGS.
NOTE: Please sign exactly as your
name(s) appear on this instruction
form. When signing as attorney,
executor, administrator, trustee,
guardian or as custodian for a minor,
please sign your name and give your
full title as such. If signing on
behalf of a corporation, please sign
the full corporate name and your name
and indicate your title. If you are a
partner signing for a partnership,
please sign the partnership name and
your name. Joint owners should each
sign this form. Please sign, date and
return in the enclosed envelope.
____________________________________
Signature
____________________________________
Signature of joint owner, if any
____________________________________
Date
PLEASE MARK, SIGN AND DATE YOUR INSTRUCTION FORM AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
[BALLOT FOR CITISELECT VIP FOLIOS 200-500]
PLEASE MARK VOTES AS IN THIS EXAMPLE:
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS. IF NO
SPECIFICATION IS MADE, THE FORM SHALL BE VOTED FOR THE PROPOSALS. AS TO ANY
OTHER MATTER, SAID ATTORNEYS SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGEMENT.
THE BOARD OF TRUSTEES OF VARIABLE ANNUITY PORTFOLIOS RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS.
FOR AGAINST ABSTAIN
1. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to the approval of a
Sub-Management Agreement between
Mutual Management Corp. and Variable
Annuity Portfolios with respect to
CitiSelect VIP Folios 200-500.
2. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to the approval of a
Sub-Management Agreement between
Salomon Brothers Asset Management
Limited and Variable Annuity
Portfolios with respect to
CitiSelect VIP Folios 200-500.
3. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to the approval of a
Sub-management Agreement between
Salomon Brothers Asset Management
Inc and Variable Annuity Portfolios
with respect to CitiSelect VIP
Folios 200-500.
4. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to approval of an
amendment to the Funds' Declaration
of Trust to allow the assets of each
Fund to be invested in one or more
investment companies to the extent
not prohibited by the Investment
Company Act of 1940, the rules and
regulations thereunder, and
exemptive orders granted under such
Act.
5. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to the approval of an
amendment to the fundamental
investment policies of each Fund to
allow the assets of that Fund to be
invested in one or more investment
companies to the extent not
prohibited by the 1940 Act.
6. To instruct Citicorp Life to vote on [ ] [ ] [ ]
authorizing the Trustees of the
Funds to select and change
investment subadvisers and enter
into investment subadvisory
agreements without obtaining the
approval of shareholders.
7. To instruct Citicorp Life to vote on [ ] [ ] [ ]
an amendment to the fundamental
investment policies of each Fund
concerning that Fund's ability to
make loans to other persons and to
buy or sell futures contracts and
options on futures.
VOTE FOR VOTE
THE NOMINEE WITHHELD
8. To instruct Citicorp Life to elect [ ] [ ] [ ]
Heath B. McLendon as a Trustee of
the Funds.
FOR AGAINST ABSTAIN
9. To instruct Citicorp Life to vote on [ ] [ ] [ ]
the selection of
PricewaterhouseCoopers LLP as the
independent certified public
accountants for each fund.
<PAGE>
[BALLOT FOR CITIFUNDS SMALL CAP GROWTH VIP PORTFOLIO]
PLEASE MARK VOTES AS IN THIS EXAMPLE:
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS. IF NO
SPECIFICATION IS MADE, THE FORM SHALL BE VOTED FOR THE PROPOSALS. AS TO ANY
OTHER MATTER, SAID ATTORNEYS SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGEMENT.
THE BOARD OF TRUSTEES OF VARIABLE ANNUITY PORTFOLIOS RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS.
FOR AGAINST ABSTAIN
1. DOES NOT APPLY TO CITIFUNDS SMALL [ ] [ ] [ ]
CAP GROWTH VIP PORTFOLIO.
2. DOES NOT APPLY TO CITIFUNDS SMALL [ ] [ ] [ ]
CAP GROWTH VIP PORTFOLIO.
3. DOES NOT APPLY TO CITIFUNDS SMALL [ ] [ ] [ ]
CAP GROWTH VIP PORTFOLIO.
4. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to approval of an
amendment to the Funds' Declaration
of Trust to allow the assets of each
Fund to be invested in one or more
investment companies to the extent
not prohibited by the Investment
Company Act of 1940, the rules and
regulations thereunder, and
exemptive orders granted under such
Act.
5. To instruct Citicorp Life to vote [ ] [ ] [ ]
with respect to the approval of an
amendment to the fundamental
investment policies of each Fund to
allow the assets of that Fund to be
invested in one or more investment
companies to the extent not
prohibited by the 1940 Act.
6. To instruct Citicorp Life to vote on [ ] [ ] [ ]
authorizing the Trustees of the
Funds to select and change
investment subadvisers and enter
into investment subadvisory
agreements without obtaining the
approval of shareholders.
7. To instruct Citicorp Life to vote on [ ] [ ] [ ]
an amendment to the fundamental
investment policies of each Fund
concerning that Fund's ability to
make loans to other persons and to
buy or sell futures contracts and
options on futures.
VOTE FOR VOTE
THE NOMINEE WITHHELD
8. To instruct Citicorp Life to elect [ ] [ ] [ ]
Heath B. McLendon as a Trustee of
the Funds.
FOR AGAINST ABSTAIN
9. To instruct Citicorp Life to vote on [ ] [ ] [ ]
the selection of
PricewaterhouseCoopers LLP as the
independent certified public
accountants for each fund.
<PAGE>
EVERY VOTE IS IMPORTANT!
VOTING INSTRUCTIONS - PLEASE SELECT ONE OF
THESE VOTING METHODS:
Vote by Paper Ballot: Please read your proxy
statement and read each of the following
proposals. Vote by filling in on the ballot
the appropriate box representing your vote on
each proposal. Sign and mail the instruction
form in the enclosed return envelope.
Vote by Telephone: Please read your
proxy statement and read each of the
following proposals. Dial our toll
free number 1-800-790-7068 where you
will use this ballot and the control
number listed below to vote on the
proposals applicable to the
portfolios in which you have
invested. Do not mail your
instruction form when you vote by
phone.
YOUR CONTROL NUMBER:
123 4567 8
PLEASE VOTE VIA PHONE OR SIGN, DATE AND PROMPTLY RETURN YOUR INSTRUCTION FORM IN
THE ENCLOSED ENVELOPE TODAY!
INSTRUCTION FORM INSTRUCTION FORM
[NAME OF FUND]
The undersigned, revoking previous proxies, hereby instructs First Citicorp Life
Insurance Company (First Citicorp Life), to vote all shares of the series of
Variable Annuity Portfolios (Funds), which are held in the account of the
undersigned in the First Citicorp Life Variable Annuity Separate Account, at the
Special Meeting of shareholders of the Funds, to be held at Citicorp Center, 153
East 53rd Street, 14th floor, New York, New York, on Friday, April 9, 1999, at
3:00 p.m. Eastern Time, and at any adjournments thereof. First Citicorp Life is
hereby instructed to vote on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
VOTE THIS INSTRUCTION FORM TODAY! YOUR PROMPT RESPONSE WILL SAVE VARIABLE
ANNUITY PORTFOLIOS THE EXPENSE OF ADDITIONAL MAILINGS.
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME(S) APPEAR ON THIS INSTRUCTION
FORM. When signing as attorney,
executor, administrator, trustee,
guardian or as custodian for a minor,
please sign your name and give your
full title as such. If signing on
behalf of a corporation, please sign
the full corporate name and your name
and indicate your title. If you are a
partner signing for a partnership,
please sign the partnership name and
your name. Joint owners should each
sign this form. Please sign, date and
return in the enclosed envelope.
____________________________________
Signature
____________________________________
Signature of joint owner, if any
____________________________________
Date
PLEASE MARK, SIGN AND DATE YOUR INSTRUCTION FORM AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
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[BALLOT FOR CITISELECT VIP FOLIOS 200-500]
PLEASE MARK VOTES AS IN THIS EXAMPLE:
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS. IF NO
SPECIFICATION IS MADE, THE FORM SHALL BE VOTED FOR THE PROPOSALS. AS TO ANY
OTHER MATTER, SAID ATTORNEYS SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGEMENT.
THE BOARD OF TRUSTEES OF VARIABLE ANNUITY PORTFOLIOS RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS.
FOR AGAINST ABSTAIN
1. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to the approval of
a Sub-Management Agreement between
Mutual Management Corp. and Variable
Annuity Portfolios with respect to
CitiSelect VIP Folios 200-500.
2. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to the approval of
a Sub-Management Agreement between
Salomon Brothers Asset Management
Limited and Variable Annuity
Portfolios with respect to
CitiSelect VIP Folios 200-500.
3. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to the approval of
a Sub-management Agreement between
Salomon Brothers Asset Management
Inc and Variable Annuity Portfolios
with respect to CitiSelect VIP
Folios 200-500.
4. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to approval of an
amendment to the Funds' Declaration
of Trust to allow the assets of each
Fund to be invested in one or more
investment companies to the extent
not prohibited by the Investment
Company Act of 1940, the rules and
regulations thereunder, and
exemptive orders granted under such
Act.
5. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to the approval of
an amendment to the fundamental
investment policies of each Fund to
allow the assets of that Fund to be
invested in one or more investment
companies to the extent not
prohibited by the 1940 Act.
6. To instruct First Citicorp Life to [ ] [ ] [ ]
vote on authorizing the Trustees of
the Funds to select and change
investment subadvisers and enter
into investment subadvisory
agreements without obtaining the
approval of shareholders.
7. To instruct First Citicorp Life to [ ] [ ] [ ]
vote on an amendment to the
fundamental investment policies of
each Fund concerning that Fund's
ability to make loans to other
persons and to buy or sell futures
contracts and options on futures.
VOTE FOR VOTE
THE NOMINEE WITHHELD
8. To instruct First Citicorp Life to [ ] [ ] [ ]
elect Heath B. McLendon as a Trustee
of the Funds.
FOR AGAINST ABSTAIN
9. To instruct First Citicorp Life to [ ] [ ] [ ]
vote on the selection of
PricewaterhouseCoopers LLP as the
independent certified public
accountants for each fund.
<PAGE>
[BALLOT FOR CITIFUNDS SMALL CAP GROWTH VIP PORTFOLIO]
PLEASE MARK VOTES AS IN THIS EXAMPLE:
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS. IF NO
SPECIFICATION IS MADE, THE FORM SHALL BE VOTED FOR THE PROPOSALS. AS TO ANY
OTHER MATTER, SAID ATTORNEYS SHALL VOTE IN ACCORDANCE WITH THEIR BEST JUDGEMENT.
THE BOARD OF TRUSTEES OF VARIABLE ANNUITY PORTFOLIOS RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS.
FOR AGAINST ABSTAIN
1. DOES NOT APPLY TO CITIFUNDS SMALL [ ] [ ] [ ]
CAP GROWTH VIP PORTFOLIO.
2. DOES NOT APPLY TO CITIFUNDS SMALL [ ] [ ] [ ]
CAP GROWTH VIP PORTFOLIO.
3. DOES NOT APPLY TO CITIFUNDS SMALL [ ] [ ] [ ]
CAP GROWTH VIP PORTFOLIO.
4. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to approval of an
amendment to the Funds' Declaration
of Trust to allow the assets of each
Fund to be invested in one or more
investment companies to the extent
not prohibited by the Investment
Company Act of 1940, the rules and
regulations thereunder, and
exemptive orders granted under such
Act.
5. To instruct First Citicorp Life to [ ] [ ] [ ]
vote with respect to the approval of
an amendment to the fundamental
investment policies of each Fund to
allow the assets of that Fund to be
invested in one or more investment
companies to the extent not
prohibited by the 1940 Act.
6. To instruct First Citicorp Life to [ ] [ ] [ ]
vote on authorizing the Trustees of
the Funds to select and change
investment subadvisers and enter
into investment subadvisory
agreements without obtaining the
approval of shareholders.
7. To instruct First Citicorp Life to [ ] [ ] [ ]
vote on an amendment to the
fundamental investment policies of
each Fund concerning that Fund's
ability to make loans to other
persons and to buy or sell futures
contracts and options on futures.
VOTE FOR VOTE
THE NOMINEE WITHHELD
8. To instruct First Citicorp Life to [ ] [ ] [ ]
elect Heath B. McLendon as a Trustee
of the Funds.
FOR AGAINST ABSTAIN
9. To instruct First Citicorp Life to [ ] [ ] [ ]
vote on the selection of
PricewaterhouseCoopers LLP as the
independent certified public
accountants for each fund.
