Exhibit m(2)
DISTRIBUTION PLAN
DISTRIBUTION PLAN, dated as of May 5, 2000 of CitiFunds Tax Free
Reserves, a Massachusetts business trust (the "Trust"). This Plan relates solely
to shares of beneficial interest of the Trust which are designated "Cititrade
Tax Free Reserves" ("Shares").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Trust intends to distribute Shares in accordance with Rule
12b-1 under the 1940 Act, and wishes to adopt this Plan as a plan of
distribution pursuant to Rule 12b-1;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan as a plan of
distribution in accordance with Rule 12b-1 under the 1940 Act, with the terms of
the Plan being as follows:
1. Distribution and Servicing Activities. Subject to the
supervision of the Trustees of the Trust, the Trust may:
(a) engage, directly or indirectly, in any activities
primarily intended to result in the sale of Shares of the Trust, which
activities may include, but are not limited to (i) payments to CFBDS,
Inc., the Trust's distributor (the "Distributor") for distribution
services, (ii) payments to securities dealers, financial institutions
(which may include banks) and others in respect of the sale of Shares,
(iii) payments for advertising, marketing or other promotional
activity, and (iv) payments for preparation, printing, and distribution
of prospectuses and statements of additional information and reports of
the Trust for recipients other than regulators and existing
shareholders of the Trust; and
(b) make payments, directly or indirectly, to the Trust's
Distributor, securities dealers, financial institutions (which may
include banks) and others for providing personal service and/or the
maintenance of shareholder accounts.
The Trust is authorized to engage in the activities listed above either directly
or through other persons with which the Trust has entered into agreements
related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but (a) in no event
may such expenditures for the purposes set forth in Section 1(a) above exceed an
amount calculated at the rate of 0.50% per annum of the average daily net assets
attributable to the Shares of the Trust, and (b) in no event may such
expenditures for the purposes set forth in Section 1(b) above exceed an amount
calculated at the rate of 0.10% per annum of the average daily net assets
attributable to the Shares of the Trust. Payments pursuant to this Plan may be
made directly by the Trust to the Distributor or to other persons with which the
Trust has entered into agreements related to this Plan. For purposes of
determining the fees payable under this Plan, the value of the Trust's average
daily net assets shall be computed in the manner specified in the Trust's
then-current prospectus and statement of additional information.
3. Trust's Expenses. The Trust shall pay all expenses of its
operations, including the following, and such expenses shall not constitute
expenditures under this Plan: organization costs of the Trust; compensation of
Trustees; governmental fees; interest charges; loan commitment fees; taxes;
membership dues in industry associations allocable to the Trust; fees and
expenses of independent auditors, legal counsel and any transfer agent,
distributor, shareholder servicing agent, registrar or dividend disbursing agent
of the Trust; expenses of issuing and redeeming shares of beneficial interest
and servicing shareholder accounts; expenses of preparing, typesetting, printing
and mailing prospectuses, statements of additional information, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to existing shareholders of the Trust; expenses connected with
the execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Trust,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Trust (including
but not limited to the fees of independent pricing services); expenses of
meetings of shareholders; expenses relating to the issuance, registration and
qualification of shares; and such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Trust may be a party and the legal obligation which the Trust may have to
indemnify its Trustees and officers with respect thereto.
4. Term and Termination. (a) This Plan shall become effective upon (i)
approval by a vote of at least a majority of the outstanding voting securities
(as defined in the 1940 Act) of Shares of the Trust, and (ii) approval by a
majority of the Trustees of the Trust and a majority of the Non-Interested
Trustees cast in person at a meeting called for the purpose of voting on this
Plan. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both the Trustees of the Trust
and the Non-Interested Trustees, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Plan may be terminated at any time by a vote of a majority of
the Non-Interested Trustees or by a vote of a majority of the outstanding voting
securities, as defined in the 1940 Act, of Shares of the Trust.
5. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities, as
defined in the 1940 Act, of Shares of the Trust, and no material amendment to
this Plan shall be made unless approved in the manner provided for annual
renewal of this Plan in Section 4(a) hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Non-Interested Trustees of the Trust shall
be committed to the discretion of such Non-Interested Trustees.
7. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
9. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the provisions
of the 1940 Act.
