<PAGE>
As filed with the Securities and Exchange Commission on June 16, 2000
File Nos. 33-36556
811-6154
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 26
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 32
CITIFUNDS INTERNATIONAL TRUST*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
21 MILK STREET, 5TH FLOOR, BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 21 MILK STREET, 5TH FLOOR, BOSTON, MASSACHUSETTS
02109
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM DANA LLP, 150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[X] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Premium Portfolios, on behalf of International Equity Portfolio, has
also executed this Registration Statement.
--------------------------------------------------------------------------------
* This filing relates solely to shares of the Trust's series CitiFunds
International Growth Portfolio.
<PAGE>
Smith Barney
Mutual Funds
PROSPECTUS
INTERNATIONAL GROWTH
FUND
CLASS A, B, L AND Y SHARES
SEPTEMBER , 2000
The Securities and Exchange Commission has not approved or
disapproved these securities or determined whether this prospectus is
accurate or complete. Any statement to the contrary is a crime.
INVESTMENT PRODUCTS:
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
<PAGE>
CONTENTS
Investments, risks and performance......................................
More on the fund's investments..........................................
Management..............................................................
Choosing a class of shares to buy.......................................
Comparing the fund's classes............................................
Sales charges...........................................................
More about deferred sales charges.......................................
Buying shares...........................................................
Exchanging shares.......................................................
Redeeming shares........................................................
Other things to know about share transactions...........................
Salomon Smith Barney retirement programs................................
Dividends, distributions and taxes......................................
Share price.............................................................
Financial highlights....................................................
<PAGE>
INVESTMENTS, RISKS AND PERFORMANCE
INVESTMENT OBJECTIVE
The fund seeks to provide long-term capital growth. Dividend income, if any, is
incidental to this goal.
PRINCIPAL INVESTMENT STRATEGIES
KEY INVESTMENTS The fund invests primarily in the common stocks of foreign
companies that the fund's manager believes have above-average prospects for
growth, including companies in developing countries. Generally, the fund invests
in a number of different countries and, under normal circumstances, the fund
invests at least 65% of its assets in equity securities of companies in at least
three foreign markets. The fund usually invests in securities listed on
securities exchanges, although it may also purchase securities which are not
registered for sale to the general public, or, to a limited extent, securities
that are not readily marketable.
In addition to common stocks, the fund may also invest in other securities
including rights to purchase common stocks, depositary receipts (receipts which
represent the right to receive the securities of foreign issuers deposited in a
U.S. bank or local branch of a foreign bank), preferred stock or warrants, and
also, to a limited extent, purchase shares of other investment companies,
including closed end investment companies, that invest in foreign securities.
The fund may, but is not required to, enter into forward currency transactions
to buy or sell currencies at a future date, which may be a few days or a number
of months. The fund may enter into these forward currency contracts to:
[] Settle transactions in securities quoted in foreign currencies
[] Attempt to protect against the economic impact of adverse changes in the
value of the U.S. dollar or other currencies
SELECTION PROCESS In managing the fund, the manager looks for well-established
companies with medium to large capitalizations (typically $750 million or more),
superior management teams and histories of above-average revenues and earnings
growth which appear to be reasonably valued compared to their long-term earnings
potential. The manager uses fundamental analysis to find companies that it
believes have growth potential, and looks first at a particular company and then
at the country in which the company is located and the industry in which the
company participates. The manager eliminates stocks that it believes are over
priced relative to a company's financial statements and projections. The manager
then analyzes each company to find those believed to have superior management
teams, solid product lines, strong competitive positioning, attractive cash
flows and histories of above-average revenues and earnings growth. The manager
seeks opportunities to invest in foreign economies that are growing faster than
the U.S. economy.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investing in foreign issuers may involve unique risks. Some of these risks do
not apply to larger more developed countries. However, these risks may be more
pronounced to the extent the fund invests in emerging market countries or
significantly in any one country. Investors could lose money on their investment
in the fund, or the fund may not perform as well as other investments, if:
[] Foreign securities prices decline
[] Adverse governmental action or political, social, economic or market
instability affects a foreign country or region
[] The currency in which a security is priced declines in value relative to the
U.S. dollar
[] The manager's judgement about the attractiveness, value or potential
appreciation of a particular security proves to be incorrect
[] Foreign withholding taxes reduce the fund's returns
[] The economies of foreign countries grow at a slower rate than expected or
experience a downturn or recession
In addition, foreign investing involves the following risks:
[] Many foreign countries the fund invests in have markets that are smaller,
less liquid and more volatile than markets in the U.S. In a changing market,
the manager may not be able to sell the fund's portfolio securities in
amounts and at prices it considers reasonable
[] In some foreign countries, less information is available about foreign
issuers and markets because of less rigorous accounting and regulatory
standards than in the U.S.
[] Non-U.S. equity securities may trade at price-earnings multiples that are
higher than those of comparable U.S. companies, and that may not be
sustainable. As a result, there may be rapid changes in the value of foreign
securities
[] Enforcing legal rights may be difficult, costly and slow and there may be
special problems enforcing claims against foreign governments
[] Some foreign currency values may be volatile and there is the possibility of
governmental controls on currency exchanges or governmental intervention in
currency markets which may prevent the fund from realizing value in U.S.
dollars from its investment in foreign securities
[] There may be other governmental or non-governmental actions resulting in
expropriations of assets, confiscatory taxation, and limitations on the use
or transfer of assets by the fund or the issuers of securities.
Because the value of a depositary receipt is dependent upon the market price of
an underlying foreign security, depositary receipts are subject to most of the
risks associated with investing in foreign securities directly.
Economic and Monetary Union (EMU) and the introduction of a single European
currency (the Euro), which began on January 1, 1999, may increase uncertainties
relating to investment in European markets. Among other things, EMU entails
sharing a single currency and official interest rate and adhering to limits on
government borrowing by participating countries. EMU is driven by the
expectation of economic benefits, however, there are significant risks
associated with EMU. Monetary and economic union on this scale has not been
attempted before, and there is uncertainty whether participating countries will
remain committed to EMU in the face of changing economic conditions.
The fund's growth-oriented investment style may increase the risks of investing
in the fund. Growth securities typically are quite sensitive to market movements
because their market prices tend to reflect future expectations. When it appears
those expectations will not be met, the prices of growth securities typically
fall. Growth securities may also be more volatile than other investments because
they generally do not pay dividends.
To the extent that the fund enters into forward foreign currency transactions,
it may not fully benefit from or may lose money on the transactions if changes
in currency rates do not occur as anticipated or do not correspond accurately to
changes in the value of the fund's holdings, or if the counterparty defaults. It
may also prevent the fund from realizing profits on favorable movements in
exchange rates. The fund's ability to use currency exchange contracts
successfully depends on a number of factors, including the contracts being
available at prices that are not too costly, the availability of liquid markets,
and the ability of the manager to accurately predict the direction of changes in
currency exchange rates.
Please remember that an investment in the fund is not a bank deposit and it is
not insured or guaranteed by the FDIC or any other government agency.
See page [ ] for more information about the risks of investing in the fund.
WHO MAY WANT TO INVEST The fund may be an appropriate investment if:
[] You want to direct a portion of your overall investment portfolio to
securities of non-U.S. companies and you are prepared to accept the risks of
international investing
[] You are prepared to accept significant fluctuations in share price and
possible losses
[] You are not seeking current income
[] Your investment horizon is longer term -- typically at least five years
<PAGE>
RISK RETURN BAR CHART
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. This bar chart
shows the performance of the fund's Class A shares for each of the years
indicated. Class B, L and Y shares would have different performance because of
their different expenses. The performance information in the chart does not
reflect sales charges, which would reduce your return. The performance
information does reflect certain fee waivers or reimbursements, which if reduced
or eliminated may cause the fund's performance to go down.
TOTAL RETURN FOR CLASS A SHARES
1992 1993 1994 1995 1996 1997 1998 1999
(1.45)% 29.82% (11.46)% 18.08% 2.59% 5.15% 17.62% 35.66%
CALENDAR YEARS ENDED DECEMBER 31
QUARTERLY RETURNS (FOR THE YEARS COVERED BY THE BAR CHART):
Highest: 28.09% in 4th quarter 1999; Lowest: (14.04)% in 3rd quarter 1998.
Year to date: ___% through 6/30/00.
*The returns shown for Class A shares include returns for periods before the
creation of share classes on January 4, 1999.
RISK RETURN TABLE
This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown with that of the MSCI
EAFE Index. This table assumes imposition of the maximum sales charge applicable
to the class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends. The performance information also reflects certain
fee waivers or reimbursements, which if are reduced or eliminated may cause the
fund's performance to go down.
AVERAGE ANNUAL TOTAL RETURNS:
CALENDAR YEARS ENDED DECEMBER 31, 1999
CLASS 1 YEAR 5 YEARS SINCE INCEPTION INCEPTION DATE
A* 28.87% 14.06% 9.45% 3/1/91
B 25.35% n/a n/a 1/4/99
L** n/a n/a n/a 9/__/00
Y** n/a n/a n/a 9/__/00
MSCI EAFE Index 27.30% 13.15% *** ***
* The returns for Class A in the table have been adjusted to reflect maximum
front end sales charge currently applicable to the Class A shares.
** There were no Class L or Y shares outstanding for the calendar year ended
December 31,1999.
*** Index comparison begins on 2/28/91.
<PAGE>
<TABLE>
FEE TABLE
This table sets forth the fees and expenses you will pay if you invest in fund shares.
<CAPTION>
SHAREHOLDER FEES
<S> <C> <C> <C> <C>
(fees paid directly from your investment) CLASS A CLASS B CLASS L CLASS Y
Maximum sales charge (load) imposed on purchases
(as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption) None(1) 5.00% 1.00% None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES(2)
<S> <C> <C> <C> <C>
(expenses deducted from fund assets) CLASS A CLASS B CLASS L(3) CLASS Y(3)
Management fee 1.00% 1.00% 1.00% 1.00%
Distribution and service (12b-1) fees 0.15% 1.00% 1.00% None
Shareholder services 0.25% 0.15% None None
Administrative and other services 0.55% 0.55% 0.55% 0.55%
----- ----- ----- -----
Total annual fund operating expenses* 1.95% 2.70% 2.55% 1.55%
* Because some of the Fund's expenses were waived or reimbursed,
actual total operating expenses for the prior year were (or,
in the case of Class L or Y shares, would have been): 1.75% 2.50% 2.35% 1.35%
These fee waivers and reimbursements may be reduced or terminated at any time.
(1) You may buy Class A shares in amounts of $1,00,000 or more at net asset value (without an initial sales charge) but if
you redeem those shares within 12 months of their purchase, you will pay a deferred sales charge of 1.00%.
(2) The fund invests in securities through an underlying mutual fund. This table reflects the expenses of the fund and the
underlying mutual fund.
(3) For Class L and Y shares, "Other Expenses" have been estimated based on expenses incurred by Class A shares because no
Class L or Y shares were outstanding as of the fiscal year ended December 31, 1999.
</TABLE>
EXAMPLE
This example helps you compare the costs of investing in the fund with the costs
of investing in other mutual funds. Your actual costs may be higher or lower.
The example assumes:
[] You invest $10,000 in the fund for the period shown
[] Your investment has a 5% return each year - the assumption of a 5% return is
required by the SEC for purpose of this example and is not a prediction of
the fund's future performance
[] You reinvest all distributions and dividends without a sales charge
[] The fund's operating expenses, without waivers, remain the same
<TABLE>
<CAPTION>
NUMBER OF YEARS YOU OWN YOUR SHARES
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A (with or without redemption) $688 $1,082 $1,500 $2,661
Class B (redemption at end of period) $773 $1,138 $1,530 $2,848
Class B (no redemption) $273 $ 838 $1,430 $2,848
Class L (redemption at end of period) $456 $ 886 $1,442 $2,956
Class L (no redemption) $356 $ 886 $1,442 $2,956
Class Y (with or without redemption) $158 $ 490 $ 845 $1,845
</TABLE>
<PAGE>
MORE ON THE FUND'S INVESTMENTS
The fund also may, but is not required to, invest in other foreign securities
including debt securities and convertible securities.
DEBT SECURITIES Long-term debt securities must be investment grade when the fund
purchases them meaning they must be rated Baa by Moody's or BBB by Standard &
Poors, or if unrated, of comparable quality in the manager's opinion. After the
fund buys a bond, if the credit quality of the bond deteriorates below
investment grade, the fund may continue to hold the bond, commonly known as a
junk bond, but the manger will consider the change in rating in deciding whether
to keep the security. Generally, the value of debt securities will decline if
interest rates rise, the credit rating of the security is downgraded or the
issuer defaults on its obligation to pay principal or interest. The prices of
lower rated securities, especially junk bonds, often are more volatile than
those of higher rated securities, and the security may be difficult to sell.
CONVERTIBLE SECURITIES Convertible securities, which are debt securities that
may be converted into stock, are subject to the market risks of stocks and, like
debt securities, are also subject to interest rate risk and the credit risk of
their issuers.
PORTFOLIO TURNOVER The fund may engage in active and frequent trading to achieve
its principal investment strategies. This may lead to the realization and
distribution to shareholders of higher capital gains, which would increase their
tax liability. Frequent trading also increases transaction costs, which could
detract from the fund's performance. The "Financial highlights" section of this
Prospectus shows the fund's historical portfolio turnover rate.
CASH MANAGEMENT The fund may hold cash pending investment, and may invest in
money market instruments, repurchase agreements and reverse repurchase
agreements for cash management purposes.
INVESTMENT STRUCTURE The fund does not invest directly in securities but instead
invests through an underlying mutual fund, having the same investment goals and
strategies as the fund. The underlying mutual fund buys, holds and sells
securities in accordance with these goals and strategies. Unless otherwise
indicated, references to the fund in this Prospectus include the underlying
fund. The fund may stop investing the its underlying mutual fund at any time,
and will do so if the fund's Trustees believe that to be in the best interests
of the fund's shareholders. The fund could then invest in another mutual fund or
pooled investment vehicle or invest directly in securities.
DEFENSIVE INVESTING The fund may depart from its principal investment strategies
in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.
The fund may also use other strategies and invest in other securities that are
described, along with their risks, in the Statement of Additional Information.
However, the fund may not use all of the strategies and techniques or invest in
all of the types of securities described in this Prospectus or in the Statement
of Additional Information. Also note that there are many other factors that
could adversely affect your investment and that could prevent the fund from
achieving its goals, which are not described here.
The fund's goals and strategies may be changed without shareholder approval.
<PAGE>
MANAGEMENT
MANAGER The fund draws on the strength and experience of Citibank N.A., the
investment manager of the fund. Subject to policies set by the fund's Trustees,
the manager makes investment decisions. The manager has been managing money
since 1822. With its affiliates, it currently manages more than $351 billion in
assets worldwide.
Citibank, with headquarters at 153 East 53rd Street, New York, New York, is a
wholly-owned subsidiary of Citigroup Inc. Citibank is an affiliate of Salomon
Smith Barney.
Citibank and its affiliates, including their directors, officers or employees,
may have banking and investment banking relationships with the issuers of
securities that are held in the fund. They may also own the securities of these
issuers. However, in making investment decisions for the fund, the manager does
not obtain or use material inside information acquired by any division,
department or affiliate of the manager in the course of those relationships. The
manager and its affiliates may have loans outstanding that are repaid with
proceeds of securities purchased by the fund.
Matthew Bowyer, a Vice President of Citibank, has managed the fund since
February 1999. Mr. Bowyer is a Senior Portfolio Manager and Cross Border Equity
Strategist who has been responsible for managing global equity and balanced
portfolios at Citibank since mid 1996. Prior to that he ran a quantitative
research group, providing portfolio and market analysis to Citibank's equity and
fixed income teams in London. Mr. Bowyer has 14 years of investment management
experience at Citibank.
MANAGEMENT FEE For the fund's fiscal year ended December 31, 1999, Citibank
received management fees totaling 1.00% of the fund's average daily net assets,
after waivers.
DISTRIBUTOR The fund has entered into an agreement with CFBDS, Inc. to
distribute the fund's shares.
DISTRIBUTION PLANS The fund has adopted Rule 12b-1 distribution plans for its
Class A, B and L shares. Under each plan, the fund pays distribution and/or
service fees. These fees are an ongoing expense and, over time, may cost you
more than other types of sales charges.
The distributor may make payments for distribution and/or shareholder servicing
activities out of its past profits and other available sources. The distributor
may also make payments for marketing, promotional or related expenses to
dealers. The amount of these payments is determined by the distributor and may
be substantial. The manager or an affiliate may make similar payments under
similar arrangements.
<PAGE>
CHOOSING A CLASS OF SHARES TO BUY
You can choose among four classes of shares: Classes A, B, L and Y. Each class
has different sales charges and expenses, allowing you to choose the class that
best meets your needs. Which class is more beneficial to an investor depends on
the amount and intended length of the investment
[] If you plan to invest regularly or in large amounts, buying Class A shares
may help you reduce sales charges and ongoing expenses
[] For Class B shares, all of your purchase amount and, for Class L shares, more
of your purchase amount (compared to Class A shares) will be immediately
invested. This may help offset the higher expenses of Class B and Class L
shares, but only if the fund performs well
[] Class L shares have a shorter deferred sales charge period than Class B
shares. However, because Class B shares convert to Class A shares, and Class
L shares do not, Class B shares may be more attractive to long-term investors
You may buy shares from:
[] A broker-dealer, financial intermediary, or financial institution (called a
Service Agent) that has entered into a sales or service agreement with the
distributor concerning the fund
[] The fund, but only if you are investing through certain qualified plans or
[certain dealer representatives]
INVESTMENT MINIMUMS Minimum initial and additional investment amounts vary
depending on the class of shares you buy and the nature of your investment
account.
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
---------------------------------- -----------
CLASSES A, B, L CLASS Y ALL CLASSES
<S> <C> <C> <C>
General $1,000 $15 million $50
IRA, Self Employed Retirement Plans, Uniform Gift to
Minor Accounts $ 250 $15 million $50
Qualified Retirement Plans* $ 25 $15 million $25
Simple IRAs $ 1 n/a $ 1
Monthly Systematic Investment Plans $ 25 n/a $25
Quarterly Systematic Investment Plans $ 50 n/a $50
* Qualified Retirement Plans are retirement plans qualified under Section 403(b)(7) or Section 401(a) of the
Internal Revenue Code, including 401(k) plans
</TABLE>
<PAGE>
<TABLE>
COMPARING THE FUND'S CLASSES
Your Service Agent can help you decide which class meets your goals. They may receive different compensation depending upon which
class you choose.
<CAPTION>
CLASS A CLASS B CLASS L CLASS Y
<S> <C> <C> <C> <C>
KEY FEATURES [] Initial sales [] No initial [] Initial sales [] No initial or
charge sales charge charge is lower deferred sales
[] You may qualify [] Deferred sales than Class A charge
for reduction or charge declines [] Deferred sales [] Must invest at
waiver of initial over time charge for only least $15 million
sales charge [] Converts to 1 year [] Lower annual
[] Lower annual Class A after 8 [] Does not expenses than the
expenses than years convert to Class A other classes
Class B and [] Higher annual [] Higher annual
Class L expenses than expenses than
Class A Class A
---------------------------------------------------------------------------------------------------------------------------
INITIAL SALES Up to 5.00%; reduced for None 1.00% None
CHARGE large purchases and
waived for certain
investors. No charge for
purchases of $1,000,000
or more
---------------------------------------------------------------------------------------------------------------------------
DEFERRED SALES 1.00% on purchases of Up to 5.00% charged when 1.00% if you redeem None
CHARGE $1,000,000 or more if you redeem shares. The within 1 year of purchase
you redeem within 1 year charge is reduced over
of purchase time and there is no
deferred sales charge
after 6 years
---------------------------------------------------------------------------------------------------------------------------
ANNUAL 0.25% of average daily 1.00% of average daily 1.00% of average daily None
DISTRIBUTION net assets net assets net assets
AND SERVICE FEES
---------------------------------------------------------------------------------------------------------------------------
EXCHANGEABLE Class A shares of most Class B shares of most Class L shares of most Class Y shares of most
INTO* Smith Barney funds Smith Barney funds Smith Barney funds Smith Barney funds
---------------------------------------------------------------------------------------------------------------------------
* Ask your Service Agent for the Smith Barney funds available for exchange.
</TABLE>
<PAGE>
SALES CHARGES
CLASS A SHARES
You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales charge on
the fund's distributions or dividends you reinvest in additional Class A shares.
The table below shows the rate of sales charge that you pay, depending on the
amount that you purchase.
The table below also shows the amount of broker/dealer compensation that is paid
out of the sales charge. This compensation includes commissions and other fees
that Service Agents that sell shares of the fund receive. The distributor keeps
up to approximately 10% of the sales charge imposed on Class A shares. Service
Agents that sell Class A shares will also receive the service fee payable on
Class A shares at an annual rate equal to 0.25% of the average daily net assets
represented by the Class A shares sold by them.
<TABLE>
<CAPTION>
BROKER/
SALES CHARGE AS A % OF DEALER
----------------------------- COMMISSION
OFFERING NET AMOUNT AS A % OF
AMOUNT OF PURCHASE PRICE (%) INVESTED (%) OFFERING PRICE
<S> <C> <C> <C>
Less than $25,000 5.00 5.26 4.50
$25,000 but less than $50,000 4.25 4.44 3.83
$50,000 but less than $100,000 3.75 3.90 3.38
$100,000 but less than $250,000 3.25 3.36 2.93
$250,000 but less than $500,000 2.75 2.83 2.48
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more -0- -0- up to 1.00
</TABLE>
INVESTMENTS OF $1,000,000 OR MORE You do not pay an initial sales charge when
you buy $1,000,000 or more of Class A shares. However, if you redeem these Class
A shares within one year of purchase, you will pay a deferred sales charge of
1.00%.
QUALIFYING FOR A REDUCED CLASS A SALES CHARGE There are several ways you can
combine multiple purchases of Class A shares of Smith Barney funds to take
advantage of the breakpoints in the sales charge schedule.
[] Accumulation privilege -- lets you combine the current value of Class A
shares owned
[] by you, or
[] by members of your immediate family
and for which a sales charge was paid, with the amount of your next purchase of
Class A shares for purposes of calculating the initial sales charge. Certain
trustees and fiduciaries may be entitled to combine accounts in determining
their sales charge.
[] Letter of intent -- lets you purchase Class A shares of the fund and other
Smith Barney funds over a 13-month period and pay the same sales charge, if
any, as if all shares had been purchased at once. You may include purchases
on which you paid a sales charge within 90 days before you sign the letter.
WAIVERS FOR CERTAIN CLASS A INVESTORS Class A initial sales charges are waived
for certain types of investors, including:
[] Employees of members of the NASD
[] Clients of financial consultants or other registered representatives who
recently joined a broker-dealer affiliated with Citigroup that has a sales
agreement with the distributor concerning the fund, if certain conditions are
met
[] Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Service Agent is notified
If you want to learn about additional waivers of Class A initial sales charges,
contact your Service Agent or consult the Statement of Additional Information
("SAI").
CLASS B SHARES
You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of purchase,
you will pay a deferred sales charge. The deferred sales charge decreases as the
number of years since your purchase increases.
Year after purchase 1st 2nd 3rd 4th 5th 6th through 8th
Deferred sales charge 5% 4% 3% 2% 1% 0%
CLASS B CONVERSION After 8 years, Class B shares automatically convert into
Class A shares. This helps you because Class A shares have lower annual
expenses. Your Class B shares will convert to Class A shares as follows:
<TABLE>
<CAPTION>
SHARES ISSUED: SHARES ISSUED:
SHARES ISSUED: ON REINVESTMENT OF UPON EXCHANGE FROM
AT INITIAL DIVIDENDS AND ANOTHER SMITH BARNEY
PURCHASE DISTRIBUTIONS FUND
<S> <C> <C>
Eight years after the date In same proportion as the number of Class On the date the shares
of purchase B shares converting is to total Class B originally acquired
shares you own (excluding shares issued as would have converted
dividends) into Class A shares
</TABLE>
CLASS L SHARES
You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1.00% (1.01% of the net amount invested). Service Agents
selling Class L shares receive a commission of up to __% of the purchase price
of the Class L shares they sell. In addition, if you redeem your Class L shares
within one year of purchase, you will pay a deferred sales charge of 1.00%. If
you held Class C shares of any Smith Barney fund on June 12, 1998, you will not
pay an initial sales charge on Class L shares of the fund you may buy before
June 22, 2001.
CLASS Y SHARES
You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of the fund over a 13-month period. To qualify, you
must initially invest $5,000,000.
<PAGE>
MORE ABOUT DEFERRED SALES CHARGES
The deferred sales charge is based on the net asset value at the time of
purchase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
In addition, you do not pay a deferred sales charge on:
[] Shares exchanged for shares of another Smith Barney fund
[] Shares representing reinvested distributions and dividends
[] Shares no longer subject to the deferred sales charge
Each time you place a request to sell shares, the fund will first sell any
shares in your account that are not subject to a deferred sales charge and then
the shares in your account that have been held the longest.
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you
notify your Service Agent.
The fund's distributor receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Service Agent.
Service Agents selling Class B shares receive a commission of up to 4.50% of the
purchase price of the Class B shares that they sell, except for sales exempt
from the CDSC. Service Agents also receive a service fee at an annual rate equal
to 0.25% of the average daily net assets represented by the Class B shares that
they have sold.
Service Agents selling Class L shares receive a commission of up to __% of the
purchase price of the Class L shares they sell.
DEFERRED SALES CHARGE WAIVERS
The deferred sales charge for each share class will generally be waived:
[] On payments made through certain systematic withdrawal plans
[] On certain distributions from a retirement plan
[] For involuntary redemptions of small account balances
[] For 12 months following the death or disability of a shareholder
If you want to learn about additional waivers of deferred sales charges, contact
your Service Agent or consult the SAI.
<PAGE>
BUYING SHARES
Through a Service Agent
You should contact your Service Agent to open a brokerage account and make
arrangements to buy shares.
If you do not provide the following information, your order will be rejected:
[] Class of shares being bought
[] Dollar amount or number of shares being bought
You should pay for your shares through your brokerage account no later than the
third business day after you place your order. Your Service Agent may charge an
annual account maintenance fee.
Through the fund's sub-transfer agent
Qualified retirement plans and [certain other investors who are clients of
dealer representatives] are eligible to buy shares directly from the fund.
[] Write the sub-transfer agent at the following address:
SMITH BARNEY INTERNATIONAL GROWTH FUND
(SPECIFY CLASS OF SHARES)
C/O PFPC GLOBAL FUND SERVICES
P.O. BOX 9699
PROVIDENCE, RI 02940-9699
[] Enclose a check to pay for the shares. For initial purchases, complete and
send an account application
[] For more information, call the transfer agent at 1-800-451-2010.
Through a systematic investment plan
You may authorize your Service Agent or the sub-transfer agent to transfer funds
automatically from (i) a regular bank account, (ii) cash held in a brokerage
account opened with a Service Agent or (iii) a certain money market funds, in
order to buy shares on a regular basis.
[] Amounts transferred should be at least $25 monthly or $50 quarterly
[] If you do not have sufficient funds in your account on a transfer date, your
Service Agent or the sub-transfer agent may charge you a fee
For more information, contact your Service Agent or the transfer agent or
consult the SAI.
<PAGE>
EXCHANGING SHARES
Smith Barney offers a distinctive family of funds tailored to help meet the
varying needs of both large and small investors.
You should contact your Service Agent to exchange into other Smith Barney funds.
Be sure to read the prospectus of the Smith Barney fund you are exchanging into.
An exchange is a taxable transaction.
[] You may exchange shares only for shares of the same class of another Smith
Barney fund. Not all Smith Barney funds offer all classes.
[] Not all Smith Barney funds may be offered in your state of residence. Contact
your Service Agent or the transfer agent for more information.
[] You must meet the minimum investment amount for each fund (except for
systematic exchanges).
[] The fund may suspend or terminate your exchange privilege if you engage in an
excessive pattern of exchanges.
Waiver of additional sales charges
Your shares will not be subject to an initial sales charge at the time of the
exchange.
Your deferred sales charge (if any) will continue to be measured from the date
of your original purchase. If the fund you exchange into has a higher deferred
sales charge, you will be subject to that charge. If you exchange at any time
into a fund with a lower charge, the sales charge will not be reduced.
By telephone
If you do not have a brokerage account with a Service Agent, you may be eligible
to exchange shares through the transfer agent. You must complete an
authorization form to authorize telephone transfers. If eligible, you may make
telephone exchanges on any day the New York Stock Exchange is open. Call the
transfer agent at 1-800-451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern time).
Requests received after the close of regular trading on the Exchange are priced
at the net asset value next determined. You can make telephone exchanges only
between accounts that have identical registrations.
By mail
If you do not have a brokerage account, contact your Service Agent or write to
the transfer agent at the address on the opposite page.
<PAGE>
REDEEMING SHARES
Generally
Contact your Service Agent to redeem shares of the fund.
If the shares are held by a fiduciary or corporation, other documents may be
required.
Your redemption proceeds will normally be sent within three business days after
your request is received in good order, but in any event within seven days.
However, if you recently purchased your shares by check, your redemption
proceeds will not be sent to you until your original check clears, which may
take up to 15 days.
If you have a brokerage account with a Service Agent, your redemption proceeds
will be placed in your account and not reinvested without your specific
instruction. In other cases, unless you direct otherwise, your redemption
proceeds will be paid by check mailed to your address of record.
By mail
For accounts held directly at the fund, send written requests to the
sub-transfer agent at the following address:
SMITH BARNEY INTERNATIONAL GROWTH FUND
(SPECIFY CLASS OF SHARES)
C/O PFPC GLOBAL FUND SERVICES
P.O. BOX 9699
PROVIDENCE, RI 02940-9699
Your written request must provide the following:
[] Your account number
[] The class of shares and the dollar amount or number of shares to be redeemed
[] Signatures of each owner exactly as the account is registered
By telephone
If you do not have a brokerage account, you may be eligible to redeem shares
(except those held in retirement plans) in amounts up to $10,000 per day through
the transfer agent. You must complete an authorization form to authorize
telephone redemptions. If eligible, you may request redemptions by telephone on
any day the New York Stock Exchange is open. Call the transfer agent at
1-800-451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern time). Requests received
after the close of regular trading on the Exchange are priced at the net asset
value next determined.
Your redemption proceeds can be sent by check to your address of record or by
wire transfer to a bank account designated on your authorization form. You must
submit a new authorization form to change the bank account designated to receive
wire transfers and you may be asked to provide certain other documents.
Automatic cash withdrawal plans
You can arrange for the automatic redemption of a portion of your shares on a
monthly or quarterly basis. To qualify you must own shares of the fund with a
value of at least $10,000 ($5,000 for retirement plan accounts) and each
automatic redemption must be at least $50. If your shares are subject to a
deferred sales charge, the sales charge will be waived if your automatic
payments do not exceed 1.00% per month of the value of your shares subject to a
deferred sales charge. All your dividends and distributions must be reinvested.
For more information, contact your Service Agent or consult the SAI.
<PAGE>
OTHER THINGS TO KNOW ABOUT SHARE TRANSACTIONS
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your
request will not be processed:
[] Name of the fund
[] Account number
[] Class of shares being bought, exchanged or redeemed
[] Dollar amount or number of shares being bought, exchanged or redeemed
[] Signature of each owner exactly as the account is registered
The transfer agent will try to confirm that any telephone exchange or redemption
request is genuine by recording calls, asking the caller to provide a personal
identification number for the account, sending you a written confirmation or
requiring other confirmation procedures from time to time.
SIGNATURE GUARANTEES To be in good order, your redemption request must include a
signature guarantee if you:
[] Are redeeming over $10,000 of shares
[] Instruct the sub-transfer agent to mail the check to an address different
from the one on your account
[] Changed your account registration
[] Want the check paid to someone other than the account owner(s)
[] Are transferring the redemption proceeds to an account with a different
registration
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.
The fund has the right to:
[] Suspend the offering of shares
[] Waive or change minimum and additional investment amounts
[] Reject any purchase or exchange order
[] Change, revoke or suspend the exchange privilege
[] Suspend telephone transactions
[] Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the
Securities and Exchange Commission
[] Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities
SMALL ACCOUNT BALANCES If your account falls below $500 because of a redemption
of fund shares, the fund may ask you to bring your account up to $500. If your
account is still below $500 after 60 days, the fund may close your account and
send you the redemption proceeds.
EXCESSIVE EXCHANGE TRANSACTIONS The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other
shareholders. If so, the fund may limit additional purchases and/or exchanges by
the shareholder.
<PAGE>
SALOMON SMITH BARNEY RETIREMENT PROGRAMS
You may be eligible to participate in a retirement program sponsored by Salomon
Smith Barney or one of its affiliates. The fund offers Class A and Class L
shares at net asset value to participating plans under the programs. You can
meet minimum investment and exchange amounts, if any, by combining the plan's
investments in any of the Smith Barney mutual funds.
There are no sales charges when you buy or sell shares and the class of shares
you may purchase depends on the amount of your initial investment and/or the
date your account is opened. Once a class of shares is chosen, all additional
purchases must be of the same class.
[] For plans opened on or after March 1, 2000 that are not plans for which
Paychex, Inc. or an affiliate provide administrative services (a "Paychex
plan"), Class A shares may be purchased regardless of the amount invested.
[] For plans opened prior to March 1, 2000 and for Paychex plans, the class of
shares you may purchase depends on the amount of your initial investment:
[] Class A shares may be purchased by plans investing at least $1 million.
[] Class L shares may be purchased by plans investing less than $1 million.
Class L shares are eligible to exchange into Class A shares not later than
8 years after the plan joined the program. They are eligible for exchange
in the following circumstances:
If the plan was opened on or after June 21, 1996 and a total of $1 million
is invested in Smith Barney Funds Class L shares (other than money market
funds), all Class L shares are eligible for exchange after the plan is in
the program 5 years.
If the plan was opened before June 21, 1996 and a total of $500,000 is
invested in Smith Barney Funds Class L shares (other than money market
funds) on December 31 in any year, all Class L shares are eligible for
exchange on or about March 31 of the following year.
For more information, call your Service Agent or the transfer agent, or consult
the SAI.
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS The fund pays substantially all of its net income (if any) from
dividends to its shareholders of record as a dividend semi-annually during the
months of June and December.
The Fund's net realized short-term and long-term capital gains, if any, will be
distributed to fund shareholders at least annually, in December. The fund may
also make additional distributions to shareholders to the extent necessary to
avoid the application of the 4% non-deductible excise tax on certain
undistributed income and net capital gains of mutual funds.
Unless you choose to receive your dividends in cash, you will receive them as
full and fractional additional fund shares.
TAXES In general, redeeming shares, exchanging shares and receiving
distributions (whether in cash or additional shares) are all taxable events.
TRANSACTION FEDERAL TAX STATUS
Redemption or exchange of shares Usually capital gain or loss; long-term
only if shares owned more than one year
Long-term capital gain distributions Long-term capital gain
Short-term capital gain distributions Ordinary income
Dividends Ordinary income
Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when the fund is about to declare a capital gain distribution or a
dividend, because it will be taxable to you even though it may actually be a
return of a portion of your investment.
After the end of each year, the fund will provide you with information about the
distributions and dividends you received and any redemptions of shares during
the previous year. If you do not provide the fund with your correct taxpayer
identification number and any required certifications, you may be subject to
back-up withholding of 31% of your distributions, dividends, and redemption
proceeds. Because each shareholder's circumstances are different and special tax
rules may apply, you should consult your tax adviser about your investment in
the fund.
<PAGE>
SHARE PRICE
You may buy, exchange or redeem shares at their net asset value, plus any
applicable sales charge, next determined after receipt of your request in good
order. The fund's net asset value is the value of its assets minus its
liabilities. Net asset value is calculated separately for each class of shares.
The fund calculates its net asset value every day the New York Stock Exchange is
open. The Exchange is closed on certain holidays listed in the SAI. This
calculation is done when regular trading closes on the Exchange (normally 4:00
p.m., Eastern time).
The fund generally values its fund securities based on market prices or
quotations. When reliable market prices or quotations are not readily available,
the fund may price those securities at fair value. Fair value is determined in
accordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your Service Agent before the New York Stock Exchange closes. If
the Exchange closes early, you must place your order prior to the actual closing
time. Otherwise, you will receive the next business day's price.
Your Service Agent must transmit all orders to buy, exchange or redeem shares to
the fund's agent before the agent's close of business.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's financial performance for the fiscal periods
indicated. Certain information reflects financial results for a single Class A and Class B fund share. The total returns in
the table represent the rate that an investor would have earned or lost on an investment in the fund (assuming investment of
all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with
the fund's financial statements, is included in the annual report which is incorporated by reference in the Statement of
Additional Information and which is available upon request. No information is provided for Class L or Y shares because those
classes had no outstanding shares as of December 31, 1999. The Fund was formerly known as CitiFunds International Growth
Portfolio.
FOR A CLASS A OR B SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR ENDED DECEMBER 31:
<CAPTION>
CLASS A CLASS B
JANUARY 4, 1999
(COMMENCEMENT OF
OPERATIONS) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995 1999
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of
period $12.60 $11.42 $11.79 $13.46 $11.44 $12.87
-------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment
income (loss) (0.077) (0.009) 0.004* 0.028* 0.013* (0.095)
Net realized and
unrealized gain
(loss) 4.452 1.996 0.592* 0.314* 2.055* 4.090
-------------------------------------------------------------------------------------------------------------------------------
Total from
operations 4.375 1.987 0.596 0.342 2.068 3.995
-------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment
income -- (0.008) (0.025) (0.021) (0.048) --
In excess of net
investment
income -- (0.001) -- -- -- --
Net realized
gain on
investments (1.055) (0.798) (0.941) (1.991) -- (1.055)
-------------------------------------------------------------------------------------------------------------------------------
Total from
distributions (1.055) (0.807) (0.966) (2.012) (0.048) (1.055)
-------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
end of period $15.92 $12.60 $11.42 $11.79 $13.46 $15.81
-------------------------------------------------------------------------------------------------------------------------------
Total return 35.66% 17.62% 5.15% 2.59% 18.08% 31.95%++
-------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
CLASS A CLASS B
JANUARY 4, 1999
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
1999 1998 1997 1996 1995 DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end
of period (in
thousands) $25,058 $21,132 $18,333 $32,589 $32,159 $323
Ratio of
expenses to
average net
assets (A) 1.75% 1.75% 1.75% 1.75% 1.75% 2.50%+
Ratio of net
investment
income (loss) to
average net
assets (0.49)% (0.17)% 0.03% 0.18% 0.10% (1.24)%+
Portfolio turn-
over (B) 68% 118% 99% 109% 51% 68%
Note: If agents of the fund for the periods indicated had not voluntarily waived a portion of their fees and expenses, the
net investment income (loss) per share and the ratios would have been as follows:
Net investment
income (loss)
per share $(0.210) $(0.011) $(0.004)* $(0.002)* $0.013* $(0.108)
RATIOS:
Expenses to
average net
assets (A) 1.90% 1.80% 1.82% 1.94% 1.75% 2.70%+
Net investment
income (loss) to
average net
assets (0.64)% (0.22)% (0.04)% (0.01)% 0.10% (1.44)%+
* The per share amounts were computed using a monthly average number of shares outstanding during the period.
(A) Includes the fund's share of International Equity Portfolio allocated expenses.
(B) The portfolio turnover rates represent the rate of portfolio activity of International Equity Portfolio, the underlying
portfolio through which the fund invests.
+ Annualized.
++ Not annualized.
</TABLE>
<PAGE>
INTERNATIONAL GROWTH FUND
SHAREHOLDER REPORTS Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
[The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent or the transfer agent if you do not
want this policy to apply to you.]
STATEMENT OF ADDITIONAL INFORMATION The statement of additional information
provides more detailed information about the fund and is incorporated by
reference into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent, by calling the fund at 1-800-451-2010, or by writing to the fund at Smith
Barney Mutual Funds, 388 Greenwich Street, MF2, New York, New York 10013.
VISIT OUR WEB SITE Our web site is located at www.smithbarney.com. Please note
that www.smithbarney.com is an inactive textual reference only, meaning that the
information contained on the website is not part of this prospectus and is not
incorporated herein by reference.
Information about the fund (including the SAI) can be reviewed and copied at the
Commission's Public Reference Room in Washington, D.C. In addition, information
on the operation of the Public Reference Room may be obtained by calling the
Commission at 1-202-942-8090. Reports and other information about the fund are
available on the EDGAR Database on the Commission's Internet site at
http://www.sec.gov. Copies of this information may be obtained for a duplicating
fee by electronic request at the following E-mail address: [email protected],
or by writing the Commission's Public Reference Section, Washington, D.C.
20549-0102.
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not
lawfully sell its shares.
(Investment Company Act file no. 811-6154)
<PAGE>
Statement of
Additional Information
September , 2000
SMITH BARNEY(SM) INTERNATIONAL GROWTH FUND
Smith Barney(SM) International Growth Fund (the "fund") is a series of
CitiFunds(SM) International Trust (the "trust"). The address and telephone
number of the trust are 21 Milk Street, Boston, MA 02109, (617) 423-1679. The
trust invests all of the investable assets of the fund in International Equity
Portfolio (the "portfolio"), which is a series of The Premium Portfolios, a
trust organized under the laws of the State of New York (the "portfolio
trust"). The address of the portfolio trust is Elizabethan Square, George
Town, Grand Cayman, British West Indies.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS PAGE
----------------- ----
1. The Trust ........................................................... 2
2. Investment Objective and Policies; Special Information Concerning
Investment Structure ................................................ 2
3. Description of Permitted Investments and Investment Practices ....... 3
4. Investment Restrictions ............................................. 10
5. Performance Information ............................................. 11
6. Determination of Net Asset Value; Valuation of Securities ........... 13
7. Additional Information on the Purchase and Sale of Fund Shares and
Shareholder Programs ................................................ 14
8. Management .......................................................... 23
9. Portfolio Transactions .............................................. 30
10. Description of Shares, Voting Rights and Liabilities ................ 31
11. Tax Matters ......................................................... 33
12. Financial Statements ................................................ 34
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
fund's Prospectus, dated September , 2000, by which shares of the fund are
offered. This Statement of Additional Information should be read in
conjunction with the Prospectus. This Statement of Additional Information
incorporates by reference the financial statements described on page
hereof. These financial statements can be found in the fund's Annual Report to
Shareholders. An investor may obtain copies of the fund's Prospectus and
Annual Report without charge by calling toll-free [1-800-625-4554].
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
<PAGE>
1. THE TRUST
CitiFunds International Trust is an open-end management investment company
that was organized as a business trust under the laws of the Commonwealth of
Massachusetts on August 7, 1990. The trust was called Landmark International
Equity Fund until its name was changed to Landmark International Funds
effective May 5, 1995. Effective January 7, 1998, the Trust's name was changed
to CitiFunds International Trust. This Statement of Additional Information
describes Smith Barney International Growth Fund (the "fund"), which is a
series of the trust. Prior to September , the fund was called CitiFunds
International Growth Portfolio; prior to October 5, 1998, the fund was called
CitiFunds International Equity Portfolio; and prior to March 2, 1998 the fund
was called Landmark International Equity Fund. References in this Statement of
Additional Information to the "Prospectus" of the fund are to the Prospectus,
dated September 1, 2000.
The fund is a diversified fund. The fund is permitted to seek its
investment objectives by investing all or a portion of its assets in one or
more investment companies to the extent not prohibited by the Investment
Company Act of 1940, as amended (the "1940 Act"), the rules and regulations
thereunder, and exemptive orders granted under the 1940 Act. Currently, the
fund invests all of its investable assets in International Equity Portfolio
(the "portfolio"). The portfolio is a series of The Premium Portfolios (the
"portfolio trust") and is an open-end, diversified management investment
company. The portfolio has the same investment objectives and policies as the
fund.
Under the 1940 Act, a diversified management investment company must
invest at least 75% of its assets in cash and cash items, U.S. Government
securities, investment company securities and other securities limited as to
any one issuer to not more than 5% of the total assets of the investment
company and not more than 10% of the voting securities of the issuer.
Because the fund invests through the portfolio, all references in this
Statement of Additional Information to the fund include the portfolio, unless
the context otherwise requires. In addition, references to the trust include
the portfolio trust, unless the context otherwise requires.
Citibank, N.A. ("Citibank" or the "Adviser") is investment adviser to the
portfolio. The adviser manages the investments of the portfolio from day to
day in accordance with the portfolio's investment objectives and policies. The
selection of investments for the portfolio and the way it is managed depend on
the conditions and trends in the economy and the financial marketplaces.
CFBDS, Inc. ("CFBDS"), the administrator of the fund (the
"administrator"), and Signature Financial Group (Cayman) Ltd. ("SFG"), the
administrator of the portfolio (the "portfolio administrator"), supervise the
overall administration of the fund and the portfolio, respectively. The boards
of trustees of the trust and the portfolio trust provide broad supervision
over the affairs of the fund and the portfolio, respectively. Shares of the
fund are continuously sold by CFBDS, the fund's distributor (the
"distributor"), only to investors who are customers of a financial consultant,
financial institution (called a "Service Agent") that has entered into a sales
or service agreement with the distributor concerning the fund.
2. INVESTMENT OBJECTIVE AND POLICIES;
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE
The investment objective of the fund is to promote long-term capital
growth. Dividend income, if any, is incidental to this investment objective.
The investment objective of the fund may be changed without approval by
the fund's shareholders, but shareholders will be given written notice at
least 30 days before any change is implemented. Of course, there can be no
assurance that the fund will achieve its investment objective.
As noted above, the fund does not invest directly in securities, but
instead invests all of its investable assets in the portfolio, which has the
same investment objective and policies as the fund. The portfolio, in turn,
buys, holds and sells securities in accordance with this objective and these
policies. Of course, there can be no assurance that the fund or the portfolio
will achieve its objective. The trustees of the fund believe that the
aggregate per share expenses of the fund and the portfolio will be less than
or approximately equal to the expenses that the fund would incur if the assets
of the fund were invested directly in the types of securities held by the
portfolio.
The trust may withdraw the investment of the fund from the portfolio at
any time if the board of trustees of the trust determines that it is in the
best interests of the fund to do so. Upon any such withdrawal, the fund's
assets would continue to be invested in accordance with its investment
objective and policies, either directly in securities or in another mutual
fund or pooled investment vehicle having the same investment objective and
policies. If the fund were to withdraw, the fund could receive securities from
the portfolio instead of cash, causing the fund to incur brokerage, tax and
other charges or leaving it with securities which may or may not be readily
marketable or widely diversified.
The portfolio may change its investment objective and certain of its
investment policies and restrictions without approval by its investors, but
the portfolio will notify the fund (which in turn will notify its
shareholders) and its other investors at least 30 days before implementing any
change in its investment objective. A change in investment objective, policies
or restrictions may cause the fund to withdraw its investment in the
portfolio.
Certain investment restrictions of the portfolio described below under
"Investment Restrictions" are fundamental and cannot be changed without
approval by the investors in the portfolio. When the fund is asked to vote on
certain matters concerning the portfolio, the fund will either hold a
shareholder meeting and vote in accordance with shareholder instructions or
otherwise vote in accordance with applicable rules and regulations. Of course,
the fund could be outvoted, or otherwise adversely affected by other investors
in the portfolio.
The portfolio may sell interests to investors in addition to the fund.
These investors may be mutual funds which offer shares to their shareholders
with different costs and expenses than the fund. Therefore, the investment
return for all investors in funds investing in the portfolio may not be the
same. These differences in returns are also present in other mutual fund
structures. Information about other holders of interests in the portfolio is
available from the fund's distributor, CFBDS.
3. DESCRIPTION OF PERMITTED INVESTMENTS
AND INVESTMENT PRACTICES
The fund may, but need not, invest in all of the investments and utilize
all of the investment techniques described below and in the Prospectus. The
selection of investments and the utilization of investment techniques depend
on, among other things, the adviser's investment strategies for the fund,
conditions and trends in the economy and financial markets and investments
being available on terms that, in the adviser's opinion, make economic sense.
The Prospectus contains a discussion of the principal investment
strategies of the fund and the principal risks of investing in the fund. The
following supplements the information contained in the Prospectus concerning
the investment policies and techniques of the fund. The policies described
herein are not fundamental and may be changed without shareholder approval.
As a non-fundamental policy, at least 65% of the value of the fund's total
assets will be invested in equity securities of issuers organized in at least
three countries other than the United States. While the fund's policy is to
invest primarily in common stocks of companies organized outside the United
States ("non-U.S. issuers") believed to possess better than average prospects
for growth, appreciation may be sought in other types of securities,
principally of non-U.S. issuers, such as fixed income securities, convertible
and non-convertible bonds, preferred stocks and warrants, when relative values
make such purchases appear attractive either as individual issues or as types
of securities in certain economic environments. There is no formula as to the
percentage of assets that may be invested in any one type of security.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements collateralized by securities
in which the Fund may otherwise invest. Repurchase agreements are agreements
by which the Fund purchases a security and simultaneously commits to resell
that security to the seller (which is usually a member bank of the U.S.
Federal Reserve System or a member firm of the New York Stock Exchange (or a
subsidiary thereof)) at an agreed-upon date within a number of days
(frequently overnight and usually not more than seven days) from the date of
purchase. The resale price reflects the purchase price plus an agreed-upon
market rate of interest which is unrelated to the coupon rate or maturity of
the purchased security. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price, which obligation is in effect secured by
the value of the underlying security, usually U.S. Government or Government
agency issues. Under the 1940 Act, repurchase agreements may be considered to
be loans by the buyer. The Fund's risk is limited to the ability of the seller
to pay the agreed-upon amount on the delivery date. If the seller defaults,
the underlying security constitutes collateral for the seller's obligation to
pay although the Fund may incur certain costs in liquidating this collateral
and in certain cases may not be permitted to liquidate this collateral. All
repurchase agreements entered into by the Fund are fully collateralized, with
such collateral being marked to market daily.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements, subject to the
Fund's investment restriction on borrowing. Reverse repurchase agreements
involve the sale of securities held by the Fund and the agreement by the Fund
to repurchase the securities at an agreed-upon price, date and interest
payment. When the Fund enters into reverse repurchase transactions, securities
of a dollar amount equal in value to the securities subject to the agreement
will be segregated. The segregation of assets could impair the Fund's ability
to meet its current obligations or impede investment management if a large
portion of the Fund's assets are involved. Reverse repurchase agreements are
considered to be a form of borrowing by the Fund. In the event of the
bankruptcy of the other party to a reverse repurchase agreement, the Fund
could experience delays in recovering the securities sold. To the extent that,
in the meantime, the value of the securities sold has changed, the Fund could
experience a loss.
RULE 144A SECURITIES
Consistent with applicable investment restrictions, the Fund may purchase
securities that are not registered under the Securities Act of 1933 (the
"Securities Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the Securities Act ("Rule 144A securities").
However, the Fund will not invest more than 15% of its net assets (taken at
market value) in illiquid investments, which include securities for which
there is no readily available market, securities subject to contractual
restrictions on resale and Rule 144A securities, unless, in the case of Rule
144A securities, the Board of Trustees determines, based on the trading
markets for the specific Rule 144A security, that it is liquid. The Trustees
have adopted guidelines and, subject to oversight by the Trustees, have
delegated to the Adviser the daily function of determining and monitoring
liquidity of Rule 144A securities. The Trustees, however, retain oversight and
are ultimately responsible for the determinations.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in securities for which
there is no readily available market. These illiquid securities may include
privately placed restricted securities for which no institutional market
exists. The absence of a trading market can make it difficult to ascertain a
market value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be difficult
or impossible for the Fund to sell them promptly at an acceptable price.
CONVERTIBLE SECURITIES
The Fund may invest in convertible securities. A convertible security is a
fixed-income security (a bond or preferred stock) which may be converted at a
stated price within a specified period of time into a certain quantity of
common stock or other equity securities of the same or a different issuer.
Convertible securities rank senior to common stock in a corporation's capital
structure but are usually subordinated to similar non-convertible securities.
While providing a fixed-income stream (generally higher in yield than the
income derivable from common stock but lower than that afforded by a similar
non-convertible security), a convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation attendant upon a market price advance in the convertible
security's underlying common stock.
In general, the market value of a convertible security is at least the
higher of its "investment value" (i.e., its value as a fixed-income security)
or its "conversion value" (i.e., its value upon conversion into its underlying
stock). As a fixed-income security, a convertible security tends to increase
in market value when interest rates decline and tends to decrease in value
when interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying common stock. The
price of a convertible security tends to increase as the market value of the
underlying stock rises, whereas it tends to decrease as the market value of
the underlying stock declines. While no securities investment is without some
risk, investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.
SECURITIES OF NON-U.S. ISSUERS
The Fund invests in securities of non-U.S. issuers. Investing in
securities of foreign issuers may involve significant risks not present in
domestic investments. For example, the value of such securities fluctuates
based on the relative strength of the U.S. dollar. In addition, there is
generally less publicly available information about foreign issuers,
particularly those not subject to the disclosure and reporting requirements of
the U.S. securities laws. Non-U.S. issuers are generally not bound by uniform
accounting, auditing and financial reporting requirements comparable to those
applicable to domestic issuers. Investments in securities of non-U.S. issuers
also involve the risk of possible adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, limitations on
the removal of funds or other assets of the Fund, political or financial
instability or diplomatic and other developments which would affect such
investments. Further, economies of other countries or areas of the world may
differ favorably or unfavorably from the economy of the U.S.
It is anticipated that in most cases the best available market for
securities of non-U.S. issuers would be on exchanges or in over-the-counter
markets located outside the U.S. Non-U.S. securities markets, while growing in
volume and sophistication, are generally not as developed as those in the
U.S., and securities of some non-U.S. issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. Prices at which the Fund may acquire securities may
be affected by trading by persons with material non-public information and by
securities transactions by brokers in anticipation of transactions by the
Fund. Non-U.S. security trading practices, including those involving
securities settlement where the Fund's assets may be released prior to receipt
of payments, may expose the Fund to increased risk in the event of a failed
trade or the insolvency of a non-U.S. broker-dealer. In addition, foreign
brokerage commissions are generally higher than commissions on securities
traded in the U.S. and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of non-U.S. securities
exchanges, brokers and listed companies than in the U.S.
The Fund may invest in issuers located in developing countries, which are
generally defined as countries in the initial stages of their
industrialization cycles with lower per capita income. All of the risks of
investing in non-U.S. securities are heightened by investing in issuers in
developing countries. Shareholders should be aware that investing in the
equity and fixed income markets of developing countries involves exposure to
economic structures that are generally less diverse and mature, and to
political systems which can be expected to have less stability, than those of
developed countries. Historical experience indicates that the markets of
developing countries have been more volatile than the markets of developed
countries with more mature economies; such markets often have provided higher
rates of return, and greater risks, to investors. These heightened risks
include (i) greater risks of expropriation, confiscatory taxation and
nationalization, and less social, political and economic stability; (ii) the
small current size of markets for securities of issuers based in developing
countries and the currently low or non-existent volume of trading, resulting
in a lack of liquidity and in price volatility; (iii) certain national
policies which may restrict the Fund's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to
relevant national interests; and (iv) the absence of developed legal
structures. Such characteristics can be expected to continue in the future.
The costs attributable to non-U.S. investing, such as the costs of
maintaining custody of securities in non-U.S. countries, frequently are higher
than those involved in U.S. investing. As a result, the operating expense
ratio of the Fund may be higher than that of investment companies investing
exclusively in U.S. securities.
Subject to applicable statutory and regulatory limitations, assets of the
Fund may be invested in shares of other investment companies. The Fund may
invest up to 5% of its assets in closed-end investment companies which
primarily hold securities of non-U.S. issuers. Investments in closed-end
investment companies which primarily hold securities of non-U.S. issuers may
entail the risk that the market value of such investments may be substantially
less than their net asset value and that there would be duplication of
investment management and other fees and expenses.
American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs") and other forms of depositary
receipts for securities of non-U.S. issuers provide an alternative method for
the Fund to make non-U.S. investments. These securities are not usually
denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs and GDRs, in bearer form, are designed for use in
European and global securities markets. ADRs are receipts typically issued by
a U.S. bank or trust company evidencing ownership of the underlying
securities. EDRs and GDRs are European and global receipts, respectively,
evidencing a similar arrangement. ADRs, EDRs and GDRs are subject to many of
the same risks that apply to other investments in non-U.S. securities.
ADRs, EDRs, and GDRs may be issued pursuant to sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements to have its
securities traded in the form of depositary receipts. In unsponsored programs,
the issuer may not be directly involved in the creation of the program.
Although regulatory requirements with respect to sponsored and unsponsored
programs are generally similar, in some cases it may be easier to obtain
financial information from an issuer that has participated in the creation of
a sponsored program. Accordingly, there may be less information available
regarding issuers of securities underlying unsponsored programs and there may
not be a correlation between such information and the market value of the
depositary receipts.
The Fund may invest in securities of non-U.S. issuers that impose
restrictions on transfer within the U.S. or to U.S. persons. Although
securities subject to such transfer restrictions may be marketable abroad,
they may be less liquid than securities of non-U.S. issuers of the same class
that are not subject to such restrictions.
EURO CONVERSION
The Fund may invest in securities of issuers in European countries.
Certain European countries have joined the European Economic and Monetary
Union (EMU). Each EMU participant's currency began a conversion into a single
European currency, called the euro, on January 1, 1999, to be completed by
July 1, 2002. The consequences of the euro conversion for foreign exchange
rates, interest rates and the value of European securities held by the Fund
are presently unclear. European financial markets, and therefore, the Fund,
could be adversely affected if the euro conversion does not continue as
planned or if a participating country chooses to withdraw from the EMU. The
Fund could also be adversely affected if the computing, accounting and trading
systems used by its service providers are not capable of processing
transactions related to the euro. These issues may negatively affect the
operations of the companies in which the Fund invests as well.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS
Because the Fund may buy and sell securities denominated in currencies
other than the U.S. dollar, and receive interest, dividends and sale proceeds
in currencies other than the U.S. dollar, the Fund may enter into currency
exchange transactions to convert U.S. currency to foreign currency and foreign
currency to U.S. currency, as well as convert foreign currency to other
foreign currencies. The Fund either enters into these transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or uses forward contracts to purchase or sell foreign
currencies. The Fund also may, but is not obligated to, enter into foreign
currency hedging transactions in an attempt to protect the value of the assets
of the Fund as measured in U.S. dollars from unfavorable changes in currency
exchange rates and control regulations. (Although the Fund's assets are valued
daily in terms of U.S. dollars, the Trust does not intend to convert the
Fund's holdings of other currencies into U.S. dollars on a daily basis.) The
Fund does not currently intend to speculate in currency exchange rates or
forward contracts.
The Fund may convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although
currency exchange dealers do not charge a fee for conversion, they do realize
a profit based on the difference (the "spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a currency at one rate, while offering a lesser rate of exchange should
the Fund desire to resell that currency to the dealer.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. Because these contracts are traded in the interbank market and not
on organized commodities or securities exchanges, these contracts operate in a
manner distinct from exchange-traded instruments, and their use involves
certain risks. A forward contract generally has no deposit requirement, and no
fees or commissions are charged at any stage for trades.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a non-U.S. currency, it may desire to "lock in" the
U.S. dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of non-
U.S. currency involved in the underlying security transaction, the Fund may be
able to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the non-U.S. currency during the
period between the date the security is purchased or sold and the date on
which payment is made or received.
When the Adviser believes that the currency of a particular country may
suffer a substantial decline against the U.S. dollar, the Fund may enter into
a forward contract to sell, for a fixed amount of U.S. dollars, the amount of
non-U.S. currency approximating the value of some or all of the Fund's
securities denominated in such non-U.S. currency. The projection of a short-
term hedging strategy is highly uncertain. Under normal circumstances,
consideration of the prospect for currency parities will be incorporated in
the investment decisions made with regard to overall diversification
strategies. However, the Fund believes that it is important to have the
flexibility to enter into such forward contracts when it determines that its
best interests will be served.
The Fund generally would not enter into a forward contract with a term
greater than one year. At the maturity of a forward contract, the Fund will
either sell the security and make delivery of the non-U.S. currency, or retain
the security and terminate its contractual obligation to deliver the non-U.S.
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
non-U.S. currency. If the Fund retains the security and engages in an
offsetting transaction, the Fund will incur a gain or a loss (as described
below) to the extent that there has been movement in forward contract prices.
If the Fund engages in an offsetting transaction, it may subsequently enter
into a new forward contract to sell the non-U.S. currency. Should forward
prices decline during the period between the date the Fund enters into a
forward contract for the sale of the non-U.S. currency and the date it enters
into an offsetting contract for the purchase of such currency, the Portfolio
will realize a gain to the extent the selling price of the currency exceeds
the purchase price of the currency. Should forward prices increase, the Fund
will suffer a loss to the extent that the purchase price of the currency
exceeds the selling price of the currency.
It is impossible to forecast with precision the market value of Fund
securities at the expiration of the contract. Accordingly, it may be necessary
for the Fund to purchase additional non-U.S. currency on the spot market if
the market value of the security is less than the amount of non-U.S. currency
the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of such currency. Conversely, it may be necessary
to sell on the spot market some of the non-U.S. currency received upon the
sale of the security if its market value exceeds the amount of such currency
the Fund is obligated to deliver.
The Fund has established procedures consistent with policies of the
Securities and Exchange Commission (the "SEC") concerning forward contracts.
Those policies currently require that an amount of the Fund's assets equal to
the amount of the purchase be held aside or segregated to be used to pay for
the commitment or that the Fund otherwise covers its position in accordance
with applicable regulations and policies.
The Fund may also purchase put options on a non-U.S. currency in order to
protect against currency rate fluctuations. If the Fund purchases a put option
on a non-U.S. currency and the value of the non-U.S. currency declines, the
Fund will have the right to sell the non-U.S. currency for a fixed amount in
U.S. dollars and will thereby offset, in whole or in part, the adverse effect
on the Fund which otherwise would have resulted. Conversely, where a rise in
the U.S. dollar value of another currency is projected, and where the Fund
anticipates investing in securities traded in such currency, the Fund may
purchase call options on the non-U.S. currency.
The purchase of such options could offset, at least partially, the effects
of adverse movements in exchange rates. However, the benefit to the Fund from
purchases of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where currency exchange
rates do not move in the direction or to the extent anticipated, the Fund
could sustain losses on transactions in foreign currency options which would
require it to forego a portion or all of the benefits of advantageous changes
in such rates.
The Fund may write options on non-U.S. currencies for hedging purposes or
otherwise to achieve its investment objective. For example, where the Fund
anticipates a decline in the value of the U.S. dollar value of a foreign
security due to adverse fluctuations in exchange rates it could, instead of
purchasing a put option, write a call option on the relevant currency. If the
expected decline occurs, the option will most likely not be exercised, and the
diminution in value of the security held by the Fund may be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a foreign security to be acquired because
of an increase in the U.S. dollar value of the currency in which the
underlying security is primarily traded, the Fund could write a put option on
the relevant currency which, if rates move in the manner projected, will
expire unexercised and allow the Fund to hedge such increased cost up to the
amount of the premium.
The writing of put or call options on non-U.S. currencies by the Fund will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may
be exercised and the Fund would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium.
Through the writing of options on currencies, the Fund also may be required to
forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
Put and call options on non-U.S. currencies written by the Fund will be
covered by segregation of cash and liquid securities in an amount sufficient
to discharge the Fund's obligations with respect to the option, by acquisition
of the non-U.S. currency or of a right to acquire such currency (in the case
of a call option) or the acquisition of a right to dispose of the currency (in
the case of a put option), or in such other manner as may be in accordance
with the requirements of any exchange on which, or the counterparty with
which, the option is traded and applicable laws and regulations.
Investing in ADRs and other depositary receipts presents many of the same
risks regarding currency exchange rates as investing directly in securities
denominated in currencies other than the U.S. dollar. Because the securities
underlying these receipts are traded primarily in non-U.S. currencies, changes
in currency exchange rates will affect the value of these receipts. For
example, a decline in the U.S. dollar value of another currency in which
securities are primarily traded will reduce the U.S. dollar value of such
securities, even if their value in the other non-U.S. currency remains
constant, and thus will reduce the value of the receipts covering such
securities. The Fund may employ any of the above described foreign currency
hedging techniques to protect the value of its assets invested in depositary
receipts.
Of course, the Fund is not required to enter into the transactions
described above and does not do so unless deemed appropriate by the Adviser.
It should be realized that under certain circumstances, hedging arrangements
to protect the value of the Fund's securities against a decline in currency
values may not be available to the Fund on terms that make economic sense
(they may be too costly). It should also be realized that these methods of
protecting the value of the Fund's securities against a decline in the value
of a currency do not eliminate fluctuations in the underlying prices of the
securities. Additionally, although such contracts, if correctly used, may
minimize the risk of loss due to a decline in the value of the hedged
currency, they do not eliminate the risk of loss and also tend to limit any
potential gain which might result should the value of such currency increase.
SHORT SALES "AGAINST THE BOX"
In a short sale, the Fund sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. The
Fund, in accordance with applicable investment restrictions, may engage in
short sales only if at the time of the short sale it owns or has the right to
obtain, at no additional cost, an equal amount of the security being sold
short. This investment technique is known as a short sale "against the box."
In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. If the Fund engages in a short sale, the collateral for the short
position is maintained for the Fund by the custodian or qualified sub-
custodian. While the short sale is open, an amount of securities equal in kind
and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities is maintained in a segregated
account for the Fund. These securities constitute the Fund's long position.
The Fund does not engage in short sales against the box for investment
purposes. The Fund may, however, make a short sale against the box as a hedge,
when it believes that the price of a security may decline, causing a decline
in the value of a security owned by the Fund (or a security convertible or
exchangeable for such security). In such case, any future losses in the Fund's
long position should be reduced by a gain in the short position. Conversely,
any gain in the long position should be reduced by a loss in the short
position. The extent to which such gains or losses are reduced depends upon
the amount of the security sold short relative to the amount the Fund owns.
There are certain additional transaction costs associated with short sales
against the box, but the Fund endeavors to offset these costs with the income
from the investment of the cash proceeds of short sales.
The Adviser does not expect that more than 40% of the Fund's total assets
would be involved in short sales against the box. The Adviser does not
currently intend to engage in such sales.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, the Fund may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks
of the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested
in high quality short-term instruments. Either party has the right to
terminate a loan at any time on customary industry settlement notice (which
will not usually exceed three business days). During the existence of a loan,
the Fund would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and with respect to cash
collateral would also receive compensation based on investment of cash
collateral (subject to a rebate payable to the borrower). Where the borrower
provides the Fund with collateral consisting of U.S. Treasury obligations, the
borrower is also obligated to pay the Fund a fee for use of the borrowed
securities. The Fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but would call the loan
in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of their consent on a material
matter affecting the investment. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower fail financially. However, the loans would be made only to entities
deemed by the Adviser to be of good standing. In addition, the Fund could
suffer loss if the borrower terminates the loan and the Fund is forced to
liquidate investments in order to return the cash collateral to the buyer. The
Adviser will make loans only when, in the judgment of the Adviser, the
considerations which can be earned currently from loans of this type justifies
the attendant risk. If the Adviser determines to make loans, it is not
intended that the value of the securities loaned would exceed 33 1/3% of the
market value of the Fund's total net assets.
WHEN-ISSUED SECURITIES
The Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis, meaning that delivery of the securities occurs beyond normal
settlement times. In general, the Fund does not pay for the securities until
received and does not start earning interest until the contractual settlement
date. It is expected that, under normal circumstances, the Fund would take
delivery of such securities but the Fund may sell them before the settlement
date. When the Fund commits to purchase a security on a "when-issued" or on a
"forward delivery" basis, it sets up procedures consistent with SEC policies.
Since those policies currently require that an amount of the Fund's assets
equal to the amount of the purchase be held aside or segregated to be used to
pay for the commitment, the Fund expects always to have cash or liquid
securities sufficient to cover any commitments or to limit any potential risk.
However, even though the Fund does not intend to make such purchases for
speculative purposes and intends to adhere to the provisions of SEC policies,
purchases of securities on such bases may involve more risk than other types
of purchases. The when-issued securities are subject to market fluctuation,
and no interest accrues on the security to the purchaser during this period.
The payment obligation and the interest rate that will be received on the
securities are each fixed at the time the purchaser enters into the
commitment. Purchasing obligations on a when-issued basis is a form of
leveraging and can involve a risk that the yields available in the market when
the delivery takes place may actually be higher than those obtained in the
transactions itself. In that case, there could be an unrealized loss at the
time of delivery. An increase in the percentage of the Fund's assets committed
to the purchase of securities on a "when-issued basis" may increase the
volatility of its net asset value.
DEFENSIVE STRATEGIES
During periods of unusual economic or market conditions or for temporary
defensive purposes or liquidity, the Fund may invest without limit in cash and
in U.S. dollar-denominated high quality money market and short-term
instruments. These investments may result in a lower yield than would be
available from investments in a lower quality or longer term.
4. INVESTMENT RESTRICTIONS
The Trust, on behalf of the Fund, and the Portfolio Trust, on behalf of
the Portfolio, each have adopted the following policies which may not be
changed with respect to the Fund or the Portfolio, as the case may be, without
approval by holders of a majority of the outstanding voting securities of the
Fund or the Portfolio, which as used in this Statement of Additional
Information means the vote of the lesser of (i) 67% or more of the outstanding
voting securities of the Fund or Portfolio present at a meeting at which the
holders of more than 50% of the outstanding voting securities of the Fund or
Portfolio are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Fund or Portfolio. The term "voting
securities" as used in this paragraph has the same meaning as in the 1940 Act.
Neither the Portfolio nor the Fund may:
(1) Borrow money, except that as a temporary measure for extraordinary
or emergency purposes it may borrow from banks in an amount not to exceed
1/3 of the current value of its respective net assets, including the
amount borrowed (and neither the Portfolio nor the Fund may purchase any
securities at any time at which borrowings exceed 5% of the total assets
of the Portfolio or the Fund, taken at market value). It is intended that
the Fund or Portfolio would borrow money only from banks and only to
accommodate requests for the repurchase of shares of the Fund or
beneficial interests in the Portfolio while effecting an orderly
liquidation of portfolio securities.
(2) Purchase any security or evidence of interest therein on margin,
except that the Portfolio may obtain such short term credit as may be
necessary for the clearance of purchases and sales of securities.
(3) Underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in another registered investment
company having the same investment objectives and policies and
substantially the same investment restrictions as those with respect to
the Fund (a "Qualifying Portfolio") and except insofar as the Portfolio
may technically be deemed an underwriter under the Securities Act in
selling a security.
(4) Make loans to other persons except (a) through the lending of its
portfolio securities, but not in excess of 33 1/3% of the Fund's or
Portfolio's net assets, (b) through the use of fixed time deposits or
repurchase agreements or the purchase of short-term obligations or (c) by
purchasing all or a portion of an issue of debt securities of types
commonly distributed privately to financial institutions; for purposes of
this paragraph 4 the purchase of short-term commercial paper or a portion
of an issue of debt securities which are part of an issue to the public
shall not be considered the making of a loan.
(5) Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business (the foregoing
shall not be deemed to preclude the Fund or Portfolio from investing in
futures contracts, and the Fund and Portfolio reserve the freedom of
action to hold and to sell real estate acquired as a result of the
ownership of securities by the Fund and the Portfolio).
(6) With respect to 75% of the Fund's or Portfolio's total assets,
purchase securities of any issuer if such purchase at the time thereof
would cause more than 5% of the Fund's or the Portfolio's assets (taken at
market value) to be invested in the securities of such issuer (other than
securities or obligations issued or guaranteed by the United States or any
agency or instrumentality of the United States); provided that, for
purposes of this restriction the issuer of an option or futures contract
shall not be deemed to be the issuer of the security or securities
underlying such contract; and further provided that the Fund may invest
all or substantially all of its assets in a Qualifying Portfolio.
(7) With respect to 75% of the total assets of the Fund or Portfolio,
purchase securities of any issuer if such purchase at the time thereof
would cause more than 10% of the voting securities of such issuer to be
held by the Fund, except that all the assets of the Fund may be invested
in a Qualifying Portfolio.
(8) Concentrate its investments in any particular industry, but the
Fund may invest all of its assets in a Qualifying Portfolio (except that
positions in futures or options contracts shall not be subject to this
restriction).
(9) Issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the
rules and regulations promulgated thereunder, except as appropriate to
evidence a debt incurred without violating Investment Restriction (1)
above.
For purposes of restriction (1) above, arrangements with respect to
securities lending are not treated as borrowing.
As an operating policy, the Fund will not invest more than 15% of its net
assets (taken at market value) in securities for which there is no readily
available market. This policy is not fundamental and may be changed without
shareholder approval.
If a percentage or rating restriction on investment or utilization of
assets (taken at market value) set forth above or referred to in the Fund's
Prospectus is adhered to at the time an investment is made or assets are so
utilized, a later change in percentage resulting from changes in the value of
the securities or a later change in the rating of the securities held for the
Fund or Portfolio will not be considered a violation of policy. If the value
of the Fund's holdings of illiquid securities at any time exceeds the
percentage limitation applicable at the time of acquisition due to subsequent
fluctuations in value or other reasons, the Board of Trustees will consider
what actions, if any, are appropriate to maintain adequate liquidity.
5. PERFORMANCE INFORMATION
From time to time the fund may advertise its total return and average annual
total return in advertisements and/or other types of sales literature. These
figures are computed separately for Class A, Class B, Class L and Class Y shares
of the fund. These figures are based on historical earnings and are not intended
to indicate future performance. Total return is computed for a specified period
of time assuming deduction of the maximum sales charge, if any, from the initial
amount invested and reinvestment of all income dividends and capital gain
distributions on the reinvestment dates at prices calculated as stated in the
Prospectus, then dividing the value of the investment at the end of the period
so calculated by the initial amount invested and subtracting 100%. The standard
average annual total return, as prescribed by the SEC is derived from this total
return, which provides the ending redeemable value. Such standard total return
information may also be accompanied with nonstandard total return information
for differing periods computed in the same manner but without annualizing the
total return or taking sales charges into account. The fund may also include
comparative performance information in advertising or marketing its shares. Such
performance information may include data from Lipper Analytical Services, Inc.
and other financial publications.
From time to time, the trust may quote a fund's yield or total return in
advertisements or in reports and other communications to shareholders. The
trust may include comparative performance information in advertising or
marketing the fund's shares. Such performance information may include the
following industry and financial publications- Barron's, Business Week, CDA
Investment Technologies, Inc., Changing Times, Forbes, Fortune, Institutional
Investor, Investors Business Daily, Money, Morningstar Mutual Fund Values, The
New York Times, USA Today and The Wall Street Journal. To the extent any
advertisement or sales literature of the fund describes the expenses or
performance of any Class it will also disclose such information for the other
Classes.
AVERAGE ANNUAL TOTAL RETURN
A fund's "average annual total return," as described below, is computed
according to a formula prescribed by the SEC. The formula can be expressed as
follows:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made
at the beginning of a 1-, 5- or 10-year period at the end of a
1-, 5- or 10-year period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period. A fund's net investment income changes in
response to fluctuations in interest rates and the expenses of the fund.
In computing total rates of return and yield quotations, all fund expenses
are included. However, fees that may be charged directly to a shareholder by
that shareholder's broker dealer, Service Agent or other financial
intermediaries are not included. Of course, any such fees will reduce the
shareholder's net return on investment.
Set forth below is average annual total rate of return information for the
Class A shares of the Fund for the periods indicated, assuming that dividends
and capital gains distributions, if any, were reinvested. All outstanding
shares were designated Class A shares on January 4, 1999. Prior to January 4,
1999, there were no sales charges on the purchase or sale of the fund's
shares. The Class A share performance for past periods has therefore been
adjusted to reflect the maximum sales charge currently in effect. The fund
offered Class B shares beginning January 4, 1999 and Class L and Y shares
beginning September , 2000. For periods prior to that date, Class B share
performance includes the performance of the fund's Class A shares, adjusted to
take into account the deduction of the different contingent deferred sales
charges applicable to each such Class, rather than the initial sales charge
applicable to Class A shares. This blended performance has not been adjusted
to take into account differences in class-specific operating expenses. Because
operating expenses of Class B, L and Y shares are different than those of
Class A shares, this blended Class B, L and Y share performance is different
than the performance of Class B, L or Y shares would have been had Class B, L
or Y shares been offered for the entire period.
Performance results include any applicable fee waivers or expense
subsidies in place during the time period, which may cause the results to be
more favorable than they otherwise would have been. There were no Class L or Y
shares outstanding on October 31, 1999.
AVERAGE
ANNUAL
TOTAL RATE
OF RETURN
---------
CITIFUNDS INTERNATIONAL GROWTH PORTFOLIO
CLASS A
March 1, 1991 (commencement of operations) to December 31, 1999 .... 9.45%
Five years ended December 31, 1999 ................................. 14.06%
One year ended December 31, 1999 ................................... 28.87%
CLASS B
January 4, 1999 (commencement of operations) to December 31, 1999 .. 25.35%
Five years ended December 31, 1999 ................................. 13.24%
One year ended December 31, 1999 ................................... 28.03%
For advertising and sales purposes, the fund will generally use the
performance of Class A shares. Class A shares are sold at net asset value plus
a current maximum sales charge of 5.00%. Performance will typically include
this maximum sales charge for the purposes of calculating performance figures.
If the performance of Class B, L or Y shares is used for advertising and sales
purposes, performance after class inception will be actual performance, while
performance prior to that date will be Class A performance, adjusted to
reflect the differences in sales charges (but may not reflect the differences
in fees and expenses) between the classes. For these purposes, it will be
assumed that the maximum contingent deferred sales charge applicable to the
Class B and L shares is deducted at the times, in the amount, and under the
terms stated in the Prospectus. Class B, L and Y share performance generally
would have been different than Class A performance, had the Class B, L and Y
shares been offered for the entire period, because the expenses attributable
to Class B, L and Y shares are different than the expenses attributable to the
Class A shares. Fund performance may also be presented in advertising and
sales literature without the inclusion of sales charges.
AGGREGATE TOTAL RETURN
The fund's "aggregate total return," as described below, represents the
cumulative change in the value of an investment in the fund for the specified
period and is computed by the following formula:
ERV - P
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000 investment made
at the beginning of the 1-, 5- or 10-year period at the end of the
1-, 5- or 10-year period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period.
AGGREGATE ANNUAL TOTAL RETURN
SINCE
CLASS OF SHARES 1-YEAR 5-YEAR 10-YEAR INCEPTION
--------------- ------ ------ ------- ---------
Class A(2) % % N/A %
Class B(3) % N/A N/A N/A
----------
(1) All outstanding shares were designated Class A on January 4, 1999. Class B
shares commenced operations on January 4, 1999. Class L and Class Y shares
commenced operations on September , 2000.
(2) The average annual total return figure assumes that the maximum 5.00% sales
charge has been deducted from the investment at the time of purchase. If
the maximum sales charge had not been deducted, the average annual total
return for Class A shares for the same period would have been [ %] and
[ %] for one year and since inception of the fund, respectively.
(3) The average annual total return figure assumes that the maximum applicable
Deferred Sales Charge has been deducted from the investment at the time of
redemption. If the maximum Deferred Sales Charge had not been deducted, the
average annual total return for Class B shares for the same period would
have been [ %] and [ %] for one year and since inception of the
fund, respectively.
*There were no Class L or Y shares outstanding on December 31, 1999.
Performance will vary from time to time depending upon market conditions,
the composition of the fund's portfolio and operating expenses and the
expenses exclusively attributable to the Class. Consequently, any given
performance quotation should not be considered representative of the Class's
performance for any specified period in the future. Because performance will
vary, it may not provide a basis for comparing an investment in the Class with
certain bank deposits or other investments that pay a fixed yield for a stated
period of time. Investors comparing a Class's performance with that of other
mutual funds should give consideration to the quality and maturity of the
respective investment companies' portfolio securities.
6. DETERMINATION OF NET ASSET VALUE;
VALUATION OF SECURITIES
The net asset value per share of the fund is determined for each class on
each day during which the New York Stock Exchange (the "Exchange") is open for
trading (a "Business Day"). As of the date of this Statement of Additional
Information, the Exchange is open for trading every weekday except for the
following holidays (or the days on which they are observed): New Year's Day,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. This
determination of net asset value is made once each day as of the close of
regular trading on such Exchange (normally 4:00 p.m. Eastern time) by adding
the market value of all securities and other assets attributable to the class
(including its interest in the portfolio), then subtracting the liabilities
attributable to that class, and then dividing the result by the number of
outstanding shares of the class. The net asset value per share is effective
for orders received and accepted by the Service Agent prior to its
calculation.
The value of the portfolio's net assets (i.e. the value of its securities
and other assets less its liabilities, including expenses payable or accrued)
is determined at the same time and on the same days as the net asset value per
share of the fund is determined. The net asset value of the fund's investment
in the portfolio is equal to the fund's pro rata share of the net assets of
the portfolio.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in non-U.S. currencies will be converted into
U.S. dollars at the prevailing market rates or if there are no market rates,
at fair value at the time of valuation. Equity securities are valued at the
last sale price on the exchange on which they are primarily traded or on the
NASDAQ system for unlisted national market issues, or at the last quoted bid
price for securities in which there were no sales during the day or for
unlisted securities not reported on the NASDAQ system. Securities listed on a
foreign exchange are valued at the last quoted sale price available before the
time when net assets are valued. Bonds and other fixed income securities
(other than short-term obligations) are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by the board of
trustees of the trust. In making such valuations, the pricing service utilizes
both dealer-supplied valuations and electronic data processing techniques that
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data, without exclusive
reliance upon quoted prices or exchange or over-the-counter prices, since such
valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which constitutes fair value as determined by the board of
trustees of the trust. Securities for which there are no such valuations are
valued at fair value as determined in good faith by or at the direction of the
board of trustees of the trust.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of regular trading on the
Exchange and may also take place on days on which the Exchange is closed. If
events materially affecting the value of foreign securities occur between the
time when the exchange on which they are traded closes and the time when the
fund's net asset value is calculated, such securities may be valued at fair
value in accordance with procedures established by and under the general
supervision of the board of trustees of the trust.
Interest income on long-term obligations held for the Fund is determined
on the basis of interest accrued plus amortization of "original issue
discount" (generally, the difference between issue price and stated redemption
price at maturity) and premiums (generally, the excess of purchase price over
stated redemption price at maturity). Interest income on short-term
obligations is determined on the basis of interest accrued plus amortization
of any premium.
7. ADDITIONAL INFORMATION ON THE PURCHASE AND SALE
OF FUND SHARES AND SHAREHOLDER PROGRAMS
As described in the Prospectus, the fund provides you with alternative
ways of purchasing shares based upon your individual investment needs.
Each class of shares of the fund represents an interest in the same
portfolio of investments. Each class is identical in all respects except that
each class bears its own class expenses, including distribution and service
fees and service agent fees, and each class has exclusive voting rights with
respect to any distribution plan or administrative services plan applicable to
its shares. As a result of the differences in the expenses borne by each class
of shares, net income per share, dividends per share and net asset value per
share will vary for each class of shares. There are no conversion, preemptive
or other subscription rights, except that Class B shares automatically convert
to Class A shares in eight years as more fully described below.
Shareholders of each class will share expenses proportionately for
services that are received equally by all shareholders. A particular class of
shares will bear only those expenses that are directly attributable to that
class, where the type or amount of services received by a class varies from
one class to another. The expenses that may be borne by specific classes of
shares may include (i) transfer agency fees attributable to a specific class
of shares, (ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxy
statements to current shareholders of a specific class of shares, (iii) SEC
and state securities registration fees incurred by a specific class, (iv) the
expense of administrative personnel and services required to support the
shareholders of a specific class of shares, (v) litigation or other legal
expenses relating to a specific class of shares, (vi) accounting expenses
relating to a specific class of shares and (vii) any additional incremental
expenses subsequently identified and determined to be properly allocated to
one or more classes of shares.
The following classes of shares are available for purchase. See the
prospectus for a discussion of factors to consider in selecting which Class of
shares to purchase.
CLASS A SHARES
Class A shares are sold to investors at the public offering price, which
is the net asset value plus an initial sales charge as follows:
The Fund receives the entire net asset value of all Class A shares that
are sold. The Distributor retains the full applicable sales charge from which
it pays the uniform reallowances shown in the table below to Service Agents
which are broker-dealers. The Distributor keeps the full applicable sales
charge with respect to Class A shares sold by Service Agents that are not
broker-dealers.
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER REALLOWANCE
AMOUNT OF AS A % OF AS A % OF AS A % OF
INVESTMENT OFFERING PRICE INVESTMENT OFFERING PRICE
---------- -------------- ---------- --------------
<S> <C> <C> <C>
Less than $25,000 ................................ 5.00% 5.26% 4.50%
$25,000 to less than $50,000 ..................... 4.25% 4.44% 3.83%
$50,000 to less than $100,000 .................... 3.75% 3.90% 3.38%
$100,000 to less than $250,000 ................... 3.25% 3.36% 2.93%
$250,000 to less than $500,000 ................... 2.75% 2.83% 2.48%
$500,000 to less than $1,000,000 ................ 2.00% 1.80% 1.80%
$1,000,000 or more ............................... none* none* up to 1.00%
------------
* Purchases of Class A shares of $1,000,000 or more will be made at net asset value without any initial sales
charge, but will be subject to a Deferred Sales Charge of 1.00% on redemptions made within 12 months of purchase.
The deferred sales charge on Class A shares is payable to [Salomon Smith Barney], which compensates brokers,
dealers and other institutions (called "Service Agents") whose clients make purchases of $1,000,000 or more. The
deferred sales charge is waived in the same circumstances in which the Deferred Sales Charge applicable to Class
B and Class L shares is waived. See "Deferred Sales Charge Provisions" and "Waivers of Deferred Sales Charge."
</TABLE>
Service Agents may receive up to 90% of the sales charge and may be deemed
to be underwriters of the fund as defined in the 1933 Act. The reduced sales
charges shown above apply to the aggregate of purchases of Class A shares of
the fund made at one time by "any person," which includes an individual and
his or her immediate family, or a trustee or other fiduciary of a single trust
estate or single fiduciary account.
CLASS B SHARES
Class B shares are sold without an initial sales charge but are subject to
a Deferred Sales Charge payable upon certain redemptions. See "Deferred Sales
Charge Provisions" below.
Class B shares pay distribution/service fees of up to 1.00% of the average
daily net assets of the fund represented by the Class B shares. The
distributor pays commissions to Service Agents which are broker-dealers of
4.50% of the offering price of Class B shares sold by these entities. The
Distributor keeps the full applicable sales charge with respect to Class B
shares sold by Service Agents that are not broker-dealers. These commissions
are not paid on exchanges from other Smith Barney mutual funds or on sales of
Class B shares to investors exempt from the CDSC. The distributor is
compensated for these payments through the receipt of the ongoing distribution
fees from the fund, and through the CDSC, if any. The distributor will also
advance the first year service fee to dealers at an annual rate equal to 0.25%
of the average daily net assets represented by Class B shares sold by them. As
a result, the total amount paid to a dealer upon the purchase of Class B
shares may be a maximum of 4.75% of the purchase price of the Class B shares.
CLASS L SHARES
Class L shares are sold with an initial sales charge of 1.00% (which is
equal to 1.01% of the amount invested) and are subject to a Deferred Sales
Charge payable upon certain redemptions. Service Agents selling Class L shares
receive a commission of up to [___%] of the purchase price of the Class L shares
they sell. See "Deferred Sales Charge Provisions" below. Until June 22, 2001
purchases of Class L shares by investors who were holders of Class C shares of
another Smith Barney mutual fund on June 12, 1998 will not be subject to the 1%
initial sales charge.
CLASS Y SHARES
Class Y shares are sold without an initial sales charge or Deferred Sales
Charge and are available only to investors investing a minimum of $15,000,000
(except purchases of Class Y shares by Smith Barney Concert Allocation Series
Inc., for which there is no minimum purchase amount).
From time to time, the distributor or the adviser, at its expense, may
provide additional commissions, compensation or promotional incentives
("concessions") to dealers that sell or arrange for the sale of shares of the
fund. Such concessions provided by the distributor or the adviser may include
financial assistance to dealers in connection with pre-approved conferences or
seminars, sales or training programs for invited registered representatives
and other employees, payment for travel expenses, including lodging, incurred
by registered representatives and other employees for such seminars or
training programs, seminars for the public, advertising and sales campaigns
regarding the fund, and/or other dealer-sponsored events. From time to time,
the distributor or the adviser may make expense reimbursements for special
training of a dealer's registered representatives and other employees in group
meetings or to help pay the expenses of sales contests. Other concessions may
be offered to the extent not prohibited by state laws or any self-regulatory
agency, such as the NASD.
GENERAL
[Investors may purchase shares from a financial consultant or financial
institution (called a "Service Agent") that has entered into a sales or
service agreement with the distributor concerning the fund. In addition,
certain investors, including qualified retirement plans purchasing through
certain brokers that clear through Salomon Smith Barney ("Dealer
Representatives"), may purchase shares directly from the fund. When purchasing
shares of the fund, investors must specify whether the purchase is for Class
A, Class B, Class L or Class Y shares. Service Agents and Dealer
Representatives may charge their customers an annual account maintenance fee
in connection with a brokerage account through which an investor purchases or
holds shares. Accounts held directly at the sub-transfer agent are not subject
to a maintenance fee.]
Investors in Class A, Class B and Class L shares may open an account in
the fund by making an initial investment of at least $1,000 for each account,
or $250 for an IRA or a Self-Employed Retirement Plan, in the fund. Investors
in Class Y shares may open an account by making an initial investment of
$15,000,000. Subsequent investments of at least $50 may be made for all
Classes. For participants in retirement plans qualified under Section 403(b)
(7) or Section 401(c) of the Code, the minimum initial investment required for
Class A, Class B and Class L shares and the subsequent investment requirement
for all Classes in the fund is $25. For shareholders purchasing shares of the
fund through the Systematic Investment Plan on a monthly basis, the minimum
initial investment requirement for Class A, Class B and Class L shares and
subsequent investment requirement for all Classes is $25. For shareholders
purchasing shares of the fund through the Systematic Investment Plan on a
quarterly basis, the minimum initial investment required for Class A, Class B
and Class L shares and the subsequent investment requirement for all Classes
is $50. There are no minimum investment requirements for Class A shares for
employees of Citigroup and its subsidiaries, including Salomon Smith Barney,
unitholders who invest distributions from a unit investment trust ("UIT")
sponsored by Salomon Smith Barney, and Directors/Trustees of any of the Smith
Barney mutual funds, and their spouses and children. The fund reserves the
right to waive or change minimums, to decline any order to purchase its shares
and to suspend the offering of shares from time to time. Shares purchased will
be held in the shareholder's account by the sub-transfer agent.
Purchase orders received by the fund or a Service Agent prior to the close
of regular trading on the New York Stock Exchange ("NYSE"), on any day the
fund calculates its net asset value, are priced according to the net asset
value determined on that day (the "trade date"). Orders received by a [Dealer
Representative] prior to the close of regular trading on the NYSE on any day
the fund calculates its net asset value, are priced according to the net asset
value determined on that day, provided the order is received by the fund or
the fund's agent prior to its close of business. [For shares purchased through
Salomon Smith Barney or a Dealer Representative purchasing through Salomon
Smith Barney, payment for shares of the fund is due on the third business day
after the trade date.] In all other cases, payment must be made with the
purchase order.
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any time by
purchasing shares through a service known as the Systematic Investment Plan.
Under the Systematic Investment Plan, a Service Agent or the sub-transfer
agent is authorized through preauthorized transfers of at least $25 on a
monthly basis or at least $50 on a quarterly basis to charge the shareholder's
account held with a bank or other financial institution on a monthly or
quarterly basis as indicated by the shareholder, to provide for systematic
additions to the shareholder's fund account. A shareholder who has
insufficient funds to complete the transfer will be charged a fee of up to $25
by its Service Agent or the sub-transfer agent. The Systematic Investment Plan
also authorizes a Service Agent to apply cash held in the shareholder's
brokerage account opened with the Service Agent or redeem the shareholder's
shares of certain money market funds to make additions to the account.
Additional information is available from the fund or your Service Agent or a
Dealer Representative.
SALES CHARGE WAIVERS AND REDUCTIONS
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales to (i) Board Members and
employees of Citigroup and its subsidiaries and any Citigroup affiliated funds
including the Smith Barney mutual funds (including retired Board Members and
employees); the immediate families of such persons (including the surviving
spouse of a deceased Board Member or employee); and to a pension, profit-
sharing or other benefit plan for such persons and (ii) employees of members of
the National Association of Securities Dealers, Inc., provided such sales are
made upon the assurance of the purchaser that the purchase is made for
investment purposes and that the securities will not be resold except through
redemption or repurchase; (b) offers of Class A shares to any other investment
company to effect the combination of such company with the fund by merger,
acquisition of assets or otherwise; (c) purchases of Class A shares by any
client of financial consultants or other registered representatives affiliated
with Citicorp who recently joined a broker-dealer that has a sales agreement
with the distributor concerning the fund, if certain conditions are met; (d)
purchases by shareholders who have redeemed Class A shares in the fund (or Class
A shares of another Smith Barney mutual fund that is offered with a sales
charge) and who wish to reinvest their redemption proceeds in the fund, provided
the reinvestment is made within 60 calendar days of the redemption; (e)
purchases by accounts managed by registered investment advisory subsidiaries of
Citigroup; (f) direct rollovers by plan participants of distributions from a
401(k) plan offered to employees of Citigroup or its subsidiaries or a 401(k)
plan enrolled in the Smith Barney 401(k) Program (Note: subsequent investments
will be subject to the applicable sales charge); (g) purchases by a separate
account used to fund certain unregistered variable annuity contracts; (h)
investments of distributions from or proceeds from a sale of a UIT sponsored by
Salomon Smith Barney; (i) purchases by investors participating in a Salomon
Smith Barney fee- based arrangement; and (j) purchases of Class A shares by
Section 403(b) or Section 401(a) or (k) accounts associated with Copeland
Retirement Programs. In order to obtain such discounts, the purchaser must
provide sufficient information at the time of purchase to permit verification
that the purchase would qualify for the elimination of the sales charge.
RIGHT OF ACCUMULATION
Class A shares of the fund may be purchased by "any person" (as defined
above) at a reduced sales charge or at net asset value determined by
aggregating the dollar amount of the new purchase and the total net asset
value of all Class A shares of the fund and of other Smith Barney mutual funds
that are offered with a sales charge as currently listed under "Exchange
Privilege" then held by such person and applying the sales charge applicable
to such aggregate. In order to obtain such discount, the purchaser must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales charge. The right of
accumulation is subject to modification or discontinuance at any time with
respect to all shares purchased thereafter.
LETTER OF INTENT - CLASS A SHARES
A Letter of Intent for an amount of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales charge by aggregating
investments over a 13 month period, provided that the investor refers to such
Letter when placing orders. For purposes of a Letter of Intent, the "Amount of
Investment" as referred to in the preceding sales charge table includes (i)
all Class A shares of the fund and other Smith Barney mutual funds offered
with a sales charge acquired during the term of the letter plus (ii) the value
of all Class A shares previously purchased and still owned. Each investment
made during the period receives the reduced sales charge applicable to the
total amount of the investment goal. If the goal is not achieved within the
period, the investor must pay the difference between the sales charges
applicable to the purchases made and the charges previously paid, or an
appropriate number of escrowed shares will be redeemed. The term of the Letter
will commence upon the date the Letter is signed, or at the options of the
investor, up to 90 days before such date. Please contact your Service Agent or
the transfer agent to obtain a Letter of Intent application.
LETTER OF INTENT - CLASS Y SHARES
A Letter of Intent may also be used as a way for investors to meet the
minimum investment requirement for Class Y shares (except purchases of Class Y
shares by Smith Barney Concert Allocation Series Inc., for which there is no
minimum purchase amount). Such investors must make an initial minimum purchase
of $5,000,000 in Class Y shares of the fund and agree to purchase a total of
$15,000,000 of Class Y shares of the fund within 13 months from the date of
the Letter. If a total investment of $15,000,000 is not made within the 13-
month period, all Class Y shares purchased to date will be transferred to
Class A shares, where they will be subject to all fees (including a service
fee of 0.25%) and expenses applicable to the fund's Class A shares, which may
include a deferred sales charge of 1.00%. Please contact your Service Agent or
the transfer agent for further information.
DEFERRED SALES CHARGE PROVISIONS
"Deferred Sales Charge Shares" are: (a) Class B shares; (b) Class L
shares; and (c) Class A shares that were purchased without an initial sales
charge but are subject to a deferred sales charge. A Deferred Sales Charge may
be imposed on certain redemptions of these shares.
Any applicable Deferred Sales Charge will be assessed on an amount equal
to the lesser of the original cost of the shares being redeemed or their net
asset value at the time of redemption. Deferred Sales Charge shares that are
redeemed will not be subject to a deferred sales charge to the extent that the
value of such shares represents: (a) capital appreciation of fund assets; (b)
reinvestment of dividends or capital gain distributions; (c) with respect to
Class B shares, shares redeemed more than five years after their purchase; or
(d) with respect to Class L shares and Class A shares that are deferred sales
charge shares, shares redeemed more than 12 months after their purchase.
Class L shares and Class A shares that are deferred sales charge shares
are subject to a 1.00% Deferred Sales Charge if redeemed within 12 months of
purchase. In circumstances in which the Deferred Sales Charge is imposed on
Class B shares, the amount of the charge will depend on the number of years
since the shareholder made the purchase payment from which the amount is being
redeemed. Solely for purposes of determining the number of years since a
purchase payment, all purchase payments made during a month will be aggregated
and deemed to have been made on the last day of the preceding Salomon Smith
Barney statement month. The following table sets forth the rates of the charge
for redemptions of Class B shares by shareholders, except in the case of Class
B shares held under the Smith Barney 401(k) Program, as described below. See
"Purchase of Shares -- Smith Barney 401(k) and ExecChoice(TM) Programs."
SALE DURING CDSC ON SHARES BEING SOLD
----------- -------------------------
1st year since purchase 5%
2nd year since purchase 4%
3rd year since purchase 3%
4th year since purchase 2%
5th year since purchase 1%
6th year (or later) since purchase None
Class B shares will convert automatically to Class A shares eight years
after the date on which they were purchased and thereafter will no longer be
subject to any distribution fees. There will also be converted at that time
such proportion of Class B Dividend Shares owned by the shareholders as the
total number of his or her Class B shares converting at the time bears to the
total number of outstanding Class B shares (other than Class B Dividend
Shares) owned by the shareholder.
In determining the applicability of any Deferred Sales Charge, it will be
assumed that a redemption is made first of shares representing capital
appreciation, next of shares representing the reinvestment of dividends and
capital gain distributions and finally of other shares held by the shareholder
for the longest period of time. The length of time that Deferred Sales Charge
shares acquired through an exchange have been held will be calculated from the
date that the shares exchanged were initially acquired in one of the other
Smith Barney mutual funds, and fund shares being redeemed will be considered
to represent, as applicable, capital appreciation or dividend and capital gain
distribution reinvestments in such other funds. For Federal income tax
purposes, the amount of the Deferred Sales Charge will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any deferred sales charge will be paid to Salomon Smith Barney.
To provide an example, assume an investor purchased 100 Class B shares of the
fund at $10 per share for a cost of $1,000. Subsequently, the investor
acquired 5 additional shares of the fund through dividend reinvestment. During
the fifteenth month after the purchase, the investor decided to redeem $500 of
his or her investment. Assuming at the time of the redemption the net asset
value had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The Deferred Sales Charge would
not be applied to the amount which represents appreciation ($200) and the
value of the reinvested dividend shares ($60). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4.00% (the
applicable rate for Class B shares) for a total deferred sales charge of
$9.60.
WAIVERS OF DEFERRED SALES CHARGE
The Deferred Sales Charge will be waived on: (a) exchanges (see "Exchange
Privilege"); (b) automatic cash withdrawals in amounts equal to or less than
1.00% per month of the value of the shareholder's shares at the time the
withdrawal plan commences (see "Automatic Cash Withdrawal Plan") (provided,
however, that automatic cash withdrawals in amounts equal to or less than
2.00% per month of the value of the shareholder's shares will be permitted for
withdrawal plans that were established prior to November 7, 1994); (c)
redemptions of shares within 12 months following the death or disability of
the shareholder; (d) redemptions of shares made in connection with qualified
distributions from retirement plans or IRAs upon the attainment of age 59 1/2;
(e) involuntary redemptions; and (f) redemptions of shares to effect a
combination of the fund with any investment company by merger, acquisition of
assets or otherwise. In addition, a shareholder who has redeemed shares from
other Smith Barney mutual funds may, under certain circumstances, reinvest all
or part of the redemption proceeds within 60 days and receive pro rata credit
for any deferred sales charge imposed on the prior redemption.
Deferred sales charge waivers will be granted subject to confirmation (by
Service Agents in the case of shareholders who are also clients of Service
Agents or by the transfer agent in the case of all other shareholders) of the
shareholder's status or holdings, as the case may be.
SMITH BARNEY RETIREMENT PROGRAMS
You may be eligible to participate in a retirement program sponsored by
Salomon Smith Barney or one of its affiliates. The fund offers Class A and Class
L shares at net asset value to participating plans under the programs. You can
meet minimum investment and exchange amounts, if any by combining the plan's
investments in any of the Smith Barney mutual funds.
There are no sales charges when you buy or sell shares and the class of
shares you may purchase depends on the amount of your initial investment and/
or the date your account is opened. Once a class of shares is chosen, all
additional purchases must by of the same class.
For plans opened on or after March 1, 2000 that are not part of the
Paychex offering, Class A shares may be purchased regardless of the amount
invested.
For plans opened prior to March 1, 2000 and for plans that are part of the
Paychex offering, the class of shares you may purchase depends on the amount
of your initial investment:
Class A Shares. Class A shares may be purchased by plans investing at
least $1 million.
Class L Shares. Class L shares may be purchased by plans investing less
than $1 million. Class L shares are eligible to exchange into Class A shares
not later than 8 years after the plan joined the program. They are eligible
for exchange in the following circumstances:
If the plan was opened on or after June 21, 1996 and a total of $1 million
is invested in Smith Barney Funds Class L shares (other than money market
funds), all Class L shares are eligible for exchange after the plan is in the
program for 5 years.
[If the plan was opened before June 21, 1996 and a total of $500,000 is
invested in Smith Barney Funds Class L shares (other than money market funds)
on December 31 in any year, all Class L shares are eligible for exchange on or
about March 31 of the following year.]
For more information, call your Service Agent or the transfer agent.
Retirement Programs Opened On or after June 21, 1996. If, at the end of
the fifth year after the date the participating plan enrolled in the Smith
Barney 401(k) Program or the ExecChoice(TM) Program, a participating plan's
total Class L holdings in all non-money market Smith Barney mutual funds equal
at least $1,000,000, the participating plan will be offered the opportunity to
exchange all of its Class L shares for Class A shares of the fund. (For
participating plans that were originally established through a Salomon Smith
Barney retail brokerage account, the five-year period will be calculated from
the date the retail brokerage account was opened.) Such participating plans
will be notified of the pending exchange in writing within 30 days after the
fifth anniversary of the enrollment date and, unless the exchange offer has
been rejected in writing, the exchange will occur on or about the 90th day
after the fifth anniversary date. If the participating plan does not qualify
for the five-year exchange to Class A shares, a review of the participating
plan's holdings will be performed each quarter until either the participating
plan qualifies or the end of the eighth year.
Any participating plan in the Smith Barney 401(k) or the ExecChoice(TM)
Program, whether opened before or after June 21, 1996, that has not previously
qualified for an exchange into Class A shares will be offered the opportunity
to exchange all of its Class L shares for Class A shares of the fund,
regardless of asset size, at the end of the eighth year after the date the
participating plan enrolled in the Smith Barney 401(k) Program or
ExecChoice(TM) Program. Such plans will be notified of the pending exchange in
writing approximately 60 days before the eighth anniversary of the enrollment
date and, unless the exchange has been rejected in writing, the exchange will
occur on or about the eighth anniversary date. Once an exchange has occurred,
a participating plan will not be eligible to acquire additional Class L
shares, but instead may acquire Class A shares of the same fund. Any Class L
shares not converted will continue to be subject to the distribution fee.
Participating plans wishing to acquire shares of the fund through the
Smith Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program must
purchase such shares directly from the transfer agent. For further information
regarding these Programs, investors should contact their Service Agent.
Retirement Programs Investing in Class B Shares: Class B shares of a fund
are not available for purchase by participating plans opened on or after June
21, 1996.
At the end of the eighth year after the date the participating plan
enrolled in the Smith Barney 401 (k) Program, the participating plan will be
offered the opportunity to exchange all of its Class B shares for Class A
shares of the same fund. Such participating plan will be notified of the
pending exchange in writing approximately 60 days before the eighth
anniversary of the enrollment date and, unless the exchange has been rejected
in writing, the exchange will occur on or about the eighth anniversary date.
Once the exchange has occurred, a participating plan will not be eligible to
acquire additional Class B shares, but instead may acquire Class A shares of a
the same fund. If the participating plan elects not to exchange all of its
Class B shares at that time, each Class B share held by the participating plan
will have the same conversion feature as Class B shares held by other
investors. See "Purchase of Shares-Deferred Sales Charge Alternatives."
No deferred sales charge is imposed on redemptions of Class B shares to
the extent that the net asset value of the shares redeemed does not exceed the
current net asset value of the shares purchased through reinvestment of
dividends or capital gain distributions, plus the current net asset value of
Class B shares purchased more than eight years prior to the redemption, plus
increases in the net asset value of the shareholders Class B shares above the
purchase payments made during the preceding eight years. Whether or not the
deferred sales charge applies to the redemption by a participating plan
depends on the number of years since the participating plan first became
enrolled in the Smith Barney 401(k) Program, unlike the applicability of the
deferred sales charge to redemptions by other shareholders, which depends on
the number of years since those shareholders made the purchase payment from
which the amount is being redeemed.
The deferred sales charge will be waived on redemptions of Class B shares
in connection with lump-sum or other distributions made by a participating
plan; as a result of (a) the retirement of an employee in the participating
plan; (b) the termination of employment of an employee in the participating
plan; (c) the death or disability or an employee in the participating plan;
(d) the attainment of age 59 1/2 by an employee in the participating plan; (e)
hardship of an employee in the participating plan to the extent permitted
under Section 401(k) of the Code; or (f) redemptions of shares in connection
with a loan made by the participating plan to an employee.
AUTOMATIC CASH WITHDRAWAL PLAN
An automatic cash withdrawal plan (the "Withdrawal Plan") is available to
shareholders of the fund who own shares of the fund with a value of at least
$10,000 and who wish to receive specific amounts of cash monthly or quarterly.
Withdrawals of at least $50 may be made under the Withdrawal Plan by redeeming
as many shares of the fund as may be necessary to cover the stipulated
withdrawal payment. Any applicable Deferred Sales Charge will not be waived on
amounts withdrawn by shareholders that exceed 1.00% per month of the value of
a shareholder's shares at the time the Withdrawal Plan commences. (With
respect to Withdrawal Plans in effect prior to November 7, 1994, any
applicable Deferred Sales Charge will be waived on amounts withdrawn that do
not exceed 2.00% per month of the value of a shareholder's shares at the time
the Withdrawal Plan commences). To the extent that withdrawals exceed
dividends, distributions and appreciation of a shareholder's investment in a
fund, continued withdrawal payments will reduce the shareholder's investment,
and may ultimately exhaust it. Withdrawal payments should not be considered as
income from investment in a fund. Furthermore, as it generally would not be
advantageous to a shareholder to make additional investments in the fund at
the same time he or she is participating in the Withdrawal Plan, purchases by
such shareholders in amounts of less than $5,000 ordinarily will not be
permitted.
Shareholders of a fund who wish to participate in the Withdrawal Plan and
who hold their shares of the fund in certificate form must deposit their share
certificates with the sub-transfer agent as agent for Withdrawal Plan members.
All dividends and distributions on shares in the Withdrawal Plan are
reinvested automatically at net asset value in additional shares of the fund
involved. A shareholder who purchases shares directly through the sub-
transfer agent may continue to do so and applications for participation in the
Withdrawal Plan must be received by the sub-transfer agent no later than the
eighth day of the month to be eligible for participation beginning with that
month's withdrawal. For additional information, shareholders should contact
their Service Agent.
EXCHANGE PRIVILEGE
Except as noted below, shareholders of any of the Smith Barney mutual
funds may exchange all or part of their shares for shares of the same Class of
other Smith Barney mutual funds, on the basis of relative net asset value per
share at the time of exchange as follows:
A. Class A and Class Y shares of the fund may be exchanged without a sales
charge for the respective shares of any of the Smith Barney mutual funds.
B. Class B shares of any fund may be exchanged without a sales charge. Class B
shares of the fund exchanged for Class B shares of another Smith Barney mutual
fund will be subject to the higher applicable Deferred Sales Charge of the two
funds and, for purposes of calculating deferred sales charge rates and
conversion periods, will be deemed to have been held since the date the shares
being exchanged were deemed to be purchased.
C. Class L shares of any fund may be exchanged without a sales charge. For
purposes of Deferred Sales Charge applicability, Class L shares of the fund
exchanged for Class C shares of another Smith Barney mutual fund will be
deemed to have been owned since the date the shares being exchanged were
deemed to be purchased.
The exchange privilege enables shareholders in any Smith Barney mutual
fund to acquire shares of the same Class in a fund with different investment
objectives when they believe a shift between funds is an appropriate
investment decision. This privilege is available to shareholders residing in
any state in which the fund shares being acquired may legally be sold. Prior
to any exchange, the shareholder should obtain and review a copy of the
current prospectus of each fund into which an exchange is being considered.
Prospectuses may be obtained from your Service Agent.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current net
asset value and, subject to any applicable Deferred Sales Charge, the proceeds
are immediately invested, at a price as described above, in shares of the fund
being acquired. Salomon Smith Barney reserves the right to reject any exchange
request. The exchange privilege may be modified or terminated at any time
after written notice to shareholders.
ADDITIONAL INFORMATION REGARDING THE EXCHANGE PRIVILEGE
Although the exchange privilege is an important benefit, excessive
exchange transactions can be detrimental to the fund's performance and its
shareholders. The manager may determine that a pattern of frequent exchanges
is excessive and contrary to the best interests of the fund's other
shareholders. In this event, the fund may, at its discretion, decide to limit
additional purchases and/or exchanges by a shareholder. Upon such a
determination, the fund will provide notice in writing or by telephone to the
shareholder at least 15 days prior to suspending the exchange privilege and
during the 15 day period the shareholder will be required to (a) redeem his or
her shares in the fund or (b) remain invested in the fund or exchange into any
of the funds of the Smith Barney mutual funds ordinarily available, which
position the shareholder would be expected to maintain for a significant
period of time. All relevant factors will be considered in determining what
constitutes an abusive pattern of exchanges.
This exchange privilege may be modified or terminated at any time, and is
available only in those jurisdictions where such exchanges legally may be
made. Before making any exchange, shareholders should contact the Transfer
Agent or, if they hold Fund shares through Service Agents, their Service
Agents to obtain more information and prospectuses of the funds to be acquired
through the exchange. An exchange is treated as a sale of the shares exchanged
and could result in taxable gain or loss to the shareholder making the
exchange.
DETERMINATION OF PUBLIC OFFERING PRICE
The fund offers its shares to the public on a continuous basis. The public
offering price for a Class A and Class Y share of the fund is equal to the net
asset value per share at the time of purchase, plus for Class A shares an
initial sales charge based on the aggregate amount of the investment. The
public offering price for a Class L share (and Class A share purchases,
including applicable rights of accumulation, equaling or exceeding $1,000,000)
is equal to the net asset value per share at the time of purchase and no sales
charge is imposed at the time of purchase. A deferred sales charge, however,
is imposed on certain redemptions of Class L shares, and Class A shares when
purchased in amounts exceeding $1,000,000. The method of computation of the
public offering price is shown in each fund's financial statements,
incorporated by reference in their entirety into this SAI.
ADDITIONAL PURCHASE AND SALE INFORMATION
REDEMPTION OF SHARES
The right of redemption of shares of the fund may be suspended or the date
of payment postponed (a) for any periods during which the NYSE is closed
(other than for customary weekend and holiday closings), (b) when trading in
the markets the fund normally utilizes is restricted, or an emergency exists,
as determined by the SEC, so that disposal of the fund's investments or
determination of its net asset value is not reasonably practicable or (c) for
any other periods as the SEC by order may permit for the protection of the
fund's shareholders.
Any signature appearing on a written redemption request in excess of
$10,000 must be guaranteed by an eligible guarantor institution such as a
domestic bank, savings and loan institution, domestic credit union, member
bank of the Federal Reserve System or member firm of a national securities
exchange. Written redemption requests of $10,000 or less do not require a
signature guarantee unless more than one such redemption request is made in
any 10-day period or the redemption proceeds are to be sent to an address
other than the address of record. Unless otherwise directed, redemption
proceeds will be mailed to an investor's address of record. The transfer agent
may require additional supporting documents for redemptions made by
corporations, executors, administrators, trustees or guardians. A redemption
request will not be deemed properly received until the transfer agent receives
all required documents in proper form.
If a shareholder holds shares in more than one Class, any request for
redemption must specify the Class being redeemed. In the event of a failure to
specify which Class, or if the investor owns fewer shares of the Class than
specified, the redemption request will be delayed until the transfer agent
receives further instructions from the investor's Service Agent, or if the
shareholder's account is not with a Service Agent, from the shareholder
directly. The redemption proceeds will be remitted on or before the third
business day following receipt of proper tender, except on any days on which
the NYSE is closed or as permitted under the 1940 Act, in extraordinary
circumstances. Generally, if the redemption proceeds are remitted to a
brokerage account, these funds will not be invested for the shareholder's
benefit without specific instruction and the investor's Service Agent will
benefit from the use of temporarily uninvested funds. Redemption proceeds for
shares purchased by check, other than a certified or official bank check, will
be remitted upon clearance of the check, which may take up to fifteen days or
more.
If the board of trustees of the trust determines that it would be
detrimental to the best interests of the remaining shareholders to make a
redemption payment wholly in cash, the fund may pay, in accordance with SEC
rules, any portion of a redemption in excess of the lesser of $250,000 or
1.00% of the fund's net assets by a distribution in kind of portfolio
securities in lieu of cash. Securities issued as a distribution in kind may
incur brokerage commissions when shareholders subsequently sell those
securities.
8. MANAGEMENT
The fund is supervised by the board of trustees of the trust, and the
portfolio is supervised by the board of trustees of the portfolio trust. In
each case, a majority of the trustees are not affiliated with the adviser. In
addition, a majority of the disinterested trustees of the fund are different
from a majority of the disinterested trustees of the portfolio.
The trustees and officers of the trust and the portfolio trust, their ages
and their principal occupations during at least the past five years are set
forth below. Their titles may have varied during that period. Asterisks
indicate that those trustees and officers are "interested persons" (as defined
in the 1940 Act) of the trust. Unless otherwise indicated below, the address
of each trustee and officer is 21 Milk Street, Boston, Massachusetts. The
address of the portfolio trust is Elizabethan Square, George Town, Grand
Cayman, British West Indies.
TRUSTEES OF THE TRUST
PHILIP W. COOLIDGE*; 48 -- President of the trust and the portfolio trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
RILEY C. GILLEY; 73 -- Vice President and General Counsel, Corporate Property
Investors (November 1988 to December 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.
DIANA R. HARRINGTON; 60 -- Professor, Babson College (since September 1994);
Trustee, The Highland Family of Funds (March 1997 to March 1998). Her address
is 120 Goulding Street, Holliston, Massachusetts.
SUSAN B. KERLEY; 48 -- Consultant, Global Research Associates, Inc.
(Investment Research) (since September 1990); Director, Mainstay Institutional
Funds (since December 1990). Her address is P.O. Box 9572, New Haven,
Connecticut.
HEATH B. MCLENDON*; 66 -- Chairman, President, and Chief Executive Officer of
SSB Citi Fund Management LLC (formerly known as SSBC Fund Management, Inc.)
(since March 1996); Managing Director of Salomon Smith Barney (since August
1993); and Chairman, President and Chief Executive Officer of fifty-eight
investment companies sponsored by Salomon Smith Barney. His address is 388
Greenwich Street, New York, New York.
C. OSCAR MORONG, JR.; 65 -- Chairman of the board of trustees of the trust and
the portfolio trust; Managing Director, Morong Capital Management (since
February 1993); Director, Indonesia Fund (1990 to 1999); Trustee, MAS Funds
(since 1993). His address is 1385 Outlook Drive West, Mountainside, New
Jersey.
E. KIRBY WARREN; 65 -- Professor of Management, Graduate School of Business,
Columbia University (1987 to December 1999). His address is Laurel Road, P.O.
Box 146, Tuxedo Park, New York.
TRUSTEES OF THE PORTFOLIO TRUST
ELLIOTT J. BERV; 57 -- Chief Executive Officer, Rocket City Enterprises
(Consulting, Publishing, Internet Services) (since January 2000) President and
Chief Executive Officer, Catalyst, Inc. (Management Consultants) (since June
1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May 1984). His address is 24 Atlantic Drive, Scarborough,
Maine.
PHILIP W. COOLIDGE*; 48 -- President of the trust and the portfolio trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
MARK T. FINN; 56 -- President and Director, Delta Financial, Inc. (since June
1983); Chairman of the Board and Part Owner, FX 500 Ltd. (Commodity Trading
Advisory Firm) (April 1990 to February 1996); General Partner and Shareholder,
Greenwich Ventures LLC (Investment Partnership) (since January 1996);
President, Secretary and Owner, Phoenix Trading Co. (Commodity Trading
Advisory Firm) (since March 1997); Director, Chairman and Owner, Vantage
Consulting Group, Inc. (since October 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
C. OSCAR MORONG, JR.; 65 -- Chairman of the board of trustees of the trust and
the portfolio trust; Managing Director, Morong Capital Management (since
February 1993); Director, Indonesia Fund (1990 to 1999); Trustee, MAS Funds
(since 1993). His address is 1385 Outlook Drive West, Mountainside, New
Jersey.
WALTER E. ROBB, III; 73 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (Corporate Financial Advisors) (since 1978);
President and Treasurer, Benchmark Advisors, Inc. (Corporate Financial
Advisors) (since 1989); Trustee of certain registered investment companies in
the MFS Family of Funds (since 1985). His address is 35 Farm Road, Sherborn,
Massachusetts.
E. KIRBY WARREN, 65 -- Professor of Management, Graduate School of Business,
Columbia University (1987 to December 1999). His address is Laurel Road, P.O.
Box 146, Tuxedo Park, New York.
OFFICERS OF THE TRUST AND THE PORTFOLIO TRUST
PHILIP W. COOLIDGE*; 48 -- President of the trust and the portfolio trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
CHRISTINE D. DORSEY*; 29 -- Assistant Secretary and Assistant Treasurer of the
trust and the portfolio trust; Vice President, Signature Financial Group, Inc.
(since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996).
LINWOOD C. DOWNS*; 38 -- Treasurer of the trust and the portfolio trust; Chief
Financial Officer and Senior Vice President, Signature Financial Group;
Treasurer, CFBDS.
TAMIE EBANKS-CUNNINGHAM*; 27 -- Assistant Secretary of the trust and the
portfolio trust; Office Manager, Signature Financial Group (Cayman) Ltd.
(since April 1995); Administrator, Cayman Islands Primary School (prior to
April 1995). Her address is P.O. Box 2494, Elizabethan Square, George Town,
Grand Cayman, Cayman Islands, B.W.I.
SUSAN JAKUBOSKI*; 36 -- Vice President, Assistant Secretary and Assistant
Treasurer of the trust and the portfolio trust; Vice President, Signature
Financial Group (Cayman) Ltd.
MOLLY S. MUGLER*; 48 -- Assistant Secretary and Assistant Treasurer of the
trust and the portfolio trust; Vice President, Signature Financial Group,
Inc.; Assistant Secretary, CFBDS.
JULIE J. WYETZNER*; 40 -- Vice President, Assistant Secretary and Assistant
Treasurer of the trust and the portfolio trust; Vice President, Signature
Financial Group, Inc.
The trustees and officers of the trust and the portfolio trust also hold
comparable positions with certain other funds for which CFBDS, SFG or their
affiliates serve as the distributor or administrator.
The trustees of the trust received the following remuneration from the
sources indicated below during its fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
RETIREMENT FROM TRUST
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND COMPLEX
COMPENSATION AS PART OF FUND BENEFITS UPON PAID TO
TRUSTEE FROM FUND(1) EXPENSES RETIREMENT TRUSTEES(1)
------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C>
Philip W. Coolidge None None None None
Riley C. Gilley $1,696 None None $1,696
Diana R. Harrington $1,749 None None $1,749
Susan B. Kerley $1,745 None None $1,745
Heath B. McLendon None None None None
C. Oscar Morong, Jr. $1,789 None None $1,789
E. Kirby Warren $1,722 None None $1,722
William S. Woods, Jr. (2) $1,784 None None $1,734
------------
(1) Prior to September , 2000, the funds were part of the CitiFunds(SM) Complex. The total compensation Messrs.
Coolidge, Gilley, McLendon, Morong, Warren and Woods and Mses. Harrington and Kerley earned from the trust and the
CitiFunds Complex equaled $0, $65,250, $0, $92,000, $62,750, $66,000, $71,250, and $69,750, respectively, for the
fiscal year ended 10/31/99. Messrs. Coolidge, Gilley, McLendon, Morong and Warren and Mses. Harrington and Kerley
are trustees of 48, 35, 23, 39, 39, 30, and 30 funds or portfolios, respectively, in the family of open-end
registered investment companies advised or managed by the adviser.
(2) Effective December 31, 1999, Mr. Woods became a trustee emeritus of the trust. Per the terms of the trust's trustee
emeritus plan, Mr. Woods serves the board of trustees in an advisory capacity. As a trustee emeritus, Mr. Woods is
paid 50% of the annual retainer fee and meeting fees otherwise applicable to trustees, together with reasonable
out-of-pocket expenses for each meeting attended.
</TABLE>
As of , 2000, all trustees and officers as a group owned less than
1% of the outstanding shares of the fund. The following shareholders owned of
record 5% or more of the fund's outstanding voting securities on April 12,
2000: Class A shares: [Fiserv Securities Inc., Attn: Mutual Funds, One
Commerce Square, 2005 Market Street, Suite 1200, Philadelphia, PA 19103-7042 -
%; Citibank, N.A., Tailored Trust Co. Trustee, 1 Court Square, 22nd Fl
Zone 4, Attn: Jeff Jardine, Long Island City, NY 11120-0001 - 10.74%;
Citibank, N.A., Tailored Trust Co. Trustee, 1 Court Square, 22nd Fl Zone 4,
Attn: Jeff Jardine, Long Island City, NY 11120-0001 - %; Class B shares:
Fiserv Securities Inc., Attn: Mutual Funds Dept., One Commerce Square, 2005
Market Street, Suite 1200, Philadelphia, PA 19103-7084 - %.]
The Declaration of Trust of each of the trust and the portfolio trust
provides that the trust or the portfolio trust, as the case may be, will
indemnify its trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices with the trust or the portfolio trust, as the case may be, unless, as
to liability to the trust, the portfolio trust or their respective investors,
it is finally adjudicated that they engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in their
offices, or unless with respect to any other matter it is finally adjudicated
that they did not act in good faith in the reasonable belief that their
actions were in the best interests of the trust or the portfolio trust, as the
case may be. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination, based upon
a review of readily available facts, by vote of a majority of disinterested
trustees of the trust or the portfolio trust, or in a written opinion of
independent counsel, that such officers or trustees have not engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
ADVISER
The adviser manages the assets of the portfolio pursuant to an investment
advisory agreement (the "advisory agreement"). Subject to such policies as the
board of trustees of the portfolio trust may determine, the adviser manages
the securities of the portfolio and makes investment decisions for the
portfolio. The adviser furnishes at its own expense all services, facilities
and personnel necessary in connection with managing the portfolio's
investments and effecting securities transactions for the portfolio. Unless
otherwise terminated, the Advisory Agreement will continue in effect as long
as such continuance is specifically approved at least annually by the board of
trustees of the portfolio trust or by a vote of a majority of the outstanding
voting securities of the portfolio, and, in either case, by a majority of the
trustees of the portfolio trust who are not parties to the Advisory Agreement
or interested persons of any such party, at a meeting called for the purpose
of voting on the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable without penalty on not more than
60 days' nor less than 30 days' written notice by the portfolio trust when
authorized either by a vote of a majority of the outstanding voting securities
of the portfolio or by a vote of a majority of the board of trustees of the
portfolio trust, or by the Adviser on not more than 60 days' nor less than 30
days' written notice, and will automatically terminate in the event of its
assignment. The Advisory Agreement provides that neither the Adviser nor its
personnel shall be liable for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in the
execution of security transactions for the portfolio, except for willful
misfeasance, bad faith or gross negligence or reckless disregard of its or
their obligations and duties under the Advisory Agreement.
For its services under the Advisory Agreement with respect to the
portfolio, the adviser receives fees, which are computed daily and paid
monthly, at an annual rate equal to 1.00% of the portfolio's average daily net
assets on an annualized basis for the Fund's then-current fiscal year. This
investment advisory fee is higher than the investment advisory fees paid by
most mutual funds. The trustees of the portfolio have determined that the
1.00% investment advisory fee is reasonable in light of the portfolio's
investment policy of investing primarily in foreign securities. The adviser
may reimburse the portfolio or waive all or a portion of its advisory fees.
For the fiscal years ended December 31, 1997, 1998 and 1999, the fees paid to
the adviser under the Advisory Agreement, after fee waivers, were $438,017,
$353,752 and $348,915, respectively.
ADMINISTRATOR
Pursuant to administrative services agreements (the "Administrative
Services Agreements"), CFBDS and SFG provide the trust and the portfolio
trust, respectively, with general office facilities and CFBDS and SFG
supervise the over-all administration of the trust and the portfolio trust,
respectively, including, among other responsibilities, the negotiation of
contracts and fees with, and the monitoring of performance and billings of,
the trust's or the portfolio trust's independent contractors and agents; the
preparation and filing of all documents required for compliance by the trust
or the portfolio trust with applicable laws and regulations; and arranging for
the maintenance of books and records of the trust or the portfolio trust. The
administrator and the portfolio administrator provide persons satisfactory to
the board of trustees of the trust or the portfolio trust to serve as trustees
and officers of the trust and the portfolio trust, respectively. Such trustees
and officers, as well as certain other employees and trustees of the trust and
the portfolio trust, may be directors, officers or employees of CFBDS, SFG or
their affiliates.
The fees payable to the Administrator and the Portfolio Administrator,
respectively, under the Administrative Services Agreements are 0.30% of the
average daily net assets of the Fund and 0.05% of the average daily net assets
of the Portfolio, accrued daily and paid monthly, in each case on an
annualized basis for the Fund's or the Portfolio's then-current fiscal year.
However each of the Administrator and the Portfolio Administrator has
voluntarily agreed to waive a portion of the fees payable as necessary to
maintain the projected rate of total operating expenses. CFBDS has agreed to
pay certain expenses of the Fund. SFG has agreed to pay certain expenses of
the Portfolio. For the fiscal years ended December 31, 1997, 1998 and 1999,
the fees paid by the Fund to CFBDS under the Administrative Services Agreement
and a prior administrative services agreement, after waivers, were $79,045,
$58,123 and $62,978, respectively. For the fiscal years ended December 31,
1997, 1998 and 1999, the Portfolio paid no fees, after waivers, to SFG under
the Administrative Services Agreement with the Portfolio Trust.
The Administrative Services Agreements with the Trust and the Portfolio
Trust provide that CFBDS or SFG, as the case may be, may render administrative
services to others. These Administrative Services Agreements continue in
effect as to the Fund or the Portfolio, as applicable, if such continuance is
specifically approved at least annually by the Trust's or the Portfolio
Trust's Board of Trustees or by a vote of a majority of the outstanding voting
securities of the Fund or the Portfolio and, in either case, by a majority of
the Trustees of the Trust or Portfolio Trust who are not parties to the
applicable Administrative Services Agreement or interested persons of any such
party. The Administrative Services Agreements with the Trust and the Portfolio
Trust terminate automatically if they are assigned and may be terminated by
the Trust or the Portfolio Trust without penalty by vote of a majority of the
outstanding voting securities of the Fund or Portfolio, as applicable, or by
either party thereto on not more than 60 days' nor less than 30 days' written
notice. The Administrative Services Agreements with the Trust and the
Portfolio Trust also provide that CFBDS, SFG and their personnel shall not be
liable for any error of judgment or mistake of law or for any act or omission
in the administration or management of the Trust or the Portfolio Trust,
except for willful misfeasance, bad faith or gross negligence in the
performance of its or their duties or by reason of reckless disregard of its
or their obligations and duties under the Administrative Services Agreements.
CFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. SFG is a company organized under the laws of the Cayman Islands. Its
principal place of business is in George Town, Grand Cayman, British West
Indies.
Pursuant to sub-administrative services agreements, Citibank performs such
sub-administrative duties for the Trust and the Portfolio Trust as from time
to time are agreed upon by Citibank and respectively, CFBDS and SFG.
Citibank's sub-administrative duties may include providing equipment and
clerical personnel necessary for maintaining the Trust's and the Portfolio
Trust's organization, participation in the preparation of documents required
for compliance by the Trust and the Portfolio Trust with applicable laws and
regulations, the preparation of certain documents in connection with meetings
of Trustees and shareholders, and other functions which would otherwise be
performed by the Administrator. For performing such sub-administrative
services, Citibank receives compensation as from time to time is agreed upon
by CFBDS or SFG, not in excess of the amount paid to CFBDS or SFG for its
services under the Administrative Services Agreements with the Trust and the
Portfolio Trust. All such compensation is paid by CFBDS or SFG.
DISTRIBUTOR
CFBDS, 21 Milk Street, Boston, MA 02109, serves as the Distributor of the
Fund's shares pursuant to a Distribution Agreement with the Trust with respect
to each class of shares of the Fund (each, a "Distribution Agreement"). In
those states where CFBDS is not a registered broker-dealer, shares of the Fund
are sold through Signature Broker-Dealer Services, Inc., as dealer. Under the
Distribution Agreements, CFBDS is obligated to use its best efforts to sell
shares of each class of the Fund.
Either party may terminate a Distribution Agreement on not less than 30
days' nor more than 60 days' written notice to the other party. Unless
otherwise terminated each Distribution Agreement will continue from year to
year upon annual approval by the Trust's Board of Trustees by vote of a
majority of the Board of Trustees of the Trust who are not parties to such
Distribution Agreement or interested persons of any party to such Distribution
Agreement, cast in person at a meeting called for the purpose of voting on
such approval. Each Distribution Agreement will terminate in the event of its
assignment, as defined in the 1940 Act.
Class A, B and L of the Fund have each adopted a Distribution Plan (each,
a "Distribution Plan") in accordance with Rule 12b-1 under the 1940 Act with
respect to shares of the Fund after concluding that there is a reasonable
likelihood that a Distribution Plan will benefit the Fund and its
shareholders. The Distribution Plan with respect to Class A shares provides
that the Fund shall pay a monthly distribution fee to the Distributor at an
annual rate not to exceed 0.10% of the Fund's average daily net assets with
respect to Class A shares. The Distributor receives distribution fees for its
services under the Distribution Agreement with respect to Class A shares in
connection with the distribution of Class A Fund shares (exclusive of any
advertising expenses incurred by the Distributor in connection with the sale
of shares). The Distributor may use all or any portion of such distribution
fee to pay for expenses of printing prospectuses and reports used for sales
purposes, expenses of the preparation and printing of sales literature and
other such expenses related to the distribution of Class A shares. The
Distribution Plan with respect to Class A shares also permits the Fund to pay
the Distributor an additional fee (not to exceed 0.05% of the average daily
net assets of the Fund with respect to Class A shares) in anticipation of or
as reimbursement for print or electronic media advertising expenses incurred.
The Fund did not pay this fee during its most recent fiscal year and does not
anticipate paying it during the current fiscal year. The Distributor receives
a fee, not to exceed 1.00% of the average daily net assets of the Fund
attributable to Class B and L shares. Such fees may be used to make payments
to the Distributor for distribution services, to Service Agents that have
entered into service agreements with the Distributor and others in respect of
the sale of Class B shares of the Fund, and to other parties in respect of the
sale of Class B shares of the Fund, and to make payments for advertising,
marketing or other promotional activity, and payments for preparation,
printing, and distribution of prospectuses, statements of additional
information and reports for recipients other than regulators and existing
shareholders. The Fund also may make payments to the Distributor, Service
Agents and others for providing personal service or the maintenance of
shareholder accounts. The amounts paid by the Distributor to each recipient
may vary based upon certain factors, including, among other things, the levels
of sales of Fund shares and/or shareholder services provided. Recipients may
receive different compensation for sales for Class A and Class B shares.
Each Distribution Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trustees and a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust and who have no direct or indirect
financial interest in the operation of the Distribution Plans or in any
agreement related to the Plans (for purposes of this paragraph "Qualified
Trustees"). Each Distribution Plan requires that the Trust and the Distributor
provide to the Board of Trustees and the Board of Trustees review, at least
quarterly, a written report of the amounts expended (and the purposes
therefor) under the Distribution Plans. Each Distribution Plan further
provides that the selection and nomination of the Qualified Trustees is
committed to the discretion of the Qualified Trustees then in office who are
not interested Trustees of the Trust. A Distribution Plan may be terminated
with respect to any class of the Fund at any time by a vote of a majority of
the Trust's Qualified Trustees or by a vote of a majority of the outstanding
voting securities of that class. A Distribution Plan may not be amended to
increase materially the amount of permitted expenses of the class thereunder
without the approval of a majority of the outstanding securities of that class
and may not be materially amended in any case without a vote of a majority of
both the Trustees and Qualified Trustees. The Distributor will preserve copies
of any plan, agreement or report made pursuant to the Distribution Plans for a
period of not less than six years from the date of each Plan, and for the
first two years the Distributor will preserve such copies in an easily
accessible place.
As contemplated by the Distribution Plans, CFBDS acts as the agent of the
Trust in connection with the offering of shares of the Fund pursuant to the
Distribution Agreements. After the prospectuses and periodic reports of the
Fund have been prepared, set in type and mailed to existing shareholders, the
Distributor pays for the printing and distribution of copies thereof which are
used in connection with the offering of shares of the Fund to prospective
investors. For the fiscal years ended December 31, 1997, 1998 and 1999, the
fees paid to CFBDS under the Distribution Agreements with respect to Class A
shares of the Fund were $27,121, $19,374 and $0, respectively, no portion of
which was applicable to reimbursement for expenses incurred in connection with
print or electronic media advertising. For the period January 4, 1999
(commencement of operations) to December 31, 1999, the fees paid to CFBDS
under the Distribution Agreements with respect to Class B shares of the Fund
were $1,420. All of the foregoing amounts paid under the Distribution Plans
were spent on printing and mailing expenses.
The Distributor may enter into agreements with Service Agents and may pay
compensation to such Service Agents for accounts for which the Service Agents
are holders of record. The Distributor may make payments for distribution and/
or shareholder servicing activities out of its past profits and other
available sources. The Distributor may also make payments for marketing,
promotional or related expenses to dealers. The amount of these payments are
determined by the Distributor and may vary. Citibank may make similar payments
under similar arrangements.
CODE OF ETHICS
The Trust, the Portfolio Trust, the Adviser and the Distributor each have
adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act. Each code
of ethics permits personnel subject to such code to invest in securities,
including securities that may be purchased or held by the Fund. However, the
codes of ethics contain provisions and requirements designed to identify and
address certain conflicts of interest between personal investment activities
and the interests of the Fund. Of course, there can be no assurance that the
codes of ethics will be effective in identifying and addressing all conflicts
of interest relating to personal securities transactions.
EXPENSES
In addition to amounts payable under its Investment Advisory Agreement,
the Administrative Services Plan and the Distribution Plans, the Fund is
responsible for its own expenses, including, among other things, the costs of
securities transactions, the compensation of Trustees that are not affiliated
with the adviser or the Fund's Distributor, government fees, taxes, accounting
and legal fees, expenses of communication with shareholders, interest expense,
and insurance premiums.
CFBDS has agreed to pay the Fund's ordinary operating expenses (excluding
interest, taxes, brokerage commission, litigation costs or other extraordinary
costs and expenses and excluding the fees paid under the Fund's Investment
Advisory Agreement, Administrative Services Agreement, Distribution Agreements
and Service Agreements). CFBDS receives a fee from the Fund, in addition to
the administrative services and distribution fees, estimated and accrued daily
and paid monthly in an amount such that immediately after any such payment the
aggregate ordinary operating expenses of the Fund would not on a per annum
basis exceed an agreed upon rate of the Fund's average daily net assets. For
the fiscal year ended December 31, 1999, CFBDS paid expenses of the Fund in
the amount of $195,158, and the Fund paid CFBDS under this agreement the
amount of $42,645. For that fiscal year, the total expenses of Class A shares
and Class B shares (commencement of operations, January 4, 1999) were 1.75%
and 2.50%, respectively, of their average daily assets. The agreement of CFBDS
to pay the ordinary operating expenses of the Fund, as well as the obligation
of the Fund to pay any corresponding fee to CFBDS, may be terminated by either
CFBDS or the Fund upon not less than 30 days nor more than 60 days written
notice.
SERVICE AGENTS.
[The Trust has adopted an administrative services plan (the
"Administrative Services Plan") after having concluded that there is a
reasonable likelihood that the Administrative Services Plan will benefit the
Fund and its shareholders. The Administrative Services Plan provides that the
Trust may obtain the services of an administrator, a transfer agent, a
custodian, a fund accountant and one or more Service Agents, and may enter
into agreements providing for the payment of fees for such services. Under the
Trust's Administrative Services Plan, the total of the fees paid from the Fund
to the Trust's Administrator and Service Agents with respect to Class A shares
may not exceed 0.65% of the Fund's average daily net assets on an annualized
basis for the Fund's then-current fiscal year. Distribution fees (other than
any fee concerning electronic or media advertising) paid under the
Distribution Plan with respect to the Class A shares are included in this
percentage limitation. Within this overall limitation, individual fees may
vary. Distribution fees may be used to offset the Fund's marketing costs, such
as preparation of sales literature, advertising, and printing and distributing
prospectuses and other shareholder materials to prospective investors, and to
pay costs related to distribution activities, including employee salaries,
bonuses and other overhead expenses.
The Administrative Services Plan continues in effect if such continuance
is specifically approved at least annually by a vote of both a majority of the
Trustees and a majority of the Trustees who are not "interested persons" of
the Trust and who have no direct or indirect financial interest in the
operation of the Administrative Services Plan or in any agreement related to
such Plan (for purposes of this paragraph "Qualified Trustees"). The
Administrative Services Plan requires that the Trust provide to its Board of
Trustees and the Board of Trustees review, at least quarterly, a written
report of the amounts expended (and the purposes therefor) under the
Administrative Services Plan. The Administrative Services Plan may be
terminated at any time by a vote of a majority of the Qualified Trustees of
the Trust or as to a class by a vote of a majority of the outstanding voting
securities of that class. The Administrative Services Plan for the Fund may
not be materially amended in any case without a vote of the majority of both
the Trustees and the Qualified Trustees.
The Trust has entered into a shareholder servicing agreement (a
"Shareholder Servicing Agreement") with each Service Agent pursuant to such
that Service Agent provides shareholder services, including answering customer
inquiries, assisting in processing purchase, exchange and redemption
transactions and furnishing Fund communications to shareholders. Some Service
Agents may impose certain conditions on their customers in addition to or
different from those imposed by the Fund, such as requiring a minimum initial
investment or charging their customers a direct fee for their services. Each
Service Agent has agreed to transmit to its customers who are shareholders of
the Fund appropriate prior written disclosure of any fees that it may charge
them directly and to provide written notice at least 30 days prior to
imposition of any transaction fees. Service Agents that sell Class A shares or
Class B shares receive a shareholder servicing fee payable on such shares at
an annual rate equal to, as applicable, 0.25% of the average daily net assets
represented by such Class A shares and/or 0.15% of the average daily net
assets represented by such Class B shares. For the fiscal years ended December
31, 1997, 1998 and 1999, the aggregate fees paid to Service Agents under the
Service Agreements with respect to Class A Shares of the Fund, after waivers,
were $67,802, $48,436 and $52,604, respectively. For the period from January
4, 1999 (commencement of operations) to December 31, 1999, the aggregate fees
paid to Service Agents under the Shareholder Servicing Agreements with respect
to Class B shares of the Fund, after waivers, were $0.
TRANSFER AGENT
The Trust has also entered into a Transfer Agency and Service Agreement
with Citi Fiduciary Trust Company ("Citi"), an affiliate of Salomon Smith
Barney, pursuant to which Citi acts as transfer agent. PFPC Global Fund
Services ("PFPC") acts as sub-transfer agent pursuant to an agreement with
Citi.
The principal place of business of Citi is 388 Greenwich Street, New York,
New York 10013. The principal place of business of PFPC is P.O. Box 9699,
Providence, Rhode Island 02940-9699.
CUSTODIAN
The trust, on behalf of the fund, has also entered into a Custodian
Agreement and a Fund Accounting Agreement with State Street pursuant to which
custodial and fund accounting services, respectively, are provided for the
Fund. Among other things, State Street calculates the daily net asset value
for the Fund. Securities may be held by a sub-custodian bank approved by the
Trustees.
The Portfolio Trust has also adopted an administrative services plan (the
"Portfolio Administrative Plan"), which provides that the Portfolio Trust may
obtain the services of an administrator, a transfer agent, a custodian and a
fund accountant and may enter into agreements providing for the payment of
fees for such services. Under the Portfolio Administrative Plan, the
administrative services fee payable to the Portfolio Administrator from the
Portfolio may not exceed 0.05% of the Portfolio's average daily net assets on
an annualized basis for its then-current fiscal year.
The Portfolio Administrative Plan continues in effect if such continuance
is specifically approved at least annually by a vote of both a majority of the
Portfolio Trust's Trustees and a majority of the Portfolio Trust's Trustees
who are not "interested persons" of the Portfolio and who have no direct or
indirect financial interest in the operation of the Portfolio Administrative
Plan or in any agreement related to such Plan (for purposes of this paragraph
"Qualified Trustees"). The Portfolio Administrative Plan requires that the
Portfolio Trust provide to the Board of Trustees and the Board of Trustees
review, at least quarterly, a written report of the amounts expended (and the
purposes therefor) under the Portfolio Administrative Plan. The Portfolio
Administrative Plan may not be amended to increase materially the amount of
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the Portfolio Trust and may not be materially
amended in any case without a vote of the majority of both the Portfolio
Trust's Trustees and the Portfolio Trust's Qualified Trustees.
The Portfolio Trust, on behalf of the Portfolio, has entered into a
Custodian Agreement with State Street pursuant to which custodial services are
provided for the Portfolio. The Portfolio Trust, on behalf of the Portfolio,
has also entered into a Fund Accounting Agreement with State Street Cayman
Trust Company, Ltd. ("State Street Cayman") pursuant to which State Street
Cayman provides fund accounting services for the Portfolio. State Street
Cayman also provides transfer agency services to the Portfolio Trust.
The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of State Street
Cayman is P.O. Box 2508 GT Grand Cayman, Cayman Islands, British West Indies.
AUDITORS
PricewaterhouseCoopers LLP are the independent accountants for the Trust,
providing audit services and assistance and consultation with respect to the
preparation of filings with the SEC. The address of PricewaterhouseCoopers LLP
is 160 Federal Street, Boston, Massachusetts 02110. PricewaterhouseCoopers LLP
are the chartered accountants for the Portfolio Trust. The address of
PricewaterhouseCoopers LLP is Suite 3000, Box 82, Royal Trust Towers, Toronto
Dominion Center, Toronto, Ontario, Canada M5K 1G8.
COUNSEL
Bingham Dana LLP, 150 Federal Street, Boston, MA 02110, serves as counsel
for the Fund.
9. PORTFOLIO TRANSACTIONS
The Portfolio Trust trades securities for the Portfolio if it believes
that a transaction net of costs (including custodian charges) will help
achieve the Portfolio's investment objective. Changes in the Portfolio's
investments are made without regard to the length of time a security has been
held or whether a sale would result in the recognition of a profit or loss.
Therefore, the rate of turnover is not a limiting factor when changes are
appropriate. For the fiscal years ended December 31, 1998 and December 31,
1999, the turnover rates for the Portfolio were 118% and 68%, respectively.
The amount of brokerage commissions and realization of taxable capital gains
will tend to increase as the level of Portfolio activity increases. Specific
decisions to purchase or sell securities for the Portfolio are made by a
portfolio manager who is an employee of the Adviser and who is appointed and
supervised by its senior officers. The portfolio manager may serve other
clients of the Adviser in a similar capacity.
The primary consideration in placing portfolio securities transactions
with broker-dealers for execution is to obtain and maintain the availability
of execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting broker-
dealers to execute transactions on behalf of the Portfolio and other clients
of the Adviser on the basis of their professional capability, the value and
quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Adviser normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere.
In the case of securities purchased from underwriters, the cost of such
securities generally includes a fixed underwriting commission or concession.
From time to time, soliciting dealer fees are available to the Adviser on the
tender of the Portfolio's securities in so-called tender or exchange offers.
Such soliciting dealer fees are in effect recaptured for the Portfolio by the
Adviser. At present no other recapture arrangements are in effect.
In connection with the selection of brokers or dealers and the placing of
portfolio securities transactions, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which the adviser or its affiliates exercise investment
discretion. The adviser is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms
of either that particular transaction or the overall responsibilities which
the adviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Trustees of the Trust periodically review
the commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
The investment advisory fee that the Portfolio pays to the Adviser will
not be reduced as a consequence of the Adviser's receipt of brokerage and
research services. While such services are not expected to reduce the expenses
of the Adviser, the Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff or obtain such services
independently.
In certain instances there may be securities that are suitable as an
investment for the Portfolio as well as for one or more of the Adviser's other
clients. Investment decisions for the Portfolio and for the Adviser's other
clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling the same security. Some simultaneous
transactions are inevitable when several clients receive investment advice
from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or
more clients are simultaneously engaged in the purchase or sale of the same
security, the securities are allocated among clients in a manner believed to
be equitable to each. It is recognized that in some cases this system could
adversely affect the price of or the size of the position obtainable in a
security for the Portfolio. When purchases or sales of the same security for
the Portfolio and for other portfolios managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large volume purchases or sales.
For the fiscal years ended December 31, 1997, 1998 and 1999, the Portfolio
paid brokerage commissions in the amount of $215,467, $167,104 and $137,501,
respectively.
10. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trust to issue an unlimited
number of full and fractional shares of beneficial interest (par value
$0.00001 per share) of each series and to divide or combine the shares of any
series into a greater or lesser number of shares of that series without
thereby changing the proportionate beneficial interests in that series and to
divide such shares into classes. The Trust has reserved the right to create
and issue additional series and classes of shares. Each share of each class
represents an equal proportionate interest in the Fund with each other share
of that class. Shares of each series of the Trust participate equally in the
earnings, dividends and distribution of net assets of the particular series
upon liquidation or dissolution (except for any differences between classes of
shares of a series). Shares of each series are entitled to vote separately to
approve advisory agreements or changes in investment policy, and shares of a
class are entitled to vote separately to approve any distribution or service
arrangements relating to that class, but shares of all series may vote
together in the election or selection of Trustees and accountants for the
Trust. In matters affecting only a particular series or class, only shares of
that series or class are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust
would not be able to elect any Trustee. The Trust is not required to hold, and
has no present intention of holding, annual meetings of shareholders but the
Trust will hold special meetings of shareholders when in the judgment of the
Trustees it is necessary or desirable to submit matters for a shareholder
vote. Shareholders have, under certain circumstances (e.g., upon the
application and submission of certain specified documents to the Trustees by a
specified number of shareholders), the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees. Shareholders also have under certain
circumstances the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of shareholders. No material
amendment may be made to the Trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of
each series affected by the amendment. (See "Investment Restrictions.") The
Trust's Declaration of Trust provides that, at any meeting of shareholders of
the Trust or of any series of the Trust, a Service Agent may vote any shares
of which it is the holder of record and for which it does not receive voting
instructions proportionately in accordance with the instructions received for
all other shares of which that Service Agent is the holder of record. Shares
have no preference, pre-emptive, conversion or similar rights. Shares, when
issued, are fully paid and non-assessable, except as set forth below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by a vote of the holders of
two-thirds of the Trust's outstanding shares, voting as a single class, or of
the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's outstanding
shares (or the affected series) would be sufficient. The Trust or any series
of the Trust, as the case may be, may be terminated (i) by a vote of a
majority of the outstanding voting securities of the Trust or the affected
series or (ii) by the Trustees by written notice to the shareholders of the
Trust or the affected series. If not so terminated, the Trust will continue
indefinitely.
The Fund's transfer agent maintains a share register for shareholders of
record. Share certificates are not issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business
trust may, under certain circumstances, be held personally liable as partners
for its obligations and liabilities. However, the Declaration of Trust of the
Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust and provides for indemnification and reimbursement of
expenses out of Trust property for any shareholder held personally liable for
the obligations of the Trust. The Declaration of Trust of the Trust also
provides that the Trust may maintain appropriate insurance (e.g., fidelity
bonding, and errors and omissions insurance) for the protection of the Trust,
its shareholders, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance existed and the Trust itself was unable to
meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the
property of the Trust and that the Trustees will not be liable for any action
or failure to act, but nothing in the Declaration of Trust of the Trust
protects a Trustee against any liability to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
The Portfolio is a series of the Portfolio Trust, organized as a trust
under the laws of the State of New York. The Portfolio Trust's Declaration of
Trust provides that investors in the Portfolio (e.g., other investment
companies (including the Fund), insurance company separate accounts and common
and commingled trust funds) are each liable for all obligations of the
Portfolio. However, the risk of the Fund incurring financial loss on account
of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
It is not expected that the liabilities of the Portfolio would ever exceed its
assets.
Each investor in the Portfolio, including the Fund, may add to or withdraw
from its investment in the Portfolio on each Business Day. As of the close of
regular trading on each Business Day, the value of each investor's beneficial
interest in the Portfolio is determined by multiplying the net asset value of
the Portfolio by the percentage, effective for that day, that represents that
investor's share of the aggregate beneficial interests in the Portfolio. Any
additions or withdrawals, that are to be effected on that day, are then
effected. The investor's percentage of the aggregate beneficial interests in
the Portfolio is then re-computed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of the close of regular trading on such day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio effected on such day, and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of the close of
regular trading on such day plus or minus, as the case may be, the amount of
the net additions to or withdrawals from the aggregate investments in the
Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the
Portfolio as of the close of regular trading on the next following Business
Day.
11. TAX MATTERS
TAXATION OF THE FUND AND PORTFOLIO
FEDERAL TAXES. The Fund has elected to be treated, and intends to qualify
each year, as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), by meeting all
applicable requirements of Subchapter M, including requirements as to the
nature of the Fund's gross income, the amount of Fund distributions, and the
composition of the Fund's portfolio assets. Provided all such requirements are
met, no U.S. federal income or excise taxes generally will be required to be
paid by the Fund. If the Fund should fail to qualify as a "regulated
investment company" for any year, the Fund would incur a regular corporate
federal income tax upon its taxable income and Fund distributions would
generally be taxable as ordinary income to shareholders. The Portfolio Trust
believes the Portfolio also will not be required to pay any U.S. federal
income taxes on its income.
FOREIGN TAXES. Investment income and gains received by the Fund from non-
U.S. securities may be subject to non-U.S. taxes. The United States has
entered into tax treaties with many other countries that may entitle the Fund
to a reduced rate of tax or an exemption from tax on such income. The Fund
intends to qualify for treaty reduced rates where available. It is not
possible, however, to determine the Fund's effective rates of non-U.S. tax in
advance since the amount of the Fund's assets to be invested within various
countries is not known.
If the Fund holds more than 50% of its assets in foreign stock and
securities at the close of its taxable year, the Fund may elect to "pass
through" to the Fund's shareholders foreign income taxes paid. If the Fund so
elects, shareholders will be required to treat their pro rata portion of the
foreign income taxes paid by the Fund as part of the amount distributed to
them by the Fund and thus includable in their gross income for federal income
tax purposes. Shareholders who itemize deductions would then be allowed to
claim a deduction or credit (but not both) on their federal income tax returns
for such amount, subject to certain limitations. Shareholders who do not
itemize deductions would (subject to such limitations) be able to claim a
credit but not a deduction. No deduction will be permitted to individuals in
computing their alternative minimum tax liability. If the Fund does not
qualify to elect to "pass through" to its shareholders foreign income taxes
paid by it, shareholders will not be able to claim any deduction or credit for
any part of their foreign taxes paid by the Fund.
TAXATION OF SHAREHOLDERS
TAXATION OF DISTRIBUTIONS. Shareholders of the Fund will generally have to
pay federal income taxes and any state or local taxes on the dividends and
capital gain distributions they receive from the Fund. Dividends from ordinary
income and any distributions from net short-term capital gains are taxable to
shareholders as ordinary income for federal income tax purposes, whether the
distributions are made in cash or in additional shares. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net short-
term capital losses), whether made in cash or in additional shares, are
taxable to shareholders as long-term capital gains without regard to the
length of time the shareholders have held their shares. Any Fund dividend that
is declared in October, November, or December of any calendar year, that is
payable to shareholders of record in such a month, and that is paid the
following January, will be treated as if received by the shareholders on
December 31 of the year in which the dividend is declared.
Any Fund distribution will have the effect of reducing the per share net
asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
DIVIDENDS-RECEIVED DEDUCTION. The portion of the Fund's ordinary income
dividends attributable to dividends received in respect of equity securities
of U.S. issuers is normally eligible for the dividends received deduction for
corporations subject to U.S. federal income taxes. Availability of the
deduction for particular shareholders is subject to certain limitations, and
deducted amounts may be subject to the alternative minimum tax and result in
certain basis adjustments.
SPECIAL CONSIDERATIONS FOR NON-U.S. PERSONS. The Fund will withhold tax
payments at the rate of 30% (or any lower rate permitted under an applicable
treaty) on taxable dividends and other payments subject to withholding taxes
that are made to persons who are not citizens or residents of the United
States. Distributions received from the Fund by non-U.S. persons also may be
subject to tax under the laws of their own jurisdiction.
BACKUP WITHHOLDING. The account application asks each new shareholder to
certify that the shareholder's Social Security or taxpayer identification
number is correct and that the shareholder is not subject to 31% backup
withholding for failing to report income to the IRS. If a shareholder fails to
provide this information, or otherwise violates IRS regulations, the Fund may
be required to withhold tax at the rate of 31% on certain distributions and
redemption proceeds paid to that shareholder. Backup withholding will not,
however, be applied to payments that have been subject to 30% withholding.
DISPOSITION OF SHARES. In general, any gain or loss realized upon a
taxable disposition of shares of the Fund by a shareholder that holds such
shares as a capital asset will be treated as a long-term capital gain or loss
if the shares have been held for more than twelve months and otherwise as a
short-term capital gain or loss. However, any loss realized upon a disposition
of shares in the Fund held for six months or less will be treated as a long-
term capital loss to the extent of any distributions of net capital gain made
with respect to those shares. Any loss realized upon a disposition of shares
may also be disallowed under rules relating to wash sales. Gain may be
increased (or loss reduced) upon a redemption of Class A Fund shares held for
90 days or less followed by any purchase of shares of the Fund or of another
Smith Barney mutual fund, including purchases by exchange or by reinvestment,
without payment of a sales charge which would otherwise apply because of any
sales charge paid on the original purchase of the Class A Fund shares.
EFFECTS OF CERTAIN INVESTMENTS AND TRANSACTIONS
OPTIONS, ETC. The Fund's transactions in forward contracts, short sales
"against the box," and options will be subject to special tax rules that may
affect the amount, timing and character of Fund income and distributions to
shareholders. For example, certain positions held by the Fund on the last
business day of each taxable year will be marked to market (i.e., treated as
if closed out) on that day, and any gain or loss associated with the positions
will be treated as 60% long-term and 40% short-term capital gain or loss.
Certain positions held by the Fund that substantially diminish its risk of
loss with respect to other positions in its portfolio may constitute
"straddles," and may be subject to special tax rules that would cause deferral
of Fund losses, adjustments in the holding periods of Fund securities, and
conversion of short-term into long-term capital losses. Certain tax elections
exist for straddles that may alter the effects of these rules. The Fund
intends to limit its activities in forward contracts and options to the extent
necessary to meet the requirements of Subchapter M of the Code.
FOREIGN INVESTMENTS. Special tax considerations apply with respect to non-
U.S. investments of the Fund. Foreign exchange gains and losses realized by
the Fund will generally be treated as ordinary income and loss. Use of non-
U.S. currencies for non-hedging purposes and investment by the Fund in certain
"passive foreign investment companies" may have to be limited in order to
avoid a tax on the Fund. The Fund may elect to mark to market any investments
in "passive foreign investment companies" on the last day of each taxable
year. This election may cause the Fund to recognize ordinary income prior to
the receipt of cash payments with respect to those investments; in order to
distribute this income and avoid a tax on the Fund, the Fund may be required
to liquidate portfolio securities that it might otherwise have continued to
hold, potentially resulting in additional taxable gain or loss to the Fund.
12. FINANCIAL STATEMENTS
The audited financial statements of the fund (Statement of Assets and
Liabilities at December 31, 1999, Statement of Operations for the year ended
December 31, 1999, Statement of Changes in Net Assets for each of the years in
the two-year period ended December 31, 1999, Financial Highlights for each of
the years in the five-year period ended December 31, 1999, Notes to Financial
Statements and Independent Auditors' Report), each of which is included in the
Annual Report to Shareholders of the Fund, are incorporated by reference into
this Statement of Additional Information and have been so incorporated in
reliance upon the reports of PricewaterhouseCoopers LLP independent accountants,
on behalf of the Fund.
The audited financial statements of the International Equity Portfolio
(Portfolio of Investments at December 31, 1999, Statement of Assets and
Liabilities at December 31, 1999, Statement of Operations for the fiscal year
ended December 31, 1999, Statement of Changes in Net Assets for the fiscal
years ended December 31, 1999 and 1998, Financial Highlights for each of the
years in the five-year period ended December 31, 1999, Notes to Financial
Statements and Independent Auditors' Report), each of which is included in the
Annual Report to Shareholders of CitiFunds International Growth Portfolio, are
incorporated by reference into this Statement of Additional Information and
have been so incorporated in reliance upon the reports of
PricewaterhouseCoopers LLP, chartered accountants, on behalf of the Portfolio.
A copy of the Annual Report for the Fund accompanies this Statement of
Additional Information.
<PAGE>
CITIFUNDS INTERNATIONAL GROWTH & INCOME PORTFOLIO
INVESTMENT MANAGER
Citibank, N.A.
153 East 53rd Street, New York, NY 10043
DISTRIBUTOR
CFBDS, Inc.
21 Milk Street, Boston, MA 02109 (617) 423-1679
TRANSFER AGENT
Citi Fiduciary Trust Company
388 Greenwich Street
New York, NY 10013
SUB-TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110
LEGAL COUNSEL
Bingham Dana LLP
150 Federal Street, Boston, MA 02110
<PAGE>
PART C
Item 23. Exhibits.
*** a(1) Declaration of Trust of the Registrant
**, ***, a(2) Amendments to the Declaration of Trust of the Registrant
*****, and
filed
herewith
a(3) Form of Amended and Restated Designation of Classes of
the Registrant
*** b(1) Amended and Restated By-Laws of the Registrant
** and *** b(2) Amendments to the Amended and Restated By-Laws of
the Registrant
****** e(1) Amended and Restated Distribution Agreement
between the Registrant and CFBDS, as distributor with
respect to Class A shares of CitiFunds International
Growth Portfolio
****** e(2) Distribution Agreement between the Registrant and
CFBDS, as distributor with respect to Class B shares of
CitiFunds International Growth Portfolio
** g Custodian Contract between the Registrant and State
Street Bank and Trust Company ("State Street"), as
custodian
*** h(1) Amended and Restated Administrative Services Plan
of the Registrant with respect to CitiFunds
International Growth Portfolio
****** h(2) Amendment to the Amended and Restated
Administrative Services Plan of the Registrant with
respect to CitiFunds International Growth Portfolio
*** h(3) Administrative Services Agreement between the
Registrant and CFBDS, as administrator for
CitiFunds International Growth Portfolio
*** h(4) Sub-Administrative Services Agreement between
Citibank, N.A. and CFBDS with respect to CitiFunds
International Growth Portfolio
*** h(5)(i) Form of Shareholder Servicing Agreement between
the Registrant and Citibank, N.A., as shareholder
servicing agent for CitiFunds International Growth
Portfolio
*** h(5)(ii) Form of Shareholder Servicing Agreement between
the Registrant and a federal savings bank, as
shareholder servicing agent for CitiFunds International
Growth Portfolio
*** h(5)(iii) Form of Shareholder Servicing Agreement
between the Registrant and CFBDS, as shareholder
servicing agent for CitiFunds International Growth
Portfolio
* h(5)(iv) Form of Shareholder Servicing Agreement between
the Registrant and a national banking association or
subsidiary thereof or state chartered banking
association, as shareholder servicing agent for
CitiFunds International Growth Portfolio
h(6) Transfer Agency and Services Agreement between the
Registrant and Citi Fiduciary Trust Company, as transfer
agent
** h(7) Fund Accounting Agreement between the Registrant
and State Street, as fund accounting agent
h(8) Sub-Transfer Agency and Services Agreement between the
Registrant and PFPC Global Fund Services
**** i Opinion and consent of counsel
j Independent auditors' consent
****** m(1) Amended and Restated Distribution Plan of the
Registrant for Class A Shares of CitiFunds
International Growth Portfolio
****** m(2) Distribution Plan of the Registrant for Class B
Shares of CitiFunds International Growth Portfolio
****** o Multiple Class Plan of the Registrant
*** and p(1) Powers of Attorney for the Registrant
*******
****,
********* Powers of Attorney for The Premium Portfolios
********* q(1) Code of Ethics of the Registrant
********* q(2) Code of Ethics of CFBDS
q(3) Code of Ethics of the Manager
---------------------
* Incorporated herein by reference to Post Effective Amendment No. 13
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
April 29, 1996.
** Incorporated herein by reference to Post-Effective Amendment No. 15
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
October 24, 1997.
*** Incorporated herein by reference to Post-Effective Amendment No. 17
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
April 30, 1998.
**** Incorporated herein by reference to Post-Effective Amendment No. 18
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
December 16, 1998.
***** Incorporated herein by reference to Post-Effective Amendment No. 19
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
December 22, 1998.
****** Incorporated herein by reference to Post-Effective Amendment No. 20
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
February 16, 1999.
******* Incorporated herein by reference to Post-Effective Amendment No. 22
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange Commission on
April 16, 1999.
******** Incorporated herein by reference to Post-Effective Amendment No. 24
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed in the Securities and Exchange Commission on ____.
********* Incorporated herein by reference to Post-Effective Amendment No. 25
to the Registrant's Registration Statement on Form N-1A (File No.
33-36556) as filed with the Securities and Exchange commission on
May 1, 2000.
Item 24. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 25. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's Declaration
of Trust, filed as an Exhibit to Post-Effective Amendment No. 17 to its
Registration Statement on Form N-1A; (b) Section 6 of the Distribution
Agreements between the Registrant and CFBDS, filed as Exhibits to Post-Effective
Amendment No. 20 to its Registration Statement on Form N-1A; and (c) the
undertaking of the Registrant regarding indemnification set forth in its
Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 26. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range of
banking and investment services to customers across the United States and around
the world. Citibank is a wholly-owned subsidiary of Citicorp, which is, in turn,
a wholly-owned subsidiary of Citigroup Inc. Citibank also serves as investment
adviser to the following registered investment companies (or series thereof):
Asset Allocation Portfolios (Large Cap Value Portfolio, Small Cap Value
Portfolio, International Portfolio and Foreign Bond Portfolio), The Premium
Portfolios (U.S. Fixed Income Portfolio, High Yield Portfolio, Balanced
Portfolio, Large Cap Growth Portfolio, International Equity Portfolio,
Government Income Portfolio and Small Cap Growth Portfolio), Tax Free Reserves
Portfolio, U.S. Treasury Reserves Portfolio, Cash Reserves Portfolio,
CitiFundsSM Tax Free Income Trust (CitiFundsSM New York Tax Free Income
Portfolio, CitiFundsSM National Tax Free Income Portfolio and CitiFundsSM
California Tax Free Income Portfolio), CitiFundsSM Multi-State Tax Free Trust
(CitiFundsSM California Tax Free Reserves, CitiFundsSM New York Tax Free
Reserves and CitiFundsSM Connecticut Tax Free Reserves), CitiFundsSM
Institutional Trust (CitiFundsSM Institutional Cash Reserves) and Variable
Annuity Portfolios (CitiSelect(R) VIP Folio 200 Conservative, CitiSelect(R) VIP
Folio 300 Balanced, CitiSelect(R) VIP Folio 400, Growth CitiSelect(R) VIP Folio
500 Growth Plus and CitiFundsSM Small Cap Growth VIP Portfolio). Citibank and
its affiliates manage assets in excess of $327 billion worldwide. The principal
place of business of Citibank is located at 399 Park Avenue, New York, New York
10043.
Victor J. Menezes is the Chairman and a Director of Citibank. William R.
Rhodes and H. Onno Ruding are Vice Chairmen and Directors of Citibank. The other
Directors of Citibank are Paul J. Collins, Vice Chairman of Citigroup Inc. and
Robert I. Lipp, Chairman and Chief Executive Officer of The Travelers Insurance
Group Inc. and of Travelers Property Casualty Corp.
The following persons have the affiliations indicated:
Paul J. Collins Director, Kimberly-Clark Corporation
Director, Nokia Corporation
Robert I. Lipp Chairman, Chief Executive Officer and
President, Travelers Property Casualty Corp.
William R. Rhodes Director, Private Export Funding
Corporation
Director, Conoco, Inc.
H. Onno Ruding Supervisory Director, Amsterdamsch Trustees
Cantoor B.V.
Director, Pechiney S.A.
Advisory Director, Unilever NV and Unilever
PLC
Director, Corning Incorporated
Item 27. Principal Underwriters.
(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM)
International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves,
CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves,
CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury
Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM)
Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM)
Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves,
CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Short-Term
U.S. Government Income Portfolio, CitiFunds(SM) New York Tax Free Income
Portfolio, CitiFunds(SM) National Tax Free Income Portfolio, CitiFunds(SM)
California Tax Free Income Portfolio, CitiFunds(SM) Small Cap Value Portfolio,
CitiFunds(SM) Growth & Income Portfolio, CitiFunds(SM) Large Cap Growth
Portfolio, CitiFunds(SM) Small Cap Growth Portfolio, CitiFunds(SM) Balanced
Portfolio, CitiSelect(R) 100 Income, CitiSelect(R) 200 Conservative,
CitiSelect(R) 300 Balanced, CitiSelect(R) 400 Growth, CitiSelect(R) 500 Growth
Plus, CitiSelect(R) VIP Folio 200 Conservative, CitiSelect(R) VIP Folio 300
Balanced, CitiSelect(R) VIP Folio 400 Growth, CitiSelect(R) VIP Folio 500 Growth
Plus and CitiFunds(SM) Small Cap Growth VIP Portfolio. CFBDS is also the
placement agent for Large Cap Value Portfolio, Small Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio, Intermediate Income Portfolio,
Short-Term Portfolio, Growth & Income Portfolio, U.S. Fixed Income Portfolio,
Large Cap Growth Portfolio, Small Cap Growth Portfolio, International Equity
Portfolio, Balanced Portfolio, Government Income Portfolio, Tax Free Reserves
Portfolio, Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio. CFBDS
also serves as the distributor for the following funds: The Travelers Fund U for
Variable Annuities, The Travelers Fund VA for Variable Annuities, The Travelers
Fund BD for Variable Annuities, The Travelers Fund BD II for Variable Annuities,
The Travelers Fund BD III for Variable Annuities, The Travelers Fund BD IV for
Variable Annuities, The Travelers Fund ABD for Variable Annuities, The Travelers
Fund ABD II for Variable Annuities, The Travelers Separate Account PF for
Variable Annuities, The Travelers Separate Account PF II for Variable Annuities,
The Travelers Separate Account QP for Variable Annuities, The Travelers Separate
Account TM for Variable Annuities, The Travelers Separate Account TM II for
Variable Annuities, The Travelers Separate Account Five for Variable Annuities,
The Travelers Separate Account Six for Variable Annuities, The Travelers
Separate Account Seven for Variable Annuities, The Travelers Separate Account
Eight for Variable Annuities, The Travelers Fund UL for Variable Annuities, The
Travelers Fund UL II for Variable Annuities, The Travelers Variable Life
Insurance Separate Account One, The Travelers Variable Life Insurance Separate
Account Two, The Travelers Variable Life Insurance Separate Account Three, The
Travelers Variable Life Insurance Separate Account Four, The Travelers Separate
Account MGA, The Travelers Separate Account MGA II, The Travelers Growth and
Income Stock Account for Variable Annuities, The Travelers Quality Bond Account
for Variable Annuities, The Travelers Money Market Account for Variable
Annuities, The Travelers Timed Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond Account for Variable Annuities,
The Travelers Timed Aggressive Stock Account for Variable Annuities, The
Travelers Timed Bond Account for Variable Annuities, Small Cap Fund, Government
Fund, Growth Fund, Growth and Income Fund, International Equity Fund, Mid Cap
Fund, Municipal Bond Fund, Select Small Cap Portfolio, Select Government
Portfolio, Select Growth Portfolio, Select Growth and Income Portfolio, Select
Mid Cap Portfolio, Balanced Investments, Emerging Markets Equity Investments,
Government Money Investments, High Yield Investments, Intermediate Fixed Income
Investments, International Equity Investments, International Fixed Income
Investments, Large Capitalization Growth Investments, Large Capitalization Value
Equity Investments, Long-Term Bond Investments, Mortgage Backed Investments,
Municipal Bond Investments, S&P Index Investments, Small Capitalization Growth
Investments, Small Capitalization Value Equity Investments, Multi-Sector Fixed
Income Investments, Multi-Strategy Market Neutral Investments, Appreciation
Portfolio, Diversified Strategic Income Portfolio, Emerging Growth Portfolio,
Equity Income Portfolio, Equity Index Portfolio, Growth & Income Portfolio,
Intermediate High Grade Portfolio, International Equity Portfolio, Money Market
Portfolio, Total Return Portfolio, Smith Barney Adjustable Rate Government
Income Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney Appreciation
Fund Inc., Smith Barney Arizona Municipals Fund Inc., Smith Barney California
Municipals Fund Inc., Balanced Portfolio, Conservative Portfolio, Growth
Portfolio, High Growth Portfolio, Income Portfolio, Global Portfolio, Select
Balanced Portfolio, Select Conservative Portfolio, Select Growth Portfolio,
Select High Growth Portfolio, Select Income Portfolio, Concert Social Awareness
Fund, Smith Barney Large Cap Blend Fund, Smith Barney Fundamental Value Fund
Inc., Large Cap Value Fund, Short-Term High Grade Bond Fund, U.S. Government
Securities Fund, Smith Barney Balanced Fund, Smith Barney Convertible Fund,
Smith Barney Diversified Strategic Income Fund, Smith Barney Exchange Reserve
Fund, Smith Barney High Income Fund, Smith Barney Municipal High Income Fund,
Smith Barney Premium Total Return Fund, Smith Barney Total Return Bond Fund,
Cash Portfolio, Government Portfolio, Municipal Portfolio, Concert Peachtree
Growth Fund, Smith Barney Contrarian Fund, Smith Barney Government Securities
Fund, Smith Barney Hansberger Global Small Cap Value Fund, Smith Barney
Hansberger Global Value Fund, Smith Barney Investment Grade Bond Fund, Smith
Barney Premier Selections Fund, Smith Barney Small Cap Value Fund, Smith Barney
Small Cap Growth Fund, Smith Barney Intermediate Maturity California Municipals
Fund, Smith Barney Intermediate Maturity New York Municipals Fund, Smith Barney
Large Capitalization Growth Fund, Smith Barney S&P 500 Index Fund, Smith Barney
Mid Cap Blend Fund, Smith Barney EAFE Index Fund, Smith Barney US 5000 Index
Fund, Smith Barney Managed Governments Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund, Cash
Portfolio, Government Portfolio, Retirement Portfolio, California Money Market
Portfolio, Florida Portfolio, Georgia Portfolio, Limited Term Portfolio,
National Portfolio, Massachusetts Money Market Portfolio, New York Money Market
Portfolio, New York Portfolio, Pennsylvania Portfolio, Smith Barney Municipal
Money Market Fund, Inc., Smith Barney Natural Resources Fund Inc., Smith Barney
Financial Services Fund, Smith Barney Health Sciences Fund, Smith Barney
Technology Fund, Smith Barney New Jersey Municipals Fund Inc., Smith Barney
Oregon Municipals Fund, Zeros Plus Emerging Growth Series 2000, Smith Barney
Security and Growth Fund, Smith Barney Small Cap Blend Fund, Inc., Smith Barney
Telecommunications Income Fund, Income and Growth Portfolio, Reserve Account
Portfolio, U.S. Government/High Quality Securities Portfolio, Emerging Markets
Portfolio, European Portfolio, Global Government Bond Portfolio, International
Equity Portfolio, Pacific Portfolio, AIM Capital Appreciation Portfolio, Smith
Aggressive Growth Portfolio, Smith Mid Cap Portfolio, Alliance Growth Portfolio,
INVESCO Global Strategic Income Portfolio, MFS Total Return Portfolio, Putnam
Diversified Income Portfolio, Smith Barney High Income Portfolio, Smith Barney
Large Cap Value Portfolio, Smith Barney International Equity Portfolio, Smith
Barney Large Capitalization Growth Portfolio, Smith Barney Money Market
Portfolio, Smith Barney Pacific Basin Portfolio, Travelers Managed Income
Portfolio, Van Kampen Enterprise Portfolio, Centurion U.S. Equity Fund,
Centurion International Equity Fund, Centurion U.S. Contra Fund, Centurion
International Contra Fund, Global High-Yield Bond Fund, International Equity
Fund, Emerging Opportunities Fund, Core Equity Fund, Long-Term Bond Fund, Global
Dimensions Fund L.P., Citicorp Private Equity L.P., AIM V.I. Capital
Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM
V.I. International Equity Fund, AIM V.I. Value Fund, Fidelity VIP Growth
Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Equity Income
Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, MFS World Government Series, MFS
Money Market Series, MFS Bond Series, MFS Total Return Series, MFS Research
Series, MFS Emerging Growth Series, Salomon Brothers Institutional Money Market
Fund, Salomon Brothers Cash Management Fund, Salomon Brothers New York Municipal
Money Market Fund, Salomon Brothers National Intermediate Municipal Fund,
Salomon Brothers U.S. Government Income Fund, Salomon Brothers High Yield Bond
Fund, Salomon Brothers International Equity Fund, Salomon Brothers Strategic
Bond Fund, Salomon Brothers Large Cap Growth Fund, Salomon Brothers Balanced
Fund, Salomon Brothers Asia Growth Fund, Salomon Brothers Capital Fund Inc,
Salomon Brothers Investors Value Fund Inc, Salomon Brothers Opportunity Fund
Inc, Salomon Brothers Institutional High Yield Bond Fund, Salomon Brothers
Institutional Emerging Markets Debt Fund, Salomon Brothers Variable Investors
Fund, Salomon Brothers Variable Capital Fund, Salomon Brothers Variable Total
Return Fund, Salomon Brothers Variable High Yield Bond Fund, Salomon Brothers
Variable Strategic Bond Fund, Salomon Brothers Variable U.S. Government Income
Fund, Salomon Brothers Variable Asia Growth Fund, and Salomon Brothers Variable
Small Cap Fund.
(b) The information required by this Item 27 with respect to each director
and officer of CFBDS is incorporated by reference to Schedule A of Form BD filed
by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
CFBDS, Inc. 21 Milk Street, 5th Floor
(administrator and distributor) Boston, MA 02109
State Street Bank and Trust Company 1776 Heritage Drive
(custodian and transfer agent) North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
SHAREHOLDER SERVICING AGENTS
Citibank, N.A. 450 West 33rd Street
New York, NY 10001
Citibank, N.A. -- Citigold Citicorp Mortgage Inc. - Citigold
15851 Clayton Road
Ballwin, MO 63011
Citibank, N.A. -- The Citibank 153 East 53rd Street
Private Bank New York, NY 10043
Citibank, N.A. -- Citibank Global 153 East 53rd Street
Asset Management New York, NY 10043
Citibank, N.A. -- North American 111 Wall Street
Investor Services New York, NY 10094
Citicorp Investment Services One Court Square
Long Island City, NY 11120
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts on the 16th day of June, 2000.
CITIFUNDS INTERNATIONAL TRUST
on behalf of International Growth
Portfolio
By: Philip W. Coolidge
--------------------------
Philip W. Coolidge
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below by
the following persons in the capacities indicated below on June 16, 2000.
Signature Title
--------- -----
Philip W. Coolidge President, Principal Executive
---------------------------- Officer and Trustee
Philip W. Coolidge
Linwood C. Downs Principal Financial Officer and
---------------------------- Principal Accounting Officer
Linwood C. Downs
Riley C. Gilley* Trustee
----------------------------
Riley C. Gilley
Diana R. Harrington* Trustee
----------------------------
Diana R. Harrington
Susan B. Kerley* Trustee
----------------------------
Susan B. Kerley
Heath B. McLendon* Trustee
----------------------------
Heath B. McLendon
C. Oscar Morong, Jr.* Trustee
----------------------------
C. Oscar Morong, Jr.
E. Kirby Warren* Trustee
----------------------------
E. Kirby Warren
*By: Philip W. Coolidge
------------------------
Philip W. Coolidge
Executed by Philip W. Coolidge
on behalf of those indicated
pursuant to Powers of Attorney.
<PAGE>
SIGNATURES
The Premium Portfolios has duly caused this Post-Effective Amendment to
the Registration Statement on Form N-1A of CitiFunds International Trust to be
signed on its behalf by the undersigned, thereunto duly authorized, in Grand
Cayman, Cayman Islands, on the 16th day of June, 2000.
THE PREMIUM PORTFOLIOS
on behalf of International Equity Portfolio
By: Susan Jakuboski
----------------------------------
Susan Jakuboski
Assistant Secretary of
The Premium Portfolios
This Post-Effective Amendment to the Registration Statement on Form N-1A
of CitiFunds International Trust has been signed by the following persons in the
capacities indicated on June 16, 2000.
Signature Title
--------- -----
Philip W. Coolidge* President, Principal Executive
---------------------------- Officer and Trustee
Philip W. Coolidge
Linwood C. Downs* Principal Financial Officer and
---------------------------- Principal Accounting Officer
Linwood C. Downs
Elliott J. Berv* Trustee
----------------------------
Elliott J. Berv
Mark T. Finn* Trustee
----------------------------
Mark T. Finn
C. Oscar Morong, Jr.* Trustee
----------------------------
C. Oscar Morong, Jr.
Walter E. Robb, III* Trustee
----------------------------
Walter E. Robb, III
E. Kirby Warren* Trustee
----------------------------
E. Kirby Warren
*By: Susan Jakuboski
------------------------
Susan Jakuboski
Executed by Susan
Jakuboski on behalf
of those indicated as
attorney in fact.
<PAGE>
EXHIBIT INDEX
Exhibit No.: Description:
------- ------------
a(2) Form of Amended and Restated Establishment and Designation of
Series of the Registrant
a(3) Form of Amended and Restated Designation of Classes of the
Registrant
h(6) Transfer Agency and Services Agreement between the Registrant
and Citi Fiduciary Trust Company
h(8) Sub-Transfer Agency and Services Agreement between the
Registrant and PFPC Global Fund Services
j Independent auditors' consent
q(3) Code of Ethics of the Adviser
