As filed with the Securities and Exchange Commission September 5, 1997
File Nos. 333-____________
811-3626
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CITIZENS INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
One Harbour Place
Suite 525
Portsmouth, NH 03801
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (603) 436-5152
Sophia Collier
One Harbour Place
Suite 525
Portsmouth, NH 03801
(Name and Address of Agent for Service)
It is proposed that this filing become effective October 6, 1997, pursuant to
Rule 488.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
previously has registered an indefinite number of securities under the
Securities Act of 1933. The Notice required by Rule 24f-2 was filed by the
Registrant for its most recent fiscal year on August 28, 1997.
<PAGE>
CITIZENS INVESTMENT TRUST
FORM N-14 CROSS-REFERENCE PAGE
PART A: INFORMATION REQUIRED IN THE PROSPECTUS
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Beginning of Registration Cover Page
Statement and Outside Front
Cover Page of Prospectus
Item 2. Beginning and Outside Back Back Page
Cover Page of Prospectus
Item 3. Fee Table, Synopsis Summary; Investment Policies and
Information and Risk Factors Risk Factors
Item 4. Information About the Summary; Description of the
Transaction Reorganization; Additional Information
About the Transaction
Item 5. Information About the Investment Policies and Risk Factors;
Registrant The People and Operations of Citizens
Trust; Additional Information About the
Transaction; Additional Information
About the E*fund and Working Assets
Money Market Portfolios
Item 6. Information About the Summary; Investment Policies and Risk
Company being Acquired Factors; Factors Considered by the Board
of Trustees Before Recommending This
Transaction; Additional Information
About the Transaction; Additional
Information About the E*fund and
Working Assets Money Market
Portfolios
Item 7. Voting Information Voting Information
Item 8. Interest of Certain Description of the Reorganization; The
Persons and Experts People and Operations of Citizens Trust;
Financial Statements and Expert Advice
Item 9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
<PAGE>
PART B: INFORMATION
REQUIRED IN THE STATEMENT OF
ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. Additional Information Investment Policies and Risk Factors;
About the Registrant The People and Operations of Citizens
Trust; Additional Information About the
Transaction; Additional Information
About the E*fund and Working Assets
Money Market Portfolios
Item 13. Additional Information Summary; Investment Policies and Risk
About the Company Being Factors; Factors Considered by the Board
Acquired of Trustees Before Recommending This
Transaction; Additional Information
About the Transaction; Additional
Information About the E*fund and
Working Assets Money Market
Portfolios
Item 14. Financial Statements Additional Information About the
Transaction
PART C: OTHER INFORMATION
Item 15. Indemnification Indemnification
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
</TABLE>
<PAGE>
October x, 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*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>
PRELIMINARY MATERIALS
NOT FOR DISTRIBUTION
CITIZENS INVESTMENT TRUST
Citizens Income Portfolio
Citizens Index Portfolio
Citizens Emerging Growth Portfolio
Citizens Global Equity Portfolio
Working Assets Money Market Portfolio
E*fund
One Harbour Place
Suite 525
Portsmouth, New Hampshire 03801
Phone: (800) 223-7010
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held November 17, 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 November 17,
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.
<PAGE>
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.
For Shareholders of the E*fund Only:
PROPOSAL 6
To approve the attached Plan of Reorganization ("the Plan") which sets out the
steps needed to combine the E*fund 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*fund 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*fund; and
(c) The dissolution of the E*fund.
For all Shareholders:
To transact such other business as may properly come before the Meeting or any
adjournment thereof.
<PAGE>
Shareholders of record of Citizens Trust, as of the close of business September
12, 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 x, 1997
<PAGE>
PRELIMINARY MATERIALS
NOT FOR DISTRIBUTION
PROXY STATEMENT/PROSPECTUS
Dated: _____________ , 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 November 17, 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 on November 17, 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.
This Notice, Combined Proxy Statement/Prospectus and accompanying Proxy are
being mailed to Shareholders on or about October 18, 1997.
1
<PAGE>
PROSPECTUS SUMMARY FOR E*fund 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*fund 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*fund 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*fund, 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*fund's 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*fund 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.
<TABLE>
<CAPTION>
Pro-forma 7 day Expense Ratio
Yield 6/30/97 6/30/97
--------------- -------------
<S> <C> <C>
E*fund (without 4.24%* 1.47%*
reimbursement)
Working Assets Portfolio 4.49% 1.20%
(after reorganization)
</TABLE>
*These figures are without waivers and reimbursements, with which the E*fund's 7
day yield for the period ended 6/30/97 was 5.71% and the expense ratio was .10%.
All E*fund expenses during this period were reimbursed. All reimbursements for
the E*fund ended 9/30/97.
Investment Objectives
The investment objectives of the E*fund 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*fund 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.
2
<PAGE>
The following Table of Contents is your road map to Proposal 6:
<TABLE>
<CAPTION>
Item: Page
- -------------------------------------------------------------------------------
<S> <C>
Summary of Proposal 6 ....................................................14
Fees and Expenses.........................................................15
Investment Policies and Risk Factors .....................................18
The People and Operations of Citizens Trust...............................21
Description of the Plan of Reorganization.................................26
Factors Considered by the Board of Trustees Before Recommending This
Transaction ............................................................27
Additional Information About the Transaction..............................29
Additional Information About the E*fund and Working Assets
Portfolios..............................................................34
Financial Statements and Expert...........................................37
Voting Information........................................................37
Exhibit 1 - Proposed Sub-Advisory Agreement with Seneca
Capital Management LLC
Exhibit 2 - Plan of Reorganization
</TABLE>
Additional information about the E*fund and the Working Assets Portfolio is
provided in the Statement of Additional Information, dated September 26, 1996,
as amended March 28, 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.
DETAILED INFORMATION FOR ALL SHAREHOLDERS
Who May Vote
If you were a Shareholder September 12, 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
3
<PAGE>
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.
<TABLE>
<CAPTION>
Record Date (9/12/97)
<S> <C> <C>
Income Portfolio shares
Emerging Growth Portfolio shares
Index Portfolio
- --Retail Class shares
- --Institutional Class shares
Global Equity Portfolio shares
Working Assets Portfolio
- --Retail Class shares
- --Institutional Class shares
E*fund shares
----------------------
TOTAL shares
</TABLE>
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 through 6; because Proposal 1 only requires
a plurality, a vote withheld will not have the effect of a vote "Against."
4
<PAGE>
Even if you fill out a proxy you can still 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 brokerages 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.
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 of 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.
5
<PAGE>
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 are already serving the Trust
at the election of the Trustees, and we are now 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
below at 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 are
included below at page 23. Immediately below 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
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 is currently attending law school at Stetson University College of
Law. Address: 5416 Delette Ave. South, Gulfport, Florida 33707.
6
<PAGE>
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 to 1973. He has extensive experience in
investment banking, financial advisory and 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.
7
<PAGE>
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 sweat shops. 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.
8
<PAGE>
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.
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 or 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:
9
<PAGE>
The Trustees may at any time sell or otherwise transfer all of 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 and the
Trustees by any officer or officers of the 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.
10
<PAGE>
For Shareholders of Citizens Emerging Growth Portfolio:
PROPOSAL 4:
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 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 had 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 all 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.
11
<PAGE>
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 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.
12
<PAGE>
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 fully paid by Citizens Advisers.
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 only paid by the Emerging Growth
Portfolio and totaled $159,344.
Other Funds Managed by Seneca
Seneca also 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.
Information on these two funds is included below:
Seneca's Edge Fund:
<TABLE>
<CAPTION>
Net Assets Expense Ratio Management Fee
as of 7/31/97 as of 7/31/97 as of 7/31/97
- ------------- ------------- --------------
<S> <C> <C>
$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%
</TABLE>
*The expense ratios cited above are after waivers and reimbursements which
Seneca agreed to make under its management agreement. 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:
13
<PAGE>
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.
PROPOSAL 6: REORGANIZATION OF THE E*fund 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*fund 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*fund.
INTRODUCTION
Why Are We Doing This?
While the E*fund has been a great success in terms of the convenience it offers
to its Shareholders, in the past two years of operation the E*fund 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*fund'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*fund'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
"Eofeatures" of the E*fund's Citizens Access Account will be maintained. The
Working Assets Portfolio will now become the money market Portfolio for the
Citizens Access Account and Citizens Access Account holders who previously used
the E*fund 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.
The only significant change to prior E*fund policies or features will be the
elimination of the "E*fund Refund," wherein our distributor, Citizens
Securities, put 1% of the amount of any debit card purchases back into the fund.
This refund will be eliminated as a result of the proposed reorganization.
14
<PAGE>
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*fund will be
transferred to the Working Assets Portfolio. In exchange, the E*fund will be
given shares of the Working Assets Portfolio, Retail Class, of equal value to
the assets (reduced by the liabilities) which the E*fund transferred to the
Working Assets Portfolio.
Following the exchange, the E*fund will make what is called a "liquidating
distribution" of the shares of the E*fund. Each Shareholder of the E*fund 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*fund
held by that Shareholder.
Fees and Expenses
The following table provides: (1) a summary of the operating expenses of the
E*fund; (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
<TABLE>
<CAPTION>
Annual Operating Expenses (6/30/97)
(As a percentage of the average annual net assets)
E*fund 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 1.37%* 0.72%** 0.65%
Total 1.47%* 1.27%** 1.20%
</TABLE>
* Expenses are restated to reflect current operations. Other expenses and total
expenses shown are prior to waivers and reimbursements. The E*fund'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, were .70% and 1.25%, respectively.
15
<PAGE>
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/ $0.50 each thereafter
Per check fee...................................................................................................$.50
Stop payments (Working Assets & Citizens Access Account)......................................................$10.00
Checkbook (Working Assets & Citizens Access Account)...............................................First 20 are Free
Box of 200 checks (Citizens Access Account only)..............................................................$15.95
ATM cost (Citizens Access Account only)..............................................$0.65 each /Cash advances $2.50
Annual fee for Citizens Access Account........................................................................$35.00
Debit Card replacement (Citizens Account).....................................................................$10.00
Copies of statements, checks, tax forms...................................................................$ 2.00/ea
</TABLE>
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*fund $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.
16
<PAGE>
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 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
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.
17
<PAGE>
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 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.
18
<PAGE>
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.
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
September 26, 1996, as amended March 28, 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*fund 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 1/100th 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.
19
<PAGE>
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
on the next business day after we receive your request.
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.
20
<PAGE>
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*fund and the
Working Assets Portfolio regarding purchases, exchanges and redemption of
shares. The primary differences between the Shareholder service policies of the
E*fund and the Working Assets Portfolio are as follows:
Purchases: The E*fund has a maximum investment of $15,000 and no required
minimum. By contrast, the Working Assets Portfolio has no maximum, a $1000
minimum and accounts below $2500 (other than Citizens Access Accounts) must pay
a $3 monthly fee.
Redemptions: Check-writing in the E*fund 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.
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.
21
<PAGE>
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*fund and the Working Assets
Portfolio: E*fund .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*fund and the Working Assets Portfolio:
<TABLE>
<CAPTION>
For the year ended For the year ended
June 30, 1996 June 30, 1997
<S> <C> <C>
Working Assets Portfolio $423,731 $341,144
E*fund $ 4,018 $ 17,288
</TABLE>
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
22
<PAGE>
for all of its portfolios under the Rule 12b-1 plan; for the fiscal year ended
June 30, 1997, the amount was $868,464. The E*fund 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 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 Citizen 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*fund 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*fund 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.
23
<PAGE>
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. In 1990
- - 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 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
24
<PAGE>
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* 0
========================================================================
J.D. Nelson* 0
========================================================================
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.
25
<PAGE>
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.
Comparison
The people and operations of the Working Assets Portfolio and the E*fund 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*fund has a .10%
management fee and no contractual expense limitation. In addition, unlike the
E*fund, the Working Assets Portfolio has a 12b-1 plan. However, on an overall
basis, the combined expenses of the Working Assets Portfolio are lower than
those of the E*fund but for the fact that the E*fund received a substantial
expense reimbursement and fee waiver from our Adviser.
Making the Reorganization Smooth and Convenient
Your existing dividend re-investment option in the E*fund will 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.
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, meeting we approved combining the E*fund and the Working
Assets Portfolio, which we are recommending to the Shareholders of the E*fund
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*fund 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*fund in liquidation
of the E*fund's shares in the same dollar value; (c) the dissolution of the
E*fund.
The stock transfer books of the Trust with respect to the E*fund 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*fund will be deemed to be
redemption requests for shares of the Working Assets Portfolio to be distributed
to the former E*fund Shareholders.
26
<PAGE>
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
--Approval of the Plan and the transactions contemplated therein by the
Shareholders of the E*fund.
--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*fund 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 November 18, 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*fund 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 5, 1997 meeting of the Board of Trustees and at a subsequent
telephonic meeting on September ____, 1997, we reviewed, discussed and evaluated
alternatives available to the E*fund and its Shareholders, as well as the
possibility of a reorganization of the E*fund 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*fund Shareholders resulting from a reorganization, as well as other
information relevant to our consideration.
27
<PAGE>
Cost considerations
We reviewed potential terms of a Plan of Reorganization as it would impact
Shareholders of the E*fund. 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*fund. 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*fund 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*fund 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*fund. We noted that both the E*fund and 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*fund'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*fund
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*fund 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*fund and the
Working Assets Portfolio, and (2) that the interests of existing Shareholders of
the E*fund 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 ___, 1997, we reviewed the
Plan of Reorganization attached hereto as Exhibit 2 ("the Plan") and again
reviewed the potential benefits,
28
<PAGE>
detriments, costs and other factors discussed above. The Plan was unanimously
approved and we recommend approval by the Shareholders.
Federal Income Tax Consequences
Since the Working Assets Portfolio and the E*fund are each money market
portfolios which have 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*fund and the Working Assets Portfolio have not sought a tax ruling from
the Internal Revenue Service (the "IRS") or an opinion of counsel concerning the
foregoing. 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*fund 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.
Capitalization
The following pages provide pro-forma combination Statements of Assets and
Liabilities, Statement of Operations, and Statements of Investments for the
E*fund and the Working Assets Portfolio as of June 30, 1997.
29
<PAGE>
Pro-Forma Combination: Working Assets Money Market Portfolio and E*fund
Portfolio
Pro-Forma Statement of Operations - June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Working Assets E*fund Pro-Forma Combined
Money Market Adjustments Pro-Forma
Portfolio
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Interest $5,339,283 $921,590 -- $6,260,873
Other Income -- 74,257 -- 74,257
-------------------------------------------------------------------------------
Total investment Income 5,339,283 995,847 -- 6,335,130
-------------------------------------------------------------------------------
Expenses
Investment management 341,144 17,288 43,222 (2) 401,654
fees
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 expense 162,353 -- 34,576 (1) 196,929
Administration expense 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 -- 45,621
-------------------------------------------------------------------------------
Total Expenses 1,223,645 254,669 24,295 (2) 1,502,609
Fee Reductions (17,500)(3) (17,021)(3) 14,385 (3) (20,136) (3)
Reimbursement by Adviser (94,266) (237,648) 217,026 (5) (114,888) (6)
-------------------------------------------------------------------------------
Net expenses 1,111,879 -- 255,706 1,367,585
-------------------------------------------------------------------------------
Net investment income 4,227,404 995,847 (255,706) 4,967,545
-------------------------------------------------------------------------------
Net increase in net $4,227,404 $995,847 ($255,706) $4,967,545
assets resulting from
operations
-------------------------------------------------------------------------------
</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 shareholder meeting and the reorganization
(5) To reflect the voluntary expense limitation
(6) Statement reflects the expected cost of the Shareholders meeting and the
reorganization of $20,000
See accompanying notes to Pro-Forma Financial Statements
30
<PAGE>
Pro-Forma Combination: Working Assets Money Market Portfolio and E*fund
Portfolio
Pro-Forma Statement of Assets and Liabilities - June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Working Assets E*fund Pro-Forma Combined
Money Market Adjustments Pro-Forma
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments in securities, at market $99,960,197 $19,711,957 -- $119,672,154
value (Identified cost $99,960,197 and
$19,711,967 respectively)
Cash 1,140,650 644,875 -- 1,785,525
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 -- 168,399
Prepaid expenses 34,078 18,618 -- 52,696
--------------------------------------------------------------------
Total Assets 103,511,889 21,124,550 -- 124,636,439
--------------------------------------------------------------------
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 829,592 422,312 255,706 1,506,610
====================================================================
Net Assets $102,683,297 $20,702,238 (255,706) $123,129,829
====================================================================
Retail Shares
Net assets $85,179,413 $20,702,238 (219,431) $105,662,220
Shares outstanding 85,179,413 20,702,238 105,662,220
Net asset value, offering and $1.00 $1.00 $1.00
redemption Price Per Share
Institutional Shares
Net assets $17,503,84 (36,275) $17,467,609
Shares outstanding 17,503,884 17,467,609
Net asset value, offering and $1.00 $1.00
redemption Price per share
Net Assets
At June 30, 1997 net assets consisted
of:
--------------------------------------------------------------------
Paid-in capital $102,683,297 $20,702,238 (255,706) $123,129,829
====================================================================
--------------------------------------------------------------------
$102,683,297 $20,701,238 (255,706) $123,129,829
====================================================================
</TABLE>
(1) To reflect the pro-forma adjustments on the Pro-Forma Statement of
Operations
See accompanying notes to Pro-Forma Financial Statements
31
<PAGE>
Pro-Forma Combination: Working Assets Money Market Portfolio and E*fund
Portfolio
Pro-Forma Statement of Investments - June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PrincipSecurity Description Yield Maturity Working E*fund Pro-Forma Combined
Amount Date Assets Money Portfolio Adjustments Pro-Forma
Market Value (a)
Portfolio
Value (a)
<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 90.41%
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 4,474,555 791,259 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
2,315,000 Pitney Bowes Credit Corp. 5.500 7/17/97 2,309,341 -- 2,309,341
32
<PAGE>
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 In. 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
---------------------------------------------------------
US Government Agencies 2.70%
145,000 Fed. Home Loan Mortgage 5.410 7/14/97 -- 144,717 144,717
Discount Notes
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%
4,250,6Variable 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 97.19% (Cost $119,6762,154) (d) 99,960,196 19,711,957 119,672,154
Other assets less liabilities 2.81% 2,723,100 990,281 (255,706) 3,457,675
=========================================================
NET ASSETS $102,683,297 $20,702,238 ($255,706) $123,129,829
=========================================================
</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
33
<PAGE>
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 assets of the E*fund 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.
ADDITIONAL INFORMATION ABOUT THE WORKING ASSETS PORTFOLIO AND THE E*FUND
The following tables provide additional financial information for the E*fund
Portfolio and the Working Assets Money Market Portfolio for the periods
indicated (based on a single share outstanding throughout such periods):
34
<PAGE>
Citizens Trust Financial Highlight
<TABLE>
<CAPTION>
Working Assets Money Market Portfolio
RETAIL SHARES For the Year For the year For the year For the year For the year For the year
Selected Per-Share Data Ended Ended Ended Ended Ended Ended
June 10, 1997 June 30, 1996 June 30, 1995 June 30, 1994 June 30, 1993 June 30, 1992
<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 1.39% 1.21% 1.16% 1.16% 1.11% 1.07%
prior to Reimbursement
Ratio of expenses to average net assets
net of Reimbursement & 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%
---------------------------
For the year For the
Ended period
June 30, Ended
1997 June 30, 1996
(1)
---------------------------
INSTITUTIONAL SHARES $1.00 $1.00
Selected Per-Share Data
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
Ration of expenses to average net assets 0.60% 0.047%(2)
Ratio of expenses to average net assets .060% 0.047%
Net of reimbursement & fee waviers
Ratio of net income to average net assets 4.92% 5.16%(2)
</TABLE>
(1) For the period from February 1, 1996 to June 30, 1996
(2) Annualized
35
<PAGE>
Citizens Trust Financial Highlights
<TABLE>
<CAPTION>
E*fund
------------------------------------
For the year For the year
Ended Ended
June 30, 1997 June 30, 1996
------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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%
</TABLE>
36
<PAGE>
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
Financial statements for both the E*fund and the Working Assets Portfolio
(including assets and liabilities, operations and investments) for the relevant
periods are contained 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 on November 17, 1997.
Only E*fund Shareholders of record at the close of business on September 12,
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 _____________ shares of the E*fund.
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 may also 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*fund 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).
37
<PAGE>
Exact Text of Proposal 6:
To approve the attached Plan of Reorganization ("the Plan"), combining the
E*fund 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*Fund, 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 the outstanding voting
securities of the E*fund 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*fund.
THE TRUSTEES UNANIMOUSLY RECOMMEND A "YES" VOTE IN FAVOR OF REORGANIZATION
38
<PAGE>
Exhibit 1
SUB-INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this 17th day of November, 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 US 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
<PAGE>
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.
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 US 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.
2
<PAGE>
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.
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.
3
<PAGE>
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 November, 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.
By:___________________________
Its:___________________________
SENECA CAPITAL MANAGEMENT LLC
By:___________________________
Its:___________________________
CITIZENS INVESTMENT TRUST
By:___________________________
TRUSTEE
4
<PAGE>
Exhibit 2
PLAN OF REORGANIZATION
Citizens Investment Trust
September 5, 1997
Table of Contents
Item Page
1. Transfer of Assets of the E*fund 2
2. Liquidating Distribution 2
3. Effective Time of the Reorganization 3
4. Conditions 3
5. Termination of Plan 3
6. Amendement 3
<PAGE>
The Plan's purpose is to define the steps that will be followed upon the
affirmative vote of the Shareholders of the E*fund to transfer all the assets
and liabilities of the E*fund 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*fund as described in this Plan.
1. Transfer of Assets of the E*fund
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*fund, subject to all liabilities of the E*fund, 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*fund to the Working Assets Money Market Portfolio, such that at and
after the Effective Time of the Reorganization:
(a) all assets of the E*fund shall become the assets of the Working Assets Money
Market Portfolio; and
(b) all debts, liabilities, obligations and duties of the E*fund 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*fund 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*fund, the Working Assets Money Market
Portfolio shall simultaneously issue at the Effective Time of the Reorganization
to the E*fund 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*fund that are outstanding immediately prior to the Effective Time of the
Reorganization.
2. Liquidating Distribution
At the Effective Time of the Reorganization, the E*fund 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*fund
held of record by such Shareholder immediately prior to the Effective Time of
the Reorganization. In addition, each Shareholder of record of the E*fund 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*fund 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*fund. All of the issued and
outstanding shares representing interests in the E*fund shall be canceled on the
books of the E*fund at the Effective Time of the Reorganization, and the Trust's
transfer books with respect to the E*fund shall be closed permanently.
2
<PAGE>
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*fund pursuant to Section 2 shall take effect as of 4:00 P.M., Eastern
Standard Time, November 18, 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*fund 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*fund:
(a) This Plan shall have been adopted and the transactions contemplated by
this Plan shall have been approved by the Shareholders of the E*fund 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*fund
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*fund, the Board of Trustees may, with
or without the approval of the Shareholders, amend this Plan.
3
<PAGE>
PRELIMINARY MATERIAL
NOT FOR DISTRIBUTION
PROXY CARD
Citizens Investment Trust
Meeting of Shareholders
to be held on November 17, 1997
ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR
OF APPROVAL OF THE PLAN. SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE
MEETING ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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 November 17, 1997, at 5:00 p.m., EST, at
Boston, Massachusetts, and at any adjournment thereof on all matters coming
before the meeting.
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
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:
<PAGE>
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*fund:
6. To approve the Plan of Reorganization combining the E*fund 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>
OTHER INFORMATION
Item 15. Indemnification:
Article VII, Section 12, of the Agreement and Declaration of Trust,
provides that the Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding by reason of the fact that such
person is or was an agent of the Trust, against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with such proceeding if that person acted in good faith and reasonably believe
her/his conduct to be in the best interest of the Trust. Indemnification will
not be provided in certain circumstances, however, including instance of willful
misfeasance, bad faith, gross negligence and reckless disregard of the duties
involved in the conduct of the particular office involved.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to the trustees, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable in the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 16. Exhibits:
<TABLE>
<CAPTION>
<S> <C>
(1) declaration of trust: material currently on file
(2) by-laws: material currently on file
(3) not applicable
(4) copies of the agreement of reorganization: attached as Exhibit
1 to the Combined Proxy Statement/Prospectus
(5) not applicable
(6) management agreement: material currently on file
(7) distribution agreement: material currently on file
(8) not applicable
(9) custodian agreement: material currently on file
(10) Rule 12b-1 distribution plan: material currently on file
(11) opinion and consent of counsel as to the legality of the
securities being registered
(12) not applicable
(13) other material contracts:
a) administrative agreement: material currently on file
(14) consent of independent certified public accountants as to use of
their report
(15) not applicable
(16) power of attorneys: material currently on file
(17a) Rule 24f-2 Notice of Election of Registrant: material currently on
file
<PAGE>
(17b) Prospectus for the Trust dated September 28, 1996, as amended
March 28, 1997, and as further amended May 1, 1997 and June 18,
1997: material currently on file (Accession No.
0000950146-97-00068)
(17c) Statement of Additional Information for the Trust, dated September
26, 1996, as amended March 28, 1997: material currently on file
(Accession No. 0001029869-97-000092)
(17d) Annual Report to Shareholders of the Trust for the fiscal year ended
June 30, 1997: material currently on file (Accession No.
0000950146-96-001499)
</TABLE>
Item 17. Undertakings:
(1) The undersigned registrant agrees that, prior to any public
reoffering of the securities registered through the use of a
prospectus which is part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide
offering of them.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Portsmouth and State of New
Hampshire, on the 5th day of September, 1997.
CITIZENS INVESTMENT TRUST
By /s/ Sophia Collier
-------------------------------
Sophia Collier, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Sophia Collier
- ------------------------------Trustee,
Sophia Collier President and September 5, 1997
Principal Executive,
Accounting and Financial Officer
/s/ Azie Taylor Morton*
- ------------------------------Trustee September 5, 1997
(Azie Taylor Morton)
/s/ William P. Glenn, II*
- ------------------------------Trustee September 5, 1997
(William Glenn)
/s/ Ada Sanchez
- ------------------------------Trustee September 5, 1997
(Ada Sanchez)
/s/ J.D. Nelson*
- ------------------------------Trustee September 5, 1997
(J.D. Nelson)
/s/ Juliana Eades*
- ------------------------------Trustee September 5, 1997
(Juliana Eades)
/s/ Lokelani Devone*
<PAGE>
- ------------------------------Trustee September 5, 1997
(Lokelani Devone )
</TABLE>
* By Sophia Collier Attorney in Fact
See Power of Attorney dated May 15, 1992, filed with the Commission May 15, 1992
as part of Registrant's Post Effective Amendment #12.
See Power of Attorney dated November 12, 1992, filed with the Commission
November 12, 1992, as part of Registrant's Post Effective Amendment #14.
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
4 Plan of Reorganization (Attached as Exhibit 2 to the
Combined Proxy Statement/Prospectus)
11 Opinion and consent of counsel as to the legality of the
securities being registered
14 Consent of independent certified public accountants
as to use of their report
</TABLE>
<PAGE>
Call NOW . . . we need YOUR vote for a quorum!
Vote "YES" -- to merge the E*fund(R) into the larger
Working Assets Money Market Portfolio
[check] INCREASE efficiency
[check] REDUCE expenses
[check] Keep the everyday CONVENIENCE
[check] Continue your SOCIALLY RESPONSIBLE investment in a
conservative money market portfolio
If you have already mailed in your proxy ballot card, thank
you for voting.
If you have not yet voted, the Board of Trustees URGES you
to vote "Yes" for the reorganization of the E[bullet]fund(R). We will
be calling you soon to solicit your vote.
OR CALL US NOW: 1-800-223-7010
<PAGE>
The Citizens Trust Board of Trustees urge you to
review the information that came with your proxy
ballot then vote YES on the proposals that apply to
your portfolio shares.
Your voice and your vote should be heard on these
important issues. After reviewing the proposals,
simply check off your vote on the proxy ballot
enclosed in the proxy mailing you received recently
and return it in the self-addressed, postage paid
envelope. OR JUST CALL 1-800-223-7010 AND
VOTE.
VOTE NOW-VOTE YES-1-800-223-7010
<PAGE>
[graphic of handgrips]
EXERCISE YOUR
SHAREHOLDER RIGHTS!
1-800-7010
Vote today! We need a quorum!
Call 1-800-223-7010 to cast your vote.
<PAGE>
The small size of the E*fund(R) has made
it very expensive to maintain. The
Board of Trustees recommends that
E*fund(R) shareholders VOTE TO COMBINE
THE E*FUND(R) AND THE CITIZENS WORKING
ASSETS MONEY MARKET PORTFOLIO, thus
continuing your investment in a socially
responsible money market portfolio that
has an investment objective of safety
and liquidity.
Remember: All the convenient features
of the E*fund(R) will remain in place.
In the Trustees' opinion, the much
larger WORKING ASSETS MONEY MARKET
PORTFOLIO OFFERS greater advantages for
Citizens Trust Shareholders through
LOWER EXPENSES AND ALL THE SAME
CONVENIENT FEATURES OF THE E*FUND(R).
We will be calling you soon to solicit
your vote or call us at:
1-800-223-7010.
Presorted
First Class
U.S. Postage
Paid
Nashua, NH
Permit #375
Exhibit 11
BINGHAM, DANA & GOULD LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110-1726
September 5, 1997
Citizens Investment Trust
One Harbour Place
Portsmouth, NH 03801
Ladies and Gentlemen:
We have acted as counsel to Citizens Investment Trust, a Massachusetts
business trust (the "Trust"), in connection with the Trust's Registration
Statement on Form N-14 to be filed with the Securities and Exchange Commission
on or about September 5, 1997 (the "Registration Statement") with respect to the
transfer of all of the assets and liabilities of the series of the Trust
designated as the E-fund to the series of the Trust designated as the Working
Assets Money Market Portfolio (the "Portfolio"), and the receipt of shares of
the Portfolio ("Shares") by the holders of shares of the E-fund (the
"Transaction").
In connection with the furnishing of this opinion, we have examined the
following documents:
(a) a certificate of the Secretary of State of the
Commonwealth of Massachusetts as to the existence of the Trust;
(b) copies, certified by the Secretary of State of the
Commonwealth of Massachusetts, of the Trust's Declaration of Trust and
of all amendments thereto on file in the office of the Secretary of
State (the "Declaration of Trust");
(c) a Certificate executed by the President of the Trust,
certifying as to, and attaching copies of, the Trust's Declaration of
Trust, By-Laws and certain resolutions proposed to be adopted by the
Trustees of the Trust;
(d) a draft of the Registration Statement; and
(e) a draft of the Plan of Reorganization, dated as of
September x, 1997 (the "Plan").
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all original documents reviewed by
us in original or copy form and the legal competence of each individual
executing any document. We
<PAGE>
have also assumed that the resolutions as adopted by the Trustees of the Trust
will be in substantially the form of the resolutions referred to in paragraph
(c) above and that the Registration Statement as filed with the Securities and
Exchange Commission and the Plan as adopted by the Trustees of the Trust will be
substantially the form of the drafts referred to in paragraphs (d) and (e),
respectively, above.
This opinion is based entirely on our review of the documents listed
above and such investigation of law as we have deemed necessary or appropriate.
We have made no other review or investigation of any kind whatsoever, and we
have assumed, without independent inquiry, the accuracy of the information set
forth in such documents.
This opinion is limited solely to the internal substantive laws of the
Commonwealth of Massachusetts as applied by courts located in such Commonwealth,
except that we express no opinion as to any Massachusetts securities law. No
opinion is given herein as to the choice of law or internal substantive rules of
law which any tribunal may apply to the Transaction.
As to the opinion set forth in paragraph 1 below relating to the
existence of the Trust, our opinion relies entirely upon and is limited by the
certificate of the Secretary of State of the Commonwealth of Massachusetts
described in paragraph (a) above.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is
our opinion that:
1. The Trust is validly existing under the Declaration of Trust and the
laws of the Commonwealth of Massachusetts as a voluntary association with
transferable shares of beneficial interest commonly referred to as a
"Massachusetts business trust."
2. Subject to the adoption by the Trustees of the Trust of the
resolutions referred to in paragraph (c) above and the Plan referred to in
paragraph (e) above, and the approval of the Transaction by the shareholders of
the Trust, the shares to be delivered to the E-fund pursuant to the Plan are
duly authorized and will be, when issued and sold in accordance with the
Declaration of Trust and By-Laws of the Trust in exchange for the consideration
described in the Plan, validly issued, fully paid and non-assessable, except
that, as set forth in the Trust's
<PAGE>
Statement of Additional Information which is incorporated by reference in the
Registration Statement, shareholders of the Trust may, under certain
circumstances, be held personally liable for its obligations.
We hereby consent to the filing of this Opinion as an Exhibit to the
Registration Statement, to the use of our name, and to the references to our
Firm in the Registration Statement. This consent, however, does not constitute a
consent under Section 7 of the Securities Act of 1933, as amended, because we
have not certified any part of the Registration Statement and do not otherwise
come within the categories of persons whose consent is required under such
Section 7 or under the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
BINGHAM, DANA & GOULD LLP
Exhibit 14
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated July 25, 1997, accompanying the
financial statements and financial highlights of Working Assets Money Market
Portfolio and the E*fund, each a series of shares of beneficial interest of
Citizens Trust, appearing in the Annual Report to Shareholders for the year
ended June 30, 1997, which is incorporated by reference in the Registration
Statement on Form N-14 of Citizens Trust. We consent to the use of the
aforementioned report and to the references to our Firm in the Registration
Statement.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
September 3, 1997
