SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
The Premium Portfolios - Equity Portfolio and Small Cap Equity Portfolio
(Name of Registrant as Specified In Its Charter)
Susan Jakuboski
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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pursuant to Exchange Act rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
____________________________________________________________________
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____________________________________________________________________
3. Filing Party:
____________________________________________________________________
4. Date Filed:
____________________________________________________________________
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EQUITY PORTFOLIO
SMALL CAP EQUITY PORTFOLIO
Elizabethan Square
George Town, Grand Cayman, BWI
Telephone: (345) 945-1824
NOTICE OF SPECIAL MEETING OF HOLDERS OF BENEFICIAL INTERESTS
To be held October 21, 1997
A Special Meeting of Holders of Beneficial Interests in Equity Portfolio
and Small Cap Equity Portfolio, will be held at the offices of Signature
Financial Group (Cayman), Ltd., Elizabethan Square, George Town, Grand Cayman,
BWI, on Tuesday, October 21, 1997 at 10:00 a.m., local time, for the following
purposes:
ITEM 1. To vote on an amendment to the Portfolios' Declaration of Trust
to allow the assets of each Portfolio to be invested in one or
more investment companies to the extent not prohibited by the
Investment Company Act of 1940, the rules and regulations
thereunder, and exemptive orders granted under such Act (the
"1940 Act"), to broaden the definition of who may invest in the
Portfolios and to limit the liability of investors therein.
ITEM 2. To vote on an amendment to the fundamental investment policies
of each Portfolio to allow the assets of that Portfolio to be
invested in one or more investment companies to the extent not
prohibited by the 1940 Act.
ITEM 3. To vote on an amendment to the fundamental investment policies
of each Portfolio concerning that Portfolio's ability to make
loans to other persons and to buy or sell futures contracts and
options on futures.
ITEM 4. (a) For Equity Portfolio, to vote on a proposal to adopt
fundamental investment policies concerning the underwriting of
securities, purchases and sales of real estate and commodities
and issuance of senior securities.
(b) For Small Cap Equity Portfolio, to vote on an amendment to
the Portfolio's fundamental investment policy concerning the
issuance of senior securities.
ITEM 5. To vote on a Management Agreement for each Portfolio with
Citibank, N.A.
ITEM 6. To vote on the selection of Price Waterhouse as the independent
certified public accountants for each Portfolio.
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ITEM 7. To transact such other business as may properly come before the
Special Meeting of Holders of Beneficial Interests and any
adjournments thereof.
THE BOARD OF TRUSTEES OF THE4 PORTFOLIOS RECOMMENDS THAT YOU VOTE IN FAVOR
OF ITEMS 1 THROUGH 6.
Only holders of beneficial interests of record on August 18, 1997 will be
entitled to vote at the Special Meeting of Holders of Beneficial Interests and
at any adjournments thereof.
Susan Jakuboski, Assistant Secretary
October 1, 1997
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING
AND RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE
OF A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE
AND IS PROVIDED FOR YOUR CONVENIENCE.
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EQUITY PORTFOLIO
SMALL CAP EQUITY PORTFOLIO
Elizabethan Square
George Town, Grand Cayman, BWI
Telephone: (345) 945-1824
PROXY STATEMENT
This Proxy Statement and Notice of Special Meeting with accompanying form
of proxy are being furnished in connection with the solicitation of proxies by
the Board of Trustees of Equity Portfolio and Small Cap Equity Portfolio, for
use at a Special Meeting of Holders of Beneficial Interests in these
Portfolios, or any adjournment thereof, to be held at the offices of Signature
Financial Group (Cayman), Ltd., Elizabethan Square, George Town, Grand Cayman,
BWI, on Tuesday, October 21, 1997 at 10:00 a.m., local time. The Meeting is
being held to vote on matters which will give the Portfolios increased
flexibility to invest in other investment companies and certain other matters,
as described below and in the accompanying Notice of Special Meeting.
The close of business on August 18, 1997 has been fixed as the Record Date
for the determination of holders of beneficial interests entitled to notice of
and to vote at the Meeting. $321,128,746 of beneficial interests in Equity
Portfolio and $45,413,205 of beneficial interests in Small Cap Equity Portfolio
were outstanding as of the close of business on the Record Date. Holders of
record at the close of business on the Record Date will be entitled to vote in
the proportion that their beneficial interests in each Portfolio bear to the
total beneficial interests in that Portfolio.
The Portfolios' Annual Report for the fiscal year ended December 31, 1996,
including audited financial statements, has previously been sent to holders of
beneficial interests and is available without charge upon request by calling
the Portfolios at (345) 945-1824.
This Proxy Statement and Notice of Special Meeting with accompanying form
of proxy are being mailed by the Board of Trustees on or about October 2, 1997.
MANNER OF VOTING PROXIES AND VOTE REQUIRED
If the accompanying form of proxy is executed properly and returned,
interests represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. Holders of beneficial interests in each Portfolio
will vote separately with respect to each Item other than Item 6, where
investors in the Portfolios will vote together as a single class. IF NO
INSTRUCTIONS ARE SPECIFIED, ALL BENEFICIAL INTERESTS IN EACH PORTFOLIO WILL BE
VOTED FOR PROPOSED ITEMS 1 THROUGH 6. If the enclosed form of proxy is executed
and returned, it may nevertheless be revoked prior to its exercise by a signed
writing delivered at the Meeting or filed with the Secretary of the Portfolios.
If sufficient votes to approve the proposed Items 1 through 6 are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those interests voted at the
Meeting. When voting on a proposed adjournment, the persons named as proxies
will vote all interests that they are entitled to vote with respect to Items 1
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through 6 FOR the proposed adjournment, unless directed to disapprove the Item,
in which case such interests will be voted against the proposed adjournment.
With respect to each Portfolio, the presence in person or by proxy of the
holders of interests representing one-third of the outstanding beneficial
interests in that Portfolio is required to constitute a quorum at the Meeting
for purposes of voting on Item 1 and a majority of the outstanding beneficial
interests in that Portfolio entitled to vote is required to constitute a quorum
at the Meeting for purposes of voting on Items 2 through 6. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions will be treated as interests that are present but which have not
been voted. For this reason, abstentions will have the effect of a "no" vote
for purposes of obtaining the requisite approval of Items 1 through 6.
GENERAL BACKGROUND
The Portfolios are open-end management investment companies, or mutual
funds. Equity Portfolio invests in a broadly diversified portfolio of equity
securities consisting mainly of common stocks of U.S. issuers with medium to
large market capitalizations, i.e., $750 million or more at the time of the
Portfolio's investment. The Portfolio emphasizes securities of issuers believed
to have above-average prospects for growth. Small Cap Equity Portfolio invests
in a diversified portfolio consisting primarily of equity securities of U.S.
companies that have market capitalizations of $750 million or less at the time
of the Portfolio's investment. In addition, the Portfolio may invest in
companies that are believed to be emerging companies relative to their
potential markets.
The Portfolios currently are organized in a two-tier, master/feeder
structure. Certain feeder funds (called "Funds") invest all of their investable
assets in a corresponding Portfolio with the same investment objective and
policies as that Fund. Each Portfolio buys, holds and sells securities in
accordance with its objective and policies. Each Fund may withdraw its
investment in its Portfolio at any time, and will do so when the Fund's
Trustees believe that withdrawal would be in the best interests of the Fund's
shareholders.
Until recently, mutual funds could not invest their assets in more than
one other registered investment company without obtaining exemptive relief from
the Securities and Exchange Commission. Recent amendments to the Investment
Company Act of 1940 (the "1940 Act") now permit funds to invest their assets in
multiple registered investment companies so long as the investment companies
hold themselves out to investors as related companies for purposes of
investment and investor services. It is possible that there could be additional
amendments to the 1940 Act in the future which affect mutual funds' ability to
invest in other funds.
In order to take advantage of this change in law and any future changes in
law on this topic, the Portfolios are proposing that their Declaration of Trust
and their fundamental investment policies be amended to give them the
flexibility to invest in multiple investment companies to the extent permitted
by applicable law. Although the Portfolios have no current plan to change their
investment structure, the proposed changes, as shown below, will permit the
Portfolios to change that structure in the future without the expense of an
additional meeting of investors.
Description of Chart
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Heading above chart: "Current Portfolio Structure:"
One large box containing the name "Equity Portfolio" and one large box
containing the name "Small Cap Equity Portfolio."
Currently, the Portfolios operate on a stand-alone basis; that is, each
Portfolio invests directly in investment securities.
Heading above chart: "Investment in Multiple Investment Companies:"
One large box containing the name "Equity Portfolio" and one large box
containing the name "Small Cap Equity Portfolio." Three small boxes are
under each of the large boxes. An arrow connects each large box with the
three small boxes beneath it. Each of the small boxes contains the name
"Investment Company."
ALTHOUGH THE PORTFOLIOS HAVE NO CURRENT PLANS TO CHANGE THEIR INVESTMENT
STRUCTURE, the proposed changes will permit the Portfolios to invest their
assets in multiple investment companies to the extent permitted by applicable
law.
In addition, the Portfolios are proposing certain technical amendments to
their fundamental investment policies. These amendments are intended for
clarification and for conforming the policies to those of other mutual funds
advised by Citibank, N.A. ("Citibank").
The Portfolios currently receive administrative services under
administrative services agreements with their placement agent. The placement
agent, in turn, subcontracts with Citibank so that Citibank actually provides
administrative services to the Portfolios. In addition each Portfolio has an
investment advisory agreement with Citibank. The Portfolios are proposing to
simplify these contractual arrangements. Each Portfolio will enter into a new
management agreement with Citibank. These agreements will permit them to obtain
both investment advisory and administrative services directly from Citibank.
The Portfolios' existing administrative services agreements, and the
Portfolios' existing investment advisory agreements, will then be unnecessary,
and will be terminated. THE AGGREGATE INVESTMENT ADVISORY AND ADMINISTRATIVE
SERVICES FEES PAYABLE BY EQUITY PORTFOLIO WILL INCREASE BY 0.05% PER ANNUM OF
THE PORTFOLIO'S AVERAGE DAILY NET ASSETS. THE AGGREGATE INVESTMENT ADVISORY AND
ADMINISTRATIVE SERVICES FEES PAYABLE BY SMALL CAP EQUITY PORTFOLIO WILL
DECREASE BY 0.05% PER ANNUM OF THE PORTFOLIO'S AVERAGE DAILY NET ASSETS. THE
PORTFOLIOS WILL NO LONGER PAY A SEPARATE ADMINISTRATIVE SERVICES FEE.
IT IS EXPECTED THAT THE SAME PERSONNEL AT CITIBANK WHO CURRENTLY PROVIDE
SERVICES TO THE PORTFOLIOS WILL CONTINUE TO DO SO AFTER GIVING EFFECT TO THESE
CHANGES, AND THE NATURE, LEVEL AND QUALITY OF SERVICES TO THE PORTFOLIOS WILL
NOT BE ADVERSELY AFFECTED.
The following table summarizes current estimated annual operating expenses
for each of the Portfolios, without any fee waivers or reimbursements. The
following table also summarizes pro forma estimated annual operating expenses
for the Portfolios after giving effect to the approval of a Management
Agreement for each Portfolio with Citibank. The pro forma expenses also do not
reflect any fee waivers or reimbursements.
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Small Cap
Equity Portfolio Equity Portfolio
Current Pro Forma Current Pro Forma
- - ---------------------------------------------------------------
ANNUAL PORTFOLIO
OPERATING EXPENSES:
Management Fee.......... 0.50% 0.60%(1) 0.75% 0.75%(1)
Other Expenses
Administrative Services 0.05% None(1) 0.05% None (1)
Fees..................
Other Operating Expenses 0.05% 0.05% 0.30% 0.30%
Total Operating Expenses 0.60% 0.65% 1.10% 1.05%
(1) A combined fee for investment advisory and administrative services.
The Portfolios' Trustees believe that the matters described in this
section are in the best interests of holders of beneficial interests in the
Portfolios. In the event that the proposals in Items 1 through 6 below do not
receive the requisite investor approval for any Portfolio, the Trustees will
consider possible alternatives, which might include resubmission of the
proposals for approval by holders of beneficial interests in that Portfolio.
ITEM 1. TO VOTE ON AN AMENDMENT TO THE PORTFOLIOS' DECLARATION OF TRUST
TO ALLOW THE ASSETS OF EACH PORTFOLIO TO BE INVESTED IN ONE OR
MORE INVESTMENT COMPANIES TO THE EXTENT NOT PROHIBITED BY THE
1940 ACT, THE RULES AND REGULATIONS THEREUNDER, AND EXEMPTIVE
ORDERS GRANTED UNDER SUCH ACT, TO BROADEN THE DEFINITION OF WHO
MAY INVEST IN THE PORTFOLIOS AND TO LIMIT THE LIABILITY OF
INVESTORS THEREIN.
It is proposed that the Portfolios' Declaration of Trust be amended to
permit the Portfolios to invest in other investment companies to the extent not
prohibited by the 1940 Act and to broaden the class of investors which may
invest in the Portfolios. It also is proposed that the Portfolios' Declaration
of Trust be amended to provide that investors in the Portfolios have no
liability for the liabilities and obligations of the Portfolios.
As described above, recent amendments to the 1940 Act permit mutual funds
to invest their investable assets in multiple registered investment companies
so long as certain conditions are met. It is possible that there could be
additional amendments to the 1940 Act in the future which affect mutual funds'
ability to invest in other funds. The proposed amendment to the Portfolios'
Declaration of Trust which appears in EXHIBIT A will allow the Portfolios to
take advantage of the recent changes in law, as well as future changes in law
or regulation on this topic. The Portfolios' Board of Trustees believes that
this amendment will be to the Portfolios' advantage and is in the best
interests of the shareholders of each Portfolio.
The Portfolios' Declaration of Trust presently provides that interests in
the Portfolios may be issued only to Institutional Investors. Institutional
Investors exclude partnerships and grantor trusts beneficially owned by
partnerships. Because some investment companies elect to be treated as
partnerships for tax purposes, this exclusion could be construed to prevent
those investment companies from investing in the Portfolios.
The Portfolios' Declaration of Trust also presently provides that each
holder of an interest in a Portfolio is jointly and severally liable with each
<PAGE>
other holder of an interest in that Portfolio (with rights of contribution
among those holders in proportion to their respective interests in the
Portfolio) for the liabilities and obligations of that Portfolio in the event
that the Portfolio falls to satisfy its liabilities and obligations from its
assets. This provision was included in the Declaration of Trust in order to
enable the Portfolios to be treated as partnerships for tax purposes, and thus
to be subject to no entity-level income taxes. As a result of recent changes in
the federal tax regulations, this liability provision is no longer necessary.
The proposed amendment to the Portfolios' Declaration of Trust which
appears in EXHIBIT A will permit the Portfolios to issue their interests to
partnerships whose partnership interests are held by entities which otherwise
meet the definition of Institutional Investor. The proposed amendment also will
allow the Portfolios and their investors, to take advantage of the recent
changes in federal tax regulations described above. The Portfolios' Board of
Trustees believes that this amendment will make the Portfolios more attractive
to potential investors and could result in more assets being invested in the
Portfolios. As a result, the Board believes that this amendment will be to the
Portfolios' advantage and is in the best interests of the holders of beneficial
interests in each Portfolio.
VOTE REQUIRED
If a quorum is present at a meeting of a Portfolio's investors, the
affirmative vote of the holders of a majority of the interests in the Portfolio
present, in person or by proxy, at such meeting is required for approval of the
amendment to the Portfolios' Declaration of Trust with respect to that
Portfolio. Holders of at least one-third of the interests in a Portfolio,
present in person or by proxy, constitute a quorum for a meeting of investors
of that Portfolio.
THE BOARD OF TRUSTEES OF THE PORTFOLIOS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF BENEFICIAL INTERESTS IN EACH PORTFOLIO VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE PORTFOLIOS' DECLARATION OF TRUST.
ITEM 2. TO VOTE ON AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT POLICIES
OF EACH PORTFOLIO TO ALLOW THE ASSETS OF THAT PORTFOLIO TO BE
INVESTED IN ONE OR MORE INVESTMENT COMPANIES TO THE EXTENT NOT
PROHIBITED BY THE 1940 ACT, THE RULES AND REGULATIONS
THEREUNDER, AND EXEMPTIVE ORDERS GRANTED UNDER SUCH ACT.
Each Portfolio has adopted certain fundamental investment restrictions
which, as a matter of law, cannot be changed without investor approval. As
noted above, recent amendments to the 1940 Act permit mutual funds to invest
their investable assets in multiple investment companies so long as certain
conditions are met. There may be future amendments to the 1940 Act affecting
mutual funds' ability to invest in other funds. Please note that investment
companies incur certain expenses, such as advisory, transfer agency and
custodian fees, and therefore any investment by a Portfolio in shares of
another investment company may be subject to such duplicative expenses.
In order to take advantage of the flexibility of current and future
applicable law and regulation and to permit the Portfolios to enter into the
<PAGE>
restructuring, it is proposed that each of the fundamental investment
restrictions listed in EXHIBIT B be amended as indicated in that Exhibit.
The Trustees believe that the proposed amendments to the fundamental
investment policies are in the best interests of the holders of beneficial
interests in each Portfolio.
VOTE REQUIRED
Because the investment restrictions in EXHIBIT B are fundamental policies
of each Portfolio, the affirmative vote of investors holding 67% or more of the
outstanding interests in a Portfolio which are present at the Meeting if the
holders of more than 50% of such interests are present in person or by proxy,
or more than 50% of the outstanding interests in the Portfolio, whichever is
less (a "Majority Holder Vote"), is required for approval of the amendment of
the restrictions with respect to that Portfolio.
THE BOARD OF TRUSTEES OF THE PORTFOLIOS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF BENEFICIAL INTERESTS IN EACH PORTFOLIO VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE PORTFOLIO'S FUNDAMENTAL INVESTMENT POLICIES, TO ALLOW
THE ASSETS OF EACH PORTFOLIO TO BE INVESTED IN ONE OR MORE INVESTMENT COMPANIES
TO THE EXTENT NOT PROHIBITED BY THE 1940 ACT.
ITEM 3. TO VOTE ON AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT POLICIES
OF EACH PORTFOLIO CONCERNING THAT PORTFOLIO'S ABILITY TO MAKE
LOANS TO OTHER PERSONS AND TO BUY OR SELL FUTURES CONTRACTS AND
OPTIONS ON FUTURES.
As noted above in Item 2, each Portfolio has adopted certain fundamental
investment restrictions which, as a matter of law, cannot be changed without
investor approval. One of these fundamental investment restrictions concerns
each Portfolio's ability to make loans to other persons. The Portfolios are
proposing a technical amendment to this restriction to clarify that the
purchase of fixed time deposits would not be a violation of this restriction.
The Portfolios are proposing technical amendments to certain other of the
Portfolios' fundamental investment restrictions to clarify that these
restrictions do not limit the Portfolios' ability to buy or sell futures
contracts and options on futures. The proposed amendments clarify that the
Portfolios' ability to buy or sell futures contracts and options on futures is
consistent with that described in each Portfolio's registration statement.
To give effect to these technical amendments, it is proposed that each of
the fundamental investment restrictions listed in EXHIBIT C be amended as
indicated in that Exhibit. Investors should note that EXHIBIT C assumes that
Item 2 has been approved.
The Trustees believe that these proposed amendments to the fundamental
investment policies are in the best interests of the holders of beneficial
interests in each Portfolio.
<PAGE>
VOTE REQUIRED
Because the investment restrictions in EXHIBIT C are fundamental policies
of each Portfolio, approval of this proposal with respect to a Portfolio will
require a Majority Holder Vote of the holders of beneficial interests in that
Portfolio.
THE BOARD OF TRUSTEES OF THE PORTFOLIOS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF BENEFICIAL INTERESTS IN EACH PORTFOLIO VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE PORTFOLIOS' FUNDAMENTAL INVESTMENT POLICIES
CONCERNING THE PORTFOLIOS' ABILITY TO MAKE LOANS TO OTHER PERSONS AND TO BUY OR
SELL FUTURES CONTRACTS AND OPTIONS ON FUTURES.
ITEM 4. (A) FOR EQUITY PORTFOLIO, TO VOTE ON A PROPOSAL TO ADOPT
FUNDAMENTAL INVESTMENT POLICIES CONCERNING THE UNDERWRITING OF
SECURITIES, PURCHASES AND SALES OF REAL ESTATE AND COMMODITIES
AND ISSUANCE OF SENIOR SECURITIES.
As noted above in Items 2 and 3, Equity Portfolio has adopted certain
fundamental investment restrictions which, as a matter of law, cannot be
changed without investor approval. The Portfolio has taken the position that
additional fundamental investment restrictions also cannot be adopted without
investor approval. The Staff of the SEC has asked that the Portfolio adopt
fundamental restrictions concerning the underwriting of securities, purchases
and sales of real estate and commodities and issuance of senior securities, and
the Portfolio has undertaken to seek investor approval to do so.
As a result, the Portfolio is proposing to adopt the fundamental
investment restrictions listed for the Portfolio in EXHIBIT D. It should be
noted that the adoption of these restrictions will not change the manner in
which the Portfolio conducts its investment activities.
The Trustees believe that adoption of these fundamental investment
policies is in the best interests of holders of beneficial interests in Equity
Portfolio.
VOTE REQUIRED
Because the investment restrictions in EXHIBIT D will be fundamental
policies of Equity Portfolio, approval of this proposal will require a Majority
Holder Vote of the holders of beneficial interests in Equity Portfolio.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
BENEFICIAL INTERESTS IN EQUITY PORTFOLIO VOTE FOR THE ADOPTION OF FUNDAMENTAL
INVESTMENT POLICIES CONCERNING THE UNDERWRITING OF SECURITIES, PURCHASES AND
SALES OF REAL ESTATE AND COMMODITIES AND ISSUANCE OF SENIOR SECURITIES.
(B) FOR SMALL CAP EQUITY PORTFOLIO, TO VOTE ON AN AMENDMENT TO THE
PORTFOLIO'S FUNDAMENTAL INVESTMENT POLICY CONCERNING THE ISSUANCE OF
SENIOR SECURITIES.
As noted above in Items 2 and 3, Small Cap Equity Portfolio has adopted
certain fundamental investment restrictions which, as a matter of law, cannot
be changed without investor approval. One of these restrictions concerns the
Portfolio's ability to issue senior securities. The Portfolio is proposing a
technical amendment to this restriction to clarify that if the Portfolio
<PAGE>
borrows money, any such borrowing that results in a senior security will be
accomplished in accordance with the 1940 Act and the rules and regulations
thereunder.
To give effect to this amendment, it is proposed that the fundamental
investment restriction listed for the Portfolio in EXHIBIT D be amended as
indicated in that Exhibit.
The Trustees believe that adoption of these fundamental investment
policies is in the best interests of holders of beneficial interests in Small
Cap Equity Portfolio.
VOTE REQUIRED
Because the investment restriction in EXHIBIT D is a fundamental policy of
Small Cap Equity Portfolio, approval of this proposal will require a Majority
Holder Vote of the investors in Small Cap Equity Portfolio.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
BENEFICIAL INTERESTS IN SMALL CAP EQUITY PORTFOLIO VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE PORTFOLIO'S FUNDAMENTAL INVESTMENT POLICY CONCERNING
THE ISSUANCE OF SENIOR SECURITIES.
ITEM 5. TO VOTE ON A MANAGEMENT AGREEMENT FOR EACH PORTFOLIO WITH
CITIBANK, N.A.
As described above in "General Background," the Portfolios currently
receive investment advisory services under investment advisory agreements with
Citibank. The Portfolios currently receive administrative services under
administrative services agreements with an affiliate of their placement agent.
This entity, in turn, subcontracts with Citibank so that Citibank actually
provides administrative services to the Portfolios.
The Portfolios are proposing to enter into management agreements with
Citibank (the "Proposed Portfolio Management Agreements"). Under the Proposed
Portfolio Management Agreements, Citibank will be responsible for the overall
management of each Portfolio's business affairs, and will provide investment
advisory as well as administrative services to the Portfolios, including the
provision of general office facilities and supervising the overall
administration of each Portfolio.
The Proposed Portfolio Management Agreements will render the Portfolios'
existing investment advisory and administrative services agreements
unnecessary, and they will be terminated. The same personnel at Citibank who
currently provide administrative and investment advisory services to the
Portfolios are expected to continue to do so after the Proposed Portfolio
Management Agreements are entered into, and the nature, level and quality of
services to the Portfolios will not be adversely effected.
The aggregate investment advisory and administrative services fees payable
by Equity Portfolio will increase by 0.05% per annum of the Portfolio's average
daily net assets. The aggregate investment advisory and administrative services
fees payable by Small Cap Equity Portfolio will decrease by 0.05% per annum of
the Portfolio's average daily net assets. The Portfolios will no longer pay a
separate administrative services fee.
A copy of the Proposed Portfolio Management Agreement for each Portfolio
is attached hereto as EXHIBIT E. Investors should refer to EXHIBIT E for the
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complete terms of the Proposed Portfolio Management Agreement for each
Portfolio, and the description of the Proposed Portfolio Management Agreement
set forth herein is qualified in its entirety by the provisions of the Proposed
Portfolio Management Agreement as set forth in EXHIBIT E.
THE PROPOSED PORTFOLIO MANAGEMENT AGREEMENTS
If the Proposed Portfolio Management Agreement is approved by a
Portfolio's investors, Citibank will be authorized to provide investment
advisory services directly to that Portfolio. The terms and conditions of each
Proposed Portfolio Management Agreement are identical. A description of the
management fees payable under the Proposed Portfolio Management Agreements is
set forth below. See "Management Fees."
Under each Proposed Portfolio Management Agreement, Citibank as investment
manager will furnish continuously an investment program for the Portfolios and
will determine from time to time what securities are purchased, sold or
exchanged, and what portion of the assets of the Portfolios are held
uninvested, subject always to the restrictions of the Portfolios' Declaration
of Trust and By-laws, as each may be amended from time to time, the provisions
of the 1940 Act and the Portfolios' registration statements. Citibank will also
make recommendations as to the manner in which proxies, voting rights, rights
to consent to corporate action and any other rights pertaining to portfolio
securities will be exercised; and will take all actions which Citibank deems
necessary to implement Portfolio investment policies.
Under each Proposed Portfolio Management Agreement, Citibank also will
perform such administrative and management services as may from time to time be
reasonably requested, including: (i) providing office space, equipment and
clerical personnel necessary for maintaining the organization of the Portfolio
and for performing administrative and management functions; (ii) supervising
the overall administration of the Portfolio, including negotiation of contracts
and fees with and the monitoring of performance and billings of the Portfolio's
transfer agent, custodian and other independent contractors or agents; (iii)
preparing and, if applicable, filing all documents required for compliance by
the Portfolio with applicable laws and regulations, including registration
statements, semi-annual and annual reports to investors, proxy statements and
tax returns; (iv) preparing agendas and supporting documents for and minutes of
meetings of Trustees, committees of Trustees and investors; and (v) arranging
for maintenance of the books and records of the Portfolio.
The Proposed Portfolio Management Agreement, if approved by a Majority
Holder Vote of a Portfolio, will continue in effect for a two-year period, and
thereafter from year to year, subject to approval annually in accordance with
the 1940 Act. The Proposed Portfolio Management Agreement of a Portfolio may be
terminated at any time without the payment of any penalty by the Portfolio's
Board of Trustees or by Majority Holder Vote of that Portfolio, or by Citibank,
in each case on not more than 60 days' nor less than 30 days' written notice to
the other party. The Proposed Portfolio Management Agreement of a Portfolio
will also terminate automatically in the event of its "assignment" (as defined
in the 1940 Act).
Under each Proposed Portfolio Management Agreement, Citibank will not be
liable for any error of judgment or mistake of law or for any loss suffered by
a Portfolio in connection with the matters to which the Proposed Portfolio
Management Agreement relates, except a loss resulting from Citibank's willful
misfeasance, or its bad faith or gross negligence in the performance of its
obligations and duties, or by reason of Citibank's reckless disregard of its
obligations and duties under such agreement.
<PAGE>
MANAGEMENT FEES
Under the Proposed Portfolio Management Agreements, Equity Portfolio will
pay Citibank management fees equal on an annual basis to 0.60% of the
Portfolio's average daily net assets for the Portfolio's then-current fiscal
year, and Small Cap Equity Portfolio will pay Citibank management fees equal on
an annual basis to 0.75% of the Portfolio's average daily net assets for the
Portfolio's then-current fiscal year. Fees will be accrued daily and payable
monthly. The aggregate investment advisory and administrative services fees
currently payable by the Portfolios are 0.55% of Equity Portfolio's average
daily net assets and 0.80% of Small Cap Equity Portfolio's average daily net
assets, in each case for the Portfolio's then-current fiscal year.
Investment advisory and administrative services fees accrued to Citibank
under the existing investment advisory and administrative services agreements
for services provided to each Portfolio for the last two fiscal years of each
Portfolio were as follows: for Equity Portfolio, $1,525,950 and $1,153,909 for
the fiscal years ended December 31, 1996 and 1995, respectively; and for Small
Cap Equity Portfolio, $157,076 and $10,904 for the fiscal year ended
December 31, 1996 and the period from June 21, 1995 (commencement of
operations) to December 31, 1995, respectively. Had the proposed management
fees for the Portfolios been in effect for those periods, the following fees
would have been payable: for Equity Portfolio, $1,664,672 and $1,258,809 for
the fiscal years ended December 31, 1996 and 1995, respectively, which is a
0.05% increase for the fiscal years ended December 31, 1996 and 1995 from the
net investment advisory and administrative service fees accrued under the
existing investment advisory and administrative services agreements for such
periods; and for Small Cap Equity Portfolio, $147,258 and $10,222 for the
fiscal year ended December 31, 1996 and the period from June 21, 1995
(commencement of operations) to December 31, 1995, respectively, which is a
0.05% decrease for the fiscal year ended December 31, 1996 and the period from
June 21, 1995 (commencement of operations) to December 31, 1995 from the net
investment advisory and administrative service fees accrued under the existing
investment advisory and administrative services agreements for such period.
Except as set forth above with respect to administrative services and
investment advisory fees, neither Citibank nor any affiliated person of
Citibank, nor any affiliated person of such person, received any other fees
from the Portfolios for services provided to the Portfolios during their last
two fiscal years. There were no other material payments by the Portfolios to
Citibank, any affiliated person of Citibank, or any affiliated person of such
person, during such period.
As of June 30, 1997, Equity Portfolio had net assets of $325,864,983; and
Small Cap Equity Portfolio had net assets of $44,561,526.
For the last two fiscal years of each Portfolio, no brokerage commissions
were paid by the Portfolios to any broker during the same period that (i) is an
affiliated person of the Portfolios, or (ii) is affiliated with any person
described in clause (i) of this paragraph, or (iii) an affiliated person of
which is an affiliated person of the Portfolios, Citibank or the distributor of
the Portfolios.
DESCRIPTION OF THE MANAGER
Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
in money market, equity and fixed income securities. Citibank and its
<PAGE>
affiliates manage more than $81 billion in assets worldwide. Citibank is a
wholly-owned subsidiary of Citicorp. Citibank's address is 153 East 53rd
Street, New York, New York 10043.
Grant D. Hobson and Richard Goldman have managed the Equity Portfolio
since January 1996. Mr. Hobson is responsible for managing U.S. equity
portfolios for mutual funds, trust and pension accounts of Citibank Global
Asset Management and currently manages, or co-manages, more than $1 billion of
total assets at Citibank. Prior to joining Citibank in 1993, Mr. Hobson was a
securities analyst and sector manager for pension accounts and mutual funds for
Axe Houghton, formerly a division of USF&G. Mr. Goldman is responsible for
managing U.S. equity portfolios for mutual funds and institutional accounts,
and for quantitative equity research for the U.S. institutional business of
Citibank Global Asset Management. He currently manages, or co-manages,
approximately $500 million of total assets at Citibank. He joined Citicorp's
Investment Management Division in 1985 and from 1988 to 1994 was responsible
for running Citicorp's Institutional Investor Relations Department.
Linda J. Intini has managed the Small Cap Equity Portfolio since February
1997. Ms. Intini has over nine years of experience specializing in the
management of small cap equities, including over $300 million of Citibank's
small cap portfolios for trusts and individuals. Since 1992, Ms. Intini has
managed small cap equities for different types of managed accounts at Citibank.
Prior to joining Citibank in 1992, she was a Portfolio Manager and Research
Analyst with Manufacturers Hanover in the Special Equity area and specialized
in equity research at Eberstadt Fleming.
John S. Reed is the Chairman of the Board and a Director of Citibank. The
following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins, William R. Rhodes and H. Onno Ruding. Other Directors of Citibank are
Alain J.P. Belda, President and Chief Operating Officer, Alcoa Corporation; D.
Wayne Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.,
Purchase, New York; Kenneth T. Derr, Chairman and Chief Executive Officer,
Chevron Corporation; John M. Deutch, Director, CMS Energy; Reuben Marks,
Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard D.
Parsons, Member, Board of Representatives, Time Warner Entertainment Company,
L.P.; Rozanne L. Ridgway, President, The Atlantic Council of the United States;
Robert B. Shapiro, President and Chief Operating Officer, Monsanto Company;
Frank A. Shrontz, Chairman and Chief Executive Officer, The Boeing Company,
Seattle, Washington; Roger B. Smith, Former Chairman and Chief Executive
Officer, General Motors Corporation; Franklin A. Thomas, President, The Ford
Foundation, New York, New York; and Edgar S. Woolard, Jr., Chairman and Chief
Executive Officer, E.I. DuPont de Nemours & Company.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
Kenneth T. Derr Director, American Telephone and Telegraph, Co.
Director, Chevron Corporation
Director, Potlatch Corporation
<PAGE>
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical Technologies, Inc.
Reuben Marks Director, Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage Association
Director, Philip Morris Companies Incorporated
Member, Board of Representatives, Time Warner
Entertainment Company, L.P.
Director and President, Time Warner, Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, The Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
H. Onno Ruding Member, Board of Supervisory Directors,
Amsterdam Trustee's Kantoor
Board Member, Corning Incorporated
Advisor, Intercena (C&A) (Netherlands)
Director, Pechiney S.A.
Member, Board of Advisers, Robeco N.V.
Advisory Director, Unilever N.V.
Advisory Director, Unilever PLC
Robert B. Shapiro Director, G.D. Searle & Co.
Director, Silicon Graphics
Director, Monsanto Company
Director, The Nutrasweet Company
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director, The Boeing Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
<PAGE>
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, PepsiCo, Inc.
Edgar S. Woolard, Jr. Director, E.I. DuPont de Nemours & Company
Director, Apple Computer, Inc.
Director, Zurich Holding Company of America, Inc.
Advisory Director, Zurich Insurance Corporation
Banking Relationships. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Portfolios, including outstanding loans to such issuers which may be repaid
in whole or in part with the proceeds of securities so purchased. Citibank has
informed the Portfolios that, in making its investment decisions, it does not
obtain or use material inside information in the possession of any division or
department of Citibank or in the possession of any affiliate of Citibank.
Bank Regulatory Matters. The Glass-Steagall Act prohibits certain
financial institutions, such as Citibank, from underwriting securities of
open-end investment companies, such as the Portfolios. Citibank believes that
its services under the Proposed Portfolio Management Agreements are not
underwriting and are consistent with the Glass-Steagall Act and other relevant
federal and state laws. However, there is no controlling precedent regarding
the performance of the combination of investment advisory, shareholder
servicing and administrative activities by banks. State laws on this issue may
differ from applicable federal law, and banks and financial institutions may be
required to register as dealers pursuant to state securities laws. Changes in
either federal or state statutes or regulations, or in their interpretations,
could prevent Citibank or its affiliates from continuing to perform these
services. If Citibank or its affiliates were to be prevented from acting as the
investment manager, the Portfolios would seek alternative means for obtaining
these services. The Portfolios do not expect that investors would suffer any
adverse financial consequences as a result of any such occurrence.
Citibank furnishes at its own expense all services, facilities and
personnel necessary in connection with managing the Portfolios' investments and
effecting securities transactions for the Portfolios. Citibank also provides
other services to each of the Funds.
Citibank also serves as adviser or subadviser to other registered
investment companies. Those companies are identified in EXHIBIT F hereto, along
with their asset size and the rates of compensation paid by those companies to
Citibank for advisory or subadvisory services.
THE EVALUATION BY THE BOARD OF TRUSTEES
The Portfolios' Board of Trustees has determined that approving the
Proposed Portfolio Management Agreements is in the best interests of the
Portfolios and their investors.
At a meeting on August 8, 1997, the Trustees considered information
concerning the Proposed Portfolio Management Agreements. The Trustees
considered, among other factors, representations by Citibank that the proposed
<PAGE>
agreements would not materially affect the nature, level and quality of
services now provided to the Portfolios. The Trustees also considered that,
subject to the required approval of investors in the Portfolios, the same
personnel at Citibank who provide administrative and investment advisory
services to the Portfolios were expected to continue to do so under the
Proposed Portfolio Management Agreements. The Trustees noted that Equity
Portfolio's management fee would increase and that Small Cap Equity Portfolio's
management fee would decrease. They reviewed comparative fee data for
comparable funds and found the fees, as revised, to be in line with industry
standards and with the fees of comparable funds. The Trustees also considered
the nature and quality of services expected to be provided by Citibank to the
Portfolios, and information regarding fees, expense ratios and performance. In
evaluating Citibank's ability to provide services to the Portfolios, the
Trustees considered information as to Citibank's business organization,
financial resources and personnel.
Based upon its review, the Trustees concluded that the Proposed Portfolio
Management Agreements are reasonable, fair and in the best interests of each
Portfolio and its investors, and that the fees provided in the Proposed
Portfolio Management Agreements are fair and reasonable in light of the usual
and customary charges made by others for services of the same nature and
quality. Accordingly, after consideration of the above factors, and such other
factors and information as were deemed relevant, the Trustees, including all of
the Independent Trustees, unanimously approved the Proposed Portfolio
Management Agreements for the Portfolios and voted to recommend their approval
by Portfolio investors.
VOTE REQUIRED
Approval of the Proposed Portfolio Management Agreement with respect to a
Portfolio will require a Majority Holder Vote of the holders of beneficial
interests in that Portfolio.
THE BOARD OF TRUSTEES OF THE PORTFOLIOS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF BENEFICIAL INTERESTS IN EACH PORTFOLIO VOTE FOR APPROVAL OF THE
PROPOSED PORTFOLIO MANAGEMENT AGREEMENT FOR THAT PORTFOLIO.
ITEM 6. TO VOTE ON THE SELECTION OF PRICE WATERHOUSE AS THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR EACH PORTFOLIO.
It is intended that proxies cast by each Portfolio's holders of beneficial
interests not limited to the contrary will be voted in favor of ratifying the
selection, by a majority of the Trustees of the Portfolios who are not
"interested persons" (as that term is defined in the 1940 Act) of the
Portfolios, of Price Waterhouse under Section 32(a) of the 1940 Act as
independent public accountants, to certify every financial statement of each
Portfolio required by any law or regulation to be certified by independent
public accountants and filed with the Securities and Exchange Commission in
respect of all or any part of the fiscal year of the Portfolio ending
December 31, 1997 (or, subject to obtaining favorable rulings from the Internal
Revenue Service, such earlier date as coincides with the restructuring
described under "General Background"). Price Waterhouse has no direct or
material indirect interest in any Portfolio.
Price Waterhouse has served as the Portfolios' independent certified
public accountants since May 1, 1994 providing audit services and consultation
with respect to the preparation of filings with the Securities and Exchange
Commission.
<PAGE>
Representatives of Price Waterhouse are not expected to be present at the
Meeting.
VOTE REQUIRED
Approval of this proposal with respect to a Portfolio will require
approval by the holders of a majority of the outstanding beneficial interests
in the Portfolios, taken together as a single class, which are present at the
Meeting in person or by proxy.
THE BOARD OF TRUSTEES OF THE PORTFOLIOS UNANIMOUSLY RECOMMENDS THAT THE
HOLDERS OF BENEFICIAL INTERESTS IN EACH PORTFOLIO VOTE FOR APPROVAL OF PRICE
WATERHOUSE AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THAT PORTFOLIO.
ITEM 7. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING OF HOLDERS OF BENEFICIAL INTERESTS AND ANY
ADJOURNMENTS THEREOF.
The management of the Portfolios knows of no other business to be
presented at the Meeting. If any additional matters should be properly
presented, it is intended that the enclosed proxy (if not limited to the
contrary) will be voted in accordance with the judgment of the persons named in
the enclosed form of proxy.
INTERESTS OF CERTAIN PERSONS
As of the Record Date, the Trustees and officers of the Portfolios,
individually and as a group, owned beneficially or had the right to vote less
than 1% of the outstanding interests in any of the Portfolios or shares of any
of the Funds.
As of the Record Date, to the best knowledge of the Portfolios, the
following entities beneficially owned 5% or more of the outstanding beneficial
interests in the Portfolios:
Amount of
Name of Beneficial Percentage
Beneficial Owner Ownership Interest
Equity Portfolio:
Landmark Equity Fund . . . . . . . . $250,715,088 78.1%
Citi U.S. Equity Fund Ltd. . . . . . $70,413,658 21.9%
Small Cap Equity Portfolio:
Landmark Small Cap Equity Fund . . . $24,967,419 55.0%
Citi Small Cap Equity Fund Ltd . . . $20,445,786 45.0%
The address of each of Landmark Equity Fund and Landmark Small Cap Equity
Fund is c/o Signature Financial Group Inc., 6 St. James Avenue, Boston
Massachusetts 02116. The address of each of Citi U.S. Equity Fund Ltd. and Citi
Small Cap Equity Fund Ltd. is c/o Cititrust (Bahamas) Limited, Thompson Blvd.,
Nassau, Bahamas, Attn.: M. Carmen Butler.
ADDITIONAL INFORMATION
Each Portfolio is a series of The Premium Portfolios (the "Trust"), a
diversified, open-end registered investment company organized as a New York
trust under a Declaration of Trust dated as of September 13, 1993. Equity
Portfolio and Small Cap Equity Portfolio were designated as separate series of
<PAGE>
the Trust on September 13, 1993 and May 5, 1995, respectively. The mailing
address of the Trust is Elizabethan Square, George Town, Grand Cayman, BWI.
The cost of soliciting proxies in the accompanying form, which is expected
to be about $2,500, will be borne by Citibank. In addition to
solicitation by mail, proxies may be solicited by the Board of Trustees,
officers, and regular employees and agents of the Portfolios without
compensation therefor.
The Portfolios' placement agent is The Landmark Funds Broker-Dealer
Services, Inc., c/o Signature Financial Group (Cayman), Ltd., Elizabethan
Square, George Town, Grand Cayman, BWI. State Street Bank and Trust Company
("State Street") acts as custodian for each Portfolio. The principal business
address of State Street is 225 Franklin Street, Boston, Massachusetts 02110.
Signature Financial Services, Inc. ("SFSI") provides transfer agency services
to each Portfolio. The principal business address of SFSI is 6 St. James
Avenue, Boston, Massachusetts 02116.
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a trust formed under the laws of the State of New York, and
as such is not required to hold annual meetings of holders of beneficial
interests, although special meetings may be called for the Portfolios, or for
the Trust as a whole, for purposes such as electing Trustees or removing
Trustees, changing fundamental policies, or approving an advisory contract.
Proposals of holders of beneficial interests to be presented at any subsequent
meeting of holders of beneficial interests must be received by the Trust at the
Trust's office within a reasonable time before the proxy solicitation is made.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Susan Jakuboski, Assistant Secretary
October 1, 1997
<PAGE>
EXHIBIT A
Deleted text appears in single brackets and added
text appears in double brackets.
THE DEFINITION OF INSTITUTIONAL INVESTOR FROM SECTION 1.2, A NEW
PARAGRAPH (D) TO BE ADDED TO SECTION 3.2 AND SECTION 5.1
IN ITS ENTIRETY, OF THE PORTFOLIOS' DECLARATION OF TRUST
PROPOSED TO BE AMENDED UNDER ITEM 1.
"Institutional Investor(s)" shall mean, [[when used with respect to each
Series of the Trust other than the Series designated as Balanced Portfolio,
Government Income Portfolio, International Equity Portfolio and Emerging Asian
Markets Equity Portfolio,]] any regulated investment company, segregated asset
account, foreign investment company, common trust fund, group trust or other
investment arrangement, whether organized within or without the United States
of America, other than an individual, S corporation, or partnership or a
grantor trust beneficially owned by any individual, [or] S corporation or
partnership, [[unless, in the case of a partnership or a grantor trust
beneficially owned by a partnership, the interests in the partnership are held
by entities that otherwise meet the definition of Institutional Investor. When
used with respect to those Series of the Trust designated as Balanced
Portfolio, Government Income Portfolio, International Equity Portfolio and
Emerging Asian Markets Equity Portfolio, Institutional Investor(s) shall mean
any regulated investment company, segregated asset account, foreign investment
company, common trust fund, group trust or other investment arrangement,
whether organized within or without the United States of America, other than an
individual, S corporation, partnership or grantor trust beneficially owned by
any individual, S corporation or partnership.]]
Section 3.2:
[[(d)Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by investors to either invest all or a portion of the
Trust Property of each Series of the Trust (other than the Series designated as
Balanced Portfolio, Government Income Portfolio, International Equity Portfolio
and Emerging Asian Markets Equity Portfolio), or sell all or a portion of such
Trust Property and invest the proceeds of such sales, in one or more investment
companies to the extent not prohibited by the 1940 Act and exemptive orders
granted under such Act.]]
5.1. Liability of Holders; Indemnification. [Each][[(a) As to the Series
of the Trust designated as Balanced Portfolio, Government Income Portfolio,
International Equity Portfolio and Emerging Asian Markets Equity Portfolio,
each]] Holder of an Interest in [a] [[such]] Series shall be jointly and
severally liable with every other Holder of an Interest in that Series (with
rights of contribution inter se in proportion to their respective Interests in
the Series) for the liabilities and obligations of that Series (and of no other
Series) in the event that the Trust fails to satisfy such liabilities and
obligations from the assets of that Series[; provided, however, that, to]. To
the extent assets of [that Series ][[a Series named in the preceding sentence]]
are available in the Trust, the Trust shall indemnify and hold each Holder [[of
an Interest in that Series]] harmless from and against any claim or liability
to which such Holder may become subject by reason of being or having been a
<PAGE>
Holder of [any] [[an]] Interest in that Series to the extent that such claim or
liability imposes on the Holder an obligation or liability which, when compared
to the obligations and liabilities imposed on other Holders of Interests in
that Series, is greater than such Holder's [Interest (proportionate share)]
[[proportionate share of such claim or liability]], and shall reimburse such
Holder for all legal and other expenses reasonably incurred by such Holder in
connection with any such claim or liability.
[[(b)Notwithstanding any other provision of this Declaration, each Holder
of an Interest in a Series of the Trust other than Balanced Portfolio,
Government Income Portfolio, International Equity Portfolio and Emerging Asian
Markets Equity Portfolio, shall not be subject to any personal liability
whatsoever to any Person in connection with the Trust Property or the acts,
obligations or affairs of the Trust with respect to that Series; and if any
such Holder is made a party to any suit or proceeding to enforce any such
liability, such Holder shall not, on account thereof, be held to any personal
liability. To the extent assets of a Series enumerated in the preceding
sentence are available in the Trust, the Trust shall indemnify and hold each
Holder of an Interest in that Series harmless from and against any claim or
liability to which such Holder may become subject by reason of being or having
been a Holder of an Interest in that Series, and shall reimburse such Holder
for all legal and other expenses reasonably incurred by such Holder in
connection with any such claim or liability.]]
(c) The rights accruing to a Holder under this Section 5.1 shall not
exclude any other right to which such Holder may be lawfully entitled, nor
shall anything contained herein restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein. [Notwithstanding the indemnification procedure described
above, it is intended that each Holder of an Interest in a Series shall remain
jointly and severally liable to the creditors of that Series as a legal
matter.] The liabilities of a particular Series and the right to
indemnification granted hereunder to Holders of Interests in such Series shall
not be enforceable against any other Series or Holders of Interests in any
other Series.
<PAGE>
EXHIBIT B
Added text appears in double brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE AMENDED
UNDER ITEM 2.
(3) Purchase securities of any issuer if such purchase at the time
thereof would cause with respect to 75% of the total assets of the
Portfolio more than 10% of the voting securities of such issuer to be
held by the Portfolio, [[except that the Portfolio may invest all or
any portion of its assets in one or more investment companies, to the
extent not prohibited by the 1940 Act, the rules and regulations
thereunder, and exemptive orders granted under such Act.]]
(4) Purchase securities of any issuer if such purchase at the time
thereof would cause as to 75% of the Portfolio's total assets more than
5% of 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, any state or political
subdivision thereof, or any political subdivision of any such state, or
any agency or instrumentality of the United States or of any state or
of any political subdivision of any state), [[except that the Portfolio
may invest all or any portion of its assets in one or more investment
companies, to the extent not prohibited by the 1940 Act, the rules and
regulations thereunder, and exemptive orders granted under such Act.]]
For Small Cap Equity Portfolio Only:
(6) Underwrite securities issued by other persons, [[that all or any
portion of the assets of the Portfolio may be invested in one or more
investment companies, to the extent not prohibited by the 1940 Act, the
rules and regulations thereunder, and exemptive orders granted under
such Act, and]] except insofar as the Portfolio may technically be
deemed an underwriter under the Securities Act in selling a security.
<PAGE>
EXHIBIT C
Deleted text appears in single brackets and added text appears in double
brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE AMENDED
UNDER ITEM 3.
(1) Borrow money, except that as a temporary measure for extraordinary
or emergency purposes it may borrow in an amount not to exceed 1/3 of the
current value of its net assets, including the amount borrowed [(nor];
[[or]] purchase any securities at any time at which borrowings exceed 5%
of the total assets of the Portfolio, taken at market value[)]. It is
intended that the Portfolio would borrow money only from banks and only
to accommodate requests for the repurchase of beneficial interests in the
Portfolio while effecting an orderly liquidation of portfolio securities.
(2) Make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of
the Portfolio's total assets (taken at market value), (b) through the use
of repurchase agreements [[or fixed time deposits]] or the purchase of
short-term obligations or (c) by purchasing all or a portion of an issue
of debt securities of types commonly distributed privately to financial
institutions. The purchase of short-term commercial paper or a portion of
an issue of debt securities which is part of an issue to the public shall
not be considered the making of a loan.
(3) Purchase securities of any issuer if such purchase at the time
thereof would cause with respect to 75% of the total assets of the
Portfolio more than 10% of the voting securities of such issuer to be
held by the Portfolio; [except] [[provided that, for purposes of this
restriction, the issuer of an option or futures contract shall not be
deemed to be the issuer of the security or securities underlying such
contract; and provided further]] that the Portfolio may invest all or any
portion of its assets in one or more investment companies, to the extent
not prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act.
(4) Purchase securities of any issuer if such purchase at the time
thereof would cause as to 75% of the Portfolio's total assets more than
5% of 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, any state or political
subdivision [of either of the foregoing] [[thereof, or any political
subdivision of any such state]], or any agency or instrumentality of the
United States or of any state or of any political subdivision of any
state)[, except]; [[provided that, for purposes of this restriction, the
issuer of an option or futures contract shall not be deemed to be the
issuer of the security or securities underlying such contract; and
provided further]] that the Portfolio may invest all or any portion of
its assets in one or more investment companies, to the extent not
prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act.
(5) Concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of the Portfolio's investment
<PAGE>
[objectives] [[objective]], up to 25% of its assets, at market value at
the time of each investment, may be invested in any one industry,
[[except that positions in futures contracts shall not be subject to this
restriction.]]
For Small Cap Equity Portfolio Only:
(7) Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business ([except that the
Portfolio may invest in futures contracts] [[the foregoing shall not be
deemed to preclude the Portfolio from purchasing or selling futures
contracts or options thereon,]] and the Portfolio reserves the freedom of
action to hold and to sell real estate acquired as a result of the
ownership of securities by the Portfolio).
<PAGE>
EXHIBIT D
Deleted text appears in single brackets and added text appears in double
brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE ADOPTED
OR AMENDED UNDER ITEM 4.
For Equity Portfolio Only:
[[(6) Underwrite securities issued by other persons, except that all or
any portion of the assets of the Portfolio may be invested in one or more
investment companies, to the extent not prohibited by the 1940 Act, the
rules and regulations thereunder, and exemptive orders granted under such
Act, and except insofar as the Portfolio may technically be deemed an
underwriter under the Securities Act in selling a security.]]
[[(7) Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business (the foregoing
shall not be deemed to preclude the Portfolio from purchasing or selling
futures contracts or options thereon, and the Portfolio reserves the
freedom of action to hold and to sell real estate acquired as a result of
the ownership of securities by the Portfolio).]]
[[(8) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder.]]
For Small Cap Equity Portfolio Only:
(8) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder[, except as appropriate to
evidence a debt incurred without violating Investment Restriction (1)
above.]
<PAGE>
EXHIBIT E
PROPOSED PORTFOLIO MANAGEMENT AGREEMENT
THE PREMIUM PORTFOLIOS
Equity Portfolio
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
The Premium Portfolios, a New York trust (the "Trust"), and Citibank, N.A., a
national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain investment
advisory and administrative services for the series of the Trust designated as
Equity Portfolio (the "Portfolio"), and Citibank is willing to provide such
investment advisory and administrative services for the Portfolio on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the
Portfolio and as such shall furnish continuously an investment program and
shall determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Portfolio shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated as of September 13, 1993, and By-laws, as each may be amended from
time to time (respectively, the "Declaration" and the "By-Laws"), the
provisions of the 1940 Act, and the then-current Registration Statement of the
Trust with respect to the Portfolio. The Manager shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's securities
shall be exercised. Should the Board of Trustees of the Trust at any time,
however, make any definite determination as to investment policy applicable to
the Portfolio and notify the Manager thereof in writing, the Manager shall be
bound by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The Manager
shall take, on behalf of the Portfolio, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of securities for the
Portfolio's account with the brokers or dealers selected by it, and to that end
the Manager is authorized as the agent of the Trust to give instructions to the
custodian or any subcustodian of the Portfolio as to deliveries of securities
and payments of cash for the account of the Portfolio. In connection with the
selection of such brokers or dealers and the placing of such orders, brokers or
<PAGE>
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 Portfolio and/or the other accounts over which the Manager or its
<PAGE>
affiliates exercise investment discretion. The Manager is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Manager 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 Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. In making purchases or
sales of securities or other property for the account of the Portfolio, the
Manager may deal with itself or with the Trustees of the Trust or the Trust's
underwriter or distributor, to the extent such actions are permitted by the
1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Portfolio's expense, one or more subadvisers; provided that
in each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Portfolio and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, custodian and other independent contractors or agents;
(iii) preparing and, if applicable, filing all documents required for
compliance by the Trust with applicable laws and regulations, including
registration statements, semi-annual and annual reports to investors, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
investors; and (v) arranging for maintenance of books and records of the Trust.
Notwithstanding the foregoing, Citibank shall not be deemed to have assumed any
duties with respect to, and shall not be responsible for, the distribution of
beneficial interests in the Portfolio, nor shall Citibank be deemed to have
assumed or have any responsibility with respect to functions specifically
assumed by any transfer agent, fund accounting agent or custodian of the Trust
or the Portfolio. In providing administrative and management services as set
forth herein, Citibank may, at its own expense, employ one or more
subadministrators; provided that Citibank shall remain fully responsible for
the performance of all administrative and management duties set forth herein
and shall supervise the activities of each subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "affiliated persons" of Citibank; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
<PAGE>
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental
officers and commissions and to investors in the Portfolio; expenses connected
with the execution, recording and settlement of security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Portfolio, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of the
Portfolio (including but not limited to the fees of independent pricing
services); expenses of meetings of the Portfolio's investors; expenses relating
to the issuance of beneficial interests in the Portfolio; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Portfolio
may be a party and the legal obligation which the Trust may have to indemnify
its Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Portfolio a management fee computed daily and
paid monthly at an annual rate equal to 0.60% of the Portfolio's average daily
net assets for the Portfolio's then-current fiscal year. If Citibank provides
services hereunder for less than the whole of any period specified in this
Section 3, the compensation to Citibank shall be accordingly adjusted and
prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, if any, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests in the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to
Citibank and its directors and officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 5,
the term "Citibank" shall include directors, officers and employees of Citibank
as well as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Portfolio are
not to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as an investor or otherwise.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
<PAGE>
persons" of the Trust or of Citibank at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by "vote of a majority of the outstanding voting securities" of the
Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, or by Citibank, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or holders of
beneficial interests in the Trust individually.
8. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE PREMIUM PORTFOLIOS CITIBANK, N.A.
By:________________________ By:___________________________
Title:_____________________ Title:________________________
<PAGE>
PROPOSED PORTFOLIO MANAGEMENT AGREEMENT
THE PREMIUM PORTFOLIOS
Small Cap Equity Portfolio
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
The Premium Portfolios, a New York trust (the "Trust"), and Citibank, N.A., a
national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain investment
advisory and administrative services for the series of the Trust designated as
Small Cap Equity Portfolio (the "Portfolio"), and Citibank is willing to
provide such investment advisory and administrative services for the Portfolio
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the
Portfolio and as such shall furnish continuously an investment program and
shall determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Portfolio shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated as of September 13, 1993, and By-laws, as each may be amended from
time to time (respectively, the "Declaration" and the "By-Laws"), the
provisions of the 1940 Act, and the then-current Registration Statement of the
Trust with respect to the Portfolio. The Manager shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's securities
shall be exercised. Should the Board of Trustees of the Trust at any time,
however, make any definite determination as to investment policy applicable to
the Portfolio and notify the Manager thereof in writing, the Manager shall be
bound by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The Manager
shall take, on behalf of the Portfolio, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of securities for the
Portfolio's account with the brokers or dealers selected by it, and to that end
the Manager is authorized as the agent of the Trust to give instructions to the
custodian or any subcustodian of the Portfolio as to deliveries of securities
and payments of cash for the account of the Portfolio. In connection with the
selection of such brokers or dealers and the placing of such orders, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Portfolio and/or the other accounts over which the Manager or its
affiliates exercise investment discretion. The Manager is authorized to pay a
<PAGE>
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Manager 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 Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. In making purchases or
sales of securities or other property for the account of the Portfolio, the
Manager may deal with itself or with the Trustees of the Trust or the Trust's
underwriter or distributor, to the extent such actions are permitted by the
1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Portfolio's expense, one or more subadvisers; provided that
in each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Portfolio and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, custodian and other independent contractors or agents;
(iii) preparing and, if applicable, filing all documents required for
compliance by the Trust with applicable laws and regulations, including
registration statements, semi-annual and annual reports to investors, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
investors; and (v) arranging for maintenance of books and records of the Trust.
Notwithstanding the foregoing, Citibank shall not be deemed to have assumed any
duties with respect to, and shall not be responsible for, the distribution of
beneficial interests in the Portfolio, nor shall Citibank be deemed to have
assumed or have any responsibility with respect to functions specifically
assumed by any transfer agent, fund accounting agent or custodian of the Trust
or the Portfolio. In providing administrative and management services as set
forth herein, Citibank may, at its own expense, employ one or more
subadministrators; provided that Citibank shall remain fully responsible for
the performance of all administrative and management duties set forth herein
and shall supervise the activities of each subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "affiliated persons" of Citibank; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
<PAGE>
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental
officers and commissions and to investors in the Portfolio; expenses connected
with the execution, recording and settlement of security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Portfolio, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of the
Portfolio (including but not limited to the fees of independent pricing
services); expenses of meetings of the Portfolio's investors; expenses relating
to the issuance of beneficial interests in the Portfolio; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Portfolio
may be a party and the legal obligation which the Trust may have to indemnify
its Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Portfolio a management fee computed daily and
paid monthly at an annual rate equal to 0.75% of the Portfolio's average daily
net assets for the Portfolio's then-current fiscal year. If Citibank provides
services hereunder for less than the whole of any period specified in this
Section 3, the compensation to Citibank shall be accordingly adjusted and
prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, if any, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests in the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to
Citibank and its directors and officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 5,
the term "Citibank" shall include directors, officers and employees of Citibank
as well as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Portfolio are
not to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as an investor or otherwise.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of Citibank at a meeting specifically called for the
<PAGE>
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by "vote of a majority of the outstanding voting securities" of the
Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, or by Citibank, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or holders of
beneficial interests in the Trust individually.
8. Governing Law. This Agreement shall be construed
and the provisions thereof interpreted under and in
accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE PREMIUM PORTFOLIOS CITIBANK, N.A.
By:________________________ By:___________________________
Title:_____________________ Title:________________________
<PAGE>
EXHIBIT F
OTHER INVESTMENT COMPANIES FOR WHICH CITIBANK IS AN INVESTMENT ADVISER OR
SUBADVISER
Annual Fee (as a Percentage of Assets as of
Name of Fund Average Net Assets) December 31, 1996
Balanced Portfolio 0.40% $247,526,068
International Equity Portfolio 1.00% $49,056,241
Emerging Asian Markets
Equity Portfolio 1.00%** $11,392,760
Government Income Portfolio 0.35%** $53,498,817
Landmark Intermediate
Income Fund 0.35%** $43,918,612
Landmark New York Tax
Free Income Fund 0.40%** $82,182,006
Landmark National Tax
Free Income Fund 0.40%** $2,060,302
Asset Allocation Portfolio 200 0.75%** $101,075,069
Asset Allocation Portfolio 300 0.75%** $192,034,580
Asset Allocation Portfolio 400 0.75%** $246,152,146
Asset Allocation Portfolio 500 0.75%** $82,001,453
CitiSelectSM VIP Folio 200 0.75%** N/A*
CitiSelectSM VIP Folio 300 0.75%** N/A*
CitiSelectSM VIP Folio 400 0.75%** N/A*
CitiSelectSM VIP Folio 500 0.75%** N/A*
Landmark Small Cap Equity
VIP Fund 0.75%** N/A*
* Did not commence operations until February 10, 1997
** Certain contractual fee amounts have been voluntarily waived by Citibank.
<PAGE>
EQUITY PORTFOLIO
SMALL CAP EQUITY PORTFOLIO
PROXY CARD PROXY CARD
Elizabethan Square
George Town, Grand Cayman, BWI
Telephone: (345) 945-1824
A PROXY FOR A SPECIAL MEETING
OF HOLDERS OF BENEFICIAL INTERESTS TO BE HELD OCTOBER 21, 1997
The undersigned, revoking all Proxies heretofore given, hereby appoints
each of Susan Jakuboski, Tamie Ebanks, John R. Elder, Linda T. Gibson,
Christine A. Drapeau, Molly S. Mugler and Stephanie K. Flood, or any one of
them, as Proxies of the undersigned with full power of substitution, to vote on
behalf of all of the undersigned all beneficial interests in Equity Portfolio
and Small Cap Equity Portfolio which the undersigned is entitled to vote at the
Special Meeting of Holders of Beneficial Interests in the Portfolios to be held
at the offices of Signature Financial Group (Cayman), Ltd., Elizabethan Square,
George Town, Grand Cayman, BWI, on Tuesday, October 21, 1997 at 10:00 a.m.,
local time, and at any adjournment thereof, as fully as the undersigned would
be entitled to vote if personally present, as follows:
PROXY SOLICITED ON BEHALF OF THE PORTFOLIOS' BOARD OF TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
1. To vote on an amendment to the Portfolios' Declaration of Trust to
allow the assets of each Portfolio to be invested in one or more
investment companies to the extent not prohibited by the Investment
Company Act of 1940, the rules and regulations thereunder, and exemptive
orders granted under such Act (the "1940 Act"), to broaden the definition
of who may invest in the Portfolios and to limit the liability of
investors therein.
The undersigned votes its beneficial interest in Equity Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
The undersigned votes its beneficial interest in Small Cap Equity
Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
<PAGE>
2. To vote on an amendment to the fundamental investment policies of each
Portfolio to allow the assets of that Portfolio to be invested in one or
more investment companies to the extent not prohibited by the Investment
Company Act of 1940, the rules and regulations thereunder, and exemptive
orders granted under such Act.
The undersigned votes its beneficial interest in Equity Portfolio, if
any:
______FOR ______AGAINST ______ABSTAIN
The undersigned votes its beneficial interest in Small Cap Equity
Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
3. To vote on an amendment to the fundamental investment policies of each
Portfolio concerning that Portfolio's ability to make loans to other
persons and to buy or sell futures contracts and options on futures.
The undersigned votes its beneficial interest in Equity Portfolio, if
any:
______FOR ______AGAINST ______ABSTAIN
The undersigned votes its beneficial interest in Small Cap Equity
Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
4. (a) For Equity Portfolio, to vote on a proposal to adopt fundamental
investment policies concerning the underwriting of securities, purchases
and sales of real estate and commodities and issuance of senior
securities.
The undersigned votes its beneficial interest in Equity Portfolio, if
any:
______FOR ______AGAINST ______ABSTAIN
(b) For Small Cap Equity Portfolio, to vote on an amendment to the
Portfolio's fundamental investment policy concerning the issuance of
senior securities.
The undersigned votes its beneficial interest in Small Cap Equity
Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
<PAGE>
5. To vote on a Management Agreement for each Portfolio with Citibank, N.A.
The undersigned votes its beneficial interest in Equity Portfolio, if
any:
______FOR ______AGAINST ______ABSTAIN
The undersigned votes its beneficial interest in Small Cap Equity
Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
6. To vote on the selection of Price Waterhouse as the independent certified
public accountants for each Portfolio.
The undersigned votes its beneficial interest in Equity Portfolio, if
any:
______FOR ______AGAINST ______ABSTAIN
The undersigned votes its beneficial interest in Small Cap Equity
Portfolio, if any:
______FOR ______AGAINST ______ABSTAIN
THE BENEFICIAL INTERESTS REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR
FOR ANY PROPOSALS FOR WHICH NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER
MATTERS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Date:_______________
__________________________________
Signature
__________________________________
Signature of joint owner, if any
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners
should each sign this proxy. Please sign, date and return in the enclosed
envelope.
