October 17, 1997
Dear Shareholder:
I am very pleased to be writing to you as the new Chair of your Board of
Trustees. I previously served as the Chair of the Audit Committee and, as of
July 1, 1997, I have been elected Chair after the conclusion of a very
successful term by my fellow Trustee William Glenn. Our mission as Trustees is
to represent you and oversee the management of the Trust during what is proving
to be a very dynamic period in the financial markets.
During our upcoming meeting, which we plan to hold for the first time in Boston,
we will be considering a number of proposals. Some items must be voted on by all
Shareholders of the Trust, and others are only for specific portfolios.
As a whole, we'll be considering the election of several new Trustees. I think
all Shareholders will agree with the current Trustees that we have recruited
some terrific candidates. We also will be considering the adoption of some
"Social Action" resolutions to send to the companies in which we invest. This is
a new idea for us and something I hope all Shareholders will support.
Individual portfolios will be considering two basic proposals. Citizens Income
and Citizens Emerging Growth Portfolios have the opportunity to approve a new
Sub-Advisory Agreement with Seneca Capital Management LLC now that it has been
sold to Phoenix Duff & Phelps. (A related entity, GMG/Seneca Capital Management,
L.P. has been the Sub-Adviser for these two portfolios.) The E[bullet]fund
Shareholders will be looking at a reorganization with the Working Assets Money
Market Portfolio in order to gain the opportunity for improved investment
performance and reduced costs. There are no separate proposals for the Citizens
Index Portfolio, Citizens Global Equity Portfolio or Working Assets Money Market
Portfolio.
We have a lot to do at our upcoming meeting. I hope all of you will read the
enclosed materials and decide you want to join the Trustees in voting FOR all
proposals.
Thank you very much.
Azie Taylor Morton
Chair
<PAGE>
Citizens Investment Trust Meeting of Shareholders to be held December 1, 1997
The undersigned, having received the Notice of the Special Meeting of
Shareholders and the Board of Trustees' Prospectus/Proxy Statement (the "Proxy
Statement"), hereby appoints Sophia Collier, Azie Taylor Morton and William D.
Glenn II, or any of them, his/her true and lawful agents and proxies with full
power of substitution in each to represent the undersigned at the aforementioned
meeting of the Shareholders to be held December 1, 1997, at 5:00 p.m. EST, at
Boston, Massachusetts, and at any adjournment thereof on all matters coming
before the meeting.
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PROXY BALLOT
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Please complete reverse side and sign before returning in the enclosed envelope.
<PAGE>
For all shareholders:
1. To approve the election of new members of the board of trustees: Lokelani
Devone, Ada Sanchez, Robert B. Reich, Mitchell Johnson.
[ ] For [ ] Against
If you wish to withhold authority to vote for any one or more of the above
individuals, please write their name(s) on the space below and vote to withhold
authority.
___________________________________ [ ] Withhold Authority
Name(s)
2. To approve the text and mailing of the shareholder action letter.
[ ] For [ ] Against [ ] Abstain
3. To amend the provisions of the declaration of trust regarding the voting of
Shares.
[ ] For [ ] Against [ ] Abstain
For shareholders of Citizens Income Portfolio:
4. To approve the new investment sub-advisory contract with Seneca Capital
Management LLC, now that it has been sold to Phoenix, Duff & Phelps.
[ ] For [ ] Against [ ] Abstain
For shareholders of Citizens Emerging Growth Portfolio:
5. To approve the new investment sub-advisory contract with Seneca Capital
Management LLC, now that it has been sold to Phoenix, Duff & Phelps.
[ ] For [ ] Against [ ] Abstain
For shareholders of the E[bullet]fund(R):
6. To approve the plan of reorganization combining the E[bullet]fund(R) with the
Working Assets Portfolio.
[ ] For [ ] Against [ ] Abstain
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournments thereof.
Please sign exactly as your name or names appear on the label. Joint owners each
should sign personally. Corporate accounts should be signed with full corporate
names by an officer of the corporation. Fiduciaries should give full titles as
such.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no decision is indicated, this proxy will be
voted in favor of the proposals.
- ----------------------------------- --------------------------------
Signature Signature (joint owners)
- ----------------------------------- --------------------
Date Date
<PAGE>
Citizens Trust
CITIZENS INVESTMENT TRUST
Citizens Income Portfolio
Citizens Index Portfolio
Citizens Emerging Growth Portfolio
Citizens Global Equity Portfolio
Working Assets Money Market Portfolio
E[bullet]Fund(R)
One Harbour Place
Suite 525
Portsmouth, New Hampshire 03801
Phone: (800) 223-7010
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held December 1, 1997, at the Hotel Meridian, 250 Franklin Street,
Boston, Massachusetts, at 5:00 pm, EST.
To the Shareholders of Citizens Investment Trust:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of Shareholders of Citizens
Investment Trust ("Citizens Trust" or "the Trust") will be held December 1,
1997, for the following purposes:
For all Shareholders:
Proposal 1
To elect Lokelani Devone, Ada Sanchez, Robert B. Reich and Mitchell Johnson
to the Board of Trustees.
Proposal 2
To authorize Citizens Advisers, our management company, to send a social
action letter, where appropriate, to companies in whose securities we invest.
Proposal 3
To amend the provisions of the Declaration of Trust regarding the voting of
shares.
For Shareholders of Citizens Income Portfolio:
Proposal 4
To approve a new investment Sub-Advisory Agreement with Seneca Capital
Management LLC, now that it has been sold to Phoenix, Duff & Phelps.
For Shareholders of Citizens Emerging Growth Portfolio:
Proposal 5
To approve a new investment Sub-Advisory Agreement with Seneca Capital
Management LLC, now that it has been sold to Phoenix, Duff & Phelps.
1
<PAGE>
Proxy Statement/Prospectus
For Shareholders of the E[bullet]Fund(R) Only:
Proposal 6
To approve the attached Plan of Reorganization ("the Plan") which sets out the
steps needed to combine the E[bullet]Fund(R) with the Working Assets Money
Market Portfolio ("the Working Assets Portfolio"), another money market series
within Citizens Trust.
The basic steps in the Plan are as follows:
a) The transfer of all the assets and liabilities of the E[bullet]Fund(R) to
the Working Assets Portfolio, in exchange for shares of equal value in the
Working Assets Portfolio, Retail Class;
b) The distribution of these new Working Assets Portfolio Retail Class shares
to the Shareholders of the E[bullet]Fund(R); and
c) The dissolution of the E[bullet]Fund(R).
For all Shareholders:
To transact such other business as may properly come before the Meeting or
any adjournment thereof.
Shareholders of record of Citizens Trust, as of the close of business October 8,
1997, (the "Record Date"), are entitled to notice of, and to vote at, the
Special Meeting or at any adjournments thereof.
The Trustees recommend that Shareholders vote YES on all proposals.
YOUR VOTE MATTERS! PLEASE READ, COMPLETE AND RETURN PROMPTLY THE ENCLOSED PROXY
CARD, WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF CITIZENS TRUST.
RETURNING YOUR PROXY CARD (OR APPEARING IN PERSON) IS IMPORTANT TO ENSURE A
QUORUM AT THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY TELEPHONE OR BY A SIGNED WRITING DELIVERED AT THE MEETING, OR FILED
WITH THE SHAREHOLDER SERVICING AGENT.
Joseph F. Keefe
Secretary
October 17, 1997
2
<PAGE>
Dated: October 17, 1997
CITIZENS INVESTMENT TRUST
One Harbour Place
Suite 525
Portsmouth, New Hampshire 03801
Phone: (800) 223-7010
We, the Board of Trustees, on behalf of Citizens Trust, are sending you this
Combined Proxy Statement/Prospectus to solicit your proxy to be voted for or
against certain Proposals set forth below at a Special Meeting of Shareholders
to be held December 1, 1997, at the Hotel Meridian, 250 Franklin Street, Boston,
Massachusetts, at 5:00 p.m. EST.
GENERAL INFORMATION FOR ALL SHAREHOLDERS
As Shareholders of Citizens Trust and its portfolios, you will have the
opportunity to consider a number of Proposals at our upcoming Shareholders
Meeting to be held December 1, 1997. All Shareholders of the Trust are eligible
to vote on Proposals 1, 2 and 3.
Proposals 4 - 6 are specific to individual portfolios and, thus, only
Shareholders of those portfolios may vote on these items. Each Proposal is
described for your consideration. Throughout this document, we have attempted to
write in plain English - the style Shareholders have come to expect from
Citizens Trust.
We expect this solicitation and Shareholders meeting will cost the Trust
approximately $90,000, of which approximately $40,000 will be paid by Seneca
Capital Management LLC because their acquisition is one of the main reasons this
Shareholders Meeting is needed. Of the remaining $50,000 in costs, approximately
$20,000 will be borne by the Working Assets Portfolio and the remaining $30,000
will be shared on a pro rata basis by all six portfolios.
This Notice, Combined Proxy Statement/Prospectus and accompanying Proxy are
being mailed to Shareholders on or about October 17, 1997.
3
<PAGE>
Proxy Statement/Prospectus
Prospectus Summary For E[bullet]Fund(R) Shareholders
The following section is a summary of Proposal 6 only. For complete information
on Proposal 6, please read the full discussion beginning on page 14. The
material on Proposal 6 sets forth concisely the information that Shareholders of
the E[bullet]Fund(R) should know before voting and should be retained for future
reference. It describes the Plan of Reorganization (the "Plan") wherein it is
proposed to combine the E[bullet]Fund(R) with the Working Assets Portfolio,
another series portfolio of the Trust.
The reason for the reorganization is to seek economies of scale, resulting in
the potential for lower costs and improved investment performance. This is
necessary because the E[bullet]Fund(R) while highly successful in other ways,
has only attained $21 million in assets in more than two years of operation. As
reflected in the E[bullet}Fund(R) recent annual report, its
expense ratio before waivers and reimbursements is 1.47%, significantly higher
than the Working Assets Portfolio. Until now, our Adviser, Citizens Advisers,
was willing to waive its fees and reimburse the E[bullet]Fund(R) for expenses;
however, they no longer are willing to do so beyond September 30, 1997.
Therefore, a merger with a larger, lower-cost money market portfolio within the
Trust makes sense.
Pro-Forma
7 Day Yield Expense Ratio
6/30/97 6/30/97
------- -------
E[bullet]Fund(R) 4.24%* 1.47%*
(without reimbursement)
Working Assets Portfolio 4.49% 1.20%
(after reorganization)
*These figures are without waivers and reimbursements, with which the
E[bullet]Fund(R)'s 7-day yield for the period ended 6/30/97 was 5.71%, and the
expense ratio was .10%. All E[bullet]Fund(R) expenses during this period were
reimbursed. All reimbursements for the E[bullet]Fund(R) ended 9/30/97.
Investment Objectives
The investment objectives of the E[bullet]Fund(R) and the Working Assets
Portfolio are the same: current income consistent with safety and liquidity.
Risk Factors for Proposal 6
The shares of the Working Assets Portfolio and the E[bullet]Fund(R) are neither
insured nor guaranteed by the U.S. Government, and there is no assurance that
the portfolios will be able to maintain a stable Net Asset Value of $1.00 per
share.
4
<PAGE>
The following Table of Contents is your road map to Proposal 6.
- ------------------------
<TABLE>
<CAPTION>
<S> <C>
13 Summary of Proposal 6
14 Fees and Expenses
16 Investment Policies and Risk Factors
18 The People and Operations of Citizens Trust
22 Description of the Plan of Reorganization
22 Factors Considered by the Board of Trustees Before Recommending This Transaction
24 Additional Information About the Transaction.
29 Additional Information About the E[bullet]Fund(R) and Working Assets Portfolios
31 Financial Statements and Expert
31 Voting Information
A Exhibit 1- Proposed Sub-Advisory Agreement with Seneca Capital Management LLC
AA Exhibit 2 - Plan of Reorganization
</TABLE>
Additional information about the E[bullet]Fund(R) and the Working Assets
Portfolio is provided in the Trust's prospectus dated October 3, 1997,
accompanying this proxy statement/prospectus, in the Statement of Additional
Information, dated October 3, 1997, and in the Trust's annual report for the
fiscal year ended June 30, 1997. These documents are on file with the Securities
and Exchange Commission and are incorporated into this document by reference. If
you would like us to send you a copy of either document, please call us
toll-free at (800) 223-7010, and we will be happy to send it to you at no
charge.
THE SECURITIES OF CITIZENS TRUST HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS COMBINED PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
5
<PAGE>
Proxy Statement/Prospectus
Detailed Information For All Shareholders
Who May Vote
If you were a Shareholder October 8, 1997 (the "Record Date"), you will be
entitled to vote at the meeting or any adjournments thereof. You will have one
vote for each share you owned on that date. The following table shows the number
of shares in the Trust as a whole and within each portfolio as of the Record
Date.
Record Date (10/8/97)
Income Portfolio 4,237,506 shares
Emerging Growth Portfolio 4,491,366 shares
Index Portfolio
Retail Class 12,309,880 shares
Institutional Class 940,381 shares
Global Equity Portfolio 2,287,410 shares
Working Assets Money Market Portfolio
Retail Class 83,739,657 shares
Institutional Class 17,565,089 shares
E[bullet]Fund(R) 20,586,525 shares
Total 146,157,814 shares
As of the Record Date, the officers and Trustees of the Trust beneficially
owned, as a group, less than 1% of the outstanding shares of the Trust and less
than 1% of the outstanding shares of each of the individual portfolios. To the
best of our knowledge, as of the Record Date, no Shareholder or "group" (as that
term is defined in section 13(d) of the Securities Exchange Act of 1934, as
amended) owned beneficially more than 5% of the shares of the Trust or the
individual portfolios.
Your Proxy Card and Proxy Rights
You do not need to attend the meeting in order to vote. Instead, you may fill
out a proxy card as your ballot. When you complete the proxy card, you are
giving the persons named on the card authority to attend the Special
Shareholders Meeting on your behalf and vote your shares in the way you have
indicated. We call these persons the "proxy holders." When you vote on the
proxy, please check off "For" or "Against" with respect to each Proposal you are
eligible to vote on and wish to vote on. If you do not wish to vote on a
particular item which you are eligible to vote on but wish to return your proxy
card, you may check the box for "Abstain" or "Withhold Authority." If you return
your proxy without indicating any choice, the proxy holders will vote your
shares "For" the Proposals you are entitled to vote on.
Abstentions, votes withheld and non-votes received from brokers will not be
treated as votes "For" or "Against" but will be counted for the purpose of
determining whether a quorum exists. For this reason, abstentions and broker
non-votes will have the effect of an "Against" vote for purposes of obtaining
the approval needed for Proposals 2 - 6; because Proposal 1 only requires a
plurality, a vote withheld will not have the effect of a vote "Against."
Even if you fill out a proxy, you still can change your vote before the meeting
by (1) notifying us in writing or by telephone, (2) signing a new and different
proxy, or (3) voting your shares in person at the Meeting.
We plan to solicit proxies by mail, telephone, telecopy and in person. We may
also ask brokerage firms, banks and others to forward this Combined Proxy
Statement/Prospectus at the Trust's expense to beneficial owners of our shares
so these owners may authorize the voting of their shares.
6
<PAGE>
Citizens Trust
A Quorum Is Needed or the Meeting May Be Adjourned
In order for our Special Shareholders Meeting to be open for business, we need a
quorum. This means we must have received proxies from more than one half of the
Shareholders entitled to vote on each Proposal. If we do not reach a quorum by
the Meeting date, or if a quorum is present but there are insufficient votes to
approve any or all Proposals, the proxy holders may ask for one or more
adjournments of the Meeting in order to solicit additional proxies. The Meeting
may only be adjourned if the total of shares voting "For," votes withheld and
abstentions are greater than the "Against" votes. The proxy holders will vote
"For" the adjournment if the Shareholder had voted "For," "Withhold Authority"
or "Abstain" for the Proposal. Otherwise, the proxy holders will vote "Against"
the adjournment.
No adjournment will be for a period beyond March 17, 1998.
Receipt of Shareholder Proposals
As a socially responsible investment company, we are pleased to include
Shareholder proposals in our Proxy Statement/Prospectus and on our proxy card
for subsequent Shareholder meetings, provided that a Shareholder proposal meets
all the Securities and Exchange Commission tests for required inclusion in our
proxy. One of the important requirements, although it is not the only one, is
that we receive the proposal in a timely manner. At present, there are no
outstanding Shareholder proposals to be considered in this proxy. However, if
any other matters come before the Meeting, it is intended that proxies which do
not contain specific restrictions to the contrary will be voted on such matters
in accordance with the judgment of the proxy holders.
Shareholder Inquiries
If you need more information, please do not hesitate to write us at the address
on the cover, or call us at (800) 223-7010.
Detailed Information On Each Proposal
For all Shareholders:
Proposal 1: Election of New Trustees of Citizens Trust
We are pleased to present to you a very fine slate of candidates for election to
the Board of Trustees. According to our By Laws, Trustees serve for an
indefinite term. In the event of a vacancy on the Board between Special
Shareholders Meetings, the Trustees may elect new Trustees to the Board,
provided that (1) after filling such vacancy or vacancies, at least two-thirds
of the Trustees then holding office shall have been elected by the Shareholders,
and (2) at all times there must be at least 50% of Trustees elected by
Shareholders.
Under this policy, Lokelani Devone and Ada Sanchez already are serving the Trust
at the election of the Trustees, and we now are proposing their election by the
Shareholders. Robert B. Reich and Mitchell Johnson are being proposed as new
Trustees. Trustees receive compensation, and a compensation table is included on
page 25. Lokelani Devone, Ada Sanchez and Mitchell Johnson will be compensated
by the Trust at the same rate as other Trustees (an annual stipend of $6,000
plus $1,000 per meeting and reimbursement of expenses). Robert Reich will be an
"interested Trustee," and therefore, his compensation will be borne by the
Trust's adviser, Citizens Advisers. Biographies of current Trustees begin on
page 21. Immediately following is the biography of each Trustee candidate
standing for election.
Lokelani Devone (DOB: 4/8/57), Trustee, is the Assistant General Counsel at DFS
Group Limited, an international retail business group where she has worked since
1989. Prior to that, she was an aide to Congresswoman Nancy Pelosi,
D-California. She is also a member of the Board of Continuum HIV Day Services in
San Francisco, where Trustee William Glenn is employed. Ms. Devone is a graduate
of the University of California at Berkeley (B.A. 1978) and the University of
7
<PAGE>
Proxy Statement/Prospectus
California, Davis (J.D. 1983), and was an International Research Fellow at the
University of Tokyo from 1983 to 1985. Address: 525 Market Street, 33rd Floor,
San Francisco, California 94105.
Ada Sanchez (DOB: 8/17/52), Trustee, is the former Director of the Public
Service and Social Change Program at Hampshire College. From 1985 - 1987, she
was the National Toxic Waste Campaign Coordinator for Greenpeace USA. Prior to
that, Ms. Sanchez was involved with a number of activist organizations,
including Western States Field Consultant for the Disarmament Program for the
National Fellowship of Reconciliation; co-director and founder of Viewpoint
Syndicate; lecturer for Progressive Foundation Speakers Bureau; national
coordinator for Supporters of Silkwood; and outreach coordinator for Coalition
for a Non-Nuclear World. She currently is attending law school at Stetson
University College of Law. Address: 5416 Delette Ave. South, Gulfport, Florida
33707.
Robert B. Reich (DOB: 6/24/46), is University Professor and the Maurice B.
Hexter Professor of Social and Economic Policy at Brandeis University and its
Heller Graduate School. Before joining Brandeis, he served as the nation's 22nd
Secretary of Labor during President Bill Clinton's first term. Under Reich's
leadership, the Labor Department moved forward on several path-breaking
initiatives, including the School-to-Work Opportunities Act; the Family and
Medical Leave Act; and Goals 2000. The Department also cracked down on unsafe
worksites and fraudulent purveyors of pensions and health insurance while
initiating a national crusade to abolish sweatshops in the United States and to
eradicate child labor around the world. In addition, Secretary Reich was
instrumental in raising the minimum wage for the first time since 1989. Before
heading the Labor Department, Secretary Reich was on the faculty of Harvard
University's John F. Kennedy School of Government. He served as an assistant to
the Solicitor General in the Ford Administration, where he represented the
United States before the Supreme Court, and he headed the policy planning staff
of the Federal Trade Commission in the Carter Administration. Professor Reich is
the author of seven books, including The Work of Nations which has been
translated into 17 languages and most recently, Locked in the Cabinet, as well
as more than 200 articles on the global economy, the changing nature of work and
the centrality of human capital.
Mitchell Johnson (DOB: 3/1/42), is President of MAJ Capital Management, Inc., a
money management firm which he organized in August 1994. Prior to forming MAJ
Capital, Mr. Johnson was employed for 21 years at the Student Loan Marketing
Association ("Sallie Mae"), where he served as Senior Vice President of
Corporate Finance (1987 - 1994); Vice President of Corporate Finance (1984 -
1987); Vice President and Fiscal Agent (1982 - 1984); Manager of Banking and
Investments (1978 - 1982); and Portfolio Manager (1976 - 1978). Prior to joining
Sallie Mae, Mr. Johnson served as Financial Analyst for the Federal Home Loan
Bank Board, Office of Finance, from 1970 - 1973. He has extensive experience in
the investment banking and financial advisory fields, as well as in global
capital markets. Mr. Johnson is a Director on the Board of Bank Commerce
Security Bancorp, Inc., a Director of the Federal Agricultural Mortgage
Association (Farmer Mac) and a Trustee of the District of Columbia Retirement
Board. Mr. Johnson earned his B.A. degree from the University of California at
Los Angeles in 1965 and has attended American University.
Exact Text of Proposal 1
To elect Lokelani Devone, Ada Sanchez, Robert B. Reich and Mitchell Johnson to
the Board of Trustees.
Vote Required for Proposal 1
The election of new Trustees requires that the number of votes cast "For" each
nominee be greater than the number of votes cast "Against" that nominee.
8
<PAGE>
Citizens Trust
Proposal 2: Shareholder Social Action Letter
From time to time, the Trust participates in social action initiatives on issues
of concern to our Shareholders. We have done so in the past on issues ranging
from Apartheid in South Africa to international sweatshops. At this particular
time, the Trustees share the concern expressed by many of our Shareholders that
corporations simply are not doing enough to recruit, hire and promote qualified
women and people of color within corporate management and onto corporate boards.
We believe certain corporations in which we invest should hear from us on this
issue. Although a Shareholder vote is not required for the Trust to participate
in social action initiatives, we believe corporations are more likely to listen
if our message has the full force and effect of a Shareholders' resolution.
The Trustees therefore recommend to the Shareholders of the Trust that they pass
a resolution approving the following letter and directing that this letter be
sent, where appropriate, to companies on the Citizens Trust approved list of
investments.
Exact Text of Proposal 2
Resolved, to approve the text and mailing of the (following) Social Action
Letter:
Dear [Name of Board Chairman]:
At our recent Shareholders Meeting, we reviewed our ownership in [Name of
Company] and noted with concern that you do not have any women or people of
color on your board of directors. As a board, your duty is to represent us, your
Shareholders, and to closely supervise the chief executive officer on our
behalf. In a number of recent well-publicized cases, boards failed to adequately
carry out this duty, resulting in adverse results for Shareholders.
In some cases, boards assented to truly excessive compensation for the chief
executive officer. In many other cases, boards retained the CEO despite several
years of poor performance for the company and its stock. In our opinion, these
boards may have failed to serve their Shareholders due to an insular atmosphere
which limited their insight and prevented them from taking objective action. In
other words, their lack of diversity may well have contributed to their poor
decision making. When all board members come from the same background and share
the same experiences, they will inevitably be less capable than a board with a
wider set of experiences.
Today's global business environment is very dynamic and highly competitive. We
need diverse views in order to succeed. While race and gender are only two
measures of diversity, they are crucial ones. In the interest of all
Shareholders, we urge you to seek qualified candidates of both genders and all
races for inclusion on your board of directors.
Sincerely yours,
Azie Taylor Morton
On behalf of the Shareholders of Citizens Trust
Vote Required on Proposal 2
The resolution to send the above Social Action Letter requires the affirmative
vote of a majority of the outstanding voting securities ("majority of the
shares") of the Trust, which is defined as the lesser of (1) 67% or more of the
Shareholders of the Trust who are present either in person or by proxy at the
meeting, provided that a quorum (more than 50% of the outstanding shares) has
been attained, or (2) more than 50% of the Trust's outstanding shares.
Proposal 3: Amending The Declaration of Trust
Our Declaration of Trust establishing Citizens Trust was adopted in 1982, some
15 years ago. It recently has come to our attention that certain provisions
within the Declaration of Trust, relative to the voting of shares, differ from
definitions contained within the Investment Company Act of 1940 ("the 1940
Act"). We therefore propose amending the Declaration of Trust, Eighth Article,
Sections 4(a), 4(b) and 12, regarding the voting of shares.
9
<PAGE>
Proxy Statement/Prospectus
Under section 2(a)(42) of the 1940 Act, the vote of the majority of the
outstanding voting securities of a company means the vote, at the annual meeting
or a special meeting of the Shareholders of the company, (A) of 67% or more of
the voting securities present at such meeting, if the holders of more than 50%
of the outstanding voting securities of such company are present or represented
by proxy, or (B) of more than 50% of the outstanding voting securities of such
company, whichever is less. Under Article Eight of the Trust's Declaration of
Trust, however, the voting requirements specified (1) for conveying the assets
of the Trust or its portfolios to another financial services company (Section
4(a)), (2) for selling and converting into money the assets of the Trust or its
portfolios (Section 4(b)) and (3) for amending or supplementing the Declaration
of Trust (Section 12), are different from and more strict than the definition of
a majority vote under the 1940 Act. These stricter voting requirements,
therefore, make it more difficult than necessary for the Trust's Shareholders to
approve the conveying of assets, combining, reorganizing or liquidating
portfolios, or amending the Declaration of Trust, even though such actions may
be in the best interests of the Shareholders.
The Trustees, therefore, recommend that the first sentence of the Eighth
Article, Section 4 (a), of the Declaration of Trust be deleted, and that the
following language be substituted:
The Trustees may at any time sell or otherwise transfer all the assets of the
Trust or any of its series with the vote of a majority of the outstanding
securities of the Trust or such series, as the case may be (which sale may be
subject to the retention of assets for the payment of liability and expenses),
to another issuer for a consideration which may be or may include securities of
such issuer. The vote of a majority of the outstanding voting securities means
the vote, at a duly called meeting of the Shareholders of the Trust or such
series, of the lesser of (1) 67% or more of the outstanding voting securities of
the Trust or such series present at such meeting, if the holders of more than
50% of the outstanding voting securities of the Trust or such series are present
or represented by proxy, or (2) more than 50% of the outstanding voting
securities of the Trust or such series.
The Trustees also recommend that the first sentence of the Eighth Article,
Section 4(b), of the Declaration of Trust be deleted, and that the following
language be substituted:
The Trustees may at any time sell or otherwise transfer all the assets of the
Trust or any of its series, with the vote of a majority of the outstanding
securities of the Trust or such series, as the case may be. The vote of a
majority of the outstanding voting means the vote, at a duly called meeting of
the Shareholders of the Trust or such series, of the lesser of (1) 67% or more
of the outstanding voting securities of the Trust or such series present at such
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (2) more than 50% of the outstanding
voting securities of the Trust or such series.
The Trustees also recommend that the Eighth Article, Section 12, of the
Declaration of Trust be deleted, and that the following language be substituted:
The Trustees may amend or otherwise supplement this Declaration of Trust by
making a Declaration of Trust supplemental hereto, which thereafter shall form a
part hereof, by a vote of a majority of the outstanding voting securities of the
Trust, or, if such amendment or supplement does not affect all series of the
Trust, of the affected series. The vote of a majority of the outstanding voting
securities means the vote, at a duly called meeting of the Shareholders of the
Trust or such series, of the lesser of (1) 67% or more of the outstanding voting
securities of the Trust or such series present at such meeting, if the holders
of more than 50% of the outstanding voting securities of the Trust or such
series are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the Trust or such series. Any such supplemental
Declaration of Trust may be executed by and on behalf of the Trust or such
series and the Trustees by any officer or officers of the Trust.
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Citizens Trust
Vote Required for Proposal 3
The approval of Proposal 3 requires the favorable vote of the majority of the
outstanding shares of the Trust.
For Shareholders of Citizens Emerging Growth Portfolio:
Proposal 4: Approval of a New Sub-Advisory Agreement
Approval of a new Sub-Advisory Agreement with Seneca Capital Management LLC, now
that it has been sold to Phoenix, Duff & Phelps.
For Shareholders of Citizens Income Portfolio:
Proposal 5: Approval of a New Sub-Advisory Agreement
Approval of a new Sub-Advisory Agreement with Seneca Capital Management LLC, now
that it has been sold to Phoenix, Duff & Phelps.
Information about the New Owners of Seneca Capital Management LLC and the
Conditions of Sale
GMG/Seneca Capital Management, L.P. ("GMG/Seneca") is currently the Sub-Adviser
for Citizens Emerging Growth Portfolio and Citizens Income Portfolio. Its job is
to manage the portfolios on a day-to-day basis using the "Approved List" of
socially responsible companies that has been carefully researched by our
Adviser, Citizens Advisers. In general, GMG/Seneca has done a good job of
managing these portfolios, and we recently voted to renew their annual contract
with us. However, in the current dynamic business climate, it was inevitable
that a good company such as GMG/Seneca would be considered an attractive
acquisition target by a larger company.
Gail Seneca recently informed us that she and her partners have sold a 74.9%
interest in their business to Phoenix, Duff & Phelps Corporation ("Phoenix").
The business will be continued under the name of Seneca Capital Management LLC
("Seneca"). Ms. Seneca and her key staff members plan to remain with the company
and will continue to be owners of the interests not acquired by Phoenix. Ms.
Seneca, who is a general partner of our current Sub-Adviser, will remain
President, Chief Executive Officer and Chief Investment Officer of the new
company. In addition to the other senior management members of the firm
(including our portfolio manager for the Citizens Emerging Growth Portfolio,
Richard D. Little), Ms. Seneca has entered into a long-term employment contract
with Seneca.
The acquiring company, Phoenix, is a diversified financial services organization
engaged primarily in investment management of institutional and individualized
accounts, including the General Account and separate accounts of Phoenix Home
Life Mutual Insurance Company, which owns approximately 60% of the outstanding
common stock of Phoenix, Duff & Phelps. Phoenix also serves as principal
underwriter and national distributor of Phoenix mutual funds. As of December 31,
1996, Phoenix had total assets under management of approximately $33.6 billion.
The existing outside investors in GMG/Seneca, including William K. Weinstein and
Philip C. Stapleton, will not have any continuing interest in Seneca.
Information on the Sale Itself
The sale is expected to proceed in several stages. The first stage, Phoenix's
acquisition of a majority interest in Seneca, has already occurred. The next
stage, which involves the Trust, is the approval of new Sub-Advisory Agreements
by Shareholders of the Income Portfolio and the Emerging Growth Portfolio. Once
the new Sub-Advisory Agreements have been approved and become effective, the
existing agreements with GMG/Seneca will be terminated.
What Seneca's Sale Means to Us
In the world of mutual funds, investment managers are prohibited from assigning
their investment advisory contracts. Therefore, when an investment management
business is sold, the investment management contract is canceled and the mutual
fund Shareholders have the option of making a
11
<PAGE>
Proxy Statement/Prospectus
new contract. That is what we are doing now. If you vote "For" Proposal 4 or 5,
you will be voting to establish a relationship with Seneca Capital Management
LLC, the successor of GMG/Seneca Capital Management, L.P.
How the New Seneca Capital Management Will Be Run
Gail Seneca and her staff have provided us with a significant amount of
information about this transaction. A representative of Phoenix also attended
our August 4, 1997, Trustee meeting and answered detailed questions. The
statements below are based on the information they have provided to us.
Under the operating agreement between Phoenix and Seneca, Gail Seneca retains
responsibility for managing Seneca, including all investment management and
portfolio management. Phoenix has agreed not to interfere in any way in the
day-to-day business and affairs of Seneca, and to assume no role in investment
management activities. Gail Seneca and the Seneca management team will continue
to have complete control of investment and portfolio management. Therefore, they
believe there will be no actual change in the investment management of the two
affected portfolios, the Citizens Income Portfolio and the Citizens Emerging
Growth Portfolio.
The Sub-Advisory Agreement itself (as between the Trust, the Adviser and Seneca
Capital Management LLC) is substantially the same as the previous Sub-Advisory
Agreement with Seneca's predecessor, GMG/Seneca Capital Management, L.P. It
provides that the day-to-day portfolio management of investments will be
performed by Seneca and sets forth Seneca's fees. Under the new Sub-Advisory
Agreement, Seneca would be paid a fee of .175% of the average annual net assets
for the Income Portfolio and .35% of the average annual net assets for the
Emerging Growth Portfolio. Our Adviser, Citizens Advisers, paid $344,348 to
Seneca's predecessor, GMG/Seneca, for the fiscal year ended June 30, 1997, and
$227,387 for the fiscal year ended June 30, 1996. The Trustees found these fees
to be reasonable based on the services provided and compared to fees paid by
other funds. A copy of the proposed Sub-Advisory Agreement is attached hereto as
Exhibit 1.
The Trustees have reviewed the proposed Sub-Advisory Agreement, which is
substantially the same as the previous agreement, and recommend its approval by
the Shareholders.
No Additional Expense
As per our Investment Management Agreement with Citizens Advisers, all
compensation to a sub-adviser is paid fully by Citizens Advisers. There will be
no increase in the advisory fees paid by Shareholders as a result of the new
Sub-Advisory Agreement.
Brokerage Commissions
Our Adviser seeks to obtain for us the best net price and the most favorable
execution of orders. Purchases of money market securities are made directly from
issuers or from underwriters, dealers or banks who specialize in the types of
securities we buy. Purchases from underwriters may include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
include the spread between the bid or the asked price. For the fiscal year ended
June 30, 1997, brokerage commissions were paid only by the Emerging Growth
Portfolio and totaled $159,344.
Other Funds Managed by Seneca
Seneca serves as investment adviser to its own family of funds in addition to
the portfolios it manages for Citizens Trust. One such fund, the Seneca Mid-Cap
Edge Administrative Fund (the "Edge Fund"), has an investment objective similar
to the Citizens Emerging Growth Portfolio. Another fund, the Seneca Bond
Institutional Fund (the "Bond Fund") has an investment objective similar to the
Citizens Income Portfolio, although it requires a minimum investment of $10,000.
12
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Citizens Trust
Information on these two funds is included below.
Seneca's Edge Fund
Net Assets Expense Ratio Management Fee
AS OF 7/31/97 AS OF 7/31/97 AS OF 7/31/97
- ------------- ------------- -------------
$2.3 million 2.70%* .80%
Seneca's Bond Fund
Net Assets Expense Ratio Management Fee
AS OF 7/31/97 AS OF 7/31/97 AS OF 7/31/97
- ------------- ------------- -------------
$8 million 1.85%* .50%
*The expense ratios cited above are after waivers and reimbursements which
Seneca has agreed to make up to and including September 30, 1997. Prior to
waivers and reimbursements, the expense ratios for the period ended 7/31/97
would have been 4.51% for the Edge Fund and 3.87% for the Bond Fund.
Exact Text of Proposals 4 and 5
To approve the new investment Sub-Advisory Agreement with Seneca Capital
Management LLC, now that it has been sold to Phoenix, Duff & Phelps.
Vote Required for Proposals 4 and 5
The approval of a new Sub-Advisory Agreement requires the affirmative vote of a
majority of the outstanding voting securities ("majority of the shares") of each
of the portfolios which will employ the Sub-Adviser. This is defined as the
lesser of (1) 67% or more of the Shareholders of a portfolio who are present
either in person or by proxy at the meeting, provided that a quorum (more than
50% of the total outstanding shares) has been attained, or (2) more than 50% of
the outstanding shares of the portfolio.
For E[bullet]Fund(R) Shareholders Only:
Proposal 6: Reorganization of the E[bullet]Fund(R)
Into the Working Assets Portfolio
As explained in the summary at the front of this booklet, the following material
covering Proposal 6 is both a proxy statement and a prospectus. It sets forth
concisely the information that Shareholders of the E[bullet]Fund(R) should know
before voting on the Plan of Reorganization (the "Plan") and should be retained
for future reference. This further information presents each aspect of the
Working Assets Portfolio, followed by a section comparing it to the
E[bullet]Fund.(R)
Introduction
Why Are We Doing This?
While the E[bullet}Fund(R) has been a great success in terms of the convenience
it offers to its Shareholders, in the past two years of operation, the
E[bullet]Fund(R) has attained only $21 million in assets. Unfortunately, this is
insufficient to attain the economies of scale needed to successfully operate a
money market fund. As reflected in the E[bullet]Fund (R)'s recent annual report,
its expense ratio is 1.47% before waivers and reimbursements, significantly
higher than the Working Assets Portfolio. Until now, our Adviser, Citizens
Advisers, was willing to support the E[bullet]Fund(R)'s expense ratio. However,
they no longer are willing to do so beyond September 30, 1997. Therefore, a
merger with a larger money market portfolio within the Trust makes sense.
An important aspect of this reorganization is that all of the convenient
"E[bullet]Features" of the E[bullet]Fund(R)'s Citizens Access Account will be
maintained. The Working Assets Portfolio will become the money market portfolio
for the Citizens Access Account, and Citizens Access Account holders who
previously used the E[bullet]Fund(R) as their money market portfolio will be
able to use the Working Assets Portfolio in its place. All debit cards,
automatic transactions and other services will continue without disruption.
13
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Proxy Statement/Prospectus
The only significant change to prior E[bullet]Fund(R) policies or features will
be the elimination of the "E[bullet]Fund(R) Refund," wherein our distributor,
Citizens Securities, put 1% of the amount of any debit card purchases back into
the fund. This refund was eliminated effective September 30, 1997.
How the Reorganization Will Work
The Working Assets Portfolio, an existing series of the Trust, started
operations on November 11, 1983. It was our first portfolio and has a 14-year
record of delivering a daily dividend. If the Shareholders vote to go ahead with
the reorganization, all the assets and liabilities of the E[bullet]Fund(R) will
be transferred to the Working Assets Portfolio. In exchange, the
E[bullet]Fund(R) will be given shares of the Working Assets Portfolio, Retail
Class, of equal value to the assets (reduced by the liabilities) which the
E[bullet]Fund(R) transferred to the Working Assets Portfolio.
Following the exchange, the E[bullet]Fund(R) will make what is called a
"liquidating distribution" of the shares of the E[bullet]Fund(R). Each
Shareholder of the E[bullet]Fund(R) as of the Effective Time of the
Reorganization (November 18, 1997) will receive a number of full and fractional
shares of the Working Assets Portfolio, Retail Class, having a Net Asset Value
equal to the value of the shares of the E[bullet]Fund(R) held by that
Shareholder.
Comparison
The people and operations of the Working Assets Portfolio and the
E[bullet]Fund(R) are identical except in the case of fees. Working Assets
Portfolio has a .35% management fee combined with an expense limitation of 1.5%
of the first $40 million in assets and 1% thereafter. By contrast, the
E[bullet]Fund(R) has a .10% management fee and no contractual expense
limitation. In addition, unlike the E[bullet]Fund(R) the Working Assets
Portfolio has a 12b-1 plan. Finally, the Working Assets Portfolio has an
investment minimum of $1,000 and accounts under $2,500 (other than Citizens
Access Accounts) are assessed a $3 monthly fee. However, on an overall basis,
the combined expenses of the Working Assets Portfolio are lower than those of
the E[bullet]Fund(R) but for the fact that the E[bullet]Fund(R) received a
substantial expense reimbursement and fee waiver from our Adviser.
Fees and Expenses
The following table provides: (1) a summary of the operating expenses of the
E[bullet]Fund(R); (2) a summary of the operating expenses of the Working Assets
Portfolio, Retail Class; and (3) a pro-forma summary of the operating expenses
of the Working Assets Portfolio, Retail Class, following the reorganization.
Expense Table
Annual Operating Expenses (6/30/97) (As a percentage of average annual net
assets)
<TABLE>
<CAPTION>
E[bullet]Fund(R) Working Assets Pro-Forma
Portfolio Portfolio Combined
<S> <C> <C> <C>
Management fee 0.10% 0.35% 0.35%
Distribution fee 12b-1 0.00% 0.20% 0.20%
Other expenses (after waiver, if
applicable) 1.37%* 0.70%** 0.65%
Total 1.47%* 1.25%** 1.20%
</TABLE>
*Expenses are restated to reflect current operations. The
E[bullet]Fund(R)'s expenses for the year ended June 30, 1997,
were waived by the Adviser; however, this waiver ended September 30, 1997.
**The Trust's investment adviser was required by the terms of its contract to
waive certain fees and reimburse expenses, without which other expenses and
total expenses for the Working Assets Portfolio, for the year ended June 30,
1997, would have been .72% and 1.27%, respectively. The contract, which limits
investment management expenses for the Working Assets Portfolio to 1.50% of the
first $40 million of average annual net assets and 1% thereafter, will remain in
effect following the reorganization.
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<PAGE>
Citizens Trust
Example: You would have paid the following expenses (prior to waivers and
reimbursements) on a $1,000 investment assuming a 5% annual return and
redemption at the end of each period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Working Assets Portfolio $13 $41 $73 $165
E[bullet]Fund(R) $15 $49 $85 $194
Pro-Forma Combined $12 $40 $70 $158
</TABLE>
The example should not be considered a representation of past or future expenses
or past or future return. Actual expenses and actual return may be greater or
less than those included in the example above.
Costs for Other Services
<TABLE>
<CAPTION>
<S> <C>
Returned checks (all portfolios........................................$15.00
Returned Electronic Purchase - ACH (all portfolios)....................$10.00
Returned Electronic Payment - ACH (all portfolios).....................$10.00
Outgoing wire transfer (all portfolios)................................$10.00
International wire transfer (all portfolios)...........................$20.00
Incoming wire (all portfolios).........................................Free
2-day Electronic Payment - ACH (all portfolios)........................2/month free/ $0.50 each thereafter
Per-check fee (excluding E[bullet]Fund(R) Account)....................$ .50
Stop payments (Working Assets & E[bullet]Fund(R) Account)..............$10.00
Checkbook (Working Assets & E[bullet]Fund(R) Account)..................First 20 are free
Box of 200 checks (E[bullet]Fund(R) Account(R) only)...................$15.95
ATM cost (E[bullet]Fund(R) Account only)..............................$ 0.65 each
Cash advances (E[bullet]Fund(R) Account only)..........................$ 2.50
Annual fee for E[bullet]Fund(R) Account...............................$35.00
Debit Card replacement (E[bullet]Fund(R) Account only).................$10.00
Copies of statements, checks and tax forms.............................$ 2.00/each
Below minimum balance fee (excluding E[bullet]Fund(R)).................$ 3.00/month
</TABLE>
How We Select Investments
Financially Sound
Citizens Trust has certain policies we consider fundamental, such as
consistently applying both social and financial screens to all our investment
decisions. This policy, together with each portfolio's investment objective and
other technical investment policies described in the Statement of Additional
Information, cannot be changed without the approval of a majority of the
outstanding shares of each portfolio that would be affected by the change. In
addition to the specific policies for each portfolio, we also have some general
policies we use to manage all our portfolios.
Socially Responsible
We are always seeking profitable investments for our Shareholders. To find them,
we favor companies that make good and useful products and have positive
environmental, community and workplace records. We avoid companies that engage
in discrimination or union busting; whose primary business is the manufacture of
alcohol, tobacco, firearms or nuclear power; and those that use animals to test
personal care products or otherwise treat animals in an inhumane manner.
Additional Investment Policies
We try not to put all our eggs in one basket. In the case of the Working Assets
Portfolio, this means that 100% of its assets will never hold more than 5% of
any one company. We do not invest more than 25% of the value of any portfolio in
one industry, with the exception of securities of U.S. government agencies or
enterprises, or domestic banks.
We believe Citizens Trust's role is to be a conscientious and alert investor,
not a controlling
15
<PAGE>
Proxy Statement/Prospectus
manager; therefore, across all our portfolios, we will not accumulate more than
10% of the voting securities of any one company.
We sometimes purchase securities issued by companies that do not trade in the
public market. To maintain a good investment balance, we will limit these and
all other illiquid securities to a total of no more than 10% of each portfolio's
net assets.
Each portfolio may temporarily borrow money from banks (and pledge its assets to
secure such borrowing) to meet redemption requests, or for other purposes. We
will keep this borrowing down to no more than 10% of the value of each
portfolio's total assets and make no purchase while we have any outstanding
loans.
Repurchase Agreements
To allow us to earn a return on surplus cash, we usually invest this cash
overnight or for longer periods through an arrangement called a repurchase
agreement, or "repo," with a financially strong company that is either a large
stock broker or a substantial bank that is a member of the Federal Reserve. As
additional security, we always require all vendors of repurchase agreements to
set aside collateral in our name in the form of government securities equal to
102% of the value of any repurchase agreement. However, it is important to note
that, while repurchase agreements are a useful tool in managing the portfolio,
they do have some greater risk than direct investing in securities. If a bank or
stockbroker becomes bankrupt or otherwise defaults after selling us a repurchase
agreement, we may suffer some delay and expense in liquidating our collateral or
have a loss of principal or interest. However, in any default, the resold
securities are expected to provide collateral sufficient to cover the amount of
the repurchase agreement, so we do not feel these risks outweigh the benefits of
repurchase agreements.
Investment Policies and Risk Factors
The Working Assets Portfolio has the investment objective of current income
consistent with safety and liquidity. It is a good vehicle for short-term cash
management and for investors who need stability of principal.
In this portfolio, we only invest in short-term money market instruments
(short-term debt issued by branches of the government, corporations, banks or
other financial institutions) that we believe present minimal risk, and we
maintain a dollar-weighted average maturity of 90 days or less for the portfolio
as a whole. Our goal is to earn a market rate of return (or better) for our
Shareholders by investing in financially attractive companies whose operations
have a positive impact on the human and natural environment.
U.S. Government Securities
When we look at government securities, we only buy those that are issued or
guaranteed, as to both interest and principal, by agencies or other enterprises
of the United States Government.
Commercial Paper
We also will buy high quality "commercial paper," which is short-term debt
issued by well-established corporations. One hundred percent of this short-term
debt must be rated A-1 by Standards & Poor's Corporation or have a comparably
high rating by another nationally recognized rating service. If a security is
only rated by one agency, it must be rated in one of the two highest ratings by
that agency. If a security is not rated, it must be as good as A-1 in our
judgment. We also use our own research and experience to help assure our money
market securities have only a minimal credit risk.
Other types of debt that may offer us a yield advantage are sometimes issued by
banks. These include certificates of deposit, time deposits and bankers'
acceptance of U.S. banks or thrift institutions.
16
<PAGE>
Citizens Trust
Risk Factors
The shares of the Working Assets Portfolio are neither insured nor guaranteed by
the U.S. Government, and there is no assurance that the portfolio will be able
to maintain a stable Net Asset Value of $1.00 per share, despite our care and
caution. Please see the Trust's Statement of Additional Information dated
October 3, 1997, and the Trust's annual report for the fiscal year ended June
30, 1997, on file with the Securities and Exchange Commission, for more
information.
Comparison of the E[bullet]Fund(R) and the Working Assets Portfolio
The portfolios are identical as to their investment objectives, policies and
risk factors.
How to Buy Shares
It's easy to buy shares in the Working Assets Portfolio. For future investments
after the reorganization, just send in your payment by check, wire transfer,
exchange from another portfolio or through arrangement with your investment
dealer. To open a new account, fill out an application and send in your
investment. All checks must be made payable to Citizens Trust. Foreign checks
drawn off U.S. dollars are accepted but must be held in escrow for 20 days. We
are unable to accept travelers checks.
Your cost will be the Net Asset Value next determined after your payment is
received (expected but not guaranteed to be $1.00 per share). You can purchase
both full and fractional shares, which will be rounded to the nearest 1/1000th
of a share. If your check is returned for any reason, you will be assessed a fee
of $15.
Investment Minimum
The initial investment minimum in the Working Assets Portfolio is $1,000.
However, accounts under $2,500 (other than Citizens Access Accounts) are
assessed a $3 monthly fee.
Payroll Deduction
Setting up direct payroll deposit is very easy. We will send you a form
including the necessary information and steps to follow. Simply complete and
sign the form, then give it to your payroll administrator for processing. If you
or your payroll administrator have any questions, please call our Shareholder
Service Department.
Funds will be deposited into your account using the Electronic Funds Transfer
System. We will provide the account number. Your payroll department will let you
know the date of the pay period when your investment begins.
How to Redeem Shares
We offer you several convenient ways to redeem your shares in the Working Assets
Portfolio.
Call Us
We have a Telephone Exchange and Redemption option on your account application.
Under this option, you can call us and tell us how much you want us to redeem.
Depending upon your instructions, we will then deposit your redemption into
another Citizens Trust Portfolio account, mail you a check or electronically
transfer your redemption to your pre-designated account. One-day wired funds
cost $10, or we offer two-day service via the Automated Clearing House (ACH).
You will earn dividends up to and including the date when we receive your
redemption request. If you do select the Telephone Exchange and Redemption
option, you should be aware that it may increase the risk of error or of an
unauthorized party gaining access to your account. To keep these problems to a
minimum, we record all telephone calls. But please remember, neither the Trust,
our Adviser nor our Transfer Agent will be responsible if we properly act on
telephone instructions we reasonably believe to be genuine. Normally, we will
send you your redemption the next business day after we receive your request.
17
<PAGE>
Proxy Statement/Prospectus
Write a Check
The Working Assets Portfolio offers check-writing privileges to all
Shareholders. Shareholders may write checks in any amount at a cost of $.50 per
check. These checks are payable through Androscoggin Savings Bank, Lewiston,
Maine.
Use Your Debit Card
Shareholders of the Working Assets Portfolio may choose to open a "Citizens
Access Account," a special form of account offered by the Trust's distributor.
This account offers a debit card and expanded check-writing privileges. It will
only be available to holders of Working Assets Portfolio shares.
Written Request for Redemption
If you do not use Telephone Exchange and Redemption, you can still redeem your
shares at any time, although the process will take longer. Send us a written
request together with a signature guarantee. We may require further
documentation from corporations, fiduciaries, pension plans and/or institutional
investors.
Certain broker-dealers may have arrangements with the Trust that permit them to
order redemption of shares by telephone or facsimile transmission.
Escrow Period
We reserve the right to wait up to seven (7) business days to redeem any
investments made by check and five (5) business days for purchases made by ACH
transfer. Foreign checks drawn off U.S. dollars are held in escrow for 20 days.
Exchange Privileges
Shareholders of the Working Assets Portfolio are entitled to exchange their
shares for shares of other series of Citizens Trust that are registered in their
state. Any exchange will be a taxable event for which a Shareholder may have to
recognize a gain or a loss under federal income tax provisions. The Trust
reserves the right to terminate or modify the exchange privilege in the future.
Dividends
The Working Assets Portfolio declares dividends daily and pays out dividends
monthly. Shareholders may elect to reinvest dividend distributions.
Comparison
There are no material differences between the policies of the E[bullet]Fund(R)
and the Working Assets Portfolio regarding purchases, exchanges and redemption
of shares. The primary differences between the Shareholder service policies of
the E[bullet]Fund(R) and the Working Assets Portfolio are as follows:
Purchases: The E[bullet]Fund(R) has a maximum investment of $15,000 and no
required minimum. By contrast, the Working Assets Portfolio has no maximum, a
$1,000 minimum and accounts below $2,500 (other than Citizens Access Accounts)
must pay a $3 monthly fee.
Redemptions: Check-writing in the E[bullet]Fund(R) is restricted to 35 checks a
month. The Working Assets Portfolio has no restriction, but all checks cost $.50
per check.
The People and Operations of Citizens Trust
Citizens Investment Trust began as Working Assets Money Fund on November 14,
1982. The Trust is a Massachusetts business trust and an open-end investment
company, registered under the 1940 Act as a diversified management company. The
Trust is set up as a "series" company, which means the Trust can have several
portfolios, each with its own investment objective, assets and liabilities.
The Trust has a Management Agreement with Citizens Advisers, Inc. Citizens
Advisers, which prior to 1988 was organized as a limited partnership, has
managed the Trust's affairs since the Trust's inception in 1982. The Trust is
located at One Harbour Place, Portsmouth, New Hampshire 03801.
18
<PAGE>
Citizens Trust
Management Company Owners
Citizens Securities Inc., the Trust's Distributor, and its parent, Citizens
Advisers, are both California corporations. Sophia Collier, President of
Citizens Advisers, owns 60% of the outstanding stock of Citizens Advisers. Her
fellow Shareholders are three brothers, John P. Dunfey, Robert J. Dunfey, Sr.
and Gerald F. Dunfey, who own 12% each, and William B. Hart, who owns 4%.
In its role as investment adviser to the Trust, Citizens Advisers determines
which companies meet the Trust's social and financial criteria and therefore
will be approved for inclusion in the Trust's investment portfolio. It also
decides which securities will be bought and sold for the Working Assets
Portfolio. Citizens Advisers also provides additional administrative functions
as needed under a separate Administrative Contract. Citizens Advisers' wholly
owned subsidiary, Citizens Securities, serves as the Trust's Distributor.
Additional Information About Our Investment Adviser, Citizens Advisers
The Trust's contract with Citizens Advisers is known as the Management
Agreement. It is dated June 1, 1992, and was approved by the Trust's
Shareholders May 18, 1992. It has been reviewed by the Board of Trustees on a
yearly basis and was last approved by the Board of Trustees on May 5, 1997. It
provides for the following percentages of average net assets to be paid to
Citizens Advisers as fees for its investment adviser work for the
E[bullet]Fund(R) and the Working Assets Portfolio: E[bullet]Fund(R), .10%, and
Working Assets Portfolio, .35%. The Management Agreement has a one-year
renewable term and can be canceled upon 60 days notice. Under this agreement,
our Adviser received the following fees for services provided to the
E[bullet]Fund(R) and the Working Assets Portfolio:
For the year ended For the year ended
JUNE 30, 1996 JUNE 30, 1997
Working Assets Portfolio $423,731 $341,144
E[bullet]Fund(R) 4,018 $17,288
Citizens Advisers has agreed to limit its total expenses charged to the Working
Assets Portfolio to 1.50% of the first $40 million of average net assets and 1%
thereafter. If expenses exceed that limit, Citizens Advisers will reduce its fee
by, or refund, the amount of the excess. In exchange for these fees, Citizens
Advisers agrees to provide all office space, facilities, equipment and personnel
necessary to do its job as investment adviser.
12b-1 Fees
Citizens Trust has a 12b-1 plan which allows us to reimburse Citizens Securities
and other distributors of the Trust's shares for sales-related costs. These
costs include the printing of prospectuses and reports not sent to current
Shareholders, as well as other sales material, advertising and salaries for
salespeople and other personnel. We also will pay commissions to outside brokers
or service organizations for similar services.
The amounts paid under the 12b-1 plan by the Working Assets Portfolio were
$182,653 for the fiscal year ended June 30, 1996, and $162,353 for the fiscal
year ended June 30, 1997. For the fiscal year ended June 30, 1996, the Trust
reimbursed Citizens Advisers $683,513 for all its portfolios under the Rule
12b-1 plan; for the fiscal year ended June 30, 1997, the amount was $868,464.
The E[bullet]Fund(R) was not included in the 12b-1 plan and thus paid no
distribution fees. Sometimes Citizens Securities makes additional promotional
expenditures that are not reimbursed by the 12b-1 plan, such as expense
reimbursements to non-dealers for meetings, advertising and other valid
promotional purposes.
Administration Fees and Expenses
Citizens Advisers also provides administrative services to the Trust under a
separate Administrative Contract. Under this contract, Citizens Advisers
provides general administrative services, Shareholder servicing and
sub-accounting, telephone services and services relating to the organization of
a portfolio's federal and state regulatory filings. The fees paid by the Trust
under
19
<PAGE>
Proxy Statement/Prospectus
this contract are set by the Trustees based upon the services required and are
memorialized in the Administrative Contract. For the year ended June 30, 1996,
the Trust paid Citizens Advisers $583,266 for administrative services; for the
year ended June 30, 1997, the Trust paid Citizens Advisers $1,262,300 for
administrative services.
The individual series of the Trust pay all expenses not expressly assumed by
Citizens Advisers. These include interest, taxes, audit and legal fees,
custodian and transfer agent charges, insurance premiums, cost of registering
shares under federal and state laws, dues, and any litigation costs, as well as
the cost of typesetting, printing and distributing shareholder reports and
prospectuses sent to Shareholders. When a cost is shared by several series, the
staff at Citizens Advisers will allocate it among the series in a reasonable
manner.
Accounting Matters
The E[bullet]Fund(R) and the Working Assets Portfolio use the same method to
value their shares. The value of their shares is expressed as Net Asset Value,
expected but not guaranteed to be $1.00 per share. Net Asset Value is computed
by subtracting total liabilities from total assets and dividing that number by
the total number of our outstanding shares. The value of the E[bullet]Fund(R)
and Working Assets Portfolio is determined at 4:00 p.m. Eastern Standard Time
each day on which the New York Stock Exchange is open for regular trading and at
such other times as we determine may be necessary or appropriate.
Trustees
Citizens Trust is governed by a Board of Trustees. Their names, dates of birth
and occupations are as follows. The Trustees who are "interested persons," as
defined in the 1940 Act ("Interested Trustees") are indicated by an asterisk.
Azie Taylor Morton (DOB: 2/1/36), Chair of the Board and Trustee, was Treasurer
of the United States during the Carter Administration. From 1984 - 1989, she
owned and operated the Stami Corporation, a franchisee of Wendy's Old Fashioned
Hamburgers. Her 30-year career began as a teacher at the State School for Girls
in Crockett, Texas. She went on to work at the AFL-CIO, the White House
Conference on Civil Rights and the U.S. Equal Employment Opportunity Commission.
She has served as the Commissioner of the Virginia Department of Labor and
Industry as well as Executive Director of the Human Rights Project, Inc. From
1990 to 1992, she was Director of Resource Coordination at Reading is
Fundamental, Inc. She is currently an investment adviser. Address: 10910
Medfield Court, Austin, Texas 78739.
William D. Glenn II (DOB: 9/9/48), immediate past Chair of the Board and
Trustee, has been a Shareholder of Citizens Trust since 1983. He is a
psychotherapist and the Executive Director of Continuum HIV Day Services in San
Francisco. He is a past President of the San Francisco AIDS Foundation and
former member of the Board of Directors of the Gay Rights Chapter of the
Northern California American Civil Liberties Union. From 1981 to 1988, Mr. Glenn
was the Assistant Principal and Dean of Students at Mercy High School in San
Francisco. He currently serves on the boards of San Francisco's KQED and the
18th St. Services Chemical Dependency Recovery Center. Address: 915 Las Ovegas,
San Rafael, California 94903.
Sophia Collier* (DOB: 3/13/56), President and Trustee, is also President and
Principal owner of Citizens Advisers. She also serves in an advisory capacity to
RhumbLine Advisers. Ms. Collier is the co-founder of American Natural Beverage
Corp., the maker of Soho Natural Soda, a company which Ms. Collier co-founded in
her Brooklyn kitchen when she was 21 years old and built up over the next 12
years to an enterprise with 52 employees and retail sales of $25 million. Soho
Soda was the first natural soda in America and was created as an alternative to
mass-market sodas. Ms. Collier and her partners sold American Natural Beverage
in 1989. Address: One Harbour Place, Portsmouth, New Hampshire 03801.
Juliana Eades (DOB: 2/2/53), Trustee, has served as President of the $6 million
New Hampshire
20
<PAGE>
Citizens Trust
Community Loan Fund since its inception in 1984. In this capacity, she has been
a leading force in the creation of jobs and affordable housing in New Hampshire.
Prior to accepting her position at the Loan Fund, Ms. Eades was Program Manager
at the NH Governor's Council on Energy. In other community activities, Ms. Eades
is a member of the Campaign for Rate Payers' Rights, the Society for the
Protection of New Hampshire Forests and serves on the Board of the New Hampshire
Charitable Foundation. Address: 79 South State Street, Concord, New Hampshire
03301.
Lokelani Devone (See Bio, Page 6).
J.D. Nelson* (DOB: 3/28/38), Trustee, is the founder and C.E.O. of RhumbLine
Advisers Corp., an investment firm specializing in the management of
institutional pension assets using indexed and quantitative techniques. Mr.
Nelson was formerly Senior Vice President and Director of Public Funds Services
at State Street Bank and Trust Company in Boston. Prior to his 12 years at State
Street, he was the Administrator of the Democratic National Committee. He
currently serves on the Board of the City of Boston's Economic Development
Industrial Corporation. He is a former Chairman of the Roxbury (Mass.)
MultiService Center, a past director of the United Way and has taught at the
School of Banking at Williams College. Address: RhumbLine Advisers, 50 Rowes
Wharf, Boston, Massachusetts 02110.
Ada Sanchez (See Bio, Page 6).
Pursuant to our Distribution Plan, we have agreed that Trustees who are not
"interested persons" of the Trust, as defined in the 1940 Act, and who have no
direct or indirect financial interest in the operation of the Distribution Plan
or any agreement relating to the Plan ("Qualified Trustees"), shall have
responsibility for the selection and nomination of other Qualified Trustees.
This agreement will continue for so long as our Distribution Plan is in effect.
The following compensation table discloses the aggregate compensation from the
Trust for services provided through June 30, 1997.
Citizens Investment Trust - Trustee Compensation Table
Name of Person and Position Aggregate Compensation from The Trust
Azie Taylor Morton $4,514.80
Juliana Eades $4,500.00
William D. Glenn, II. $6,304.90
Ada Sanchez $4,000.00
Lokelani Devone $3,500.00
Sophia Collier* 00.00
J.D. Nelson* 00.00
Wilma Mankiller** $500.00
* Sophia Collier and J.D. Nelson are Interested Trustees and received no
compensation from Citizens Trust.
**Wilma Mankiller is no longer a Trustee.
Trustees received no further fees from the Trust. Each Trustee is a Trustee of a
total of six series portfolios of Citizens Trust, two of which have an
additional class of shares.
The Trustees who are not "interested persons" received aggregate fees from the
Trust of $23,319.70 for services provided through June 30, 1997, and were also
reimbursed for out-of-pocket expenses.
Making the Reorganization Smooth and Convenient
Your existing dividend re-investment option in the E[bullet]Fund[Registration
Mark] wil l continue to be the same in the Working Assets Portfolio unless you
notify us of a new election. Your account numbers will not change, and any
automatic transactions will continue uninterrupted.
21
<PAGE>
Description of the Reorganization
The main provisions of the reorganization are summarized below. For further
information, please refer to the full text of the Plan (Exhibit 2 within this
booklet).
At our August 4, 1997 Trustee meeting, we approved combining the
E[bullet]Fund(R) and the Working Assets Portfolio, which we are recommending to
the Shareholders of the E[bullet]Fund(R) for approval at the upcoming
Shareholders Meeting.
Subject to formal approval by the Board of Trustees and your own approval, the
Plan provides for: (a) the acquisition by the Working Assets Portfolio of all
assets and liabilities of the E[bullet]Fund(R) in exchange for shares of the
Working Assets Portfolio, Retail Class; (b) the distribution of such Working
Assets Portfolio, Retail Class, shares to the Shareholders of the
E[bullet]Fund(R) in liquidation of the E[bullet]Fund's(R) shares in the same
dollar value; and (c) the dissolution of the E[bullet]Fund(R).
The stock transfer books of the Trust with respect to the E[bullet]Fund(R) will
be permanently closed as of the close of business on the day immediately
preceding the Effective Time of the Reorganization. Redemption requests received
thereafter by the Trust with respect to the E[bullet]Fund(R) will be deemed to
be redemption requests for shares of the Working Assets Portfolio to be
distributed to the former E[bullet]Fund(R) Shareholders.
Under the Plan, Citizens Advisers will continue to provide advisory and
administrative services to the Working Assets Portfolio after the reorganization
is completed.
The Reorganization is Subject to the Following Conditions
[diamond] Approval of the Plan and the transactions contemplated therein by the
Shareholders of the E[bullet]Fund(R).
[diamond] The receipt of a legal opinion described in Section 4 of the Plan
(which includes the opinion of counsel that Working Assets Portfolio shares
issued to the E[bullet]Fund(R) Shareholders in accordance with the terms of the
Plan will be validly issued, fully paid and non-assessable).
If the above conditions are met, the Plan will be carried out December 8, 1997,
or another date set by the Trustees.
We, as Trustees, retain the option to cancel or modify the Plan.
Factors Considered by the Board of Trustees Before
Recommending This Transaction
As Trustees, we have sought all the information we believed was relevant to this
situation and have made a careful evaluation of the information presented to us
in the light of our fiduciary duties under federal and state law. We have
determined that the proposed reorganization is in the best interests of the
Shareholders of the E[bullet]Fund(R) and the Working Assets Portfolio, and we
recommend approval of a Plan of Reorganization at the Shareholders Meeting.
The following is a summary of the information we considered in making this
determination.
At our August 4, 1997, meeting of the Board of Trustees and at a subsequent
telephonic meeting on September 17, 1997, we reviewed, discussed and evaluated
alternatives available to the E[bullet]Fund(R) and its Shareholders, as well as
the possibility of a reorganization of the E[bullet]Fund(R) and the Working
Assets Portfolio. We received from Citizens Advisers written material containing
relevant information about both portfolios, including fee structure and expense
ratio information. Citizens Advisers also provided us with an analysis of the
benefits to E[bullet]Fund(R) Shareholders resulting from a reorganization, as
well as other information relevant to our consideration.
22
<PAGE>
Citizens Trust
Cost Considerations
We reviewed potential terms of a Plan of Reorganization as it would impact
Shareholders of the E[bullet]Fund(R). This review included both direct and
indirect expenses, such as the expected costs of the reorganization and the
anticipated expenses after reorganization.
We evaluated the contractual expense levels of the Working Assets Portfolio and
compared these expense levels with the current actual and contractual expense
levels of the E[bullet]Fund(R). We considered it favorable that the combined
contractual costs (including advisory and administrative fees) of the surviving
Portfolio were lower overall than those of the E[bullet]Fund(R) presently
(before waivers). We noted that the Working Assets Portfolio has a 12b-1 plan
and discussed how this would bear on the reorganization. The 12b-1 plan has
helped the Working Assets Portfolio grow, benefiting all Shareholders, even
though it also costs money.
We also considered additional benefits that were expected to result from a
reorganization of the two portfolios. These benefits include lower per-share
professional, registration and other non-management expenses, and the fact that
the reorganization will not result in the loss of debit card privileges or other
conveniences to current E[bullet]Fund(R) Shareholders.
Investment Considerations
Another important consideration was the compatibility of the Working Assets
Portfolio's investment objectives, policies and restrictions with those of the
E[bullet]Fund(R). We noted that both the E[bullet]Fund(R) a nd the Working
Assets Portfolio seek income from investments selected according to both
financial criteria and criteria of social responsibility. We recognized also
that the Working Assets Portfolio shares the E[bullet]Fund(R)'s objective of
"current income consistent with safety and liquidity." In this regard, we noted
that one of the goals of the reorganization was to offer a yield higher than
that of the present E[bullet]Fund(R) through a lower expense ratio and the
economies of scale associated with a larger portfolio.
We also considered presentations by representatives of Citizens Advisers
regarding significant overlap in marketing areas and efforts of the
E[bullet]Fund(R) and the Working Assets Portfolio. We also favorably noted that
Citizens Advisers would continue the same social investment criteria after the
reorganization. Overall, we concluded that the benefits of a reorganization
outweighed any possible detriments.
Based upon our evaluation of the relevant information presented to us, and in
light of our fiduciary duties under federal and state law, we, the Board of
Trustees, including all members who were not "interested persons" of the Trust
as that term is defined in the 1940 Act, unanimously determined that a proposed
reorganization (1) was in the best interests of the Trust, the E[bullet]Fund(R)
and the Working Assets Portfolio, and (2) that the interests of existing
Shareholders of the E[bullet]Fund(R) and the Working Assets Portfolio would not
be diluted as a result of their effecting such a transaction. We therefore
recommended approval of a Plan of Reorganization by Shareholders at the Meeting.
During the subsequent telephonic meeting on September 17, 1997, we reviewed the
Plan of Reorganization attached hereto as Exhibit 2 ("the Plan") and again
reviewed the potential benefits, detriments, costs and other factors discussed
above. The Plan was unanimously approved, and we recommend approval by the
Shareholders.
Federal Income Tax Consequences
The reorganization is contemplated under Section 368(a) of the Internal Revenue
Code. No portfolio securities or assets of the E[bullet]Fund(R) will be sold or
liquidated as a result of the reorganization; instead, such portfolio securities
or assets will be transferred to the Working Assets Portfolio and all
E[bullet]Fund(R) shares will be exchanged for shares of equal value in the
Working Assets Portfolio.
Since the Working Assets Portfolio and the E[bullet]Fund(R) are each money
market portfolios which have
23
<PAGE>
Proxy Statement/Prospectus
average weighted maturity of less than 60 days, the federal tax consequences of
this transaction are of very small concern. Both portfolios have historically
maintained a $1.00 Net Asset Value. Further, each portfolio declares its
dividend daily, so we anticipate no issues involving undistributed income.
Finally, each uses the amortized cost method of accounting.
As a tax-free reorganization, no capital gains or losses are sought or
anticipated in this transaction. All money market income is taxable as dividends
paid within the year it was earned.
The E[bullet]Fund(R) and the Working Assets Portfolio will seek a tax ruling
from the Internal Revenue Service (the "IRS"), or an opinion of counsel
concerning the foregoing, prior to the date of the reorganization. Shareholders
should consult their own advisers concerning the potential tax consequences to
them, including state and local income taxes.
Additional Information About the Transaction
Appraisal Rights
Shareholders are not entitled to any rights of share appraisal under the Trust's
Declaration of Trust or under federal or state law in connection with the
reorganization. Shareholders have, however, the right to redeem from the Trust
their E[bullet]Fund(R) shares at net asset value until the Effective Time of the
Reorganization, and thereafter Shareholders may redeem from the Working Assets
Portfolio the shares acquired by them in the reorganization at net asset value
in the manner described in the Trust's prospectus.
<TABLE>
<CAPTION>
Capitalization
E[bullet]fund(R) Working Assets Portfolio Pro-Forma Combination
<S> <C> <C> <C>
(10/8/97) (10/8/97) (10/8/97)
Net Assets $20,586,525 $83,739,656 $104,186,229*
Shares Outstanding 20,586,525 83,739,656 104,326,181
Net Asset Value $1.00 $1.00 $1.00
</TABLE>
*Pro-forma combination reflects write-off of deferred organization expenses of
the E[bullet]fund(R) as of the date of reorganization.
Proposed Reorganization
Under the Plan of Reorganization, the Working Assets Portfolio will acquire all
or substantially all of the assets of the E[bullet]fund(R) in exchange for
shares of Working Assets Portfolio and the assumption of certain identified
liabilities of the E[bullet]fund(R). The reorganization will be accomplished on
a tax-free basis and the exchange ratio will be computed by dividing the
E[bullet]fund(R)'s net asset value per share by the Working Assets Money
Portfolio's net asset value per share on the reorganization date.
The following pages provide pro-forma combination Statements of Assets and
Liabilities, of Operations, and of Investments for the E[bullet]Fund(R) and the
Working Assets Portfolio as of June 30, 1997.
24
<PAGE>
Citizens Trust
Pro-Forma Combination: Working Assets Money Market Portfolio and
E[bullet]Fund(R) Portfolio
Pro-Forma Statement of Operations-June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Working Assets
Money Market Pro-Forma Combined
Portfolio E[bullet]Fund(R) Adjustments Pro-Forma
-------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
Investment Income
Interest $5,339,283 $921,590 -- $6,260,873
Other Income -- 74,257 (74,257)(7) --
Total Investment Income 5,339,283 995,847 (74,257)(7) 6,260,873
Expenses
Investment management Fees 341,144 17,288 43,222 (2) 401,654
Transfer agent fees 204,548 36,538 (4,800)(1) 236,286
Custody and accounting fees 17,500 17,021 (14,385)(1) 20,136
Distribution expenses 162,353 -- 34,576 (1) 196,929
Administration expenses 153,084 11,805 15,347 (2) 180,236
Legal and audit fees 22,190 27,441 (27,000)(1) 22,631
Registration fees 31,337 25,819 (25,000)(1) 32,156
Trustees' fees and expenses 8,648 8,648 (7,207)(1) 10,089
Printing and postage 95,729 27,436 (10,457)(1) 112,708
Dues and insurance 10,486 3,191 -- 13,677
Shareholder services 140,133 22,209 -- 162,342
Other expenses 29,348 18,797 20,000 (4) 68,145
Amortization of
Organization costs 7,145 38,476 (38,476) 7,145
---------- -------- ---------- ----------
Total Expenses 1,223,645 254,669 (14,181)(2) 1,464,133
Fee reductions (17,500)(3) (17,021)(3) 14,385 (3) (20,136)(3)
Reimbursement by Adviser (94,266) 237,648) 255,502 (5) (76,412)(6)
Net expenses 1,111,879 -- 255,706 1,367,585 (6)
---------- -------- ---------- ----------
Net investment income 4,227,404 995,847 (329,963) 4,893,288
---------- -------- ---------- ----------
Net increase in net assets
resulting from operations $4,227,404 $995,847 ($ 329,963) $4,893,288
========== ======== ========== ==========
</TABLE>
(1) To reflect the economies realized through the reorganization
(2) To reflect the change in expense structure resulting from the
reorganization
(3) To reflect reduction in custody fees due to earnings credits
(4) Expected cost of the Shareholders meeting
(5) To reflect the voluntary expense limitation
(6) Statement reflects the expected cost of the Shareholders meeting and the
reorganization of $20,000
(7) To reflect the elimination of the E[bullet]Fund(R) interchange income
See accompanying notes to Pro-Forma Financial Statements
25
<PAGE>
Proxy Statement/Prospectus
Pro-Forma Combination: Working Assets Money Market Portfolio and
E[bullet]Fund(R) Portfolio
Pro-Forma Statement of Assets and Liabilities - June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Working Assets
Money Market Pro-Forma Combined
Portfolio E[bulletFund(R) Adjustments Pro-Forma
-------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
Assets
Investments in securities, at $99,960,197 $19,711,957 -- $119,672,154
market value (Identified cost
$99,960,197 and $19,711,957
respectively)
Cash 1,140,650 644,875 (74,257)(1) 1,711,268
Receivables for:
Interest 129,519 25,149 -- 154,668
Fund shares sold 2,205,016 580,330 -- 2,785,346
SBA principal paydowns 13,982 3,669 -- 17,651
Deferred organization costs 28,447 139,952 (139,952)(2) 28,447
Prepaid expenses 34,078 18,618 -- 52,696
----------- ---------- ---------- ------------
Total Assets 103,511,889 21,124,550 (214,209) 124,422,230
----------- ---------- ---------- ------------
Liabilities
Payables:
Capital shares redeemed 769,167 399,755 1,168,922
Distributions -- 243 243
Due to investment adviser 3,916 22,314 26,230
Accrued expenses 55,509 -- 255,706(1) 311,215
----------- ----------- ---------- ------------
Total Liabilities 828,592 422,312 255,706 1,506,610
----------- ----------- ---------- ------------
Net Assets $102,683,297 $20,702,238 ($469,915) $122,915,620
Retail Shares
Net assets $85,179,413 $20,702,238 (403,251) $105,478,400
Shares outstanding 85,179,413 20,702,238 105,598,498
Net asset value, offering and
redemption price per share $1.00 $1.00 $1.00
----------- ----------- ---------- ------------
Institutional Shares
Net assets $17,503,884 (66,664) $17,437,220
Shares outstanding 17,503,884 17,457,074
Net asset value, offering and
redemption price per share $1.00 $1.00
Net Assets
At June 30, 1997, net assets consisted of:
Paid-in capital $102,683,297 $20,702,238 ($469,915) $122,915,620
$102,683,297 $20,702,238 ($469,915) $122,915,620
============ =========== ========= ============
</TABLE>
(1) To reflect the pro-forma adjustments on the Pro-Forma Statement of
Operations
(2) To reflect the write-off of deferred organization expenses of the
E[bullet]fund(R) as of the date of reorganization
See accompanying notes to Pro-Forma Financial Statements
26
<PAGE>
Citizens Trust
Pro-Forma Combination: Working Assets Money Market Portfolio and
E[bullet]Fund(R) Portfolio
Pro-Forma Statement of Investments - June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Working
Assets
Money
Market E[bullet]Fund(R)
Principal Maturity Portfolio Portfolio Pro-Forma Combined
Amount Security Description Yield Date Value(a) Value(a) Adjustments Pro-Forma
- --------- -------------------- ----- -------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Certificates of Deposit .49%
100,000 Bank of New Jersey 5.160 10/20/97 $100,000 -- $100,000
100,000 Boston Bank of Commerce 5.200 10/20/97 100,000 -- $100,000
100,000 Community Capital Bank CD 5.150 10/20/97 100,000 -- $100,000
100,000 Independence Bank Chicago 5.150 12/27/97 100,000 -- $100,000
100,000 Self Help Credit Union 5.230 7/2//97 100,000 -- $100,000
100,000 South Shore Bank of Chicago 5.150 12/18/97 -- 100,000 $100,000
-------- ------- --------
500,000 100,000 600,000
======== ======= ========
Commercial Paper 90.46%
1,000,000 Air Products & Chemicals Inc. 5.520 7/31/97 995,400 -- 995,400
600,000 Air Products & Chemicals Inc. 5.600 8/22/97 163,665 431,481 595,146
1,450,000 Ameritech Corp. 5.500 7/16/97 648,510 798,167 1,446,677
3,200,000 Ameritech Corp. 5.550 7/16/97 3,192,600 -- 3,192,600
5,600,000 B.I. Funding Inc. 5.580 9/3/97 4,752,384 792,064 5,544,448
4,785,000 Bank of New York 5.535 7/22/97 3,972,133 797,417 4,769,550
5,600,000 Bankers Trust New York Corp. 5.540 9/10/97 4,474,555 91,259 5,538,814
2,800,000 Bell Atlantic Network Funding 5.580 7/2/97 2,399,628 399,938 2,799,566
2,100,000 Beneficial Corp. 5.580 7/11/97 1,697,365 399,380 2,096,745
700,000 Block Financial Corp. 5.570 7/28/97 -- 697,076 697,076
1,525,000 Campbell Soup Co. 6.200 7/1/97 695,000 830,000 1,525,000
5,600,000 Canadian Wheat Bread 5.500 7/7/97 4,795,600 799,267 5,594,867
250,000 Chub Capital Corp. 5.550 9/15/97 -- 247,071 247,071
5,600,000 Coca Cola Co. 5.520 7/7/97 4,795,584 799,264 5,594,848
2,270,000 Coop. Assoc. of Tractor Dealers 5.440 7/22/97 1,943,812 318,985 2,262,797
1,600,000 Coop. Assoc. of Tractor Dealers 5.640 7/1/97 1,400,000 200,000 1,600,000
400,000 Coop. Assoc. of Tractor Dealers 5.580 7/3/97 -- 399,876 399,876
1,700,000 Coop. Assoc. of Tractor Dealers 5.600 8/1/97 1,691,802 -- 1,691,802
1,400,000 Coop. Assoc. of Tractor Dealers 5.620 8/1/97 1,393,255 -- 1,393,225
800,000 Countrywide Funding Corp. 5.550 7/2/97 -- 799,877 799,877
2,745,000 Countrywide Funding Corp. 5.580 7/2/97 2,744,575 -- 2,744,545
2,000,000 Countrywide Funding Corp. 5.570 7/30/97 1,991,026 -- 1,991,026
4,360,000 Harley Davidson Dealer Funding 5.630 7/9/97 3,555,546 798,999 4,354,545
3,845,000 Hasbro Inc. 5.570 8/29/97 3,354,100 455,801 3,809,901
155,000 Hasbro Inc. 5.590 8/29/97 -- 153,580 153,580
670,000 Hasbro Inc. 5.620 10/7/97 433,268 226,481 659,749
4,250,000 Idaho Power Co. 5.530 7/21/97 3,917,926 319,017 4,236,943
1,350,000 Idaho Power Co. 5.530 7/24/97 866,926 478,304 1,345,230
100,000 Kellogg Co. 5.500 7/7/97 -- 99,908 99,908
5,600,000 Mid States Corp Fed Credit Union 5.570 7/17/97 4,788,117 798,019 5,586,136
1,465,000 Minnesota Mining/Mfg. Co. 5.500 7/22/97 956,920 503,380 1,460,300
805,000 Minnesota Mining/Mfg. Co. 5.500 8/12/97 506,728 293,107 799,835
5,600,000 Pacific Bell 5.500 7/18/97 4,787,533 797,922 5,585,455
</TABLE>
27
<PAGE>
Proxy Statement/Prospectus
<TABLE>
<CAPTION>
Working
Assets
Money
Market E[bullet]Fund(R)
Principal Maturity Portfolio Portfolio Pro-Forma Combined
Amount Security Description Yield Date Value(a) Value(a) Adjustments Pro-Forma
- --------- -------------------- ----- -------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
2,315,000 Pitney Bowes Credit Corp. 5.500 7/17/97 2,309,341 -- 2,309,341
600,000 Pitney Bowes Credit Corp. 5.510 7/18/97 598,439 -- 598,439
935,000 Providian Corporation 5.550 7/17/97 573,582 359,112 932,694
2,315,000 Providian Corporation 5.520 7/21/97 2,307,901 -- 2,307,901
1,000,000 Safeco Credit Co. Inc. 5.580 7/11/97 998,450 -- 998,450
325,000 Safeco Credit Co. Inc. 5.550 8/8/97 323,096 -- 323,096
1,220,000 Safeco Credit Co. Inc. 5.550 9/12/97 1,206,270 -- 1,206,270
4,430,000 Sears Roebuck Acceptance Corp. 5.550 7/16/97 3,621,606 798,150 4,419,756
3,825,000 Sonoco Prods Co. 5.520 7/22/97 3,015,260 797,424 3,812,684
4,405,000 Toronto Dominion Holdings 5.500 7/11/97 3,754,256 644,014 4,398,270
5,600,000 Toys R Us Inc. 5.470 7/2/97 4,799,270 799,878 5,599,148
2,800,000 Xerox Credit Corp. 5.530 7/8/97 1,997,849 799,140 2,796,989
----------- ---------- ------------
92,692,248 18,623,358 111,315,606
----------- ---------- ------------
Farmers Home Administration .14%
177,296 Variable Rate Notes 177,296 -- 177,296
----------- ---------- ------------
177,296 -- 177,296
----------- ---------- ------------
U.S. Government Agencies 2.70%
145,000 Fed. Home Loan Mortgage
Discount Notes 5.410 7/14/97 -- 144,717 144,717
590,000 Fed. Home Loan Mortgage Corp. 6.470 7/7/97 -- 590,100 590,100
1,000,000 Student Loan Marketing Assn. 5.286 11/20/97 1,000,133 -- 1,000,133
1,585,000 Student Loan Marketing Assn. 5.265 10/17/97 1,584570 -- 1,584,570
----------- ---------- ------------
2,584,703 734,817 3,319,520
----------- ---------- ------------
Small Business Administration 3.46%
4,250,688 Variable Rate Notes(c) 6.895-8.375(b) 4,005,950 253,782 4,259,732
----------- ---------- ------------
4,005,950 253,782 4,259,732
------------ ----------- ------------
Total Investments 97.25% (Cost $119,672,154) (d) 99,960,196 19,711,957 119,672,154
Other Assets Less Liabilities 2.75% 2,723,100 990,281 (329,963) 3,383,418
----------- ---------- ---------- ------------
NET ASSETS $102,683,297 $20,702,238 ($329,963) $123,055,572
============ =========== ========== ============
</TABLE>
KEY:
(a)Investments are based upon amortized cost method
(b) Variable rates are subject to change every 7 to 90 days
(c) Includes a total of 14 notes
(d) Aggregate cost for federal income tax purposes is $199,672,154
See accompanying notes to Pro-Forma Financial Statements
Notes to Pro-Forma Financial Statements June 30, 1997 (unaudited)
(1) Proposed Reorganization
Under the proposed Plan of Reorganization, the Working Assets Money Market
Portfolio, a separate series of Citizens Trust, will acquire all or
substantially all of the net assets of the E[bullet]Fund(R) Portfolio in
exchange for shares of the Working Assets Money Market Portfolio. The
reorganization will be accomplished on a tax-free basis, and the exchange is
expected to be one-for-one.
(2) Pro-Forma Adjustments
The pro-forma adjustments in the statement of investments, statement of
assets and liabilities, and statement of operations reflect an anticipated
increase in some expenses resulting from changes in the expense structure.
28
<PAGE>
Citizens Trust
Additional Information About the Working Assets Portfolio
and the E[bullet]Fund(R)
The following tables provide additional financial information for the
E[bullet]Fund(R) Portfolio and the Working Assets Money Market Portfolio for the
periods indicated (based on a single share outstanding throughout such periods).
Citizens Trust Financial Highlights
<TABLE>
<CAPTION>
Working Assets Money Market Portfolio
RETAIL SHARES For the Year Ended
Selected Per-Share Data 6/30/97 6/30/96 6/30/95 6/30/94 6/30/93 6/30/92
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations
Net investment income 0.042 0.045 0.044 0.023 0.024 0.041
Less distributions
Dividends (from net investment income) (0.042) (0.045) (0.044) (0.023) (0.024) (0.041)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 4.30% 4.60% 4.51% 2.35% 2.43% 4.16%
Ratios and Supplemental Data
Net assets, end of period (thousands) $85,179 $78,326 $97,611 $103,766 $152,625 $223,951
Ratio of expenses to average net assets 1.27% 1.20% 1.16% 1.16% 1.11% 1.07%
Ratio of expenses to average net assets
prior to reimbursement 1.39% 1.21% 1.16% 1.16% 1.11% 1.07%
Ratio of expenses to average net assets
net of reimbursements & fee waivers 1.25% 1.18% 1.16% 1.16% 1.11% 1.07%
Ratio of net income to average net assets .4.23% 4.56% 4.39% 2.31% 2.41% 4.09%
Ratio of net income to average net assets
prior to reimbursement 4.12% 4.56% 4.39% 2.31% 2.41% 4.09%
</TABLE>
INSTITUTIONAL SHARES For the Year Ended
Selected Per-Share Data 6/30/97 6/30/96(1)
------- -------
Net asset value, beginning of period $1.00 $1.00
Income from investment operations
Net investment income 0.049 0.021
Less distributions
Dividends (from net investment income) (0.049) (0.021)
Net asset value, end of period $1.00 $1.00
TOTAL RETURN 5.01% 2.09%
Ratios and Supplemental Data
Net assets, end of period (thousands) $17,504 $14,539
Ratio of expenses to average net assets 0.60% 0.47%(2)
Ratio of expenses to average net assets
net of reimbursement & fee waivers 0.60% 0.47%
Ratio of net income to average net assets 4.92% 5.16%(2)
(1) For the period from February 1, 1996, to June 30, 1996
(2) Annualized
29
<PAGE>
Proxy Statement/Prospectus
Citizens Trust Financial Highlights
E[bullet]Fund(R)
------------------
For the Year Ended
6/30/97 6/30/96
------- -------
Selected Per-Share Data
Net asset value, beginning of period $1.00 $1.00
------- -------
Income from operations
Net investment income 0.057 0.059
Less distributions
Dividends (from net investment income) (0.057) (0.059)
------- -------
Net asset value, end of period $1.00 $1.00
======= =======
TOTAL RETURN 5.90% 6.10%
Ratios and Supplemental Data
Net assets, end of period (thousands) $20,702 $11,082
Ratio of expenses to average net assets 0.10% 0.00%
Ratio of expenses to average net assets
prior to reimbursement 1.47% 1.55%
Ratio of expenses to average net assets
net of reimbursements & fee waivers 0.00% 0.00%
Ratio of net income to average net assets 5.76% 6.02%
Ratio of net income to average net assets
prior to reimbursement 4.39% 4.64%
30
<PAGE>
Citizens Trust
The Trust is subject to the informational requirements of the Securities
Exchange Act and the 1940 Act, as applicable, and, in accordance with such
requirements, files proxy materials, reports and other information with the
SEC. These materials can be inspected and copied at the Public Reference
Facilities maintained by the SEC at 450 Fifth Street, NW, Washington, D.C.
20549, at the offices of Citizens Advisers listed above and at the SEC's
Regional Offices at 75 Park Place, Room 1228, New York, NY 10007 and Everett
McKinley Dirksen Building, 219 South Dearborn Street, Room 1204, Chicago, IL
60604. Copies of such materials also can be obtained from Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20549, at prescribed rates.
Financial Statements and Expert
Audited financial statements for both the E[bullet]Fund(R) and
the Working Assets Portfolio (including assets and liabilities, operations and
investments) for the one year period ended June 30, 1997 are incorporated by
reference in this Combined Proxy Statement/Prospectus in reliance upon the
reports of Tait, Weller and Baker, independent certified public accountants,
given on the authority of such firm as experts in accounting and auditing.
Voting Information
This Combined Proxy Statement/Prospectus is being furnished in connection
with the solicitation of proxies by the Trust's Board of Trustees for use at
the Meeting to be held December 1, 1997.
Only E[bullet]Fund(R) Shareholders of record at the close of business October 8,
1997 (the "Record Date") will be entitled to vote on Proposal 6 at the Meeting
or any adjournments thereof. On that date, there were outstanding and entitled
to be voted 20,586,525 shares of the E[bullet]Fund(R).
Holders of each share or fraction thereof are entitled to one vote or
fraction thereof. Shares represented by a properly executed proxy will be
voted in accordance with the instructions thereon, or if no specification is
made, the persons named as proxies will vote in favor of the proposal set
forth in the Notice of Meeting. Broker non-votes or abstentions are counted
for the purpose of determination of a quorum and will be considered to be
votes against the proposals. Proxies may be revoked at any time before they
are exercised by a signed writing delivered at the Meeting or filed with the
Shareholder's Servicing Agent, which is the agent of record with respect to
the shares represented by the proxy.
It is expected that the solicitation of proxies will be primarily by mail and
telephone. The Trust's officers and service contractors also may solicit
proxies by telephone, telegraph or personal interview.
Expenses of the Meeting, mailing and all other expenses related to Proposal 6
will be partially paid by the reorganized Working Assets Portfolio and partially
paid by the Trust itself. If the reorganization of the E[bullet]Fund(R) fails to
achieve an affirmative vote, these expenses will be borne by Citizens Advisers.
If the accompanying proxy is executed and returned in time for the Meeting,
the shares covered thereby will be voted in accordance with the proxy on all
matters that may properly come before the Meeting (or any adjournments
thereof).
Exact Text of Proposal 6
To approve the attached Plan of Reorganization ("the Plan"), combining the
E[bullet]Fund(R) with the Working Assets Portfolio.
Vote Required for Proposal 6 The approval of the reorganization requires the
affirmative vote of a majority of the outstanding voting securities of the
E[bullet]Fund(R) , unless the Shareholders have passed Proposal
2 within this proxy statement/prospectus, in which case the vote required shall
be the lesser of (1) 67% or more of
31
<PAGE>
Proxy Statement/Prospectus
the outstanding voting securities of the E[bullet]Fund(R) present
at the meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the E[bullet]Fund(R).
THE TRUSTEES UNANIMOUSLY RECOMMEND A "YES" VOTE IN FAVOR OF REORGANIZATION.
32
<PAGE>
Citizens Trust
Exhibit 1
SUB-INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this 1st day of December, 1997, by and among CITIZENS
ADVISERS, INC., a California corporation (the "Adviser"), SENECA CAPITAL
MANAGEMENT, LLC, a California limited liability company (the "Sub-Adviser"),
and CITIZENS INVESTMENT TRUST, an open-end investment company organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and the Trust and
the Adviser have entered into an Investment Advisory Agreement dated June 1,
1992, whereby the Adviser shall provide, inter alia, the Citizens Income
Portfolio (the "Income Portfolio") and the Citizen's Emerging Growth Portfolio
(the "Emerging Growth Portfolio"), two series of the Trust (collectively, the
"Portfolios" and each, a "Portfolio") with investment advice and supervision on
the terms and conditions provided therein; and
WHEREAS, the Sub-Adviser is willing to provide the Adviser and the Trust with
services on the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of and
between the parties as set forth herein, the parties do hereby covenant and
agree as follows:
Article 1: DUTIES OF THE SUB-ADVISER. The Sub-Adviser will furnish the Adviser
economic, statistical and research information and advice relating to the Income
Portfolio and the Emerging Growth Portfolio, and to such other portions of the
Trust's assets as the Adviser shall from time to time designate (collectively,
the "Designated Assets"). The Sub-Adviser will also make recommendations to the
Adviser as to the manner in which voting rights, rights of consent to corporate
action and any other rights pertaining to the Trust's portfolio securities
included in the Designated Assets shall be exercised. From time to time, the
Adviser will notify the Sub-Adviser of the aggregate U.S. Dollar amount of the
Designated Assets.
The Sub-Adviser will furnish continuously an investment program with respect to
the Designated Assets and will determine from time to time what securities shall
be purchased, sold or exchanged with the Designated Assets, and what portion, if
any, of the Designated Assets shall be held uninvested subject always to
compliance with provisions of the Trust's Declaration of Trust and By-Laws as
then in effect, the provisions of the Investment Company Act of 1940 and the
provisions of the Trust's then-current Prospectus and Statement of Additional
Information (copies of all which, as amended from time to time, will be
furnished to the Sub-Adviser by the Adviser). For the purposes of compliance
with the prospectus language on "social criteria," the Adviser will furnish the
Sub-Adviser with an approved list of securities from which the Sub-Adviser will
select. The Sub-Adviser may suggest additions to this list but agrees not to
purchase any suggested securities until such security has been approved by the
Adviser as meeting the Trust's social criteria. The Adviser agrees that it will
promptly and thoroughly research the suitability, under its social criteria, of
any suggested security.
Should the Trustees of the Trust or the Adviser at any time make a definite
determination as to investment policy and notify the Sub-Adviser thereof, the
Sub-Adviser shall be bound by such determination for the period, if any,
specified in such notice or until notified that such determination has been
revoked. Further, the Adviser or the Trustees of the Trust may at any time, upon
notice to the Sub-Adviser, suspend or restrict the right of the Sub-Adviser to
determine what assets shall be purchased, sold or exchanged from the Designated
Assets and what portion, if any, of the Designated Assets shall be held
uninvested.
A
<PAGE>
Proxy Statement/Prospectus
The Sub-Adviser shall take, on behalf of the Trust, all actions which it deems
necessary to implement policies determined as provided above, and in particular,
consistent with the provisions of Article 3 of this Agreement, to place all
orders for the purchase, sale or exchange of securities of the Trust's account
with brokers, dealers or bankers selected by it, and to that end, the
Sub-Adviser is authorized as the agent of the Trust to give instructions to the
Custodian and any Sub-Custodian of the Trust as to deliveries of securities and
gold, transfers of currencies and payments of cash for the account of the Trust.
The Sub-Adviser will advise the Adviser on the same day it gives any such
instructions. In connection with the selection of such brokers, dealers or
bankers and the placing of such orders, the Sub-Adviser is directed to seek for
the Trust execution at the most favorable price by responsible brokerage firms
at reasonably competitive commission rates. In fulfilling this requirement, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any
duty, created by this Agreement or otherwise, solely by reason of effecting a
securities transaction in excess of the amount of Commission another broker or
dealer would have charged for effecting that transaction, if the Sub-Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Trust. The
Sub-Adviser further agrees that it shall, at all times, make a reasonable and
good faith determination that such brokerage or research services provided by
such broker or dealer are of benefit to the Trust.
Article 2: COMPENSATION OF THE SUB-ADVISER. For the services rendered by the
Sub-Adviser under this Agreement, the Adviser shall pay to the Sub-Adviser
compensation, computed and paid monthly in U.S. dollars on average daily net
assets at the annual rate of: Emerging Growth Portfolio - 35 basis points;
Income Portfolio - 17.5 basis points. The Sub-Adviser will pay its expenses
incurred in performing its duties under this Agreement. The Trust shall not be
liable to the Sub-Adviser for the compensation of the Sub-Adviser.
Article 3: COVENANTS OF THE SUB-ADVISER. The Sub-Adviser agrees that it will not
deal with itself or any of its affiliates, or with the Trustees of the Trust or
the Trust's principal underwriter, if any, as principal, broker or dealer in
making purchases or sales of securities or other property for the account of the
Trust except as permitted by the Investment Company Act of 1940 and all rules,
regulations and orders thereunder, will comply with all other provisions of the
Trust's Declaration of Trust and By-Laws then in effect and its current
prospectus relative to the Sub-Adviser, its directors, officers, employees and
affiliates, and will comply with all other laws, rules, regulations and orders
applicable to the activities contemplated herein.
Article 4: LIABILITY OF THE SUB-ADVISER. The Sub-Adviser 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 carrying out its duties under this
Agreement, except for violation of law, willful malfeasance, bad faith, gross
negligence or by reason of reckless disregard of its obligations and duties
hereunder. As used in this Article 4, the term "Sub-Adviser" shall include
shareholders, direct officers and employees of the Sub-Adviser, as well as the
Sub-Adviser itself. The Trust may enforce any obligations of the Sub-Adviser
under this Agreement, and may recover directly from the Sub-Adviser for any
liability it may have to the Trust.
Article 5: ACTIVITIES OF THE SUB-ADVISER. The services of the Sub-Adviser to the
Trust are not to be deemed to be exclusive, the Sub-Adviser and its affiliates
being free to render services to others. It is understood that Trustees,
officers, partners and shareholders of the Trust or the Adviser are or may
become interested in the Sub-Adviser as directors, officers, shareholders or
otherwise, and that shareholders, directors, officers and employees of the
Sub-Adviser may become similarly interested in the Trust or the Adviser as a
shareholder, Trustee, officer, partner or otherwise.
B
<PAGE>
Article 6: DURATION, TERMINATION AND AMENDMENT OF THIS AGREEMENT. This Agreement
shall become effective on the date of its execution and shall govern the
relations between the parties hereto thereafter, and shall remain in force until
November 17, 1999, on which date it will terminate with respect to a Portfolio,
unless its continuance after that date is specifically approved at least
annually (i) by the vote of a majority of the Board of Trustees of the Trust who
are not interested persons of the Trust, or of the Adviser, or of the
Sub-Adviser at a meeting specifically called for the purpose of voting on such
approval, and (ii) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the Investment
Company Act of 1940 and all rules, regulations and orders thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees of the Trust, by vote of a majority of the
outstanding voting securities of the Trust, by the Adviser or by the
Sub-Adviser, on not more than sixty (60) days nor less than thirty (30) days
written notice to other parties. This Agreement shall automatically terminate
in the event of its assignment.
This Agreement may be amended with respect to a Portfolio only if such amendment
is approved by vote of a majority of the outstanding voting securities of that
Portfolio, by the Adviser and by the Sub-Adviser.
The terms "assignment," "affiliated person," "interested person" and "majority
of the outstanding voting securities," when used in this Agreement, shall have
the respective meanings specified in the Investment Company Act of 1940 and the
rules, regulations and orders thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission under said Act.
Article 7: MISCELLANEOUS. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts, contains the entire understanding
between the parties and may be executed in several counterparts, each of which
shall be deemed to be an original and one and the same instrument.
Each party acknowledges and agrees that all obligations of the Trust under this
Agreement are binding only with respect to the Portfolios; 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
appropriate Portfolio; and that no other series of the Trust shall be liable
with respect to this Agreement or in connection with the transactions
contemplated herein.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
and delivered in their names and on their behalf by the undersigned, duly
authorized, as of this __________ day of December, 1997.
The undersigned Trustee of the Trust has executed this Agreement not
individually, but as Trustee under the Trust's Declaration of Trust dated
November 19, 1982, as amended, and the obligations of this Agreement are not
binding upon any of the Trustees or Shareholders of the Trust individually, but
bind only the Trust estate.
Citizens Advisers, Inc. Seneca Capital Citizens
Management LLC Investment Trust
By: __________________ By: __________________ By: __________________
TRUSTEE
Its: _________________ Its: _________________
C
<PAGE>
Proxy Statement/Prospectus
Exhibit 2
Plan of Reorganization
Citizens Investment Trust
September 17, 1997
Table of Contents
Item Page
1. Transfer of Assets of the E[bullet]Fund(R) .............................BB
2. Liquidating Distribution.................................................BB
3. Effective Time of the Reorganization.....................................CC
4. Conditions...............................................................CC
5. Termination of Plan......................................................CC
6. Amendment ...............................................................CC
AA
<PAGE>
Citizens Trust
The Plan's purpose is to define the steps that will be followed upon the
affirmative vote of the Shareholders of the E[bullet]Fund(R) to transfer all the
assets and liabilities of the E[bullet]Fund(R) to the Working Assets Money
Market Portfolio, and to be acquired and assumed by the Working Assets Money
Market Portfolio as stated herein, in exchange for shares of the Working Assets
Money Market Portfolio which shall thereafter be distributed to the Shareholders
of the E[bullet]Fund(R) as described in this Plan.
1. Transfer of Assets of the E[bullet]Fund(R)
At the Effective Time of the Reorganization as defined in Section 3, all
property of every description and all interests, rights, privileges and powers
of the E[bullet]Fund(R), subject to all liabilities of the E[bullet]Fund(R),
whether accrued, absolute, contingent or otherwise (such assets subject to such
liabilities hereinafter referred to as the "Fund Assets"), shall be transferred
and conveyed by the E[bullet]Fund(R) to the Working Assets Money Market
Portfolio, such that at and after the Effective Time of the Reorganization:
(a) all assets of the E[bullet]Fund(R) shall become the assets of
the Working Assets Money Market Portfolio; and
(b) all debts, liabilities, obligations and duties of the E[bullet]Fund(R) shall
become the debts, liabilities, obligations and duties of the Working Assets
Money Market Portfolio as aforesaid and may thenceforth be enforced against the
Working Assets Money Market Portfolio to the extent as if the same had been
incurred by it. It is further understood that recourse for the liabilities of
the E[bullet]Fund(R) shall, at and after the Effective Time of the
Reorganization, be limited to the Working Assets Money Market Portfolio.
In exchange for the transfer of the E[bullet]Fund(R), the Working Assets Money
Market Portfolio shall simultaneously issue at the Effective Time of the
Reorganization to the E[bullet]Fund(R) full and fractional shares of beneficial
interest of the Working Assets Money Market Portfolio, Retail Class. The number
of shares so issued by the Working Assets Money Market Portfolio shall be equal
in amortized cost value to the aggregate amortized cost value of the shares of
beneficial interest of the E[bullet]Fund(R) that are outstanding immediately
prior to the Effective Time of the Reorganization. Immediately prior to the
Effective Time of the Reorganization, the amount of the deferred organization
expenses of the E[bullet]fund(R) shall be written off and charged to capital;
provided, however, that such write-off shall not reduce the number of shares to
be received by the E[bullet]fund(R) or by any Shareholder of the
E[bullet]fund(R) in connection with the Reorganization.
2. Liquidating Distribution At the Effective Time of the Reorganization, the
E[bullet]Fund(R) shall make a liquidating distribution to its Shareholders as
follows:
Each Shareholder of record shall be credited a number of shares of the Working
Assets Money Market Portfolio, Retail Class, having an aggregate amortized cost
value equal to the aggregate amortized cost value of the shares of the
E[bullet]Fund(R) held of record by such Shareholder immediately prior to the
Effective Time of the Reorganization. In addition, each Shareholder of record of
the E[bullet]Fund(R) shall have the right to receive any unpaid dividends or
other distributions which were declared prior to the Effective Time of the
Reorganization as defined in Section 3, with respect to the shares of the
E[bullet]Fund(R) that are held by the Shareholder at the Effective Time of the
Reorganization. The Trust shall record on the books of the Working Assets
Portfolio the ownership of Working Assets Portfolio Retail Class shares by the
Shareholders of record of the E[bullet]Fund(R). All of the issued and
outstanding shares representing interests in the E[bullet]Fund(R) shall be
canceled on the books of the E[bullet]Fund(R) at the Effective Time of the
Reorganization, and the Trust's transfer books with respect to the
E[bullet]Fund(R) shall be closed permanently.
BB
<PAGE>
Proxy Statement/Prospectus
3. Effective Time of the Reorganization
Delivery of the Fund Assets and the shares of the Working Assets Money Market
Portfolio to be issued pursuant to Section 1, and the liquidation and
termination of the E[bullet]Fund(R) pursuant to Section 2, shall take effect as
of 4:00 P.M. Eastern Standard Time, December 8, 1997, or such earlier or later
date and time as may be declared by the Board of Trustees. Such date and time at
which such actions are taken are referred to herein as the "Effective Time of
the Reorganization." To the extent any Fund Assets are, for any reason, not
transferred at the Effective Time of the Reorganization, the E[bullet]Fund(R)
shall cause such Fund Assets to be transferred in accordance with this Plan at
the earliest practicable date thereafter.
4. Conditions
The following conditions must be met in order for the reorganization to be
completed as to the E[bullet]Fund(R):
(a) This Plan shall have been adopted and the transactions
contemplated by this Plan shall have been approved by the Shareholders
of the E[bullet]Fund(R) in the manner required by the Trust's
Declaration of Trust and applicable law.
(b) The Trust shall have received an opinion of counsel to the Trust,
in form reasonably satisfactory to it, and dated the Effective Time of
the Reorganization, substantially to the effect that the shares of the
Working Assets Portfolio, Retail Class, to be delivered to the
E[bullet]Fund(R) as provided for by this Agreement, are duly
authorized and, upon delivery, will be validly issued, fully paid and
non-assessable (except as otherwise disclosed in the Registration
Statement of the Trust on Form N-1A, filed with the Securities and
Exchange Commission).
5. Termination of Plan
This Plan may be terminated at any time at or prior to the Effective Time of
the Reorganization by a vote of a majority of the Trust's Board of Trustees.
6. Amendment
At any time prior to or (to the fullest extent permitted by law) after approval
of this Plan by the Shareholders of the E[bullet]Fund(R), the Board of Trustees
may, with or without the approval of the Shareholders, amend this Plan.
CC
<PAGE>
Citizens Trust
NOTES
<PAGE>
[Graphic Citizens Trust Logo]
<PAGE>
Supplement dated October 17,1997 to proxy statement/prospectus dated
October 17, 1997.
On page 27, following the entry entitled, "Commercial Paper," please delete
"90.46%" and substitute: 90.56%.
On page 28, following the entry entitled, "Small Business Administration,"
please delete "3.46%" and substitute: 3.47%.
On page 28, following the entry entitled, "Total Investments," please delete
"97.25%" and substitute 97.36%.
On page 28, beginning with entry entitled, "Other Assets Less Liabilities
2.75%," please delete remainder of the page and substitute the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Other Assets Less Liabilities 2.64% 2,723,100 990,281 (469,915) 3,243,466
------------ ----------- --------- ------------
$102,683,297 $20,702,238 ($469,915) $122,915,620
============ =========== ========== ============
</TABLE>
KEY:
(a) Investments are based upon amortized cost method
(b) Variable rates are subject to change every 7 to 90 days
(c) Includes a total of 14 notes
(d) Aggressive cost for federal income tax purposes is $199,672,154
See accompanying notes to Pro-Forma Financial Statements
Notes to Pro-Forma Financial Statements June 30, 1997 (unaudited)
(1) Proposed Reorganization
Under the proposed Plan of Reorganization, the Working Assets Money Market
Portfolio, a separate series of Citizens Trust, will acquire all or
substantially all of the net assets of the E[bullet]Fund(R) Portfolio in
exchange for shares of the Working Assets Money Market Portfolio. The
reorganization will be accomplished on a tax-free basis, and the exchange is
expected to be one-for-one.
(2) Pro-Forma Adjustments
The pro-forma adjustments in the statement of investments, statement of assets
and liabilities, and statement of operations reflect an anticipated increase
in some expenses resulting from changes in the expense structure and the
write-off of the deferred amortization costs of the E[bullet]fund(R).
