As filed with the Securities and Exchange Commission on May 10, 1996
File Nos. 2-90518
811-4006
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 19
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 20
LANDMARK FUNDS I *
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM, DANA & GOULD LLP, 150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective on July 9, 1996
pursuant to paragraph (a) of Rule 485, or such earlier date on which the
Commission may declare this filing effective pursuant to subparagraph (3) of
Rule 485(a).
Asset Allocation Portfolios has also executed this Registration Statement.
Pursuant to Rule 24f-2, Registrant has registered an indefinite number of
its Shares of Beneficial Interest (without par value) under the Securities Act
of 1933 and filed a Rule 24f-2 Notice on February 28, 1996 for Registrant's
fiscal year ended December 31, 1995.
*This filing relates only to shares of CitiSelectSM Folio 200, CitiSelectSM
Folio 300, CitiSelectSM Folio 400 and CitiSelectSM Folio 500.
<PAGE>
LANDMARK FUNDS I
(CITISELECTSM FOLIO 200, CITISELECTSM FOLIO 300, CITISELECTSM FOLIO 400
AND CITISELECTSM FOLIO 500)
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
N-1A N-1A ITEM LOCATION
ITEM NO.
PROSPECTUS
PART A
Item 1. Cover Page................................ Cover Page
Item 2. Synopsis.................................. Not Applicable
Item 3. Condensed Financial Information........... Not Applicable
Item 4. General Description of Registrant......... Investment Information;
General Information;
Appendix
Item 5. Management of the Fund.................... Management; Expenses
Item 5A. Management's Discussion of Fund
Performance............................... Not Applicable
Item 6. Capital Stock and Other Securities........ General Information;
Purchases; Redemptions;
Dividends and
Distributions; Tax Matters
Item 7. Purchase of Securities Being Offered...... Purchases; Redemptions
Item 8. Redemption or Repurchase.................. Purchases; Redemptions
Item 9. Pending Legal Proceedings................. Not Applicable
STATEMENT OF
ADDITIONAL
PART B INFORMATION
Item 10. Cover Page................................ Cover Page
Item 11. Table of Contents......................... Cover Page
Item 12. General Information and History........... The Trust
Item 13. Investment Objectives and Policies........ Investment Objectives and
Policies; Description of
Permitted Investments and
Investment Practices;
Investment Restrictions
Item 14. Management of the Fund.................... Management
Item 15. Control Persons and Principal
Holders of Securities..................... Management
Item 16. Investment Advisory and Other Services.... Management
Item 17. Brokerage Allocation and Other Practices.. Portfolio Transactions
Item 18. Capital Stock and Other Securities........ Description of Shares,
Voting Rights and
Liabilities
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered............... Description of Shares,
Voting Rights and
Liabilities; Determination
of Net Asset Value;
Valuation of Securities;
Additional Redemption
Information
Item 20. Tax Status................................ Certain Additional Tax
Matters
Item 21. Underwriters.............................. Management
Item 22. Calculation of Performance Data........... Performance Information
and Advertising
Item 23. Financial Statements...................... Not Applicable
<PAGE>
PART C Information required to be included in
Part C is set forth under the appropriate
Item, so numbered, in Part C to this
Registration Statement.
<PAGE>
Prospectus
July 9, 1996
CitiSelectSM Folio 200
CitiSelectSM Folio 300
CitiSelectSM Folio 400
CitiSelectSM Folio 500
Class A and Class C Shares
This Prospectus describes four diversified mutual funds managed by
Citibank, N.A.: CitiSelectSM Folio 200, CitiSelectSM Folio 300, CitiSelectSM
Folio 400 and CitiSelectSM Folio 500. Each Fund has its own investment objective
and policies. The Funds are asset allocation funds that offer investors a
convenient way to own a professionally managed portfolio tailored to specific
investment goals.
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, THE FUNDS SEEK THEIR INVESTMENT OBJECTIVES BY
INVESTING ALL OF THEIR INVESTABLE ASSETS IN DIFFERENT SERIES OF ASSET ALLOCATION
PORTFOLIOS. EACH PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE AND POLICIES AS ITS
CORRESPONDING FUND. SEE "SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE" ON
PAGE __.
REMEMBER THAT SHARES OF THE FUNDS:
o ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY
o ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, CITIBANK OR ANY OF ITS AFFILIATES
o ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information dated July 9, 1996 (and incorporated by reference in this
Prospectus) has been filed with the Securities and Exchange Commission. Copies
of the Statement of Additional Information may be obtained without charge, and
further inquiries about the Funds may be made, by calling 1-800-846-5200
(customers in New York City may call 212-820-2380).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Investors should read this Prospectus and retain it for future reference.
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Summary
Expense Summary
Investment Information
Risk Considerations
Valuation of Shares
Classes of Shares
Purchases
Exchanges
Redemptions
Dividends and Distributions
Management
Tax Matters
Performance Information
General Information
Appendix A -- Permitted Investments
and Investment Practices
Appendix B -- Sales Charge and Purchase
Program Information
<PAGE>
PROSPECTUS SUMMARY
See the body of the Prospectus for more information on the topics discussed
in this summary.
THE FUNDS: This Prospectus describes four diversified mutual funds: CitiSelect
Folio 200, CitiSelect Folio 300, CitiSelect Folio 400 and CitiSelect Folio 500.
Each Fund has its own investment objective and policies. There can be no
assurance that any Fund will achieve its objective. Because each Fund invests
through a Portfolio, all references in this Prospectus to a Fund include its
corresponding Portfolio, except as otherwise noted.
INVESTMENT OBJECTIVES:
CitiSelect Folio 200: high total return over time consistent with a primary
emphasis on income and a secondary emphasis on capital appreciation.
CitiSelect Folio 300: high total return over time consistent with a
balanced emphasis on income and capital appreciation.
CitiSelect Folio 400: high total return over time consistent with a primary
emphasis on capital appreciation and a secondary emphasis on income for
risk reduction purposes.
CitiSelect Folio 500: highest total return over time consistent with a
primary emphasis on capital appreciation and a secondary emphasis on income
for risk reduction purposes.
PRINCIPAL INVESTMENTS: Each Fund is a carefully selected and professionally
managed diversified mix of equity, fixed income and money market investments
that are structured to achieve specific risk and return objectives. CitiSelect
Folio 200 invests primarily in fixed income and money market securities.
CitiSelect Folio 300 emphasizes both equity securities and fixed income
securities. CitiSelect Folio 400 and CitiSelect Folio 500 invest primarily in
equity securities. Current income is not a primary consideration for these
Funds.
INVESTMENT MANAGER: Citibank, N.A., a wholly-owned subsidiary of Citicorp,
is the investment manager. Citibank and its affiliates manage more than $83
billion in assets worldwide. See "Management."
PURCHASES AND REDEMPTIONS: Investors may purchase and redeem shares of the
Funds through a Service Agent on any Business Day. See "Purchases" and
"Redemptions."
PRICING: Investors may select Class A or Class C shares, with different
expense levels and sales charges. See "Classes of Shares," "Purchases" and
"Management -- Distribution Arrangements."
CLASS A SHARES. Class A shares of each Fund are offered at net asset value
plus any applicable sales charge (the maximum is 4.00% of the public offering
price), and are subject to a fee of up to 0.50% per annum of the Fund's average
daily net assets represented by Class A shares for distribution, sales and
marketing and shareholder services. Purchases of $1,000,000 or more are not
subject to an initial sales charge, but are subject to a 1.00% contingent
deferred sales charge in the event of certain redemptions within 12 months
following purchase.
<PAGE>
The sales charge on Class A shares may be reduced or eliminated through the
following programs:
Letter of Intent
Right of Accumulation
Reinstatement privilege
See "Purchases" and "Management -- Distribution Arrangements."
CLASS C SHARES. Class C shares of each Fund are offered at net asset value,
and are subject to a fee of up to 1.00% per annum of the Fund's average daily
net assets represented by Class C shares for distribution, sales and marketing
and shareholder services.
EXCHANGES: Shares may be exchanged for shares of the same class of each
other Fund, without a sales charge. See "Exchanges."
DIVIDENDS: Dividends are declared and paid monthly for CitiSelect Folio 200,
quarterly for CitiSelect Folio 300 and annually for CitiSelect Folio 400 and
CitiSelect Folio 500. Net capital gains, if any, are distributed annually.
See "Dividends and Distributions."
REINVESTMENT: All dividends and capital gains distributions may be received
either in cash or in Fund shares of the same class, which are not subject to a
sales charge. See "Dividends and Distributions."
WHO SHOULD INVEST: The Funds are asset allocation funds. Asset allocation funds
are a basic tool of investment professionals and are differentiated by the use
of investment management strategies and techniques that range from the least
aggressive to the most aggressive. The Funds offer a convenient way to own a
diversified professionally managed portfolio tailored to specific investment
goals and expectations of risk and return. While time horizon is a factor, it is
not necessarily the determinative factor in choosing to invest in one of the
Funds. Investment goals, such as buying a home, educating children or saving for
retirement, all determine the appropriate asset allocation and amount of risk
that an investor seeks. "Investment Information" and "Risk Considerations."
CITISELECT FOLIO 200 is expected to be the least volatile of the four Funds
and is designed for the investor who is seeking lower risk provided by
substantial investments in income-producing securities, but who also seeks some
capital growth. CITISELECT FOLIO 300 offers a blend of capital appreciation and
income for the investor seeking a balanced approach by emphasizing stocks for
their higher capital appreciation potential but retaining a significant income
component to temper volatility. CITISELECT FOLIO 400 and CitiSelect Folio 500
are designed for the investor willing and able to take higher risks in the
pursuit of long-term capital appreciation. CITISELECT FOLIO 500 is expected to
be the most volatile of the four Funds and is designed for investors who can
withstand greater market swings to seek potential long-term rewards. CitiSelect
Folio 400 is designed for investors seeking long-term rewards, but with less
volatility.
RISK FACTORS: There can be no assurance that any Fund will achieve its
investment objective, and each Fund's net asset value will fluctuate based on
changes in the values of the underlying portfolio securities. Equity securities
fluctuate in value based on many factors, including actual and anticipated
earnings, changes in management, political and economic developments and the
potential for takeovers and acquisitions. The value of debt securities generally
fluctuates based on changes in the actual and perceived creditworthiness of
issuers. Also, the value of debt securities generally goes down when interest
rates go up, and vice versa. As a result, shares may be worth more or less at
redemption than at the time of purchase.
<PAGE>
Each Fund may invest a portion of its assets in securities of companies
with small market capitalizations, which may have more risks than the securities
of other companies. Small cap companies may be more susceptible to market
downturns or setbacks because they may have limited product lines, markets,
distribution channels, and financial and management resources. There is often
less publicly available information about small cap companies than about more
established companies. As a result of these and other factors, the prices of
securities issued by small cap companies may be volatile. Shares of the Funds,
therefore, may be subject to greater fluctuation in value than shares of an
equity fund with more of its investments in securities of larger more
established companies.
Each Fund may invest a portion of its assets in non-U.S. securities. The
special risks of investing in non-U.S. securities include possible adverse
political, social and economic developments abroad, differing regulations to
which non-U.S. issuers are subject and different characteristics of non-U.S.
economies and markets. The Funds' non-U.S. securities often will trade in
non-U.S. currencies, which can be volatile and may be subject to governmental
controls or intervention. In addition, securities of non-U.S. issuers may be
less liquid and their prices more volatile than those of comparable U.S.
issuers.
Each Fund may invest in securities of issuers in developing countries.
Investors in the Funds should be able to assume the heightened risks and
volatility associated with investment in developing countries, including greater
risks of expropriation, confiscatory taxation and nationalization and less
social, political and economic stability; smaller (and, in many cases, new)
markets resulting in price volatility and illiquidity; national policies which
may restrict investment opportunities; and the absence of developed legal
structures.
Certain investment practices, such as the use of forward non-U.S. currency
exchange contracts, also may entail special risks. See "Risk Considerations" and
Appendix A for more information.
EXPENSE SUMMARY
The following table summarizes estimated shareholder transaction and annual
operating expenses for Class A and Class C shares of each Fund. Each Fund
invests all of its investable assets in its corresponding Portfolio. The
Trustees of the Funds believe the aggregate per share expenses of the Funds and
their corresponding Portfolios will be less than or approximately equal to the
expenses that the Funds would incur if their assets were invested directly in
the types of securities held by their corresponding Portfolios. For more
information on costs and expenses, see "Management" -- page __ and "General
Information -- Expenses" -- page __.*
<TABLE>
<CAPTION>
CitiSelect CitiSelect CitiSelect CitiSelect
Folio 200 Folio 300 Folio 400 Folio 500
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class C Class A Class C Class A Class C Class A Class C
SHAREHOLDER TRANSACTION
EXPENSES:
Maximum Sales Load Imposed on
Purchases (as a percentage 4.00% None 4.00% None 4.00% None 4.00% None
of offering price)......................
<PAGE>
Maximum Contingent Deferred Sales
Charge (as a percentage of original See None See None See None See None
purchase price or redemption proceeds, below below below below
whichever is less)........................ (1) (1) (1) (1)
ANNUAL FUND OPERATING
EXPENSES AFTER FEE
WAIVERS (AS A PERCENTAGE OF
NET ASSETS):
Management Fee ............................. 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 Fees (including services fees) (2) ... 0.50% 1.00% 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other Expenses (3).......................... 0.25% 0.25% 0.25% 0.25% 0.50% 0.50% 0.50% 0.50%
Total Fund Operating Expenses (3) .......... ----- ----- ----- ----- ----- ----- ----- -----
1.50% 2.00% 1.50% 2.00% 1.75% 2.25% 1.75% 2.25%
</TABLE>
(1) Purchases of $1,000,000 or more are not subject to an initial sales charge,
but are subject to a contingent deferred sales charge of 1.00% in the event
of redemptions within 12 months following purchase. See "Classes of Shares"
and "Purchases" for more information and for exceptions to the imposition of
the contingent deferred sales charge.
(2) Includes fees for distribution and shareholder servicing.
(3) After reimbursement. Absent reimbursement, "Other Expenses" and "Total Fund
Operating Expenses" would have been 1.07% and 2.32% for CitiSelect Folio 200
-- Class A and 1.07% and 2.82% for CitiSelect Folio 200 -- Class C, 1.08%
and 2.33% for CitiSelect Folio 300 -- Class A and 1.08% and 2.83% for
CitiSelect Folio 300 -- Class C, 2.00% and 3.25% for CitiSelect Folio 400 --
Class A and 2.00% and 3.75% for CitiSelect Folio 400 -- Class C, and 2.15%
and 3.40% for CitiSelect Folio 500 -- Class A and 2.15% and 3.90% for
CitiSelect Folio 500 -- Class C.
* This table is intended to assist investors in understanding the various
costs and expenses that a shareholder of a Fund will bear, either directly
or indirectly. Because the Funds are newly organized, Other Expenses in the
table are based on estimated amounts for the current fiscal year. There can
be no assurance that the fee waivers reflected in the table will continue.
Long-term shareholders in a Fund could pay more in sales charges than the
economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.
EXAMPLE: A shareholder would pay the following expenses on a $1,000
investment, assuming, except as otherwise noted, redemption at the end of each
period indicated below:
One Year Three Years
CitiSelect Folio 200
Class A shares (1) $64 $86
Class C shares $20 $63
CitiSelect Folio 300
Class A shares (1) $64 $86
Class C shares $20 $63
CitiSelect Folio 400
Class A shares $67 $93
Class C shares $23 $70
CitiSelect Folio 500
Class A shares (1) $67 $93
Class C shares $23 $70
<PAGE>
(1) Assumes deduction at the time of purchase of the maximum 4.00% sales load.
The Example assumes that all dividends are reinvested and reflects certain
voluntary expense reimbursements. If expense reimbursements were not made, the
amounts in the example would be $72 and $110 for CitiSelect Folio 200 -- Class A
and $29 and $87 for CitiSelect Folio 200 -- Class C, $72 and $110 for CitiSelect
Folio 300 -- Class A and $29 and $88 for CitiSelect Folio 300 -- Class C, $81
and $136 for CitiSelect Folio 400 -- Class A and $38 and $115 for CitiSelect
Folio 400 -- Class C, and $83 and $140 for CitiSelect Folio 500 -- Class A and
$39 and $119 for CitiSelect Folio 500 -- Class C. Expenses are estimated because
the Funds are newly organized. The assumption of a 5% annual return is required
by the Securities and Exchange Commission for all mutual funds, and is not a
prediction of any Fund's future performance. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURNS OF ANY FUND.
ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN THOSE SHOWN.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVES:
The investment objective of CITISELECT FOLIO 200 is high total return over
time consistent with a primary emphasis on income and a secondary emphasis on
capital appreciation. This Fund invests all of its investable assets in Asset
Allocation Portfolio 200.
The investment objective of CITISELECT FOLIO 300 is high total return over
time consistent with a balanced emphasis on income and capital appreciation.
This Fund invests all of its investable assets in Asset Allocation Portfolio
300.
The investment objective of CITISELECT FOLIO 400 is high total return over
time consistent with a primary emphasis on capital appreciation and a secondary
emphasis on income for risk reduction purposes. This Fund invests all of its
investable assets in Asset Allocation Portfolio 400.
The investment objective of CITISELECT FOLIO 500 is highest total return
over time consistent with a primary emphasis on capital appreciation and a
secondary emphasis on income for risk reduction purposes. This Fund invests all
of its investable assets in Asset Allocation Portfolio 500.
The investment objective of each Fund may be changed by its Trustees
without approval by that Fund's shareholders, but shareholders will be given
written notice at least 30 days before any change is implemented. Of course,
there can be no assurance that any Fund will achieve its investment objective.
INVESTMENT POLICIES:
THE FUNDS
The Funds are asset allocation funds. Asset allocation funds are a basic
tool of investment professionals and are differentiated by the use of investment
management strategies and techniques that range from the least aggressive to the
most aggressive. The Funds offer a convenient way to own a diversified
professionally managed portfolio tailored to specific investment goals and
expectations of risk and return. While time horizon is a factor, it is not
necessarily the determinative factor in choosing to invest in one of the Funds.
<PAGE>
Investment goals, such as buying a home, educating children or saving for
retirement, all determine the appropriate asset allocation and amount of risk
that an investor seeks. See "Investment Information" and "Risk Considerations."
CITISELECT FOLIO 200 is expected to be the least volatile of the four Funds
and is designed for the investor who is seeking lower risk provided by
substantial investments in income-producing securities, but who also seeks some
capital growth. CitiSelect Folio 300 offers a blend of capital appreciation and
income for the investor seeking a balanced approach by emphasizing stocks for
their higher capital appreciation potential but retaining a significant income
component to temper volatility. CitiSelect Folio 400 and CitiSelect Folio 500
are designed for the investor willing and able to take higher risks in the
pursuit of long-term capital appreciation. CitiSelect Folio 500 is expected to
be the most volatile of the four Funds, and is designed for investors who can
withstand greater market swings to seek potential long-term rewards. CitiSelect
Folio 400 is designed for investors seeking long-term rewards, but with less
volatility.
INVESTMENT STRATEGY
Each Fund is a carefully selected and professionally managed diversified
mix of equity, fixed income and money market investments that are structured to
achieve certain risk and return objectives. Citibank allocates each Fund's
assets among the equity class of investments, the fixed income class of
investments and the money market class of investments. In making asset
allocations, Citibank considers long-term performance and valuation measures
within and between asset classes and the effects of market and economic
variables on those relationships. It uses this information to determine the
overall mix of each Fund's assets among the three general asset classes. Each
Fund's allocation or asset mix is determined by Citibank to be the optimal
combination of stocks, bonds and money market instruments that reduces risk and
maximizes potential return for that Fund's distinct investment objective.
The Funds' asset allocations generally correlate to different levels of
investment risk and return. Equity securities have the potential to outperform
fixed income securities over the long term. Equity securities have the greatest
potential for growth of capital, yet are generally the most volatile of the
three asset types. Fixed income and money market securities sometimes move in
the opposite direction of equity securities and may provide investment balance
to a Fund. The risks of each asset class will vary.
Citibank expects that, in general, each Fund's assets will be allocated
among the equity, fixed income and money market classes as provided in the
following chart. However, cash flows of a Fund or changes in market valuations
could produce different results. Citibank will review each Fund's asset
allocation quarterly and expects, in general, to rebalance the Fund's
investments, if necessary, at that time. Rebalancing may be accomplished over a
period of time and may be limited by tax and regulatory requirements.
CitiSelect CitiSelect CitiSelect CitiSelect
Folio Folio Folio Folio
200 300 400 500
Asset Class Range Range Range Range
Equity 25-45% 40-60% 55-85% 70-95%
Fixed Income 35-55 35-55 15-35 5-20
Money Market 10-30 1-10 1-10 1-10
Citibank will diversify the equity class of each Fund by allocating the
Fund's portfolio of equity securities among large capitalization securities,
<PAGE>
small capitalization securities and international securities. Citibank will
diversify the fixed income class of each Fund by allocating the Fund's portfolio
of fixed income securities among U.S. and foreign government and corporate
bonds. There is no requirement that Citibank allocate a Fund's assets among all
of the foregoing types of equity and fixed income securities at all times. These
types of securities have been selected because Citibank believes that this
additional level of asset diversification will provide each Fund with the
potential for higher returns with lower overall volatility.
From time to time Citibank may employ Subadvisers to perform the daily
management of a particular asset class for the Funds or of specific types of
securities within a particular asset class. Citibank will monitor and supervise
the activities of the Subadvisers and may terminate the services of any
Subadviser at any time. See "Management." In allocating each Fund's investments
among various asset classes and in supervising the Subadvisers, Citibank employs
a multi-style and multi-manager diversification strategy. Citibank believes that
there are periods when securities with particular characteristics, or an
investment style, outperform other types of securities in the same asset class.
For example, at certain times, equity securities with growth characteristics
outperform equities with income characteristics, and vice versa. Citibank will
seek to take advantage of this by blending asset classes and investment styles
on a complimentary basis in an effort to maximize the consistency of returns
over longer time periods, and to reduce volatility.
In supervising the Subadvisers, Citibank will also be taking into account
the expertise they have demonstrated in particular areas and the historical
results they have achieved within selected asset classes or investment styles.
By combining these attributes with selected asset classes and styles, Citibank
will seek to increase returns.
Citibank has delegated the responsibility for the daily management of the
following kinds of securities to the following Subadvisers: large capitalization
value securities, Miller Anderson & Sherrerd LLP; small capitalization value
securities, Franklin Advisory Services, Inc.; international equity securities,
Hotchkis & Wiley; and foreign government securities, Pacific Investment
Management Company. Citibank is responsible for the daily management of all
other kinds of securities of the Funds, including large capitalization growth
securities, small capitalization growth securities, fixed income securities and
money market securities.
INITIAL ASSET ALLOCATIONS
Initially one or more of the Funds may be of such a size that it is not
practicable for the Fund to invest in all of the above-mentioned asset classes
and types of securities. Until in Citibank's judgment a Fund has sufficient
assets to fully employ an investment strategy, Citibank may allocate assets
across fewer of the asset classes and fewer of the types of securities
identified above than it otherwise would. As a Fund's asset size increases,
Citibank will add asset classes and types of securities until the desired asset
allocation is reached. There may also be a delay in investing in asset classes
or types of securities due to market conditions and availability of suitable
investments.
THE EQUITY CLASS
Equity securities include common stocks, securities convertible into common
stocks, preferred stocks, warrants for the purchase of stock and depositary
receipts (receipts which represent the right to receive the securities of
non-U.S. issuers deposited in a U.S. or correspondent bank). While equity
securities historically have experienced a higher level of volatility risk than
fixed income securities, they also historically have produced higher levels of
<PAGE>
total return. Longer term, investors with diversified equity portfolios have a
higher probability of achieving their investment goals with lower levels of
volatility than those who have not diversified.
Each Fund will diversify its equity portfolio by investing those assets
which are allocated to the equity class among equity securities issued by large
capitalization issuers, small capitalization issuers and international issuers.
The mix of equity securities will vary from Fund to Fund. For example, the
equity class of CitiSelect Folio 400 will emphasize securities of small cap
issuers. The equity class of CitiSelect Folio 300 will emphasize securities of
large cap and small cap issuers. There is no requirement that each Fund invest
in each type of equity security.
Large Cap Issuers. Large cap issuers are those with market capitalizations
typically of $1 billion or more. In the selection of equity securities of large
cap issuers, securities issued by established companies with stable operating
histories are emphasized.
Small Cap Issuers. Small cap issuers are those with market capitalizations
below the top 1,000 stocks that comprise the large and midrange capitalization
sector of the equity market. These stocks are comparable to, but not limited to,
the stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. Small cap companies are generally represented in new or rapidly changing
industries. They may offer more profit opportunity in growing industries and
during certain economic conditions than do large and medium sized companies.
However, small cap companies also involve special risks. Often, liquidity and
overall business stability of a small cap company may be less than that
associated with larger capitalized companies. Small cap stocks frequently
involve smaller, rapidly growing companies with high growth rates, negligible
dividend yields and extremely high levels of volatility.
International Issuers. International issuers are those based outside the
United States. In the selection of equity securities of international issuers,
securities included in the Morgan Stanley Capital International Europe,
Australia and Far East Index (called the EAFE Index) are emphasized. The EAFE
Index contains approximately 1,100 equity securities of companies located in
Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Italy, Japan, Malaysia, The Netherlands, Norway, Singapore, Spain,
Sweden, Switzerland and the United Kingdom. In addition, securities of issuers
located in emerging markets may be selected. The U.S. investor may benefit from
exposure to international equity securities and foreign economies, which may be
influenced by distinctly different factors impacting a country's rate of
economic growth, interest rate structure, currency, industry and local stock
market environment. In addition, investments in the non-U.S. equity markets
allow for further diversification as many countries and regions have risk/reward
characteristics and market performance that are not highly correlated to each
other or to the U.S. market. International investments, however, particularly in
emerging countries, are subject to special risks not generally present in
domestic equity investments.
See "Risk Considerations" for certain risks associated with investing in
equity securities.
THE FIXED INCOME CLASS
Fixed income securities include bonds and short-term obligations. Fixed
income securities, in general, offer a fixed stream of cash flow and may provide
good to moderate relative total return benefits over time. Most bond investments
focus on generating income, while the potential for capital appreciation is a
secondary objective. The bond markets provide diversification benefits to a
holder of equity securities depending upon the characteristics of the bonds
<PAGE>
comprising the fixed income class of each Fund. The value of fixed income
securities generally fluctuates inversely with changes in interest rates, and
also fluctuates based on other market and credit factors as well.
Each Fund will diversify its fixed income portfolio by investing those
assets which are allocated to the fixed income class among investment grade
corporate debt obligations and securities issued by the U.S. Government and its
agencies and instrumentalities and by foreign governments. Investment grade
securities are those rated Baa or better by Moody's Investors Service, Inc. or
BBB or better by Standard & Poor's Rating Group or securities which are not
rated by these rating agencies, but which Citibank or a Subadviser believes to
be of comparable quality. Securities rated Baa or BBB and securities of
comparable quality may have speculative characteristics.
The mix of fixed income securities may vary from Fund to Fund. There is no
requirement that each Fund invest in each type of fixed income security. The
Funds may invest in securities with all maturities, including long bonds (10+
years), intermediate notes (3 to 10 years) and short-term notes (1 to 3 years).
Government Securities. U.S. Government securities may provide opportunities
for income with minimal credit risk. U.S. Treasury securities are considered the
safest of all government securities. U.S. Government securities are high quality
instruments issued or guaranteed as to principal and interest by the U.S.
Government or by an agency or instrumentality of the U.S. Government. Securities
issued or guaranteed as to principal and interest by foreign governments or
agencies or instrumentalities of foreign governments (which include securities
of supranational agencies) also may provide opportunities for income with
minimal credit risk. Government securities are, however, not immune from the
market risk of principal fluctuation associated with changing interest rates.
Corporate Bonds. Investment in bonds of U.S. and foreign corporate issuers
may provide relatively higher levels of current income. These bonds are used by
U.S. and foreign corporate issuers to borrow money from investors, and may have
varying maturities. Corporate bonds have varying degrees of quality and varying
degrees of sensitivity to changes in interest rates. The value of these
investments fluctuates based on changes in interest rates and in the underlying
credit quality of the bond issuers represented in the portfolio.
See "Risk Considerations" for certain risks associated with investing in
fixed income securities.
THE MONEY MARKET CLASS
Each Fund will invest those assets which are allocated to the money market
class in cash and in U.S. dollar-denominated high quality money market and
short-term instruments. These instruments include short-term obligations of the
U.S. Government and repurchase agreements covering these obligations, commercial
paper of U.S. and foreign issuers, bank obligations (such as certificates of
deposit, bankers' acceptances and fixed time deposits) of U.S. and non-U.S.
banks and obligations issued or guaranteed by the governments of Western Europe,
Scandinavia, Australia, Japan and Canada. These investments provide
opportunities for income with low credit risk, and may result in a lower yield
than would be available from investments with a lower quality or a longer term.
<PAGE>
CERTAIN ADDITIONAL INVESTMENT POLICIES:
FUTURES. Each of the Funds may use financial futures in order to protect
the Fund from fluctuations in interest rates (sometimes called "hedging")
without actually buying or selling debt securities, or to manage the effective
maturity or duration of fixed income securities in the Fund's portfolio in an
effort to reduce potential losses or enhance potential gain. The Funds also may
purchase stock index and foreign currency futures in order to protect against
declines in the value of portfolio securities or increases in the cost of
securities or other assets to be acquired and, subject to applicable law, to
enhance potential gain. Futures contracts provide for the future sale by one
party and purchase by another party of a specified amount of a security at a
specified future time and price, or for making payment of a cash settlement
based on changes in the value of a security, an index of securities or other
assets. In many cases, the futures contracts that may be purchased by the Funds
are standardized contracts traded on commodities exchanges or boards of trade.
See Appendix A for more information.
TEMPORARY INVESTMENTS. During periods of unusual economic or market
conditions or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and in U.S. dollar-denominated high quality money
market and short-term instruments. These investments may result in a lower yield
than would be available from investments with a lower quality or longer term.
OTHER PERMITTED INVESTMENTS. For more information regarding the Funds'
permitted investments and investment practices, see Appendix A -- Permitted
Investments and Investment Practices on page __. The Funds will not necessarily
invest or engage in each of the investments and investment practices in Appendix
A but reserve the right to do so.
INVESTMENT RESTRICTIONS. The Statement of Additional Information contains a
list of specific investment restrictions which govern the investment policies of
the Funds, including a limitation that each Fund may borrow money from banks in
an amount not to exceed 1/3 of the Fund's net assets for extraordinary or
emergency purposes (e.g., to meet redemption requests). Except as otherwise
indicated, the Funds' investment objectives and policies may be changed without
shareholder approval. If a percentage or rating restriction (other than a
restriction as to borrowing) is adhered to at the time an investment is made, a
later change in percentage or rating resulting from changes in a Fund's
securities will not be a violation of policy.
PORTFOLIO TURNOVER. Securities of each Fund will be sold whenever it is
appropriate to do so in light of the Fund's investment objective, without regard
to the length of time a particular security may have been held. The turnover
rates for CitiSelect Folio 200 and CitiSelect Folio 300 are not expected to
exceed 175% annually; the turnover rates for CitiSelect Folio 400 and CitiSelect
Folio 500 are not expected to exceed 100% annually. The amount of brokerage
commissions and realization of taxable capital gains will tend to increase as
the level of portfolio activity increases.
BROKERAGE TRANSACTIONS. In connection with the selection of brokers or
dealers for securities transactions for the Funds and the placing of such
orders, brokers or dealers may be selected who also provide brokerage and
research services to the Funds or the other accounts over which Citibank, the
Subadvisers or their affiliates exercise investment discretion. Citibank and the
Subadvisers are authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for a
Fund which is in excess of the amount of commission another broker or dealer
<PAGE>
would have charged for effecting that transaction if Citibank or the applicable
Subadviser 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.
RISK CONSIDERATIONS
The risks of investing in each Fund vary depending upon the nature of the
securities held, and the investment practices employed, on its behalf. Certain
of these risks are described below.
CHANGES IN NET ASSET VALUE. Each Fund's net asset value will fluctuate
based on changes in the values of the underlying portfolio securities. This
means that an investor's shares may be worth more or less at redemption than at
the time of purchase. Equity securities fluctuate in response to general market
and economic conditions and other factors, including actual and anticipated
earnings, changes in management, political developments and the potential for
takeovers and acquisitions. During periods of rising interest rates the value of
debt securities generally declines, and during periods of falling rates the
value of these securities generally increases. Changes by recognized rating
agencies in the rating of any debt security, and actual or perceived changes in
an issuer's ability to make principal or interest payments, also affect the
value of these investments.
CREDIT RISK OF DEBT SECURITIES. Investors should be aware that securities
offering above average yields may at times involve above average risks.
Securities rated Baa by Moody's or BBB by S&P and equivalent securities may have
speculative characteristics. Adverse economic or changing circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher grade obligations.
NON-U.S. SECURITIES. Investments in non-U.S. securities involve risks
relating to political, social and economic developments abroad, as well as risks
resulting from the differences between the regulations to which U.S. and
non-U.S. issuers and markets are subject. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends and interest, limitations
on the use or transfer of portfolio assets and political or social instability.
Enforcing legal rights may be difficult, costly and slow in non-U.S. countries,
and there may be special problems enforcing claims against non-U.S. governments.
In addition, non-U.S. companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be less
public information about their operations. Non-U.S. markets may be less liquid
and more volatile than U.S. markets, and may offer less protection to investors
such as the Funds. Prices at which a Fund may acquire securities may be affected
by trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Fund.
Because non-U.S. securities often are denominated in currencies other than
the U.S. dollar, changes in currency exchange rates will affect a Fund's net
asset value, the value of dividends and interest earned and gains and losses
realized on the sale of securities. In addition, some non-U.S. currency values
may be volatile and there is the possibility of governmental controls on
currency exchanges or governmental intervention in currency markets.
The Funds may invest in issuers located in developing countries, which are
generally defined as countries in the initial stages of their industrialization
cycles with low per capita income. All of the risks of investing in non-U.S.
securities are heightened by investing in developing countries. Shareholders
should be aware that investing in the equity and fixed income markets of
developing countries involves exposure to economic structures that are generally
<PAGE>
less diverse and mature, and to political systems which can be expected to have
less stability, than those of developed countries. Historical experience
indicates that the markets of developing countries have been more volatile than
the markets of developed countries with more mature economies; such markets
often have provided higher rates of return, and greater risks, to investors.
These heightened risks include (i) greater risks of expropriation, confiscatory
taxation and nationalization, and less social, political and economic stability;
(ii) the small current size of markets for securities of issuers based in
developing countries and the currently low or non-existent volume of trading,
resulting in a lack of liquidity and in price volatility; (iii) certain national
policies which may restrict a Fund's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to relevant
national interests; and (iv) the absence of developed legal structures. Such
characteristics can be expected to continue in the future.
Equity securities traded in certain foreign countries may trade at
price-earnings multiples higher than those of comparable companies trading on
securities markets in the United States, which may not be sustainable. Rapid
increases in money supply in certain countries may result in speculative
investment in equity securities which may contribute to volatility of trading
markets.
The costs attributable to non-U.S. investing, such as the costs of
maintaining custody of securities in non-U.S. countries, frequently are higher
than those involved in U.S. investing. As a result, the operating expense ratios
of the Funds may be higher than those of investment companies investing
exclusively in U.S. securities.
SMALL CAP COMPANIES. Investors in the Funds should be aware that the
securities of companies with small market capitalizations may have more risks
than the securities of other companies. Small cap companies may be more
susceptible to market downturns or setbacks because they may have limited
product lines, markets, distribution channels, and financial and management
resources. Further, there is often less publicly available information about
small cap companies than about more established companies. As a result of these
and other factors, the prices of securities issued by small cap companies may be
volatile. Shares of the Funds, therefore, may be subject to greater fluctuation
in value than shares of an equity fund with more of its investments in
securities of larger, more established companies.
INVESTMENT PRACTICES. Certain of the investment practices employed for the
Funds may entail certain risks. These risks are in addition to the risks
described above and are described in Appendix A. See Appendix A -- Permitted
Investments and Investment Practices on page __.
SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE. Unlike other mutual
funds which directly acquire and manage their own portfolio securities, each of
the Funds seeks its investment objective by investing all of its investable
assets in its corresponding Portfolio, a registered investment company. Each of
the Portfolios has the same investment objective and policies as its
corresponding Fund. In addition to selling a beneficial interest to a Fund, a
Portfolio may sell beneficial interests to other mutual funds, collective
investment vehicles, or institutional investors. Such investors will invest in
the Portfolio on the same terms and conditions and will pay a proportionate
share of the Portfolio's expenses. However, the other investors investing in the
Portfolio are not required to sell their shares at the same public offering
price as the Fund due to variations in sales commissions and other operating
expenses. Therefore, investors in a Fund should be aware that these differences
may result in differences in returns experienced by investors in the different
funds that invest in that Portfolio. Such differences in returns are also
present in other mutual fund structures. Information concerning other holders of
interests in the Portfolios is available from the Funds' distributor. See
"Management."
<PAGE>
The investment objective of each of the Funds may be changed by its
Trustees without the approval of the Fund's shareholders, but shareholders will
be given written notice at least 30 days before any change is implemented. If
there is a change in a Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current financial positions and needs. The investment objective of each of the
Portfolios may also be changed without the approval of the investors in the
Portfolio, but not without written notice thereof to the investors in the
Portfolio (and, if a Fund is then invested in the Portfolio, notice to Fund
shareholders) at least 30 days prior to implementing the change. There can, of
course, be no assurance that the investment objective of either a Fund or its
Portfolio will be achieved. See "Investment Restrictions" in the Statement of
Additional Information for a description of the fundamental policies of each
Fund and its Portfolio that cannot be changed without approval by the holders of
a "majority of the outstanding voting securities" (as defined in the Investment
Company Act of 1940) of the Fund or Portfolio. Except as stated otherwise, all
investment guidelines, policies and restrictions described herein and in the
Statement of Additional Information are non-fundamental.
Certain changes in a Portfolio's investment objectives, policies or
restrictions or a failure by a Fund's shareholders to approve a change in the
Portfolio's investment objectives or restrictions, may preclude the Fund from
investing its investable assets in the Portfolio or require the Fund to withdraw
its interest in the Portfolio. Any such withdrawal could result in an "in kind"
distribution of securities (as opposed to a cash distribution) from the
Portfolio which may or may not be readily marketable. If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. The in kind distribution may result in the Fund having a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing. The absence of substantial
experience with this investment structure could have an adverse effect on an
investment in the Funds.
Smaller funds investing in a Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may subsequently experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, because the Portfolio would become smaller, it may become less
diversified, resulting in increased portfolio risk; however, these possibilities
exist for traditionally structured funds which have large or institutional
investors who may withdraw from a fund. Also, funds with a greater pro rata
ownership in the Portfolio could have effective voting control of the operations
of the Portfolio. If a Fund is requested to vote on matters pertaining to its
Portfolio (other than a vote by the Fund to continue the operation of the
Portfolio upon the withdrawal of another investor in the Portfolio), the Fund
will hold a meeting of its shareholders and will cast all of its votes
proportionately as instructed by its shareholders who vote at the meeting.
Shareholders of the Fund who do not vote will have no effect on the outcome of
such matters.
Each of the Funds may withdraw its investment from its Portfolio at any
time, if the Fund's Board of Trustees determines that it is in the best interest
of the Fund to do so. Upon any such withdrawal, the Board of Trustees would
consider what action might be taken, including the investment of all of the
investable assets of the Fund in another pooled investment entity having the
same investment objective as the Fund or the retaining of an investment adviser
to manage the Fund's assets in accordance with the investment policies described
above. In the event the Fund's Trustees were unable to find a substitute
investment company in which to invest the Fund's assets or were unable to secure
directly the services of an investment adviser, the Trustees would determine the
best course of action.
<PAGE>
For a description of the management of the Portfolios, see "Management" --
page __. For descriptions of the expenses of the Portfolios, see "Management"
and "General Information -- Expenses" -- page __. For a description of the
investment objectives, policies and restrictions of the Portfolios, see
"Investment Information" -- page _.
VALUATION OF SHARES
Net asset value per share of each class of each Fund is determined each day
the New York Stock Exchange is open for trading (a "Business Day"). This
determination is made once each day as of the close of regular trading on the
Exchange (normally 4:00 p.m. Eastern time) by adding the market value of all
securities and other assets attributable to a class of a Fund (including the
Fund's interest in its Portfolio), then subtracting the liabilities charged to
that class, and then dividing the result by the number of outstanding shares of
the class. The net asset value per share is effective for orders received and
accepted by the Transfer Agent prior to its calculation.
Portfolio securities and other assets are valued primarily on the basis of
market quotations, or if quotations are not available, by a method believed to
accurately reflect fair value. Non-U.S. securities are valued based on
quotations from the primary market in which they are traded and are translated
from the local currency into U.S. dollars using current exchange rates. In light
of the non-U.S. nature of some of each Fund's investments, trading may take
place in securities held by the Funds on days which are not Business Days and on
which it will not be possible to purchase or redeem shares of the Funds.
CLASSES OF SHARES
DIFFERENCES BETWEEN THE CLASSES. Each Fund offers two classes of shares,
Class A shares and Class C shares. The primary differences between the classes
are their sales charge structures and ongoing expenses. This information is
summarized in the following chart.
Annual 12b-1 Fees
(as a percentage of
Sales Charge average daily net assets)
Class A Maximum initial 0.50%
sales charge of
4.00% of the
public offering price*
Class C None 1.00%
*The initial sales charge is waived or reduced for certain purchases. A
contingent deferred sales charge may apply in certain instances where the
initial sales charge is waived.
Class A and Class C shares of a Fund represent interests in the same
portfolio of investments and have the same rights, except as noted. Each class
has a separate exchange privilege. Each class has exclusive voting rights with
respect to its Rule 12b-1 Service Plan. Dividends and other distributions paid
by each Fund with respect to its Class A and Class C shares are calculated in
the same manner and at the same time. The per share dividends on Class C shares
of a Fund will be lower than those on Class A shares of that Fund as a result of
the higher fees for distribution, sales and marketing and shareholder services
applicable to Class C shares.
<PAGE>
FACTORS TO CONSIDER. In selecting which class of shares to purchase,
investors should consider sales charges and ongoing expenses, as well as any
other relevant facts and circumstances.
SALES CHARGES AND EXPENSES. Class A shares are sold at net asset value plus
an initial sales charge of up to 4.00% of the public offering price (except that
for purchases of $1 million or more, no initial sales charge is imposed and a
contingent deferred sales charge may be imposed instead). Because of this
initial sales charge, not all of a Class A shareholder's purchase price is
invested in a Fund. Class A shares currently bear a fee for distribution, sales
and marketing and shareholder services at an annual rate of up to 0.50% of the
Fund's average daily net assets attributable to Class A shares. Class C shares
are sold with no initial sales charge, so the entire amount of a Class C
shareholder's purchase price is immediately invested in a Fund. Class C shares
bear a higher fee for distribution, sales and marketing and shareholder services
than Class A shares, currently at an annual rate of up to 1.00% of the Fund's
average daily net assets attributable to Class C shares.
Class A shares may be purchased at reduced initial sales charges under
certain circumstances. In certain other circumstances, the entire initial sales
charge on Class A shares is waived. However, a 1.00% contingent deferred sales
charge is imposed on certain redemptions of Class A shares on which no initial
sales charge was assessed. Because Class A shares bear lower ongoing annual
expenses than Class C shares, in most cases investors eligible for reduced
initial sales charges should purchase Class A shares.
CHOOSING A CLASS. Over time, the cumulative expense of the 1.00% annual fee
of the Class C shares will approximate or exceed the expense of the applicable
4.00% maximum initial sales charge plus the 0.50% annual fee of the Class A
shares. Investors should consider how long they expect to maintain an investment
in a Fund, and whether they qualify for a reduced sales charge, when selecting a
particular class. Class C investors enjoy the benefit of permitting all their
dollars to work from the time the investments are made. Any positive investment
return on this additional invested amount would partially or wholly offset the
higher annual expenses borne by Class C shares. Because the timing and amount of
the Funds' future returns cannot be predicted, however, there can be no
assurance that such a positive return will be achieved.
OTHER INFORMATION. See "Purchases," "Redemptions" and "Management --
Distribution Arrangements" for a more complete description of the sales charges
and distribution fees for each class of shares of each Fund. By purchasing
shares an investor agrees to the imposition of initial and deferred sales
charges as described in this Prospectus.
PURCHASES
General. Each Fund offers two classes of shares, Class A shares and Class C
shares. See "Classes of Shares" for more information. WHEN PLACING PURCHASE
ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR CLASS A OR CLASS C
SHARES. ALL SHARE PURCHASE ORDERS THAT FAIL TO SPECIFY A CLASS AUTOMATICALLY
WILL BE INVESTED IN CLASS A SHARES.
Shares of the Funds are offered continuously and may be purchased on any
Business Day at the public offering price. Shares may be purchased through
certain financial institutions (which may include banks), securities dealers and
other industry professionals (called Service Agents) that have entered into
service agreements with the Distributor. Customers of Citicorp Investment
Services (CIS), a Service Agent, will purchase shares through an account with
<PAGE>
CIS and should contact CIS at 1-800-846-5200 (customers in New York City may
call 212-820-2380) for details. Customers of other Service Agents should contact
those Service Agents for information on purchases. Each Service Agent may
establish its own terms, conditions and charges with respect to services it
offers to its customers. Charges for these services may include fixed annual
fees and account maintenance fees. The effect of any such fees will be to reduce
the net return on the investment of customers of that Service Agent. Each
Service Agent has agreed to transmit to its customers who are shareholders of a
Fund appropriate prior written disclosure of any fees that it may charge them
directly.
The public offering price of shares of each Fund is the net asset value
next determined after an order in proper form is received and accepted by the
Transfer Agent, plus any applicable sales charge for Class A shares as provided
below. Each Fund and the Transfer Agent reserve the right to reject any purchase
order and to suspend the offering of Fund shares for a period of time. Each
Service Agent is responsible for transmitting promptly orders of its customers.
PURCHASING CLASS A SHARES. Initial Sales Charge. The public offering price
of Class A shares of each Fund is the next determined net asset value, plus any
applicable sales charge, which will vary with the size of the purchase as shown
in the following table:
Sales Charge As
Percentage of the Service Agent
Commission
Public Net As Percentage
Amount of Purchase at Offering Amount of the Public
Public Offering Price Price Invested Offering Price
- ---------------------------------------------------------------------------
Less than $100,000................ 4.00% 4.17% 3.56%
$100,000 to less than $250,000.... 3.50% 3.63% 3.12%
$250,000 to less than $500,000.... 2.50% 2.56% 2.23%
$500,000 to less than $1,000,000.. 2.00% 2.04% 1.78%
$1,000,000 or more................ none* none* 0.50%
______________________
*A contingent deferred sales charge may apply in certain instances.
Elimination of Initial Sales Charge. Class A shares of the Funds are
available without an initial sales charge through exchanges for Class A shares
of the other Funds. See "Exchanges." The initial sales charge also does not
apply to Class A shares acquired through the reinvestment of dividends and
capital gains distributions. In addition, Class A shares may be purchased
without an initial sales charge in certain circumstances. See Appendix B.
Reduced Sales Charge Programs. Class A shares of the Funds may be purchased
at reduced initial sales charges in certain circumstances. See Appendix B.
Waivers of Contingent Deferred Sales Charge. The contingent deferred sales
charge for Class A shares may be waived in certain circumstances. See Appendix
B.
PURCHASING CLASS C SHARES. The public offering price of Class C shares of
each Fund is the next determined net asset value. No initial or contingent
deferred sales charges are imposed.
Securities dealers and other financial institutions may receive different
compensation with respect to sales of Class A and Class C shares. Service Agents
which are banks or financial institutions will receive transaction fees that are
<PAGE>
equal to the commissions paid to securities brokers. The Distributor, at its
expense, may from time to time provide additional promotional incentives to
brokers who sell shares of a Fund. In some instances, these incentives may be
offered to certain brokers who have sold or may sell significant numbers of
shares of a Fund. From time to time the Distributor may make payments for
distribution and/or shareholder servicing activities out of its past profits and
any other sources available to it.
EXCHANGES
Shares of each Fund may be exchanged for shares of the same class of each
other Fund without charge. Shareholders may place exchange orders through the
Transfer Agent or, if they are customers of a Service Agent, through their
Service Agent, and may do so by telephone if their account applications so
permit. For more information on telephone transactions see "Redemptions." All
exchanges will be effected based on the relative net asset values per share next
determined after the exchange order in proper form is received by the Transfer
Agent. See "Valuation of Shares." Shares of the Funds may be exchanged only
after payment in federal funds for the shares has been received by the Transfer
Agent. This exchange privilege may be modified or terminated at any time, upon
at least 60 days' notice when such notice is required by SEC rules, and is
available only in those jurisdictions where such exchanges legally may be made.
See the Statement of Additional Information for further details. An exchange is
treated as a sale of the shares exchanged and could result in taxable gain or
loss to the shareholder making the exchange.
REDEMPTIONS
Fund shares may be redeemed at their net asset value next determined after
a redemption request in proper form is received by the Transfer Agent. If a
redeeming shareholder owns shares of more than one class, Class C shares will be
redeemed first unless the shareholder specifically requests otherwise. Each
Service Agent is responsible for the prompt transmission of redemption orders to
the Funds on behalf of its customers. A Service Agent may establish requirements
or procedures regarding submission of redemption requests by its customers that
are different from those described below. Investors should consult their Service
Agents for details. A redemption is treated as a sale of the shares redeemed and
could result in taxable gain or loss to the shareholder making the redemption.
Redemptions by Mail. Shareholders may redeem Fund shares by sending written
instructions in proper form (as determined by the Transfer Agent or a
shareholder's Service Agent) to the Transfer Agent or, if shareholders are
customers of a Service Agent, their Service Agent. Shareholders are responsible
for ensuring that a request for redemption is in proper form.
Redemptions by Telephone. Shareholders may redeem or exchange Fund shares
by telephone, if their account applications so permit, by calling the Transfer
Agent or, if they are customers of a Service Agent, their Service Agent. During
periods of drastic economic or market changes or severe weather or other
emergencies, shareholders may experience difficulties implementing a telephone
exchange or redemption. In such an event, another method of instruction, such as
a written request sent via an overnight delivery service, should be considered.
The Funds, the Transfer Agent and each Service Agent will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
These procedures may include recording of the telephone instructions and
verification of a caller's identity by asking for his or her name, address,
telephone number, Social Security number, and account number. If these or other
<PAGE>
reasonable procedures are not followed, the Fund, the Transfer Agent or the
Service Agent may be liable for any losses to a shareholder due to unauthorized
or fraudulent instructions. Otherwise, the shareholder will bear all risk of
loss relating to a redemption or exchange by telephone.
Payment of Redemptions. The proceeds of a redemption are paid in federal
funds normally on the next Business Day, but in any event within seven days. If
a shareholder requests redemption of shares which were purchased recently, a
Fund may delay payment until it is assured that good payment has been received.
In the case of purchases by check, this can take up to ten days. See
"Determination of Net Asset Value; Valuation of Securities; Additional Purchase
and Redemption Information" in the Statement of Additional Information regarding
the Funds' right to pay the redemption price in kind with securities (instead of
cash).
Reinstatement Privilege. Shareholders who have redeemed Class A shares may
reinstate their Fund account without a sales charge up to the dollar amount
redeemed (with a credit for any contingent deferred sales charge paid) by
purchasing Class A shares of the same Fund within 30 days after the redemption.
To take advantage of this reinstatement privilege, shareholders must notify the
Transfer Agent or, if they are customers of a Service Agent, their Service Agent
in writing at the time the privilege is exercised.
Questions about redemption requirements should be referred to the Transfer
Agent or, for customers of a Service Agent, their Service Agent. The right of
any shareholder to receive payment with respect to any redemption may be
suspended or the payment of the redemption price postponed during any period in
which the New York Stock Exchange is closed (other than weekends or holidays) or
trading on the Exchange is restricted or if an emergency exists.
DIVIDENDS AND DISTRIBUTIONS
Substantially all of each Fund's net income from dividends and interest is
paid to its shareholders of record as a dividend as follows:
For CITISELECT FOLIO 200, monthly on or about the last day of each month.
For CITISELECT FOLIO 300, quarterly on or about the last day of each March,
June, September and December.
For CITISELECT FOLIO 400 and CITISELECT FOLIO 500, annually on or about the
last day of each December.
Each Fund's net realized short-term and long-term capital gains, if any,
will be distributed to the Fund's shareholders at least annually, in December.
Each Fund may also make additional distributions to its shareholders to the
extent necessary to avoid the application of the 4% non-deductible excise tax on
certain undistributed income and net capital gains of mutual funds.
A shareholder may elect to receive dividends and capital gains
distributions in either cash or additional shares of the same class issued at
net asset value. Distributions paid by each Fund with respect to Class A shares
generally will be higher than those paid with respect to Class C shares because
expenses attributable to Class C shares generally will be higher.
<PAGE>
MANAGEMENT
TRUSTEES AND OFFICERS: Each Fund is supervised by the Board of Trustees of
Landmark Funds I. The Portfolios are supervised by the Board of Trustees of
Asset Allocation Portfolios. In each case, a majority of the Trustees are not
affiliated with Citibank. In addition, a majority of the disinterested Trustees
of the Funds are different from a majority of the disinterested Trustees of the
Portfolios. More information on the Trustees and officers of the Funds and the
Portfolios appears under "Management" in the Statement of Additional
Information.
INVESTMENT MANAGER: Each Fund draws on the strength and experience of
Citibank. 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 affiliates
manage more than $83 billion in assets worldwide. Citibank is a wholly-owned
subsidiary of Citicorp. Citibank also serves as investment adviser to other
registered investment companies. Citibank's address is 153 East 53rd Street, New
York, New York 10043.
Subject to policies set by the Trustees, Citibank is responsible for
overall management of the Funds' business affairs, and has a separate Management
Agreement with each Fund. Citibank also provides certain administrative services
to the Funds. These administrative services include providing general office
facilities and supervising the overall administration of the Funds. Pursuant to
sub-administrative services agreements, the Distributor performs such
sub-administrative duties for the Funds as from time to time are agreed upon by
Citibank and the Distributor. The Distributor's compensation as
sub-administrator is paid by Citibank.
Lawrence P. Keblusek, U.S. Chief Investment Officer of Citibank, has been
the overall portfolio manager of the Funds since their inception and is
responsible for determining asset allocations, supervising and monitoring the
performance of the Citibank personnel described below who are responsible for
the Funds' securities, and supervising and monitoring the performance of the
Subadvisers. Mr. Keblusek's investment experience is discussed below.
The following individuals at Citibank are responsible for daily management
of the following kinds of securities of each Fund.
<PAGE>
Large capitalization growth securities Lawrence P. Keblusek, U.S.
Chief Investment Officer,
has been responsible for
the daily management of
large cap growth securities
since the Funds'
inception. Mr. Keblusek,
who has 25 years experience
in the investment
management industry, was
most recently Senior Vice
President and Director of
Portfolio Management for
The Northern Trust Company
with responsibility for
investment performance in
the organization's High Net
Worth, Corporate and
Institutional and Mutual
Fund Group. Earlier in his
career, Mr. Keblusek held
senior investment positions
with Maryland National Bank
and the National Bank of
Washington.
Small capitalization growth securities David N. Pearl, Vice
President, has been
responsible for the daily
management of small cap
growth securities since the
Funds' inception. Mr.
Pearl is a portfolio
manager of U.S. equity
assets for institutional
clients, and joined
Citibank in 1994. Prior to
joining Citibank he worked
as a portfolio manager at
Fleming Capital Management
and Bankers Trust Company.
Domestic fixed income securities Mark Lindbloom, Vice
President, has been
responsible for the daily
management of domestic
fixed income securities
since the Funds'
inception. Mr. Lindbloom
has more than 12 years of
investment management
experience. Prior to
joining Citibank in 1986,
Mr. Lindbloom was a Fixed
Income Portfolio Manager
with Brown Brothers
Harriman & Co., where he
managed fixed income assets
for discretionary corporate
portfolios.
<PAGE>
Money market securities Kevin Kennedy, Vice
President, has been
responsible for the daily
management of money market
securities since the Funds'
inception. Mr. Kennedy is
responsible for managing
the Liquidity Management
Unit of the U.S. Fixed
Income Department of
Citibank Global Asset
Management. Prior to
joining Citibank in March
1993, Mr. Kennedy was with
the Metropolitan Life
Insurance Company as the
Managing Trader of the
Treasurer's Division. He
was responsible for the
management of more than $9
billion in short duration
fixed income assets. Mr.
Kennedy has more than 15
years of fixed income
management experience.
Citibank has delegated the daily management of the following kinds of
securities of each Fund to the following Subadvisers. Citibank pays all
Subadviser compensation.
Large capitalization value securities Miller Anderson & Sherrerd
LLP, One Tower Bridge, West
Conshohocken, Pennsylvania
19428. Miller Anderson has
been a registered
investment adviser since
1974. Robert Marcin, CFA,
Partner, has been
responsible for the daily
management of large cap
value securities since the
Funds' inception. Mr.
Marcin has been with Miller
Anderson since 1988.
Small capitalization value securities Franklin Advisory Services,
Inc., 777 Mariners Island
Blvd., San Mateo,
California 94404. Franklin
Advisory Services, a
wholly-owned subsidiary of
Franklin Resources, Inc.,
is a registered investment
adviser. William P.
Lippman, senior vice
president of Franklin
Advisory Services or its
predecessor since June,
1988, has been responsible
for the daily management of
small capitalization value
securities since the Funds'
inception. Prior to
joining Franklin Advisory
Services, Mr. Lippman was
president of L.F.
Rothschild Fund Management, Inc.
<PAGE>
International equity securities Hotchkis & Wiley, 800 West
Sixth Street, Fifth Floor,
Los Angeles, California
90017. Hotchkis is a
registered investment
adviser founded in 1980.
Sarah Ketterer, Vice
President has been
responsible for the daily
management of international
equity securities since the
Funds' inception. Ms.
Ketterer manages
international equity
accounts and is also
responsible for
international investment
research. She serves on
the Investment Policy
Committee at Hotchkis.
Prior to joining Hotchkis,
Ms. Ketterer was an
associate with Bankers
Trust and an analyst at
Dean Witter.
Foreign government securities Pacific Investment
Management Company, 840
Newport Center Drive, Suite
360, P.O. Box 6430, Newport
Beach, California
92658-9030. PIMCO is a
registered investment
adviser. Lee R. Thomas,
III, Senior International
Portfolio Manager, has been
responsible for the daily
management of foreign
government securities since
the Funds' inception. He
joined PIMCO in 1995.
Previously he was a member
of Investcorp's Management
Committee, where he was
responsible for global
securities and foreign
exchange trading. Prior to
Investcorp, he was
associated with Goldman
Sachs, where he was an
Executive Director in the
fixed income division of
the London office.
Management Fees. For its services under the Management Agreements, Citibank
receives a fee, which is accrued daily and paid monthly, of 0.75% of each Fund's
average daily net assets on an annualized basis for that Fund's then-current
fiscal year. This fee is higher than the management fee paid by most mutual
funds. Citibank may voluntarily agree to waive a portion of its management fee
from any Fund.
For their services to the Funds, Citibank pays the Subadvisers the
following fees, which are accrued daily and payable monthly and are at the
annual rates equal to the percentages specified below of the aggregate assets of
the Funds allocated to the particular Subadviser:
Miller Anderson & Sherrerd LLP 0.625% on first $25 million
0.375% on next $75 million
0.250% on next $400 million
0.20% on assets in excess of $500 million
<PAGE>
Franklin Advisory Services, Inc. 0.55% on first $250 million
0.50% on remaining assets
Hotchkis & Wiley 0.60% on first $10 million
0.55% on next $40 million
0.45% on next $100 million
0.35% on next $150 million
0.30% on remaining assets
PIMCO 0.35% on first $200 million
0.30% on remaining assets
Banking Relationships. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Funds, 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 Funds 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 Funds. Citibank believes that its services
under the Management Agreements and the activities performed by it or its
affiliates as Service Agents 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 or a
Service Agent, the Funds would seek alternative means for obtaining these
services. The Funds do not expect that shareholders would suffer any adverse
financial consequences as a result of any such occurrence.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT: State Street Bank and Trust
Company acts as transfer agent, dividend disbursing agent and custodian for each
Fund. Securities may be held by a sub-custodian bank approved by the Trustees.
State Street also provides certain fund accounting services and calculates the
daily net asset value for the Funds. The principal business address of State
Street is 225 Franklin Street, Boston, Massachusetts 02110.
DISTRIBUTION ARRANGEMENTS: The Landmark Funds Broker-Dealer Services, Inc.,
6 St. James Avenue, Boston, MA 02116 (telephone: (617)423-1679), is the
distributor of shares of each Fund. Under Service Plans which have been adopted
in accordance with Rule 12b-1 under the 1940 Act, the Funds may pay monthly fees
at an annual rate not to exceed 0.50% of the average daily net assets
attributable to Class A shares of each Fund and 1.00% of the average daily net
assets attributable to Class C shares of each Fund. Such fees may be used to
make payments to the Distributor for distribution services, and to Service
Agents and others in respect of the sale of the respective classes of shares of
the Funds, and to make payments for advertising, marketing or other promotional
activity, and payments for preparation, printing, and distribution of
<PAGE>
prospectuses, statements of additional information and reports for recipients
other than regulators and existing shareholders. The Funds also may make
payments to the Distributor, Service Agents and others for providing personal
service or the maintenance of shareholder accounts. The Funds and the
Distributor provide to the Trustees quarterly a written report of amounts
expended pursuant to each Service Plan and the purposes for which the
expenditures were made.
During the period they are in effect, the Service Plans and related
Distribution Agreements obligate the Funds to pay fees to the Distributor,
Service Agents and others as compensation for their services, not as
reimbursement for specific expenses incurred. Thus, even if their expenses
exceed the fees provided for under a particular Service Plan for any Fund, the
Fund will not be obligated to pay more than those fees and, if their expenses
are less than the fees paid to them, they will realize a profit. Each Fund will
pay the fees to the Distributor, Service Agents and others until the applicable
Service Plan or Distribution Agreement is terminated or not renewed. In that
event, the Distributor's or Service Agent's expenses in excess of fees received
or accrued through the termination date will be the Distributor's or Service
Agent's sole responsibility and not obligations of the Fund. In their annual
consideration of the continuation of each Service Plan for each Fund, the
Trustees will review the Plan and the expenses for each Fund separately.
Each class of shares of each Fund has exclusive voting rights with respect
to the Service Plan for that class.
TAX MATTERS
This discussion of taxes is for general information only. Investors should
consult their own tax advisers about their particular situations.
Each Fund intends to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies so that it will not be liable for
any federal income or excise taxes. Each Fund may pay withholding or other taxes
to foreign governments during the year, however, and these taxes will reduce
those Funds' dividends.
Fund dividends and capital gains distributions are subject to federal
income tax and may also be subject to state and local taxes. Dividends and
distributions are treated in the same manner for federal tax purposes whether
they are paid in cash or as additional shares. Generally, distributions from a
Fund's net investment income and short-term capital gains will be taxed as
ordinary income. A portion of distributions from net investment income may be
eligible for the dividends-received deduction available to corporations.
Distributions of long-term net capital gains will be taxed as such regardless of
how long the shares of a Fund have been held.
Fund distributions will reduce the distributing Fund's net asset value per
share. Shareholders who buy shares just before a Fund makes a distribution may
thus pay the full price for the shares and then effectively receive a portion of
the purchase price back as a taxable distribution.
Early each year, each Fund will notify its shareholders of the amount and
tax status of distributions paid to shareholders for the preceding year.
Investors should consult their own tax advisers regarding the status of their
accounts under state and local laws.
PERFORMANCE INFORMATION
Fund performance may be quoted in advertising, shareholder reports and
other communications in terms of total rate of return. All performance
<PAGE>
information is historical and is not intended to indicate future performance.
Total rates of return fluctuate in response to market conditions and other
factors, and the value of a Fund's shares when redeemed may be more or less than
their original cost.
Each Fund may provide its period and average annualized "total rates of
return." The "total rate of return" refers to the change in the value of an
investment in the Fund over a stated period and reflects any change in net asset
value per share and is compounded to include the value of any shares purchased
with any dividends or capital gains declared during such period. Period total
rates of return may be "annualized." An "annualized" total rate of return
assumes that the period total rate of return is generated over a one-year
period.
Of course, any fees charged by a shareholder's Service Agent will reduce
that shareholder's net return on investment. See the Statement of Additional
Information for more information concerning the calculation of total rate of
return quotations for the Funds.
GENERAL INFORMATION
ORGANIZATION: Each Fund is a series of Landmark Funds I. Landmark Funds I
is a Massachusetts business trust which was organized on April 13,1984; it also
is an open-end management investment company registered under the 1940 Act.
Landmark Funds I currently has five active series.
Each Fund is a diversified mutual fund. Under the 1940 Act, a diversified
mutual fund must invest at least 75% of its assets in cash and cash items, U.S.
Government securities, investment company securities and other securities
limited as to any one issuer to not more than 5% of the total assets of the
mutual fund and not more than 10% of the voting securities of the issuer.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the trust's
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.
Each Portfolio is a series of Asset Allocation Portfolios, a New York
trust. The Declaration of Trust of Asset Allocation Portfolios provides that a
Fund and other entities investing in a Portfolio are each liable for all
obligations of that Portfolio. It is not expected that the liabilities of a
Portfolio would ever exceed its assets.
VOTING AND OTHER RIGHTS: Landmark Funds I may issue an unlimited number of
shares, may create new series of shares and may divide shares in each series
into classes. Each share of each Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
each series of Landmark Funds I have equal voting rights except that, in matters
affecting only a particular Fund or class, only shares of that particular Fund
or class are entitled to vote.
At any meeting of shareholders of any Fund, a Service Agent may vote any
shares of which it is the holder of record and for which it does not receive
voting instructions proportionately in accordance with the instructions it
receives for all other shares of which that Service Agent is the holder of
record.
Each Fund's activities are supervised by Landmark Funds I's Board of
Trustees. Because Landmark Funds I is a Massachusetts business trust, the Funds
<PAGE>
are not required to hold annual shareholder meetings. Shareholder approval will
usually be sought only for changes in a Fund's or Portfolio's fundamental
investment restrictions and for the election of Trustees under certain
circumstances. Trustees may be removed by shareholders under certain
circumstances. Each share of each Fund is entitled to participate equally in
dividends and other distributions and the proceeds of any liquidation of that
Fund except that, due to the differing expenses borne by each class, dividends
and proceeds generally will be lower for Class C shares than for Class A shares.
CERTIFICATES: The Funds' Transfer Agent maintains a share register for
shareholders of record. Share certificates are not issued.
RETIREMENT PLANS: Investors may be able to establish new accounts in a Fund
under one of several tax-sheltered plans. Such plans include IRAs, Keogh or
Corporate Profit-Sharing and Money-Purchase Plans, 403(b) Custodian Accounts,
and certain other qualified pension and profit-sharing plans. Investors should
consult with their Service Agent and their tax and retirement advisers.
EXPENSES: In addition to amounts payable under its Management Agreement and
the Service Plan, each Fund is responsible for its own expenses, including,
among other things, the costs of securities transactions, the compensation of
Trustees that are not affiliated with Citibank, government fees, taxes,
accounting and legal fees, expenses of communicating with shareholders, interest
expense, and insurance premiums.
All fee waivers are voluntary and may be reduced or terminated at any time.
COUNSEL AND INDEPENDENT AUDITORS: Bingham, Dana & Gould LLP, Boston,
Massachusetts, is counsel for each Fund. Price Waterhouse LLP, Boston,
Massachusetts, serves as independent auditor for each Fund.
-------------------------------
The Statement of Additional Information dated the date hereof contains more
detailed information about the Funds and the Portfolios, including information
relating to (i) investment policies and restrictions, (ii) the Trustees,
officers and investment manager, (iii) securities transactions, (iv) the Funds'
shares, including rights and liabilities of shareholders, (v) the method used to
calculate performance information, (vi) programs for the purchase of shares, and
(vii) the determination of net asset value.
No person has been authorized to give any information or make any
representations not contained in this Prospectus or the Statement of Additional
Information in connection with the offering made by this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Funds or their distributor. This Prospectus does
not constitute an offering by the Funds or their distributor in any jurisdiction
in which such offering may not lawfully be made.
<PAGE>
APPENDIX A
PERMITTED INVESTMENTS AND
INVESTMENT PRACTICES
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements in
order to earn a return on temporarily available cash. Repurchase agreements are
transactions in which an institution sells the Fund a security at one price,
subject to the Fund's obligation to resell and the selling institution's
obligation to repurchase that security at a higher price normally within a seven
day period. There may be delays and risks of loss if the seller is unable to
meet its obligation to repurchase.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements. Reverse repurchase agreements involve the sale of securities held by
the Fund and the agreement by the Fund to repurchase the securities at an
agreed-upon price, date and interest payment. When a Fund enters into reverse
repurchase transactions, securities of a dollar amount equal in value to the
securities subject to the agreement will be maintained in a segregated account
with the Fund's custodian. The segregation of assets could impair the Fund's
ability to meet its current obligations or impede investment management if a
large portion of the Fund's assets are involved. Reverse repurchase agreements
are considered to be a form of borrowing.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, each Fund may lend its
portfolio securities to broker-dealers and other institutional borrowers. Such
loans must be callable at any time and continuously secured by collateral (cash
or U.S. Government securities) in an amount not less than the market value,
determined daily, of the securities loaned. It is intended that the value of
securities loaned by a Fund would not exceed 30% of the Fund's total assets.
In the event of the bankruptcy of the other party to a securities loan,
repurchase agreement or a reverse repurchase agreement, a Fund could experience
delays in recovering either the securities lent or cash. To the extent that, in
the meantime, the value of the securities lent has increased or the value of the
securities purchased has decreased, the Fund could experience a loss.
RULE 144A SECURITIES. Each Fund may purchase restricted securities that are
not registered for sale to the general public if it is determined that there is
a dealer or institutional market in the securities. In that case, the securities
will not be treated as illiquid for purposes of the Fund's investment
limitations. The Trustees will review these determinations. These securities are
known as "Rule 144A securities," because they are traded under SEC Rule 144A
among qualified institutional buyers. Institutional trading in Rule 144A
securities is relatively new, and the liquidity of these investments could be
impaired if trading in Rule 144A securities does not develop or if qualified
institutional buyers become, for a time, uninterested in purchasing Rule 144A
securities.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. Each Fund may invest up to 10%
of its net assets in securities for which there is no readily available market.
These illiquid securities may include privately placed restricted securities for
which no institutional market exists. The absence of a trading market can make
it difficult to ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal expenses,
and it may be difficult or impossible for a Fund to sell them promptly at an
acceptable price.
<PAGE>
"WHEN-ISSUED" SECURITIES. In order to ensure the availability of suitable
securities, each Fund may purchase securities on a "when-issued" or on a
"forward delivery" basis, which means that the securities would be delivered to
the Fund at a future date beyond customary settlement time. Under normal
circumstances, the Fund takes delivery of the securities. In general, the Fund
does not pay for the securities until received and does not start earning
interest until the contractual settlement date. While awaiting delivery of the
securities, the Fund establishes a segregated account consisting of cash, cash
equivalents or high quality debt securities equal to the amount of the Fund's
commitments to purchase "when-issued" securities. An increase in the percentage
of the Fund's assets committed to the purchase of securities on a "when-issued"
basis may increase the volatility of its net asset value.
COMMERCIAL PAPER. Each Fund may invest in commercial paper, which is
unsecured debt of corporations usually maturing in 270 days or less from its
date of issuance.
DEPOSITARY RECEIPTS FOR SECURITIES. American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and
other forms of depositary receipts for securities of non-U.S. issuers provide an
alternative method for a Fund to make non-U.S. investments. These securities are
not usually traded in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs and GDRs, in bearer form, are designed for use in
European and global securities markets. ADRs are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities.
EDRs and GDRs are European and global receipts, respectively, evidencing a
similar arrangement.
OTHER INVESTMENT COMPANIES. Subject to applicable statutory and regulatory
limitations, assets of each Fund may be invested in shares of other investment
companies. Each Fund may invest up to 5% of its assets in closed-end investment
companies which primarily hold securities of non-U.S. issuers.
CURRENCY EXCHANGE CONTRACTS. Forward currency exchange contracts may be
entered into for each Fund for the purchase or sale of non-U.S. currency to
hedge against adverse rate changes or otherwise to achieve the Fund's investment
objectives. A currency exchange contract allows a definite price in dollars to
be fixed for securities of non-U.S. issuers that have been purchased or sold
(but not settled) for the Fund. Entering into such exchange contracts may result
in the loss of all or a portion of the benefits which otherwise could have been
obtained from favorable movements in exchange rates. In addition, entering into
such contracts means incurring certain transaction costs and bearing the risk of
incurring losses if rates do not move in the direction anticipated.
SECURITIES RATED Baa or BBB. Each Fund may purchase securities rated Baa by
Moody's or BBB by S&P, which may have poor protection of payment of principal
and interest. These securities are often considered to be speculative and
involve greater risk of default or price changes than securities assigned a
higher quality rating due to changes in the issuer's creditworthiness. The
market prices of these securities may fluctuate more than higher-rated
securities and may decline significantly in periods of general economic
difficulty which may follow periods of rising interest rates.
ASSET-BACKED SECURITIES. Each Fund may invest in corporate asset-backed
securities. These securities, issued by trusts and special purpose corporations,
are backed by a pool of assets, such as credit card or automobile loan
receivables, representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance, in the
case of credit card receivables, these securities may not have the benefit of
any security interest in the related collateral.
<PAGE>
Each Fund also may purchase mortgage-backed securities issued or guaranteed
as to payment of principal and interest by the U.S. Government or one of its
agencies and backed by the full faith and credit of the U.S. Government,
including direct pass-through certificates of GNMA, as well as mortgage-backed
securities for which principal and interest payments are backed by the credit of
particular agencies of the U.S. Government. Mortgage-backed securities are
generally backed or collateralized by a pool of mortgages. These securities are
sometimes called collateralized mortgage obligations or CMOs.
Even if the U.S. Government or one of its agencies guarantees principal and
interest payments of a mortgage-backed security, the market price of a
mortgage-backed security is not insured and may be subject to market volatility.
When interest rates decline, mortgage-backed securities experience higher rates
of prepayment, because the underlying mortgages are refinanced to take advantage
of the lower rates. Thus the prices of mortgage-backed securities may not
increase as much as prices of other debt obligations when interest rates
decline, and mortgage-backed securities may not be an effective means of locking
in a particular interest rate. In addition, any premium paid for a
mortgage-backed security may be lost when it is prepaid.
FUTURES. Because the value of a futures contract changes based on the price
of the underlying security or other asset, futures contracts are commonly
referred to as "derivatives". Futures contracts are a generally accepted part of
modern portfolio management and are regularly utilized by many mutual funds and
other institutional investors. When a Fund purchases or sells a futures
contract, it is required to make an initial margin deposit. Although the amount
may vary, initial margin can be as low as 1% or less of the face amount of the
contract. Additional margin may be required as the contract fluctuates in value.
Since the amount of margin is relatively small compared to the value of the
securities covered by a futures contract, the potential for gain or loss on a
futures contract is much greater than the amount of a Fund's initial margin
deposit. None of the Funds currently intends to enter into a futures contract
if, as a result, the initial margin deposits on all of that Fund's futures
contracts would exceed approximately 5% of the Fund's net assets. Also, each
Fund intends to limit its futures contracts so that the value of the securities
covered by its futures contracts would not generally exceed 50% of the Fund's
other assets and to segregate sufficient assets to meet its obligations under
outstanding futures contracts.
The ability of a Fund to utilize futures contracts successfully will depend
on Citibank's or a Subadviser's ability to predict interest rate, stock price or
currency movements, which cannot be assured. In addition to general risks
associated with any investment, the use of futures contracts entails the risk
that, to the extent Citibank's or the Subadviser's view as to interest rate,
stock price or currency movements is incorrect, the use of futures contracts,
even for hedging purposes, could result in losses greater than if they had not
been used. This could happen, for example, if there is a poor correlation
between price movements of futures contracts and price movements in a Fund's
related portfolio position. Also, the futures markets may not be liquid in all
circumstances. As a result, in certain markets, a Fund might not be able to
close out a transaction without incurring substantial losses, if at all. When
futures contracts are used for hedging, even if they are successful in
minimizing the risk of loss due to a decline in the value of the hedged
position, at the same time they limit any potential gain which might result from
an increase in value of such position. As noted, each Fund may also enter into
transactions in futures contracts for other than hedging purposes (subject to
<PAGE>
applicable law), including speculative transactions, which involve greater risk.
In particular, in entering into such transactions, a Fund may experience losses
which are not offset by gains on other portfolio positions, thereby reducing its
gross income. In addition, the markets for such instruments may be extremely
volatile from time to time, which could increase the risks incurred by the Fund
in entering into such transactions.
The use of futures contracts potentially exposes a Fund to the effects of
"leveraging," which occurs when futures are used so that the Fund's exposure to
the market is greater than it would have been if the Fund had invested directly
in the underlying securities. "Leveraging" increases a Fund's potential for both
gain and loss. As noted above, each of the Funds intends to adhere to certain
policies relating to the use of futures contracts, which should have the effect
of limiting the amount of leverage by the Fund.
OPTIONS. Each Fund may write (sell) covered call and put options and
purchase call and put options on securities. A Fund will write options on
securities for the purpose of increasing its return on such securities and/or to
protect the values of its portfolio. In particular, where the Fund writes an
option which expires unexercised or is closed out by the Fund at a profit, it
will retain the premium paid for the option which will increase its gross income
and will offset in part the reduced value of the portfolio security underlying
the option, or the increased cost of portfolio securities to be acquired. If the
price of the underlying security moves adversely to the Fund's position, the
option may be exercised and the Fund will be required to purchase or sell the
underlying security at a disadvantageous price, which may only be partially
offset by the amount of the premium.
By writing a call option on a security, a Fund limits its opportunity to
profit from any increase in the market value of the underlying security, since
the holder will usually exercise the call option when the market value of the
underlying security exceeds the exercise price of the call. However, the Fund
retains the risk of depreciation in value of securities on which it has written
call options.
Each of the Funds also may purchase options on a non-U.S. currency in order
to protect against currency rate fluctuations. If a Fund purchases a put option
on a non-U.S. currency and the value of the U.S. currency declines, the Fund
will have the right to sell the non-U.S. currency for a fixed amount in U.S.
dollars and will thereby offset, in whole or in part, the adverse effect on the
Fund which otherwise would have resulted. Conversely, where a rise in the U.S.
dollar value of another currency is projected, and where the Fund anticipates
investing in securities traded in such currency, the Fund may purchase call
options on the non-U.S. currency. Each Fund also may buy and write options on
stock indices.
Each Fund may purchase and write options to buy or sell interest rate
futures contracts and options on stock index futures contracts. Such investment
strategies will be used for hedging and non-hedging purposes, subject to
applicable law. Put and call options on futures contracts may be traded by a
Fund in order to protect against declines in values of portfolio securities or
against increases in the cost of securities to be acquired. Purchase of options
on futures contracts may present less risk in hedging the portfolio of a Fund
than the purchase or sale of the underlying futures contracts since the
potential loss is limited to the amount of the premium plus related transaction
costs. The writing of such options, however, does not present less risk than the
trading of futures contracts and will constitute only a partial hedge, up to the
amount of the premium received. In addition, if an option is exercised, the Fund
may suffer a loss on the transaction.
Each Fund may enter into forward foreign currency contracts for the
purchase or sale of a fixed quantity of a foreign currency at a future date at a
price set at the time of the contract. A Fund may enter into forward contracts
for hedging and non-hedging purposes including transactions entered into for the
purpose of profiting from anticipated changes in foreign currency exchange
<PAGE>
rates. Each Fund has established procedures consistent with statements of the
Securities and Exchange Commission and its staff regarding the use of forward
contracts by registered investment companies, which requires use of segregated
assets or "cover" in connection with the purchase and sale of such contracts.
Forward contracts are traded over-the-counter, and not on organized
commodities or securities exchanges. As a result, such contracts operate in a
manner distinct from exchange-traded instruments, and their use involves certain
risks beyond those associated with transactions in the futures and options
contracts described herein.
Transactions in options may be entered into on U.S. exchanges regulated by
the SEC, in the over-the-counter market and on foreign exchanges, while forward
contracts may be entered into only in the over-the-counter market. Futures
contracts and options on futures contracts may be entered into on U.S. exchanges
regulated by the Commodity Futures Trading Commission and on foreign exchanges.
The securities underlying options and futures contracts traded by a Fund may
include domestic as well as foreign securities. Investors should recognize that
transactions involving foreign securities or foreign currencies, and
transactions entered into in foreign countries, may involve considerations and
risks not typically associated with investing in U.S. markets.
Transactions in options, futures contracts, options on futures contracts
and forward contracts entered into for non-hedging purposes involve greater risk
and could result in losses which are not offset by gains on other portfolio
assets. For example, a Fund may sell futures contracts on an index of securities
in order to profit from any anticipated decline in the value of the securities
comprising the underlying index. In such instances, any losses on the futures
transactions will not be offset by gains on any portfolio securities comprising
such index, as might occur in connection with a hedging transaction.
APPENDIX B
SALES CHARGE AND PURCHASE PROGRAM
INFORMATION
Elimination of Initial Sales Charge for Class A Shares. Class A shares of
each Fund may be purchased without an initial sales charge by:
(i) tax exempt organizations under Section 501(c)(3-13) of the Internal
Revenue Code (the "Code"),
(ii) trust accounts for which Citibank or any subsidiary or affiliate of
Citibank (a "Citibank Affiliate") acts as trustee and exercises
discretionary investment management authority,
(iii) accounts purchasing shares through the Private Client Division of
Citicorp Investment Services (CIS) or through other programs accessed
through the Private Client Division of CIS, or the private banking
division of either Citibank, N.A., Citibank FSB or Citicorp Trust, N.A.,
(iv) accounts for which Citibank or any Citibank Affiliate performs
investment advisory services,
(v) accounts for which Citibank or any Citibank Affiliate
charges fees for acting as custodian,
(vi) trustees of any investment company for which Citibank or any Citibank
Affiliate serves as the manager, investment adviser or as a shareholder
servicing agent,
<PAGE>
(vii) any affiliated person of a Fund, Citibank, the Distributor or any
Service Agent,
(viii) shareholder accounts established through a reorganization or similar form
of business combination approved by a Fund's Board of Trustees or by the
Board of Trustees of any other mutual fund advised or managed by Citibank
the terms of which entitle those shareholders to purchase shares of a
Fund at net asset value without a sales charge,
(ix) employee benefit plans qualified under Section 401 of the Code, including
salary reduction plans qualified under Section 401(k)of the Code, subject
to such minimum requirements as may be established by the Distributor
with respect to the number of employees or amount of purchase; currently,
these criteria require that (a) the employer establishing the qualified
plan have at least 25 eligible employees or (b) the amount invested by
such qualified plan in a Fund or in any combination of Funds totals a
minimum of $500,000,
(x) investors purchasing $1,000,000 or more of Class A shares.
However, a contingent deferred sales charge will be imposed on such
investments in the event of certain share redemptions within 12 months
following the share purchase, at the rate of 1.00% of the lesser of
the value of the shares redeemed (exclusive of reinvested dividends
and capital gains distributions) or the total cost of such shares. In
determining whether a contingent deferred sales charge on Class A
shares is payable, and if so, the amount of the charge, it is assumed
that shares not subject to the contingent deferred sales charge are
the first redeemed followed by other shares held for the longest
period of time. All investments made during a calendar month will age
one month on the last day of the month and each subsequent month. Any
applicable contingent deferred sales charge will be deferred upon an
exchange of Class A shares for Class A shares of another Fund and
deducted from the redemption proceeds when such exchanged shares are
subsequently redeemed (assuming the contingent deferred sales charge
is then payable). The holding period of shares so acquired through an
exchange will be aggregated with the period during which the original
shares were held. The contingent deferred sales charge will be waived
under certain circumstances as provided below. Any applicable
contingent deferred sales charges will be paid to the Distributor,
(xi) subject to appropriate documentation, investors where the amount invested
represents redemption proceeds from a mutual fund (other than a Fund) if:
(i) the redeemed Class A shares were subject to an initial sales charge
or a deferred sales charge (whether or not actually imposed); and (ii)
such redemption has occurred no more than 90 days prior to the purchase
of Class A shares of the Fund, or
(xii) an investor who has a business relationship with an investment
consultant or other registered representative who joined a
broker-dealer which has a sales agreement with the Distributor from
another investment firm within six months prior to the date of
purchase by such investor, if (a) the investor redeems shares of
another mutual fund sold through the investment firm that previously
employed that investment consultant or other registered
representative, and either paid an initial sales charge or was at some
time subject to, but did not actually pay, a deferred sales charge or
redemption fee with respect to the redemption proceeds, (b) the
redemption is made within 60 days prior to the investment in a Fund,
and (c) the net asset value of the Class A shares of the Fund sold to
that investor without a sales charge does not exceed the proceeds of
such redemption.
<PAGE>
Reduced Sales Charge Programs for Class A Shares. An individual who is a
member of a qualified group may purchase Class A shares of a Fund at the reduced
initial sales charge applicable to the group as a whole. The sales charge is
based upon the aggregate dollar value of Class A shares previously purchased and
still owned by the group, plus the amount of the purchase. A "qualified group"
is one which (i) has been in existence for more than six months, (ii) has a
purpose other than acquiring Fund shares at a discount, and (iii) satisfies
uniform criteria which enable the Distributor to realize economies of scale in
its costs of distributing shares. A qualified group must have more than ten
members, must be available to arrange for group meetings between representatives
of the Fund and the members, must agree to include sales and other materials
related to the Fund in its publications and mailings to members at reduced or no
cost to the Distributor, and must seek to arrange for payroll deduction or other
bulk transmission of investments to the Fund.
Reduced initial sales charges on Class A shares also may be achieved
through a Right of Accumulation or a Letter of Intent. Under a Right of
Accumulation eligible investors are permitted to purchase Class A shares of a
Fund at the public offering price applicable to the total of (a) the dollar
amount then being purchased, plus (b) an amount equal to the then-current net
asset value or cost (whichever is higher) of the purchaser's combined holdings
in the Funds. The Right of Accumulation may be amended or terminated at any
time.
If an investor anticipates purchasing $100,000 or more of Class A shares of
a Fund alone or in combination with Class A shares of the other Funds within a
13-month period, the investor may obtain such shares at the same reduced sales
charge as though the total quantity were invested in one lump sum, subject to
the appointment of an attorney for redemptions of shares if the intended
purchases are not completed, by completing a Letter of Intent. Investors should
consult "Determination of Net Asset Value; Valuation of Securities; Additional
Purchase and Redemption Information" in the Statement of Additional Information
and their Service Agents for more information about Rights of Accumulation and
Letters of Intent.
Waivers of Contingent Deferred Sales Charge for Class A Shares. The
contingent deferred sales charge for Class A shares will be waived for a total
or partial redemption made within one year of the death of the shareholder. This
waiver is available where the deceased shareholder is either the sole
shareholder or owns the shares with his or her spouse as a joint tenant with
right of survivorship, and applies only to redemption of shares held at the time
of death. The contingent deferred sales charge also will be waived in connection
with:
(i) a lump sum or other distribution in the case of an Individual Retirement
Account ("IRA"), a self-employed individual retirement plan (so-called
"Keogh Plan") or a custodian account under Section 403(b) of the Code, in
each case following attainment of age 59 1/2,
(ii) a total or partial redemption resulting from any distribution
following retirement in the case of a tax-qualified retirement plan,
and
(iii) a redemption resulting from a tax-free return of an excess
contribution to an IRA.
Contingent deferred sales charge waivers will be granted subject to
confirmation of the shareholder's status or holdings, as the case may be.
<PAGE>
Statement of
Additional Information
July 9, 1996
CITISELECTSM FOLIO 200
CITISELECTSM FOLIO 300
CITISELECTSM FOLIO 400
CITISELECTSM FOLIO 500
Class A and Class C Shares
Landmark Funds I (the "Trust") is an investment company which was organized
as a business trust under the laws of the Commonwealth of Massachusetts on April
13, 1984. The Trust offers shares of CitiSelectSM Folio 200, CitiSelectSM Folio
300, CitiSelectSM Folio 400, and CitiSelectSM Folio 500 (collectively, the
"Funds"), to which this Statement of Additional Information relates, as well as
shares of one other series. The address and telephone number of the Trust are 6
St. James Avenue, Boston, Massachusetts 02116, (617) 423-1679. The Trust invests
all of the investable assets of the Funds in, respectively, Asset Allocation
Portfolio 200, Asset Allocation Portfolio 300, Asset Allocation Portfolio 400
and Asset Allocation Portfolio 500 (the "Portfolios"), which are separate series
of Asset Allocation Portfolios (the "Portfolio Trust"). The address of the
Portfolio Trust is Elizabethan Square, George Town, Grand Cayman, British West
Indies.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
Table of Contents Page
The Trust B-3
Investment Objectives and Policies B-3
Description of Permitted Investments and
Investment Practices B-4
Investment Restrictions B-18
Performance Information and Advertising B-20
Determination of Net Asset Value; Valuation of
Securities; Additional Redemption Information B-21
Management B-22
Portfolio Transactions B-29
Description of Shares, Voting Rights and Liabilities B-30
Certain Additional Tax Matters B-32
Financial Statements B-34
<PAGE>
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the Trust's
Prospectus, dated July 9, 1996. This Statement of Additional Information should
be read in conjunction with the Prospectus, a copy of which may be obtained by
an investor without charge by calling 1-800-846-5200 (customers in New York City
may call 212-820-2380).
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. THE TRUST
Landmark Funds I (the "Trust") is an investment company organized as a
business trust under the laws of the Commonwealth of Massachusetts on April 13,
1984. This Statement of Additional Information relates to four funds offered by
the Trust -- CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect Folio 400
and CitiSelect Folio 500 (collectively, the "Funds").
The Trust seeks the investment objectives of the Funds by investing all of
their investable assets in, respectively, Asset Allocation Portfolio 200, Asset
Allocation Portfolio 300, Asset Allocation Portfolio 400 and Asset Allocation
Portfolio 500 (the "Portfolios"). The Portfolios are series of Asset Allocation
Portfolios (the "Portfolio Trust") and are open-end, diversified management
investment companies. Each Portfolio has the same investment objective and
policies as the Fund that invests in it. Because each of the Funds invests
through its corresponding Portfolio, all references in this Statement of
Additional Information to each Fund include such Fund's corresponding Portfolio,
except as otherwise noted. In addition, references to the Trust also include the
Portfolio Trust, except as otherwise noted.
Citibank, N.A. ("Citibank" or the "Manager") is investment adviser and also
provides certain administrative services to each of the Portfolios and the
Trust. Citibank manages the investments of the Portfolios from day to day in
accordance with each Portfolio's investment objective and policies. The
selection of investments for the Portfolios and the way they are managed depend
on the conditions and trends in the economy and the financial marketplaces.
The Boards of Trustees of the Trust and the Portfolio Trust provide broad
supervision over the affairs of the Funds and the Portfolios, respectively.
Shares of the Funds are continuously sold by The Landmark Funds Broker-Dealer
Services, Inc., the Funds' distributor ("LFBDS" or the "Distributor"). Shares of
each Fund are sold at net asset value plus a sales charge that may be reduced on
purchases involving substantial amounts and that may be eliminated in certain
circumstances. LFBDS receives a distribution fee from each Fund pursuant to a
Service Plan adopted with respect to shares of the Funds in accordance with Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
2. INVESTMENT OBJECTIVES AND POLICIES
The investment objective of CitiSelect Folio 200 is high total return over
time consistent with a primary emphasis on income and a secondary emphasis on
capital appreciation.
The investment objective of CitiSelect Folio 300 is high total return over
time consistent with a balanced emphasis on income and capital appreciation.
The investment objective of CitiSelect Folio 400 is high total return over
time consistent with a primary emphasis on capital appreciation and a secondary
emphasis on income for risk reduction purposes.
The investment objective of CitiSelect Folio 500 is highest total return
over time consistent with a primary emphasis on capital appreciation and a
secondary emphasis on income for risk reduction purposes.
The investment objective of each Fund may be changed by its Trustees
without approval by that Fund's shareholders, but shareholders will be given
written notice at least 30 days before any change is implemented. Of course,
there can be no assurance that any Fund will achieve its investment objective.
<PAGE>
The Prospectus contains a discussion of the various types of securities in
which each Fund may invest and the risks involved in such investments. The
following supplements the information contained in the Prospectus concerning the
investment objective, policies and techniques of each Fund.
The Funds are asset allocation funds. Asset allocation funds are a basic
tool of investment professionals and are differentiated by the use of investment
management strategies and techniques that range from the least aggressive to the
most aggressive. The Funds offer a convenient way to own a diversified
professionally managed portfolio tailored to specific investment goals and
expectations of risk and return. While time horizon is a factor, it is not
necessarily the determinative factor in choosing to invest in one of the Funds.
Investment goals, such as buying a home, educating children or saving for
retirement all determine the appropriate asset allocation and amount of risk
that an investor seeks.
CitiSelect Folio 200 is expected to be the least volatile of the four Funds
and is designed for the investor who is seeking lower risk provided by
substantial investments in income-producing securities, but who also seeks some
capital growth. CitiSelect Folio 300 offers a blend of capital appreciation and
income for the investor seeking a balanced approach by emphasizing stocks for
their higher capital appreciation potential but retaining a significant income
component to temper volatility. CitiSelect Folio 400 and CitiSelect Folio 500
are designed for the investor willing and able to take higher risks in the
pursuit of long-term capital appreciation. CitiSelect Folio 500 is expected to
be the most volatile of the four Funds, and is designed for investors who can
withstand greater market swings to seek potential long-term rewards. CitiSelect
Folio 400 is designed for investors seeking long-term rewards, but with less
volatility.
The Trust has also adopted the following policies with respect to each
Fund's investments in (i) warrants and (ii) securities of issuers with less than
three years' continuous operation. The Trust's purchases of warrants for each
Fund will not exceed 5% of the Fund's net assets. Included within that amount,
but not exceeding 2% of its net assets, may be warrants which are not listed on
the New York Stock Exchange or the American Stock Exchange. Any such warrants
will be valued at their market value except that warrants which are attached to
securities at the time such securities are acquired for a Fund will be deemed to
be without value for the purpose of this restriction. The Trust will not invest
more than 5% of each Fund's assets in companies which, including their
respective predecessors, have a record of less than three years' continuous
operation.
The Trust may withdraw the investment of any Fund from its corresponding
Portfolio at any time if the Board of Trustees of the Trust determines that it
is in the best interests of the Fund to do so. Upon any such withdrawal, the
Fund's assets would continue to be invested in accordance with the investment
policies described herein with respect to that Fund. The policies described
above and those described below are not fundamental and may be changed without
shareholder approval.
3. DESCRIPTION OF PERMITTED INVESTMENTS
AND INVESTMENT PRACTICES
BANK OBLIGATIONS
Each of the Funds may invest in bank obligations, i.e., certificates of
deposit, time deposits (including Eurodollar time deposits) and bankers'
acceptances and other short-term debt obligations issued by domestic banks,
foreign subsidiaries or foreign branches of domestic banks, domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. A bankers' acceptance is a bill of exchange or time draft
drawn on and accepted by a commercial bank. It is used by corporations to
<PAGE>
finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less. A certificate of deposit is a
negotiable interest-bearing instrument with a specific maturity. Certificates of
deposit are issued by banks and savings and loan institutions in exchange for
the deposit of funds and normally can be traded in the secondary market prior to
maturity. A time deposit is a non-negotiable receipt issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty are
considered to be illiquid securities.
MORTGAGE-BACKED SECURITIES
Each of the Funds may invest in mortgage-backed securities, which are
securities representing interests in pools of mortgage loans. Interests in pools
of mortgage-related securities differ from other forms of debt securities which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by prepayments of principal resulting from the sale,
refinancing or foreclosure of the underlying property, net of fees or costs
which may be incurred. The market value and interest yield of these instruments
can vary due to market interest rate fluctuations and early prepayments of
underlying mortgages.
The principal governmental issuers or guarantors of mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage
Corporation ("FHLMC"). Obligations of GNMA are backed by the full faith and
credit of the United States Government while obligations of FNMA and FHLMC are
supported by the respective agency only. Although GNMA certificates may offer
yields higher than those available from other types of U.S. Government
securities, GNMA certificates may be less effective than other types of
securities as a means of "locking in" attractive long-term rates because of the
prepayment feature. For instance, when interest rates decline, the value of a
GNMA certificate likely will not rise as much as comparable debt securities due
to the prepayment feature. In addition, these prepayments can cause the price of
a GNMA certificate originally purchased at a premium to decline in price to its
par value, which may result in a loss.
Each Fund may also invest a portion of its assets in collateralized
mortgage obligations or "CMOs," a type of mortgage-backed security. CMOs are
securities collateralized by mortgages, mortgage pass-through certificates,
mortgage pay-through bonds (bonds representing an interest in a pool of
mortgages where the cash flow generated from the mortgage collateral pool is
dedicated to bond repayment), and mortgage-backed bonds (general obligations of
the issuers payable out of the issuers' general funds and additionally secured
by a first lien on a pool of single family detached properties). Many CMOs are
issued with a number of classes or series which have different maturities and
are retired in sequence.
Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligations is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-through certificates to be prepaid prior to
their stated maturity. Although some of the mortgages underlying CMOs may be
supported by various types of insurance, and some CMOs may be backed by GNMA
certificates or other mortgage pass-through certificates issued or guaranteed by
U.S. Government agencies or instrumentalities, the CMOs themselves are not
generally guaranteed.
<PAGE>
CORPORATE ASSET-BACKED SECURITIES
Each of the Funds may invest in corporate asset-backed securities. These
securities, issued by trusts and special purpose corporations, are backed by a
pool of assets, such as credit card and automobile loan receivables,
representing the obligations of a number of different parties.
Corporate asset-backed securities present certain risks. For instance, in
the case of credit card receivables, these securities may not have the benefit
of any security interest in the related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of automobile receivables permit the servicers to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
acquire an interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have a proper security
interest in all of the obligations backing such receivables. Therefore, there is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities. The underlying
assets (e.g., loans) are also subject to prepayments which shorten the
securities' weighted average life and may lower their return.
Corporate asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
resulting from ultimate default ensures payment through insurance policies or
letters of credit obtained by the issuer or sponsor from third parties. A Fund
will not pay any additional or separate fees for credit support. The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquency or loss in excess of that anticipated or failure of the
credit support could adversely affect the return on an investment in such a
security.
RULE 144A SECURITIES
Consistent with applicable investment restrictions, each of the Funds may
purchase securities that are not registered ("restricted securities") under the
Securities Act of 1933 (the "Securities Act"), but can be offered and sold to
"qualified institutional buyers" under Rule 144A under the Securities Act.
However, none of the Funds invests more than 15% of its net assets in illiquid
investments, which include securities for which there is no readily available
market, securities subject to contractual restrictions on resale and restricted
securities, unless the Board of Trustees of the Trust determine, based on the
trading markets for the specific restricted security, that it is liquid. The
Trustees may adopt guidelines and delegate to the Manager or to a Subadviser the
daily function of determining and monitoring liquidity of restricted securities.
The Trustees, however, retain sufficient oversight and are ultimately
responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market
for restricted securities sold and offered under Rule 144A will develop, the
Trust's Trustees will carefully monitor each Fund's investments in these
securities, focusing on such factors, among others, as valuation, liquidity and
availability of information.
<PAGE>
SECURITIES OF NON-U.S. ISSUERS
Each of the Funds may invest in securities of non-U.S. issuers. Investing
in securities of foreign issuers may involve significant risks not present in
domestic investments. For example, the value of such securities fluctuates based
on the relative strength on the U.S. dollar. In addition, there is generally
less publicly available information about foreign issuers, particularly those
not subject to the disclosure and reporting requirements of the U.S. securities
laws. Non-U.S. issuers are generally not bound by uniform accounting, auditing
and financial reporting requirements comparable to those applicable to domestic
issuers. Investments in securities of non-U.S. issuers also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Fund, political or financial instability or diplomatic and
other developments which would affect such investments. Further, economies of
other countries or areas of the world may differ favorably or unfavorably from
the economy of the U.S.
It is anticipated that in most cases the best available market for
securities of non-U.S. issuers would be on exchanges or in over-the-counter
markets located outside the U.S. Non-U.S. stock markets, while growing in volume
and sophistication, are generally not as developed as those in the U.S., and
securities of some non-U.S. issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. companies. Non-U.S. security trading practices, including those involving
securities settlement where the Fund's assets may be released prior to receipt
of payments, may expose the Fund to increased risk in the event of a failed
trade or the insolvency of a non-U.S. broker-dealer. In addition, foreign
brokerage commissions are generally higher than commissions on securities traded
in the U.S. and may be non-negotiable. In general, there is less overall
governmental supervision and regulation of non-U.S. securities exchanges,
brokers and listed companies than in the U.S.
Investments in closed-end investment companies which primarily hold
securities of non-U.S. issuers may entail the risk that the market value of such
investments may be substantially less than their net asset value and that there
would be duplication of investment management and other fees and expenses.
American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs") and other forms of depositary
receipts for securities of non-U.S. issuers provide an alternative method for
the Funds to make non-U.S. investments. These securities are not usually
denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs and GDRs, in bearer form, are designed for use in
European and global securities markets. ADRs are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities.
EDRs and GDRs are European and global receipts, respectively, evidencing a
similar arrangement.
The Funds may invest in securities of non-U.S. issuers that impose
restrictions on transfer within the United States or to United States persons.
Although securities subject to such transfer restrictions may be marketable
abroad, they may be less liquid than securities of non-U.S. issuers of the same
class that are not subject to such restrictions.
REPURCHASE AGREEMENTS
Each of the Funds may invest in repurchase agreements collateralized by
securities in which that Fund may otherwise invest. Repurchase agreements are
agreements by which a Fund purchases a security and simultaneously commits to
resell that security to the seller (which is usually a member bank of the U.S.
<PAGE>
Federal Reserve System or a member firm of the New York Stock Exchange (or a
subsidiary thereof)) at an agreed upon date within a number of days (usually not
more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed upon market rate of interest which is unrelated to
the coupon rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security, usually
U.S. Government or Government agency issues. Under the 1940 Act repurchase
agreements may be considered to be loans by the buyer. A Fund's risk is limited
to the ability of the seller to pay the agreed-upon amount on the delivery date.
If the seller defaults, the underlying security constitutes collateral for the
seller's obligation to pay although that Fund may incur certain costs in
liquidating this collateral and in certain cases may not be permitted to
liquidate this collateral. All repurchase agreements entered into by the Funds
are fully collateralized, with such collateral being marked to market daily.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to generate
income, each of the Funds may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks of
the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. A Fund would have the right to call a loan
and obtain the securities loaned at any time on customary industry settlement
notice (which will not usually exceed three business days). During the existence
of a loan, a Fund would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and would also receive
compensation based on investment of cash collateral or a fee from the borrower
in the event the collateral consists of securities. The Fund, would not,
however, have the right to vote any securities having voting rights during the
existence of the loan, but would call the loan in anticipation of an important
vote to be taken among holders of the securities or of the giving or withholding
of their consent on a material matter affecting the investment. As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the collateral should the borrower fail financially. However, the
loans would be made only to entities deemed by the Manager or a Subadviser to be
of good standing, and when, in the judgment of the Manager or a Subadviser, the
consideration which can be earned currently from loans of this type justifies
the attendant risk. If the Manager or a Subadviser determines to make loans, it
is not intended that the value of the securities loaned would exceed 30% of the
value of the respective Fund's total assets.
WHEN-ISSUED SECURITIES
Each of the Funds may purchase securities on a "when-issued" or on a
"forward delivery" basis. It is expected that, under normal circumstances, the
applicable Fund would take delivery of such securities. When a Fund commits to
purchase a security on a "when-issued" or on a "forward delivery" basis, it sets
up procedures consistent with Securities and Exchange Commission policies. Since
those policies currently require that an amount of a Fund's assets equal to the
amount of the purchase be held aside or segregated to be used to pay for the
commitment, the respective Fund expects always to have cash, cash equivalents,
or high quality debt securities sufficient to cover any commitments or to limit
any potential risk. However, even though the Funds do not intend to make such
purchases for speculative purposes and intend to adhere to the provisions of
Securities and Exchange Commission policies, purchases of securities on such
bases may involve more risk than other types of purchases. For example, a Fund
may have to sell assets which have been set aside in order to meet redemptions.
<PAGE>
Also, if the Manager or a Subadviser determines it is advisable as a matter of
investment strategy to sell the "when-issued" or "forward delivery" securities,
the Fund would be required to meet its obligations from the then available cash
flow or the sale of securities, or, although it would not normally expect to do
so, from the sale of the "when-issued" or "forward delivery" securities
themselves (which may have a value greater or less than the Fund's payment
obligation).
FOREIGN CURRENCY EXCHANGE TRANSACTIONS
Because each of the Funds may buy and sell securities denominated in
currencies other than the U.S. dollar, and receive interest, dividends and sale
proceeds in currencies other than the U.S. dollar, the Funds may enter into
foreign currency exchange transactions to convert United States currency to
foreign currency and foreign currency to United States currency, as well as
convert foreign currency to other foreign currencies. A Fund either enters into
these transactions on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or uses forward contracts to purchase or
sell foreign currencies. The Funds may also enter into foreign currency hedging
transactions in an attempt to protect the value of the assets of the respective
Fund as measured in U.S. dollars from unfavorable changes in currency exchange
rates and control regulations. (Although each Fund's assets are valued daily in
terms of U.S. dollars, the Trust does not intend to convert a Fund's holdings of
other currencies into U.S. dollars on a daily basis.)
The Funds may convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although currency
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
currency at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no fees or
commissions are charged at any stage for trades.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a non-U.S. currency, it may desire to "lock in" the U.S. dollar
price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of non-U.S. currency
involved in the underlying security transaction, the Fund will be able to
protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the non-U.S. currency during the period
between the date the security is purchased or sold and the date on which payment
is made or received.
When the Manager or a Subadviser believes that the currency of a particular
country may suffer a substantial decline against the U.S. dollar, a Fund may
enter into a forward contract to sell, for a fixed amount of U.S. dollars, the
amount of non-U.S. currency approximating the value of some or all of the Fund's
securities denominated in such non-U.S. currency. The precise matching of the
forward contract amounts and the value of the securities involved is not
generally possible since the future value of such securities in non-U.S.
currencies changes as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date it
matures. The projection of a short-term hedging strategy is highly uncertain.
The Funds do not enter into such forward contracts or maintain a net exposure to
such contracts where the consummation of the contracts obligates a Fund to
deliver an amount of non-U.S. currency in excess of the value of the Fund's
securities or other assets denominated in that currency. Under normal
<PAGE>
circumstances, consideration of the prospect for currency parities will be
incorporated in the investment decisions made with regard to overall
diversification strategies. However, the Manager believes that it is important
to have the flexibility to enter into such forward contracts when it determines
that the best interests of the Fund will be served.
The Funds generally would not enter into a forward contract with a term
greater than one year. At the maturity of a forward contract, a Fund will either
sell the security and make delivery of the non-U.S. currency, or retain the
security and terminate its contractual obligation to deliver the non-U.S.
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
non-U.S. currency. If a Fund retains the security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If a Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the non-U.S. currency. Should forward prices decline
during the period between the date a Fund enters into a forward contract for the
sale of the non-U.S. currency and the date it enters into an offsetting contract
for the purchase of such currency, the Fund will realize a gain to the extent
the selling price of the currency exceeds the purchase price of the currency.
Should forward prices increase, the Fund will suffer a loss to the extent that
the purchase price of the currency exceeds the selling price of the currency.
It is impossible to forecast with precision the market value of Fund
securities at the expiration of the contract. Accordingly, it may be necessary
for a Fund to purchase additional non-U.S. currency on the spot market if the
market value of the security is less than the amount of non-U.S. currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of such currency. Conversely, it may be necessary to sell on the
spot market some of the non-U.S. currency received upon the sale of the security
if its market value exceeds the amount of such currency the Fund is obligated to
deliver.
Each of the Funds may also purchase put options on a non-U.S. currency in
order to protect against currency rate fluctuations. If a Fund purchases a put
option on a non-U.S. currency and the value of the U.S. currency declines, the
Fund will have the right to sell the non-U.S. currency for a fixed amount in
U.S. dollars and will thereby offset, in whole or in part, the adverse effect on
the Fund which otherwise would have resulted. Conversely, where a rise in the
U.S. dollar value of another currency is projected, and where the Fund
anticipates investing in securities traded in such currency, the Fund may
purchase call options on the non-U.S. currency.
The purchase of such options could offset, at least partially, the effects
of the adverse movements in exchange rates. However, the benefit to the Fund
from purchases of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where currency exchange
rates do not move in the direction or to the extent anticipated, the Fund could
sustain losses on transactions in foreign currency options which would require
it to forgo a portion or all of the benefits of advantageous changes in such
rates.
The Funds may write options on non-U.S. currencies for hedging purposes or
otherwise to achieve their investment objectives. For example, where a Fund
anticipates a decline in the value of the U.S. dollar value of a foreign
security due to adverse fluctuations in exchange rates it could, instead of
purchasing a put option, write a call option on the relevant currency. If the
expected decline occurs, the option will most likely not be exercised, and the
diminution in value of the security held by the Fund will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a foreign security to be acquired because of
an increase in the U.S. dollar value of the currency in which the underlying
security is primarily traded, a Fund could write a put option on the relevant
currency which, if rates move in the manner projected, will expire unexercised
<PAGE>
and allow the Fund to hedge such increased cost up to the amount of the premium.
However, the writing of a currency option will constitute only a partial hedge
up to the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at a loss which
may not be offset by the amount of the premium. Through the writing of options
on currencies, a Fund also may be required to forgo all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
exchange rates.
Put and call options on non-U.S. currencies written by a Fund will be
covered by segregation of cash, short-term money market instruments or high
quality debt securities in an account with the custodian in an amount sufficient
to discharge the Fund's obligations with respect to the option, by acquisition
of the non-U.S. currency or of a right to acquire such currency (in the case of
a call option) or the acquisition of a right to dispose of the currency (in the
case of a put option), or in such other manner as may be in accordance with the
requirements of any exchange on which, or the counterparty with which, the
option is traded and applicable laws and regulations.
Investing in ADRs and other depositary receipts presents many of the same
risks regarding currency exchange rates as investing directly in securities
traded in currencies other than the U.S. dollar. Because the securities
underlying ADRs are traded primarily in non-U.S. currencies, changes in currency
exchange rates will affect the value of these receipts. For example, decline in
the U.S. dollar value of another currency in which securities are primarily
traded will reduce the U.S. dollar value of such securities, even if their value
in the other non-U.S. currency remains constant, and thus will reduce the value
of the receipts covering such securities. A Fund may employ any of the above
described foreign currency hedging techniques to protect the value of its assets
invested in depositary receipts.
Of course, a Fund is not required to enter into the transactions described
above and does not do so unless deemed appropriate by the Manager or a
Subadviser. It should also be realized that this method of protecting the value
of a Fund's securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. Additionally,
although such contracts tend to minimize the risk of loss due to a decline in
the value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase.
Each Fund has established procedures consistent with policies of the
Securities and Exchange Commission concerning forward contracts. Since those
policies currently recommend that an amount of a Fund's assets equal to the
amount of the purchase be held aside or segregated to be used to pay for the
commitment, each Fund expects to always have cash, cash equivalents or high
quality debt securities available sufficient to cover any commitments under
these contracts or to limit any potential risk.
OPTIONS
Each of the Funds may write covered call and put options and purchase call
and put options on securities. Call and put options written by a Fund may be
covered in the manner set forth below.
A call option written by a Fund is "covered" if the Fund owns the security
underlying the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if a Fund holds a call on the same security and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by a
<PAGE>
Fund in cash, short-term money market instruments or high quality debt
securities in a segregated account with its custodian. A put option written by a
Fund is "covered" if the Fund maintains cash, short term money market
instruments or high quality debt securities with a value equal to the exercise
price in a segregated account with its custodian, or else holds a put on the
same security and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or where the exercise price of the put held is less than the
exercise price of the put written if the difference is maintained by the Fund in
cash, short-term money market instruments or high quality debt securities in a
segregated account with its custodian. Put and call options written by a Fund
may also be covered in such other manner as may be in accordance with the
requirements of the exchange on which, or the counter party with which, the
option is traded, and applicable laws and regulations. If the writer's
obligation is not so covered, it is subject to the risk of the full change in
value of the underlying security from the time the option is written until
exercise.
Each of the Funds may purchase options for hedging purposes or to increase
the Fund's return. Put options may be purchased to hedge against a decline in
the value of portfolio securities. If such decline occurs, the put options will
permit a Fund to sell the securities at the exercise price, or to close out the
options at a profit. By using put options in this way, the Fund will reduce any
profit it might otherwise have realized in the underlying security by the amount
of the premium paid for the put option and by transaction costs.
Each of the Funds may purchase call options to hedge against an increase in
the price of securities that the Fund anticipates purchasing in the future. If
such increase occurs, the call option will permit the Fund to purchase the
securities at the exercise price, or to close out the options at a profit. The
premium paid for the call option plus any transaction costs will reduce the
benefit, if any, realized by the Fund upon exercise of the option, and, unless
the price of the underlying security rises sufficiently, the option may expire
worthless to the Fund.
Each of the Funds may write (sell) covered call and put options and
purchase call and put options on stock indices. In contrast to an option on a
security, an option on a stock index provides the holder with the right, but not
the obligation, to make or receive a cash settlement upon exercise of the
option, rather than the right to purchase or sell a security. The amount of this
settlement is equal to (i) the amount, if any, by which the fixed exercise price
of the option exceeds (in the case of a call) or is below (in the case of a put)
the closing value of the underlying index on the date of exercise, multiplied by
(ii) a fixed "index multiplier."
Each of the Funds may cover call options on stock indices by owning
securities whose price changes, in the opinion of the Manager or a Subadviser,
are expected to be similar to those of the underlying index, or by having an
absolute and immediate right to acquire such securities without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other securities in its
portfolio. Where a Fund covers a call option on a stock index through ownership
of securities, such securities may not match the composition of the index and,
in that event, the Fund will not be fully covered and could be subject to risk
of loss in the event of adverse changes in the value of the index. A Fund may
also cover call options on stock indices by holding a call on the same index and
in the same principal amount as the call written where the exercise price of the
call held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, short-term money market instruments or high
quality debt securities in a segregated account with its custodian. A Fund may
cover put options on stock indices by maintaining cash, short-term money market
instruments or high quality debt securities with a value equal to the exercise
price in a segregated account with its custodian, or by holding a put on the
<PAGE>
same stock index and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or where the exercise price of the put held is less than the
exercise price of the put written if the difference is maintained by the Fund in
cash, short-term money market instruments or high quality debt securities in a
segregated account with its custodian. Put and call options on stock indices may
also be covered in such other manner as may be in accordance with the rules of
the exchange on which, or the counterparty with which, the option is traded and
applicable laws and regulations.
A Fund will receive a premium from writing a put or call option, which
increases the Fund's gross income in the event the option expires unexercised or
is closed out at a profit. If the value of an index on which a Fund has written
a call option falls or remains the same, the Fund will realize a profit in the
form of the premium received (less transaction costs) that could offset all or a
portion of any decline in the value of the securities it owns. If the value of
the index rises, however, the Fund will realize a loss in its call option
position, which will reduce the benefit of any unrealized appreciation in the
Fund's stock investments. By writing a put option, a Fund assumes the risk of a
decline in the index. To the extent that the price changes of securities owned
by a Fund correlate with changes in the value of the index, writing covered put
options on indices will increase the Fund's losses in the event of a market
decline, although such losses will be offset in part by the premium received for
writing the option.
Each of the Funds may also purchase put options on stock indices to hedge
the Fund's investments against a decline in value. By purchasing a put option on
a stock index, a Fund will seek to offset a decline in the value of securities
it owns through appreciation of the put option. If the value of the Fund's
investments does not decline as anticipated, or if the value of the option does
not increase, the Fund's loss will be limited to the premium paid for the option
plus related transaction costs. The success of this strategy will largely depend
on the accuracy of the correlation between the changes in value of the index and
the changes in value of the Fund's security holdings.
The purchase of call options on stock indices may be used by a Fund to
attempt to reduce the risk of missing a broad market advance, or an advance in
an industry or market segment, at a time when the Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing call options for
this purpose, a Fund will also bear the risk of losing all or a portion of the
premium paid if the value of the index does not rise. The purchase of call
options on stock indices when a Fund is substantially fully invested is a form
of leverage, up to the amount of the premium and related transaction costs, and
involves risks of loss and of increased volatility similar to those involved in
purchasing calls on securities the Fund owns.
Each of the Funds may purchase and write options on foreign currencies in a
manner similar to that in which futures contracts on foreign currencies, or
forward contracts, will be utilized.
FUTURES CONTRACTS
Each of the Funds may enter into interest rate futures contracts, stock
index futures contracts and/or foreign currency futures contracts. Such
investment strategies will be used for hedging purposes and for nonhedging
purposes, subject to applicable law.
A futures contract is an agreement between two parties for the purchase or
sale for future delivery of securities or for the payment or acceptance of a
cash settlement based upon changes in the value of the securities or of an index
of securities. A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at a
specified price, or to make or accept the cash settlement called for by the
contract, on a specified date. A "purchase" of a futures contract means the
acquisition of a contractual obligation to acquire the securities called for by
the contract at a specified price, or to make or accept the cash settlement
called for by the contract, on a specified date. Futures contracts have been
designed by exchanges which have been designated "contract markets" by the
<PAGE>
Commodity Futures Trading Commission ("CFTC") and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on these markets, and the
exchanges, through their clearing organizations, guarantee that the contracts
will be performed as between the clearing members of the exchange.
While futures contracts based on debt securities do provide for the
delivery and acceptance of securities, such deliveries and acceptances are very
seldom made. Generally, a futures contract is terminated by entering into an
offsetting transaction. Brokerage fees will be incurred when a Fund purchases or
sells a futures contract. At the same time such a purchase or sale is made, the
Fund must provide cash or securities as a deposit ("initial deposit") known as
"margin." The initial deposit required will vary, but may be as low as 1% or
less of a contract's face value. Daily thereafter, the futures contract is
valued through a process known as "marking to market," and the Fund may receive
or be required to pay additional "variation margin" as the futures contract
becomes more or less valuable. At the time of delivery of securities pursuant to
such a contract, adjustments are made to recognize differences in value arising
from the delivery of securities with a different interest rate than the specific
security that provides the standard for the contract. In some (but not many)
cases, securities called for by a futures contract may not have been issued when
the contract was entered into.
A Fund may purchase or sell futures contracts to attempt to protect the
Fund from fluctuations in interest rates, or to manage the effective maturity or
duration of the Fund's portfolio in an effort to reduce potential losses or
enhance potential gain, without actually buying or selling debt securities. For
example, if interest rates were expected to increase, the Fund might enter into
futures contracts for the sale of debt securities. Such a sale would have much
the same effect as if the Fund sold bonds that it owned, or as if the Fund sold
longer-term bonds and purchased shorter-term bonds. If interest rates did
increase, the value of the Fund's debt securities would decline, but the value
of the futures contracts would increase, thereby keeping the net asset value of
the Fund from declining as much as it otherwise would have. Similar results
could be accomplished by selling bonds, or by selling bonds with longer
maturities and investing in bonds with shorter maturities. However, by using
futures contracts, the Fund avoids having to sell its securities.
Similarly, when it is expected that interest rates may decline, a Fund
might enter into futures contracts for the purchase of debt securities. Such a
purchase would be intended to have much the same effect as if the Fund purchased
bonds, or as if the Fund sold shorter-term bonds and purchased longer-term
bonds. If interest rates did decline, the value of the futures contracts would
increase.
Each of the Funds may purchase and sell foreign currency futures contracts
to attempt to protect its current or intended investments from fluctuations in
currency exchange rates. Such fluctuations could reduce the dollar value of
portfolio securities denominated in foreign currencies, or increase the cost of
foreign-denominated securities to be acquired, even if the value of such
securities in the currencies in which they are denominated remains constant. A
Fund may sell futures contracts on a foreign currency, for example, where it
holds securities denominated in such currency and it anticipates a decline in
the value of such currency relative to the dollar. In the event such decline
occurs, the resulting adverse effect on the value of foreign-denominated
securities may be offset, in whole or in part, by gains on the futures
contracts.
Conversely, the Fund could protect against a rise in the dollar cost of
foreign-denominated securities to be acquired by purchasing futures contracts on
the relevant currency, which could offset, in whole or in part, the increased
cost of such securities resulting from a rise in the dollar value of the
underlying currencies. Where the Fund purchases futures contracts under such
circumstances, however, and the prices of securities to be acquired instead
decline, the Fund will sustain losses on its futures position which could reduce
or eliminate the benefits of the reduced cost of portfolio securities to be
acquired.
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Although the use of futures for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position (e.g., if a Fund sells
a futures contract to protect against losses in the debt securities held by the
Fund), at the same time the futures contract limits any potential gain which
might result from an increase in value of a hedged position.
In addition, the ability effectively to hedge all or a portion of a Fund's
investments through transactions in futures contracts depends on the degree to
which movements in the value of the debt securities underlying such contracts
correlate with movements in the value of the Fund's securities. If the security
underlying a futures contract is different than the security being hedged, they
may not move to the same extent or in the same direction. In that event, the
Fund's hedging strategy might not be successful and the Fund could sustain
losses on these hedging transactions which would not be offset by gains on the
Fund's other investments or, alternatively, the gains on the hedging transaction
might not be sufficient to offset losses on the Fund's other investments. It is
also possible that there may be a negative correlation between the security
underlying a futures contract and the securities being hedged, which could
result in losses both on the hedging transaction and the securities. In these
and other instances, the Fund's overall return could be less than if the hedging
transactions had not been undertaken. Similarly, even where a Fund enters into
futures transactions other than for hedging purposes, the effectiveness of its
strategy may be affected by lack of correlation between changes in the value of
the futures contracts and changes in value of the securities which the Fund
would otherwise buy and sell.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, there is the potential that the liquidity of the
futures market may be lacking. Prior to expiration, a futures contract may be
terminated only by entering into a closing purchase or sale transaction, which
requires a secondary market on the contract market on which the futures contract
was originally entered into. While a Fund will establish a futures position only
if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular futures contract at
any specific time. In that event, it may not be possible to close out a position
held by the Fund, which could require the Fund to purchase or sell the
instrument underlying the futures contract or to meet ongoing variation margin
requirements. The inability to close out futures positions also could have an
adverse impact on the ability effectively to use futures transactions for
hedging or other purposes.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by the exchanges, which
limit the amount of fluctuation in the price of a futures contract during a
single trading day and prohibit trading beyond such limits once they have been
reached. The trading of futures contracts also is subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Investments in futures contracts also entail the risk that if the Manager's
or a Subadviser's investment judgment about the general direction of interest
rates is incorrect, the Fund's overall performance may be poorer than if any
such contract had not been entered into. For example, if a Fund hedged against
the possibility of an increase in interest rates which would adversely affect
the price of the Fund's bonds and interest rates decrease instead, part or all
of the benefit of the increased value of the Fund's bonds which were hedged will
<PAGE>
be lost because the Fund will have offsetting losses in its futures positions.
Similarly, if a Fund purchases futures contracts expecting a decrease in
interest rates and interest rates instead increased, the Fund will have losses
in its futures positions which will increase the amount of the losses on the
securities in its portfolio which will also decline in value because of the
increase in interest rates. In addition, in such situations, if the Fund has
insufficient cash, the Fund may have to sell bonds from its investments to meet
daily variation margin requirements, possibly at a time when it may be
disadvantageous to do so.
Each contract market on which futures contracts are traded has established
a number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Manager
does not believe that these trading and position limits would have an adverse
impact on a Fund's hedging strategies.
CFTC regulations require compliance with certain limitations in order to
assure that a Fund is not deemed to be a "commodity pool" under such
regulations. In particular, CFTC regulations prohibit a Fund from purchasing or
selling futures contracts (other than for bona fide hedging transactions) if,
immediately thereafter, the sum of the amount of initial margin required to
establish that Fund's non-hedging futures positions would exceed 5% of that
Fund's net assets.
Each Fund will comply with this CFTC requirement, and each Fund currently
intends to adhere to the additional policies described below. First, an amount
of cash or cash equivalents will be maintained by each Fund in a segregated
account with the Fund's custodian so that the amount so segregated, plus the
initial margin held on deposit, will be approximately equal to the amount
necessary to satisfy the Fund's obligations under the futures contract. The
second is that a Fund will not enter into a futures contract if immediately
thereafter the amount of initial margin deposits on all the futures contracts
held by the Fund would exceed approximately 5% of the net assets of the Fund.
The third is that the aggregate market value of the futures contracts held by a
Fund not exceed approximately 50% of the market value of the Fund's total assets
other than its futures contracts. For purposes of this third policy, "market
value" of a futures contract is deemed to be the amount obtained by multiplying
the number of units covered by the futures contract times the per unit price of
the securities covered by that contract.
The ability of a Fund to engage in futures transactions may be limited by
the current federal income tax requirement that less than 30% of a Fund's gross
income be derived from the sale or other disposition of stock or securities held
for less than three months. In addition, the use of futures contracts may
increase the amount of taxable income of a Fund and may affect the amount,
timing and character of a Fund's income for tax purposes, as more fully
discussed herein in the section entitled "Certain Additional Tax Matters."
OPTIONS ON FUTURES CONTRACTS
Each of the Funds may purchase and write options to buy or sell futures
contracts in which the Fund may invest. Such investment strategies will be used
for hedging purposes and for non-hedging purposes, subject to applicable law.
An option on a futures contract provides the holder with the right to enter
into a "long" position in the underlying futures contract, in the case of a call
option, or a "short" position in the underlying futures contract, in the case of
a put option, at a fixed exercise price up to a stated expiration date or, in
the case of certain options, on such date. Upon exercise of the option by the
holder, the contract market clearinghouse establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position in the case of a put option. In the event that an
option is exercised, the parties will be subject to all the risks associated
with the trading of futures contracts, such as payment of initial and variation
margin deposits. In addition, the writer of an option on a futures contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.
<PAGE>
A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series, (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's
profits or loss on the transaction.
Options on futures contracts that are written or purchased by a Fund on
U.S. exchanges are traded on the same contract market as the underlying futures
contract, and, like futures contracts, are subject to regulation by the CFTC and
the performance guarantee of the exchange clearinghouse. In addition, options on
futures contracts may be traded on foreign exchanges.
Each of the Funds may cover the writing of call options on futures
contracts (a) through purchases of the underlying futures contract, (b) through
ownership of the instrument, or instruments included in the index, underlying
the futures contract, or (c) through the holding of a call on the same futures
contract and in the same principal amount as the call written where the exercise
price of the call held (i) is equal to or less than the exercise price of the
call written or (ii) is greater than the exercise price of the call written if
the difference is maintained by the Fund in cash or securities in a segregated
account with its custodian. A Fund may cover the writing of put options on
futures contracts (a) through sales of the underlying futures contract, (b)
through segregation of cash, short-term money market instruments or high quality
debt securities in an amount equal to the value of the security or index
underlying the futures contract, (c) through the holding of a put on the same
futures contract and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or where the exercise price of the put held is less than the
exercise price of the put written if the difference is maintained by a Fund in
cash, short-term money market instruments or high quality debt securities in a
segregated account with its custodian. Put and call options on futures contracts
may also be covered in such other manner as may be in accordance with the rules
of the exchange on which the option is traded and applicable laws and
regulations. Upon the exercise of a call option on a futures contract written by
a Fund, the Fund will be required to sell the underlying futures contract which,
if the Fund has covered its obligation through the purchase of such contract,
will serve to liquidate its futures position. Similarly, where a put option on a
futures contract written by a Fund is exercised, the Fund will be required to
purchase the underlying futures contract which, if the Fund has covered its
obligation through the sale of such contract, will close out its futures
position.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities deliverable on exercise of the
futures contract. A Fund will receive an option premium when it writes the call,
and, if the price of the futures contract at expiration of the option is below
the option exercise price, the Fund will retain the full amount of this option
premium, which provides a partial hedge against any decline that may have
occurred in the Fund's security holdings. Similarly, the writing of a put option
on a futures contract constitutes a partial hedge against increasing prices of
the securities deliverable upon exercise of the futures contract. If a Fund
writes an option on a futures contract and that option is exercised, the Fund
may incur a loss, which loss will be reduced by the amount of the option premium
received, less related transaction costs. A Fund's ability to hedge effectively
through transactions in options on futures contracts depends on, among other
factors, the degree of correlation between changes in the value of securities
held by the Fund and changes in the value of its futures positions. This
correlation cannot be expected to be exact, and the Fund bears a risk that the
value of the futures contract being hedged will not move in the same amount, or
even in the same direction, as the hedging instrument. Thus it may be possible
for a Fund to incur a loss on both the hedging instrument and the futures
contract being hedged.
Each of the Funds may purchase options on futures contracts for hedging
purposes instead of purchasing or selling the underlying futures contracts. For
<PAGE>
example, where a decrease in the value of portfolio securities is anticipated as
a result of a projected market-wide decline or changes in interest or exchange
rates, a Fund could, in lieu of selling futures contracts, purchase put options
thereon. In the event that such decrease occurs, it may be offset, in whole or
part, by a profit on the option. Conversely, where it is projected that the
value of securities to be acquired by a Fund will increase prior to acquisition,
due to a market advance or changes in interest or exchange rates, the Fund could
purchase call options on futures contracts, rather than purchasing the
underlying futures contracts.
4. INVESTMENT RESTRICTIONS
The Trust, on behalf of the Funds, and the Portfolio Trust, on behalf of
the Portfolios, have each adopted the following policies which may not be
changed with respect to any Fund or Portfolio without approval by holders of a
majority of the outstanding voting securities of that Fund or Portfolio, which
as used in this Statement of Additional Information means the vote of the lesser
of (i) 67% or more of the outstanding voting securities of the Fund or Portfolio
present at a meeting at which the holders of more than 50% of the outstanding
voting securities of the Fund or Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding voting securities of the Fund or
Portfolio. The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act.
None of the Funds or Portfolios may:
(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 purchase any
securities at any time at which borrowings exceed 5% of the total assets of the
Fund or Portfolio, taken at market value). It is intended that a Fund or
Portfolio would borrow money only from banks and only to accommodate requests
for the repurchase of shares of the Fund or beneficial interests in the
Portfolio while effecting an orderly liquidation of portfolio securities.
(2) 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
Fund's or Portfolio's total assets (taken at market value), (b) through the use
of repurchase agreements or the purchase of short-term obligations or (c) by
purchasing all or a portion of an issue of debt securities of types commonly
distributed privately to financial institutions. 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 Fund or Portfolio
more than 10% of the voting securities of such issuer to be held by the Fund or
Portfolio, except that, with respect to each Fund, the applicable Trust may
invest all or substantially all of the Fund's assets in another registered
investment company having the same investment objectives and policies and
substantially the same investment restrictions as those with respect to the Fund
(a "Qualifying Portfolio").
(4) Purchase securities of any issuer if such purchase at the time thereof
would cause as to 75% of the Fund's or Portfolio's total assets more than 5% of
the Fund's or 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, with respect to each Fund, the Trust may invest all or
substantially all of the Fund's assets in a Qualifying Portfolio.
<PAGE>
(5) Concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of the Fund's or Portfolio's investment
objectives, up to 25% of its assets, at market value at the time of each
investment, may be invested in any one industry.
(6) Underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in a Qualifying Portfolio and except in so
far as the Fund or 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 (each of the Fund 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 Fund or 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, provided that collateral arrangements with
respect to options, futures contracts, and options on futures contracts,
including deposits of initial and variation margin, are not considered to be the
issuance of a senior security for purposes of this restriction and except as
appropriate to evidence a debt incurred without violating Investment Restriction
(1) above.
NON-FUNDAMENTAL RESTRICTIONS
Each Fund and each Portfolio does not as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the net assets of the
Fund or Portfolio (taken at cost) (moreover, the Fund or Portfolio will not
purchase any securities for the Fund or Portfolio at any time at which
borrowings exceed 5% of the total assets of the Fund or Portfolio (taken at
market value)),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the net assets of the Fund or Portfolio (taken at market value),
(iii)sell any security which the Fund or Portfolio does not own unless by
virtue of the ownership of other securities there is at the time of sale a right
to obtain securities, without payment of further consideration, equivalent in
kind and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions (provided that this
limitation shall not prevent the Fund or Portfolio from entering into futures
contracts or options thereon),
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the Fund may be invested in a Qualifying Portfolio,
(v) purchase securities issued by any registered investment company, except
that all of the assets of the Fund may be invested in a Qualifying Portfolio and
except by purchase in the open market where no commission or profit to a sponsor
or dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open market, is
part of a plan of merger or consolidation; provided, however, that the Fund or
Portfolio will not purchase the securities of any registered investment company
if such purchase at the time thereof would cause more than 10% of the total
assets of the Fund or Portfolio (taken in each case at the greater of cost or
market value) to be invested in the securities of such issuers or would cause
<PAGE>
more than 3% of the outstanding voting securities of any such issuer to be held
for the Fund or Portfolio (for purposes of this clause (v) securities of
non-U.S. banks shall be treated as investment company securities, except that
debt securities and non-voting preferred stock of non-U.S. banks are not subject
to the 10% limitation described herein),
(vi) invest more than 15% of the net assets of the Fund or Portfolio in
securities that are not readily marketable, including debt securities for which
there is no established market and fixed time deposits and repurchase agreements
maturing in more than seven days, except that all the assets of the Fund may be
invested in a Qualifying Portfolio,
(vii)purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Trust or of the Portfolio Trust, or is an officer or director of the
Manager, if after the purchase of the securities of such issuer by the Fund or
Portfolio, one or more of such persons owns beneficially more than 1/2 of 1% of
the shares or securities, or both, all taken at market value, of such issuer,
and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities, or both,
all taken at market value,
(viii) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 10% of the net
assets of the Fund or Portfolio (taken at market value) is held as collateral
for such sales at any one time (the Funds and Portfolios do not presently intend
to make such short sales for investment purposes).
These policies are not fundamental and may be changed by each Fund or
Portfolio without the approval of its shareholders or holders of beneficial
interests.
PERCENTAGE AND RATING RESTRICTIONS
If a percentage or rating restriction on investment or utilization of
assets set forth above or referred to in this Registration Statement is adhered
to at the time an investment is made or assets are so utilized, a later change
in percentage resulting from changes in the value of the securities or a later
change in the rating of the securities held for the Fund will not be considered
a violation of policy.
5. PERFORMANCE INFORMATION AND ADVERTISING
A total rate of return quotation for a Fund is calculated for any period by
(a) dividing (i) the sum of the net asset value per share on the last day of the
period and the net asset value per share on the last day of the period of shares
purchasable with dividends and capital gains distributions declared during such
period with respect to a share held at the beginning of such period and with
respect to shares purchased with such dividends and capital gains distributions,
by (ii) the public offering price per share on the first day of such period, and
(b) subtracting 1 from the result. Any annualized total rate of return quotation
is calculated by (x) adding 1 to the period total rate of return quotation
calculated above, (y) raising such sum to a power which is equal to 365 divided
by the number of days in such period, and (z) subtracting 1 from the result.
Total rates of return may also be calculated on investments at various sales
charge levels or at net asset value. Any performance data which is based on a
reduced sales charge or net asset value would be reduced if the maximum sales
charge were taken into account.
From time to time, advertising and marketing material of any of the Funds
may include charts showing the historical performance of hypothetical portfolios
comprised of classes of assets similar to those in which the Funds invest. The
<PAGE>
classes of assets will be represented by the historical performance of specific
unmanaged indices. The information contained in such charts should not be viewed
as a projection of results of any of the Funds or as the historical performance
of any of the Funds. In addition, the past performance illustrated by such
charts should not be viewed as a guarantee of future results.
6. DETERMINATION OF NET ASSET VALUE; VALUATION OF
SECURITIES; ADDITIONAL REDEMPTION INFORMATION
The net asset value of each share of each class of each Fund is determined
each day during which the New York Stock Exchange is open for trading ("Business
Day"). As of the date of this Statement of Additional Information, such Exchange
is open for trading every weekday except for the following holidays (or the days
on which they are observed): New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
This determination of net asset value of shares of each class of a Fund is made
once each day as of the close of regular trading on such Exchange by adding the
market value of all securities and other assets attributable to a class of a
Fund (including the Fund's interest in its Portfolio), then subtracting the
liabilities of that class, and then dividing the result by the number of
outstanding shares of the class. The net asset value per share is effective for
orders received and accepted by the Distributor prior to its calculation.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in non-U.S. currencies will be converted into
U.S. dollars at the prevailing market rates at the time of valuation. Equity
securities are valued at the last sale price on the exchange on which they are
primarily traded or on the NASDAQ system for unlisted national market issues, or
at the last quoted bid price for securities in which there were no sales during
the day or for unlisted securities not reported on the NASDAQ system. Securities
listed on a foreign exchange are valued at the last quoted sale price available
before the time when net assets are valued. Bonds and other fixed income
securities (other than short-term obligations) are valued on the basis of
valuations furnished by a pricing service, use of which has been approved by the
Board of Trustees of the Trust. In making such valuations, the pricing service
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices or exchange or
over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Short-term obligations (maturing
in 60 days or less) are valued at amortized cost, which constitutes fair value
as determined by the Board of Trustees of the Trust. Futures contracts are
normally valued at the settlement price on the exchange on which they are
traded. Securities for which there are no such valuations are valued at fair
value as determined in good faith by or at the direction of the Board of
Trustees of the Trust.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of regular trading on the
Exchange and may also take place on days on which the Exchange is closed. If
events materially affecting the value of foreign securities occur between the
time when the exchange on which they are traded closes and the time when a
Fund's net asset value is calculated, such securities will be valued at fair
value in accordance with procedures established by and under the general
supervision of the Board of Trustees of the Trust.
Interest income on long-term obligations held for a Fund is determined on
the basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
<PAGE>
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued plus amortization of premiums.
Subject to compliance with applicable regulations, the Trust has reserved
the right to pay the redemption or repurchase price of shares of the Funds,
either totally or partially, by a distribution in kind of readily marketable
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares or beneficial interests being sold. If a holder of shares or
beneficial interests received a distribution in kind, such holder could incur
brokerage or other charges in converting the securities to cash.
The Trust may suspend the right of redemption or postpone the date of
payment for shares of a Fund more than seven days during any period when (a)
trading in the markets a Fund normally utilizes is restricted, or an emergency,
as defined by the rules and regulations of the Securities and Exchange
Commission (the "SEC"), exists making disposal of a Fund's investments or
determination of its net asset value not reasonably practicable; (b) the New
York Stock Exchange is closed (other than customary weekend and holiday
closings); or (c) the SEC has by order permitted such suspension.
7. MANAGEMENT
TRUSTEES
The Trustees and officers of the Trust and the Portfolio Trust and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined in the 1940 Act) of
the Trust or the Portfolio Trust. Unless otherwise indicated below, the address
of each Trustee and officer is 6 St. James Avenue, Boston, Massachusetts. The
address of the Portfolio Trust is Elizabethan Square, George Town, Grand Cayman,
British West Indies.
TRUSTEES OF THE TRUST
H.B. ALVORD (aged 73) -- Treasurer-Tax Collector, County of Los Angeles
(retired, March, 1984); Chairman, certain registered investment companies in the
59 Wall Street funds group. His address is P.O. Box 1812, Pebble Beach,
California.
PHILIP W. COOLIDGE* (aged 44) -- President of the Trust and the Portfolio
Trust; Chief Executive Officer, Signature Financial Group, Inc. and The Landmark
Funds Broker-Dealer Services, Inc. (since December, 1988).
RILEY C. GILLEY (aged 69) -- Vice President and General Counsel, Corporate
Property Investors (November, 1988 to December, 1991); Partner, Breed, Abbott &
Morgan (Attorneys) (retired, December, 1987). His address is 4041 Gulf Shore
Boulevard North, Naples, Florida.
DIANA R. HARRINGTON (aged 56) -- Professor, Babson College (since September,
1993); Visiting Professor, Kellogg Graduate School of Management, Northwestern
University (September, 1992 to September, 1993); Professor, Darden Graduate
School of Business, University of Virginia (September, 1978 to September, 1993);
Consultant to PanAgora Asset Management (since 1994). Her address is 120
Goulding Street, Holliston, Massachusetts.
SUSAN B. KERLEY (aged 44) -- President, Global Research Associates, Inc.
(Investment Research) (since August, 1990); Manager, Rockefeller & Co. (March,
1988 to July, 1990); Trustee, Mainstay Institutional Funds (since December,
1990). Her address is P.O. Box 9572, New Haven, Connecticut.
<PAGE>
C. OSCAR MORONG, JR. (aged 61) -- Managing Director, Morong Capital
Management (since February, 1993); Senior Vice President and Investment Manager,
CREF Investments, Teachers Insurance & Annuity Association (retired January,
1993); Director, Indonesia Fund; Director, MAS Funds. His address is 1385
Outlook Drive West, Mountainside, New Jersey.
DONALD B. OTIS (aged 77) -- Director of Investor Relations, International
Business Machines Corporation (retired February, 1982). His address is 6300
Midnight Pass Road, Sarasota, Florida.
E. KIRBY WARREN (aged 61) -- Professor of Management, Graduate School of
Business, Columbia University (since 1987); Samuel Bronfman Professor of
Democratic Business Enterprise (1978-1987). His address is Columbia University,
Graduate School of Business, 725 Uris Hall, New York, New York.
WILLIAM S. WOODS, JR. (aged 75) -- Vice President-Investments, Sun Company,
Inc. (retired, April, 1984). His address is 35 Colwick Road, Cherry Hill, New
Jersey.
TRUSTEES OF THE PORTFOLIO TRUST
ELLIOTT J. BERV (aged 53) -- Chairman and Director, Catalyst, Inc.
(Management Consultants) (since June, 1992); President, Chief Operating Officer
and Director, Deven International, Inc. (International Consultants) (June, 1991
to June 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May, 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE* (aged 44) -- President of the Trust and the Portfolio
Trust; Chairman, Chief Executive Officer and President, Signature Financial
Group, Inc. and The Landmark Funds Broker-Dealer Services, Inc. (since December,
1988).
MARK T. FINN (aged 52) -- President and Director, Delta Financial, Inc.
(since June, 1983); Chairman of the Board and Chief Executive Officer, FX 500
Ltd. (Commodity Trading Advisory Firm) (since April, 1990); Director, Vantage
Consulting Group, Inc. (since October, 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
WALTER E. ROBB, III (aged 69) -- President, Benchmark Consulting Group, Inc.
(since 1991); Principal, Robb Associates (corporate financial advisers) (since
1978); President, Benchmark Advisors, Inc. (Corporate Financial Advisors) (since
1989); Trustee of certain registered investment companies in the MFS Family of
Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
OFFICERS OF THE TRUST AND THE PORTFOLIO TRUST
PHILIP W. COOLIDGE* (aged 44) -- President of the Trust and the Portfolio
Trust; Chairman, Chief Executive Officer and President, Signature Financial
Group, Inc. and The Landmark Funds Broker-Dealer Services, Inc. (since December,
1988).
DAVID G. DANIELSON* (aged 31) -- Assistant Treasurer of the Trust and the
Portfolio Trust; Assistant Manager, Signature Financial Group, Inc. (since May,
1991).
JOHN R. ELDER* (aged 47) -- Treasurer of the Trust and the Portfolio Trust;
Vice President, Signature Financial Group, Inc. (since April, 1995); Treasurer
of the Phoenix Family of Mutual Funds, Phoenix Home Life Mutual Insurance
Company (1983 to March, 1995).
<PAGE>
LINDA T. GIBSON* (aged 30) -- Assistant Secretary of the Trust and the
Portfolio Trust; Legal Counsel, Signature Financial Group, Inc. (since June,
1991); Law Student, Boston University School of Law (September, 1989 to May,
1992); Product Manager, Signature Financial Group, Inc. (January, 1989 to
September, 1989).
SUSAN JAKUBOSKI* (aged 32) -- Assistant Secretary of the Trust and Vice
President, Assistant Treasurer and Assistant Secretary of the Portfolio Trust;
Manager, Signature Financial Group (Cayman) Ltd. (since August, 1994); Senior
Fund Administrator, Signature Financial Group, Inc. (since August, 1994);
Assistant Treasurer, Signature Broker-Dealer Services, Inc. (since September,
1994); Fund Compliance Administrator, Concord Financial Group (November, 1990 to
August, 1994); Senior Fund Accountant, Neuberger & Berman Management, Inc. (from
February, 1988 to November, 1990); Customer Service Representative, I.B.J.
Schroder (prior to 1988). Her address is Elizabethan Square, George Town, Grand
Cayman, Cayman Islands, BWI.
THOMAS M. LENZ* (aged 37) -- Secretary of the Trust and the Portfolio
Trust; Vice President and Associate General Counsel, Signature Financial Group,
Inc. (since November, 1989); Assistant Secretary, Signature Broker-Dealer
Services, Inc. (since February, 1991); Attorney, Ropes & Gray (September, 1984
to November, 1989).
MOLLY S. MUGLER* (aged 44) -- Assistant Secretary of the Trust and the
Portfolio Trust; Legal Counsel and Assistant Secretary, Signature Financial
Group, Inc. (since December, 1988); Assistant Secretary, The Landmark Funds
Broker-Dealer Services, Inc. (since December, 1988).
BARBARA M. O'DETTE* (aged 36) -- Assistant Treasurer of the Trust and the
Portfolio Trust; Assistant Treasurer, Signature Financial Group, Inc. and The
Landmark Funds Broker-Dealer Services, Inc. (since December, 1988).
ANDRES E. SALDANA* (aged 33) -- Assistant Secretary of the Trust and the
Portfolio Trust; Legal Counsel and Assistant Secretary, Signature Financial
Group, Inc. (since November, 1992); Attorney, Ropes & Gray (September, 1990 to
November, 1992).
DANIEL E. SHEA* (aged 33) -- Assistant Treasurer of the Trust and the
Portfolio Trust; Assistant Manager of Fund Administration, Signature Financial
Group, Inc. (since November, 1993); Supervisor and Senior Technical Advisor,
Putnam Investments (prior to November, 1993).
The Trustees and officers of the Trust and the Portfolio Trust also hold
comparable positions with certain other funds for which The Landmark Funds
Broker-Dealer Services, Inc., Signature Financial Group, Inc. or their
affiliates serve as the distributor or administrator.
As of the date of this Statement of Additional Information, there are no
shareholders of any of the Funds.
<PAGE>
The Trustees of the Trust (with the exception of Mr. Coolidge, who received
no remuneration from the Trust or the Portfolio Trust) received the following
remuneration from the Trust during its fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total
Pension or Compensation
Aggregate Retirement Estimated Annual from Registrant
Compensation Benefits Accrued Benefits Upon and Fund
Name of Person, from as Part of Fund Retirement Complex Paid
Position Registrant Expenses to Trustees(1)
H.B. Alvord $ 3,198.55 None None $40,000.00
Riley C. Gilley $ 4,352.29 None None $44,000.00
Diana R. Harrington $ 3,921.20 None None $40,000.00
Susan B. Kerley $ 3,921.20 None None $40,000.00
C. Oscar Morong, Jr. $ 3,606.47 None None $44,500.00
Donald B. Otis $ 7,758.16 None None $40,000.00
E. Kirby Warren $ 3,606.47 None None $44,500.00
William S. Wood, Jr. $ 4,582.57 None None $44,000.00
</TABLE>
(1) Information relates to the fiscal year ended December 31, 1995. Messrs.
Alvord, Coolidge, Gilley, Morong, Otis, Warren and Woods and Mses. Harrington
and Kerley are trustees of 16, 32, 15, 16, 11, 16, 15, 15 and 15 funds,
respectively, of the Landmark Family of Funds.
The Declaration of Trust of the Trust and the Portfolio Trust provide that
the Trust and the Portfolio Trust, respectively, will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Trust or the
Portfolio Trust, as the case may be, unless, as to liability to the Trust, the
Portfolio Trust or their respective investors, it is finally adjudicated that
they engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the Trust
or the Portfolio Trust, as the case may be. In the case of settlement, such
indemnification will not be provided unless it has been determined by a court or
other body approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of a
majority of disinterested Trustees of the Trust or the Portfolio Trust, or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
MANAGER
Citibank manages the assets of each Portfolio and provides certain
administrative services to the Trust and the Portfolio Trust pursuant to
separate management agreements (the "Management Agreements"). Subject to such
policies as the Board of Trustees of the Portfolio Trust may determine, Citibank
manages the securities of each Portfolio and makes investment decisions for each
Portfolio. Citibank furnishes at its own expense all services, facilities and
personnel necessary in connection with managing each Portfolio's investments and
effecting securities transactions for each Portfolio. The Management Agreement
with the Portfolio Trust provides that Citibank may delegate the daily
management of the securities of each Portfolio to one or more Subadvisers. The
Management Agreement with the Portfolio Trust will continue in effect until
February 9, 1998 and thereafter as long as such continuance is specifically
<PAGE>
approved at least annually by the Board of Trustees of the Portfolio Trust or by
a vote of a majority of the outstanding voting securities of the applicable
Portfolio, and, in either case, by a majority of the Trustees of the Portfolio
Trust who are not parties to the Management Agreement or interested persons of
any such party, at a meeting called for the purpose of voting on the Management
Agreement. The Management Agreement with the Trust will continue in effect until
February 9, 1998 and thereafter as long as such continuance is specifically
approved at least annually by the Board of Trustees of the Trust or by a vote of
a majority of the outstanding voting securities of the applicable Fund, and, in
either case, by a majority of the Trustees of the Trust who are not parties to
the Management Agreement or interested persons of any such party, at a meeting
called for the purpose of voting on the Management Agreement.
Citibank provides the Trust and the Portfolio Trust with general office
facilities and supervises the overall administration of the Trust and the
Portfolio Trust, including, among other responsibilities, the negotiation of
contracts and fees with, and the monitoring of performance and billings of, the
Trust's or the Portfolio Trust's independent contractors and agents; the
preparation and filing of all documents required for compliance by the Trust or
the Portfolio Trust with applicable laws and regulations; and arranging for the
maintenance of books and records of the Trust or the Portfolio Trust. Trustees,
officers, and investors in the Trust and the Portfolio Trust are or may be or
may become interested in Citibank, as directors, officers, employees, or
otherwise and directors, officers and employees of Citibank are or may become
similarly interested in the Trust and the Portfolio Trust.
Each Management Agreement provides that Citibank may render services to
others. Each Management Agreement is terminable without penalty on not more than
60 days' nor less than 30 days' written notice by the Portfolio Trust or the
Trust, as the case may be, when authorized either by a vote of a majority of the
outstanding voting securities of the applicable Portfolio or Fund or by a vote
of a majority of the Board of Trustees of the Portfolio Trust or the Trust, or
by Citibank on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. The Management
Agreement with the Portfolio Trust provides that neither Citibank nor its
personnel shall be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in the execution
of security transactions for the applicable Portfolio, except for willful
misfeasance, bad faith or gross negligence or reckless disregard of its or their
obligations and duties under the Management Agreement with the Portfolio Trust.
The Management Agreement with the Trust provides that neither Citibank nor its
personnel shall be liable for any error of judgment or mistake of law or for any
omission in the administration or management of the Trust or the performance of
its duties under the Management Agreement, except for willful misfeasance, bad
faith or gross negligence or reckless disregard of its or their obligations and
duties under the Management Agreement with the Trust.
The Prospectus contains a description of the fees payable to Citibank for
services under each of the Management Agreements. Citibank, if required by state
law, will reimburse the Funds and Portfolios or waive all or a portion of its
management fees to the extent that the expenses of a Fund and its corresponding
Portfolio exceed the expense limitation prescribed by any state in which that
Fund is qualified for offer or sale.
Pursuant to a sub-administrative services agreement with Citibank, LFBDS
performs such sub-administrative duties for the Trust and the Portfolio Trust as
from time to time are agreed upon by Citibank and LFBDS. For performing such
sub-administrative services, LFBDS receives compensation as from time to time is
agreed upon by Citibank, not in excess of the amount paid to Citibank for its
services under the Management Agreements with the Trust and the Portfolio Trust.
All such compensation is paid by Citibank.
Citibank has entered into separate Submanagement Agreements with the
Subadvisers listed below for the kinds of assets of each Fund noted opposite the
Subadvisers' names. Each Subadviser's compensation is described in the
Prospectus and is payable by Citibank.
<PAGE>
Large cap value securities Miller Anderson & Sherrerd LLP
Small cap value securities Franklin Advisory Services, Inc.
International equity Hotchkis & Wiley
securities
Foreign government securities Pacific Investment Management Company
It is the responsibility of the Subadviser to make the day-to-day
investment decisions for their allocated assets of the Funds, and to place the
purchase and sales orders for securities transactions concerning those assets,
subject in all cases to the general supervisions of Citibank. Each Subadviser
furnishes at its own expense all services, facilities and personnel necessary in
connection with managing the assets of the Funds allocated to it and effecting
securities transactions concerning those assets.
Each Submanagement Agreement will continue in effect as to each applicable
Portfolio until February 9, 1998 and thereafter as long as such continuance is
specifically approved at least annually by the Board of Trustees of the
Portfolio Trust as to that Portfolio or by a vote of a majority of the
outstanding voting securities of that Portfolio, and, in either case, by a
majority of the Trustees of the Portfolio Trust who are not parties to the
Submanagement Agreement or interested persons of any such party, at a meeting
called for the purpose of voting on the Submanagement Agreement.
Each Submanagement Agreement provides that the applicable Subadviser may
render services to others. Each Submanagement Agreement is terminable as to any
Portfolio without penalty on not more than 60 days' nor less than 30 days'
written notice by the Portfolio Trust, when authorized either by a vote of a
majority of the outstanding voting securities of the applicable Portfolio or by
a vote of a majority of the Board of Trustees of the Portfolio Trust, or by
Citibank on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. Each Submanagement
Agreement may be terminated by the applicable Subadviser on not less than 90
days' written notice. Each Submanagement Agreement provides that neither the
Subadviser nor its personnel shall be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the execution of security transactions for any Portfolio, except for
willful misfeasance, bad faith or gross negligence or reckless disregard of its
or their obligations and duties under the Submanagement Agreement.
DISTRIBUTOR
LFBDS, 6 St. James Avenue, Boston, MA 02116, serves as the Distributor of
each Fund's shares pursuant to Distribution Agreements with the Trust for each
class of shares of the Funds (the "Distribution Agreements"). Unless otherwise
terminated each Distribution Agreement remains in effect until ___________,
1997, and thereafter will continue from year to year upon annual approval by the
Trust's Board of Trustees, or by the vote of a majority of the outstanding
voting securities of the class of shares of a particular Fund to which such
Distribution Agreement relates and by the vote of a majority of the Board of
Trustees of the Trust who are not parties to the Distribution Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Each Distribution Agreement will terminate
in the event of its assignment, as defined in the 1940 Act.
Under separate Service Plans for each class of shares of the Funds (each, a
"Service Plan") which have been adopted in accordance with Rule 12b-1 under the
1940 Act, the Funds may pay monthly fees at an annual rate not to exceed 0.50%
of the average daily net assets attributable to Class A shares of each Fund and
<PAGE>
1.00% of the average daily net assets attributable to Class C shares of each
Fund. Such fees may be used to make payments to the Distributor for distribution
services, to securities dealers and other industry professionals (called Service
Agents) that have entered into service agreements with the Distributor and
others in respect of the sale of shares of the Funds, and to other parties in
respect of the sale of shares of the Funds, and to make payments for
advertising, marketing or other promotional activity, and payments for
preparation, printing, and distribution of prospectuses, statements of
additional information and reports for recipients other than regulators and
existing shareholders. The Funds also may make payments to the Distributor,
Service Agents and others for providing personal service or the maintenance of
shareholder accounts. The Funds and the Distributor provide to the Trustees
quarterly a written report of amounts expended pursuant to each Service Plan and
the purposes for which the expenditures were made.
Each Distribution Agreement obligates the Funds to pay fees to the
Distributor, Service Agents and others as compensation for their services, not
as reimbursement for specific expenses incurred. Thus, even if their expenses
exceed the fees provided for under a particular Distribution Agreement for any
Fund, the Fund will not be obligated to pay more than those fees and, if their
expenses are less than the fees paid to them, they will realize a profit. Each
Fund will pay the fees to the Distributor, Service Agents and others until the
applicable Service Plan or Distribution Agreement is terminated or not renewed.
In that event, the Distributor's or Service Agent's expenses in excess of fees
received or accrued through the termination date will be the Distributor's or
Service Agent's sole responsibility and not obligations of the Fund. In their
annual consideration of the continuation of each Service Plan for each Fund, the
Trustees will review the Service Plan and the expenses for each Fund separately.
From time to time the Distributor may make payments for distribution out of
its past profits or any other sources available to it.
Each Service Plan continues in effect if such continuance is specifically
approved at least annually by a vote of both a majority of the Trust's Trustees
and a majority of the Trustees who are not "interested persons" of each Trust
and who have no direct or indirect financial interest in the operation of the
Service Plan or in any agreement related to the Plan (for purposes of this
paragraph "Qualified Trustees"). Each Service Plan requires that the Trust and
the Distributor provide to the Board of Trustees, and the Board of Trustees
review, at least quarterly, a written report of the amounts expended (and the
purposes therefor) under the Service Plan. Each Service Plan further provides
that the selection and nomination of the Qualified Trustees is committed to the
discretion of the disinterested Trustees (as defined in the 1940 Act) then in
office. Each Service Plan may be terminated with respect to the particular class
of any Fund at any time by a vote of a majority of that class of the Trust's
Qualified Trustees or by a vote of a majority of the outstanding voting
securities of that class of that Fund. The Service Plan may not be amended to
increase materially the amount of a Fund's permitted expenses thereunder without
the approval of a majority of the outstanding securities of the particular class
of that Fund and may not be materially amended in any case without a vote of a
majority of both the Trustees and Qualified Trustees. The Distributor will
preserve copies of any plan, agreement or report made pursuant to a Service Plan
for a period of not less than six years, and for the first two years the
Distributor will preserve such copies in an easily accessible place.
As contemplated by each Service Plan, LFBDS acts as the agent of the Trust
in connection with the offering of shares of the Funds pursuant to the
Distribution Agreement. The Prospectus contains a description of fees payable to
the Distributor under the Distribution Agreement.
The Distributor may enter into agreements with Service Agents and may pay
compensation to such Service Agents for accounts for which the Service Agents
are holders of record. Payments may be made to the Service Agents out of the
distribution fees received by the Distributor and out of the Distributor's past
profits.
<PAGE>
TRANSFER AGENT AND CUSTODIAN
The Trust has entered into a Transfer Agency and Service Agreement with
State Street Bank and Trust Company ("State Street") pursuant to which State
Street acts as transfer agent for each Fund. The Trust also has entered into a
Custodian Agreement and a Fund Accounting Agreement with State Street, pursuant
to which custodial and fund accounting services, respectively, are provided for
each Fund. See "Transfer Agent, Custodian and Fund Accountant" in the Prospectus
for additional information.
The Portfolio Trust, on behalf of the Portfolios, has entered into
Custodian Agreements with State Street pursuant to which State Street acts as
custodian for each Portfolio. The Portfolio Trust, on behalf of the Portfolios,
also has entered into Fund Accounting Agreements with State Street pursuant to
which State Street provides fund accounting services for each Portfolio.
Pursuant to separate Transfer Agency and Service Agreements with the Portfolio
Trust, on behalf of the Portfolios, Signature Financial Services, Inc. provides
transfer agency services to each Portfolio.
The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of Signature
Financial Services, Inc. is 6 St. James Avenue, Boston, Massachusetts 02116.
AUDITORS
Price Waterhouse LLP are the independent certified public accountants for
the Trust, providing audit services and assistance and consultation with respect
to the preparation of filings with the SEC. The address of Price Waterhouse LLP
is 160 Federal Street, Boston, Massachusetts 02110. Price Waterhouse are the
chartered accountants for the Portfolio Trust. The address of Price Waterhouse
is Suite 3300, 1 First Canadian Place, Toronto, Ontario M5X 1H7, Canada.
8. PORTFOLIO TRANSACTIONS
The Trust trades securities for a Fund if it believes that a transaction
net of costs (including custodian charges) will help achieve the Fund's
investment objective. Changes in the Fund's investments are made without regard
to the length of time a security has been held, or whether a sale would result
in the recognition of a profit or loss. Therefore, the rate of turnover is not a
limiting factor when changes are appropriate. Specific decisions to purchase or
sell securities for each Fund are made by a portfolio manager who is an employee
of Citibank and who is appointed and supervised by its senior officers or by a
Subadviser. The portfolio manager or Subadviser may serve other clients of
Citibank in a similar capacity.
In connection with the selection of brokers or dealers and the placing of
portfolio securities transactions, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to a Fund and/or the other
accounts over which the Manager, the Subadvisers or their affiliates exercise
investment discretion. The Manager and the Subadvisers are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Manager or the applicable Subadviser 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
<PAGE>
the overall responsibilities which the Manager, the Subadvisers and their
affiliates have with respect to accounts over which they exercise investment
discretion. The Trustees of the Trust shall periodically review the commissions
paid by the Fund to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the Fund.
The investment advisory fee that each Fund pays to Citibank will not be
reduced as a consequence of Citibank's receipt of brokerage and research
services. While such services are not expected to reduce the expenses of
Citibank, Citibank would, through the use of the services, avoid the additional
expenses which would be incurred if it should attempt to develop comparable
information through its own staff or obtain such services independently.
In certain instances there may be securities that are suitable as an
investment for a Fund as well as for one or more of Citibank's or a Subadviser's
other clients. Investment decisions for each Fund and for Citibank's and the
Subadvisers' other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by, or bought or sold for,
other clients. Likewise, a particular security may be bought for one or more
clients when one or more clients are selling the same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could adversely affect
the price of or the size of the position obtainable in a security for a Fund.
When purchases or sales of the same security for a Fund and for other portfolios
managed by Citibank or a Subadviser occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large volume purchases or sales.
9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of the Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest (without
par value) of each series, to divide or combine the shares of any series into a
greater or lesser number of shares of that series without thereby changing the
proportionate beneficial interests in that series and to divide such shares into
classes. Each Fund currently has two classes of shares, Class A shares and Class
C shares. While there are at present no series of the Trust other than the Funds
and Landmark Balanced Fund, the Trust has reserved the right to create and issue
additional series and classes of shares. Each share of each Fund represents an
equal proportionate interest in that Fund with each other share of that Fund.
Shares of each series participate equally in the earnings, dividends and
distribution of net assets of the particular series upon liquidation or
dissolution except that, due to the differing expenses borne by each class,
dividends and proceeds generally will be lower for Class C shares than Class A
shares. Shares of each series are entitled to vote separately to approve
management agreements or changes in investment policy, but shares of all series
may vote together in the election or selection of Trustees and accountants for
the Trust. In matters affecting only a particular Fund or class, only shares of
that particular Fund or class are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust would
not be able to elect any Trustee. The Trust is not required to hold, and has no
present intention of holding, annual meetings of shareholders but the Trust will
hold special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have, under certain circumstances (e.g., upon the application and submission of
<PAGE>
certain specified documents to the Trustees by a specified number of
shareholders), the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have under certain circumstances the right to
remove one or more Trustees without a meeting by a declaration in writing by a
specified number of shareholders. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative vote of the holders of a
majority of the outstanding shares of each series affected by the amendment.
(See "Investment Restrictions.")
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by a vote of the holders of
two-thirds of the Trust's outstanding shares, voting as a single class, or of
the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's outstanding
shares would be sufficient. The Trust or any series of the Trust, as the case
may be, may be terminated (i) by a vote of a majority of the outstanding voting
securities of the Trust or the affected series or (ii) by the Trustees by
written notice to the shareholders of the Trust or the affected series. If not
so terminated, the Trust will continue indefinitely.
Share certificates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust of the Trust
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Trust property for any shareholder held personally liable for the obligations
of the Trust. The Declaration of Trust of the Trust also provides that the Trust
may maintain appropriate insurance (e.g., fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust of the Trust protects a Trustee
against any liability to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
The Portfolios are series of the Portfolio Trust, which is organized as a
New York trust. The Portfolio Trust's Declaration of Trust provides that
investors in the Portfolios (e.g., other investment companies (including the
corresponding Funds), insurance company separate accounts and common and
commingled trust funds) are each liable for all obligations of the Portfolios.
However, the risk of any Fund that invests through a Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the applicable Portfolio itself was unable
to meet its obligations. It is not expected that the liabilities of any
Portfolio would ever exceed its assets.
Each investor in a Portfolio, including the corresponding Fund, may add to
or withdraw from its investment in the applicable Portfolio on each Business
Day. As of the close of regular trading on each Business Day, the value of each
investor's beneficial interest in each Portfolio is determined by multiplying
the net asset value of the Portfolio by the percentage, effective for that day,
that represents that investor's share of the aggregate beneficial interests in
the Portfolio. Any additions or withdrawals that are to be effected on that day
<PAGE>
are then effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio is then re-computed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of the close of regular trading on such day plus or minus,
as the case may be, the amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of regular trading on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of the close of regular trading on the next following Business Day.
10. CERTAIN ADDITIONAL TAX MATTERS
Each Fund is treated as a separate entity for federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the "Code"). Each Fund has
elected to be treated, and intends to qualify each year, as a "regulated
investment company" under Subchapter M of the Code by meeting all applicable
requirements of Subchapter M, including requirements as to the nature of the
Fund's gross income, the amount of Fund distributions, and the composition and
holding period of the Fund's portfolio assets. Provided all such requirements
are met, no U.S. federal income or excise taxes generally will be required to be
paid by the Funds, although non-U.S. source income earned by each Fund may be
subject to non-U.S. withholding or other taxes. If a Fund should fail to qualify
as a "regulated investment company" for any year, the Fund would incur a regular
corporate federal income tax upon its taxable income and Fund distributions
would generally be taxable as ordinary income to shareholders. The Portfolio
Trust believes the Portfolios also will not be required to pay any U.S. federal
income or excise taxes on their income.
The portion of each Fund's ordinary income dividends attributable to
dividends received in respect of equity securities of U.S. issuers is normally
eligible for the dividends received deduction for corporations subject to U.S.
federal income taxes. Availability of the deduction for particular shareholders
is subject to certain limitations, and deducted amounts may be subject to the
alternative minimum tax and result in certain basis adjustments. Any Fund
dividend that is declared in October, November or December of any calendar year,
that is payable to shareholders of record in such a month, and that is paid the
following January will be treated as if received by the shareholders on December
31 of the year in which the dividend is declared.
Any Fund distribution will have the effect of reducing the per share net
asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of shares
of a Fund by a shareholder that holds such shares as a capital asset will be
treated as a long-term capital gain or loss if the shares have been held for
more than twelve months and otherwise as a short-term capital gain or loss.
However, any loss realized upon a disposition of shares in a Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales. Gain may be increased (or loss reduced) upon a
redemption of shares of a Fund within 90 days after their purchase followed by
any purchase (including purchases by exchange or by reinvestment) of shares of
that Fund or of another Landmark Fund without payment of any additional sales
charge.
Any investment by a Fund in zero coupon bonds, deferred interest bonds,
payment-in-kind bonds, certain stripped securities, and certain securities
purchased at a market discount will cause the Fund to recognize income prior to
the receipt of cash payments with respect to those securities. In order to
<PAGE>
distribute this income and avoid a tax on the Fund, the Fund may be required to
liquidate portfolio securities that it might otherwise have continued to hold,
potentially resulting in additional taxable gain or loss to the Fund.
Each Fund's transactions in options, futures and forward contracts will be
subject to special tax rules that may affect the amount, timing and character of
Fund income and distributions to shareholders. For example, certain positions
held by each Fund on the last business day of each taxable year will be marked
to market (i.e., treated as if closed out) on that day, and any gain or loss
associated with the positions will be treated as 60% long-term and 40%
short-term capital gain or loss. Certain positions held by a Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute "straddles," and may be subject to special tax rules
that would cause deferral of Fund losses, adjustments in the holding periods of
Fund securities, and conversion of short-term into long-term capital losses.
Certain tax elections exist for straddles that may alter the effects of these
rules. Each Fund intends to limit its activities in options, futures and forward
contracts to the extent necessary to meet the requirements of Subchapter M of
the Code.
An investment by a Fund in residual interests of a CMO that has elected to
be treated as a real estate mortgage investment conduit, or "REMIC," can create
complex tax problems, especially if the Fund has state or local governments or
other tax-exempt organizations as shareholders.
Special tax considerations apply with respect to non-U.S. investments of
the Funds. Use of non-U.S. currencies for non-hedging purposes may be limited in
order to avoid a tax on the Funds. Investment by a Fund in certain "passive
foreign investment companies" may also be limited in order to avoid a tax on the
Fund. Investment income received by a Fund from non-U.S. securities may be
subject to non-U.S. income taxes withheld at the source. The United States has
entered into tax treaties with many other countries that may entitle a Fund to a
reduced rate of tax or an exemption from tax on such income. The Funds intend to
qualify for treaty reduced rates where available. It is not possible, however,
to determine the Funds' effective rate of non-U.S. tax in advance since the
amount of the Funds' respective assets to be invested within various countries
is not known.
If a Fund holds more than 50% of its assets in foreign stock and securities
at the close of its taxable year, the Fund may elect to "pass through" to the
Fund's shareholders foreign income taxes paid. If the Fund so elects,
shareholders will be required to treat their pro rata portion of the foreign
income taxes paid by the Fund as part of the amounts distributed to them by the
Fund and thus includable in their gross income for federal income tax purposes.
Shareholders who itemize deductions would then be allowed to claim a deduction
or credit (but not both) on their federal income tax returns for such amounts,
subject to certain limitations. Shareholders who do not itemize deductions would
(subject to such limitations) be able to claim a credit but not a deduction. No
deduction for such amounts will be permitted to individuals in computing their
alternative minimum tax liability. If a Fund does not qualify or elect to "pass
through" to the Fund's shareholders foreign income taxes paid by it,
shareholders will not be able to claim any deduction or credit for any part of
the foreign taxes paid by the Fund.
The Funds will withhold tax payments at a rate of 30% (or any lower
applicable tax treaty rate) on taxable dividends and other payments subject to
withholding taxes that are made to persons who are not citizens or residents of
the United States. Distributions received from the Funds by non-U.S. persons
also may be subject to tax under the laws of their own jurisdiction.
The account application asks each new shareholder to certify that the
shareholder's Social Security or taxpayer identification number is correct and
that the shareholder is not subject to 31% backup withholding for failing to
report income to the IRS. The Funds may be required to withhold (and pay over to
the IRS for the shareholder's credit) 31% of certain distributions and
redemption proceeds paid to shareholders who fail to provide this information or
who otherwise violate IRS regulations.
<PAGE>
11. FINANCIAL STATEMENTS
Not applicable.
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements Included in Part A:
Not applicable.
Financial Statements Included in Part B:
Not applicable.
(b) Exhibits
* 1(a) Amended and Restated Declaration of Trust of
the Registrant
****,*****, 1(b) Amendment to Amended and Restated Declaration of
******* Trust of the Registrant
and filed herein
* 2(a) Amended and Restated By-Laws of the
Registrant
**** 2(b) Amendment to Amended and Restated By-Laws of
the Registrant
****** 5(a) Form of Management Agreement between Asset
Allocation Portfolios and Citibank, N.A., as
investment manager and administrator
******, 5(b) Forms of Sub Management Agreements
********
6(a) Form of Amended and Restated Distribution Agreement,
with respect to Class A Shares, between the
Registrant and The Landmark Funds
Broker-Dealer Services, Inc. ("LFBDS"), as
distributor
6(b) Form of Distribution Agreement, with respect to
Class C Shares, between the Registrant and LFBDS,
as distributor
**** 7 Form of Custodian Agreement between the Registrant,
on behalf of the Funds, and Investors Bank & Trust
Company ("IBT"), as custodian
****** 9(a) Form of Management Agreement between the Registrant
and Citibank, N.A., as administrator
* 9(b) Form of Transfer Agency and Service Agreement
between the Registrant and State Street Bank and
Trust Company, as transfer agent
15(a) Form of Amended and Restated Service Plan of the
Registrant with respect to Class A Shares
15(b) Form of Service Plan of the Registrant with respect
to Class C Shares
18 Form of Multiple Class Plan
*,**,***, 25 Powers of Attorney for the Registrant
*******,
********
- ---------------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
March 2, 1992.
<PAGE>
** Incorporated by reference to Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
April 13, 1993.
*** Incorporated by reference to Post-Effective Amendment No. 10 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
December 30, 1993.
**** Incorporated by reference to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
October 14, 1994.
***** Incorporated by reference to Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
March 3, 1995.
****** Incorporated by reference to Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
December 15, 1995.
******* Incorporated by reference to Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
February 5, 1996.
******** Incorporated by reference to Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form N-1A (File No. 2-90518)
as filed with the Securities and Exchange Commission on
February 16, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
Shares of Beneficial Interest As of May 9, 1996
(without par value)
CitiSelectSM Folio 200
Class A 0
Class C 0
CitiSelectSM Folio 300
Class A 0
Class C 0
CitiSelectSM Folio 400
Class A 0
Class C 0
CitiSelectSM Folio 500
Class A 0
Class C 0
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's Declaration
of Trust, filed as an Exhibit to Post-Effective Amendment No. 8 to its
<PAGE>
Registration Statement on Form N-1A; (b) Section 6 of the Service Agreement
between the Registrant and LFBDS, filed as an Exhibit to Post-Effective
Amendment No. 15 to its Registration Statement on Form N-1A; and (c) the
undertaking of the Registrant regarding indemnification set forth in its
Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Advisers.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range of
banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, a
registered bank holding company. Citibank also serves as investment adviser to
the following registered investment companies (or series thereof): The Premium
Portfolios (Balanced Portfolio, Equity Portfolio, Government Income Portfolio,
International Equity Portfolio, Emerging Asian Markets Equity Portfolio and
Small Cap Equity Portfolio), Tax Free Reserves Portfolio, U.S. Treasury
Reserves Portfolio, Cash Reserves Portfolio, Landmark Multi-State Tax Free
Funds (Landmark New York Tax Free Reserves, Landmark Connecticut Tax Free
Reserves and Landmark California Tax Free Reserves), Landmark Fixed Income
Funds (Landmark Intermediate Income Fund), Landmark Tax Free Income Funds
(Landmark National Tax Free Income Fund and Landmark New York Tax Free Income
Fund) and Landmark VIP Funds (Landmark VIP U.S. Government Portfolio, Landmark
VIP Balanced Portfolio, Landmark VIP Equity Portfolio and Landmark VIP
International Equity Portfolio). As of December 31, 1995, Citibank and its
affiliates managed assets in excess of $83 billion worldwide. The principal
place of business of Citibank is located at 399 Park Avenue, New York, New York
10043.
The Chairman of the Board and a Director of Citibank is John S. Reed. 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
D. Wayne Calloway, Chairman and Chief Executive Officer, PepsiCo, Inc.,
Purchase, New York; Colby H. Chandler, Former Chairman and Chief Executive
Officer, Eastman Kodak Company; Pei-yuan Chia, Director, Baxter International,
Inc.; Kenneth T. Derr, Chairman and Chief Executive Officer, Chevron
Corporation; H.J. Haynes, Senior Counselor, Bechtel Group, Inc., San Francisco,
California; 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.
<PAGE>
Colby H. Chandler Director, Digital Equipment Corporation
Director, Ford Motor Company
Director, J.C. Penney Company, Inc.
Pei-yuan Chia Director, Baxter International, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
Kenneth T. Derr Director, American Telephone and Telegraph, Co.
Director, Chevron Corporation
Director, Potlatch Corporation
H.J. Haynes Director, Bechtel Group, Inc.
Director, Boeing Company
Director, Fremont Group, Inc.
Director, Hewlett-Packard Company
Director, Paccar Inc.
Director, Saudi Arabian Oil Company
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, 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)
Member, Board of Supervisory Directors,
Pechiney Nederland N.V.
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
<PAGE>
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director, Boeing Company
Director, Boise Cascade Corp.
Roger B. Smith Director, International Paper Company
Director, Johnson & Johnson
Director, Pepsico, Inc.
Franklin A. Thomas Director, Aluminum Company of America
Director, American Telephone and Telegraph, Co.
Director, Cummins Engine Company, Inc.
Director, Pepsico, Inc.
Edgar S. Woolard, Jr. Director, E.I. DuPont De Nemours &
Company
Franklin Advisers, Inc. ("Franklin"), a sub-adviser of the Registrant,
maintains its principal office at 777 Mariners Island Blvd., San Mateo,
California 94404. Franklin, a California corporation incorporated in 1985, is a
registered investment adviser under the Investment Company Act of 1940 and is a
wholly-owned subsidiary of Franklin Resources, Inc., a publicly owned holding
company. Franklin is an investment adviser to various open-end and closed-end
investment companies.
William P. Lippman has been senior vice president of Franklin since June,
1988. Prior to joining Franklin, Mr. Lippman was president of L.F. Rothschild
Fund Management, Inc. He is president and director of Franklin Managed Trust,
which includes Franklin Rising Dividends Fund, Franklin Corporate Qualified
Dividend Fund, Franklin Investment Grade Income Fund and Franklin MicroCap
Value Fund. Mr. Lippman also manages Franklin Balance Sheet Investment Fund and
the Franklin Valuemark Rising Dividends Fund.
Each of the individuals named below is an officer and/or Director of
Franklin and has the affiliations indicated:
Name: Affiliations:
Charles Bartlett Johnson President and Director, Franklin Resources, Inc.
Chairman of the Board Director, Templeton Worldwide, Inc.
Chairman of Board, Franklin/Templeton
Distributors, Inc.
Director, Franklin Management, Inc.
Director, Franklin Institutional Services
Corporation
Director, Franklin Templeton Trust Company
Director, Franklin/Templeton Investor Services,
Inc.
Director, Property Resources, Inc.
Director, Franklin Bank
Director, Franklin Capital Corporation
Director, FCC Receivables Corporation
President and Chairman of Board, Franklin/
Templeton Travel, Inc.
<PAGE>
Director, F.S. Capital Group
Director, F.S. Properties
Director, Franklin Agency, Inc.
Director, Templeton Global Investors, Inc.
President and Chairman of Board, T.G.H. Holdings,
Ltd.
Director, Templeton, Galbraith & Hansberger Ltd.
Chairman of Board, Franklin Asset Management
Systems (1982-95)
President & Director, Franklin Energy Corporation
(1983-95)
Rupert Harris Johnson, Jr. Executive Vice President and Director, Franklin
President and Director Resources, Inc.
Director, Templeton Worldwide, Inc.
Executive Vice President and Director,
Franklin/Templeton Distributors, Inc.
Chairman of Board, Franklin Management, Inc.
Chairman of Board, Franklin Institutional
Services Corporation
Executive Vice President, Senior Investment
Officer and Director, Franklin Templeton Trust
Company
Director, Franklin/Templeton Investor Services,
Inc.
Director, Property Resources, Inc.
Director, Franklin Properties, Inc.
Director, Franklin Real Estate Management, Inc.
Director, Franklin Bank
Director, Franklin Capital Corporation
Director, FCC Receivables Corporation
Executive Vice President and Director,
Franklin/Templeton Travel, Inc.
Director, Franklin Agency, Inc.
Director, Templeton Global Investors
President, Templeton International, Inc.
Vice President and Director, Franklin Asset
Management Systems (1982-95)
Director, Franklin Energy Corporation (1983-95)
Harmon Evan Burns Executive Vice President - Legal and Secretary,
Executive Vice President Franklin Resources, Inc.
Director, Templeton Worldwide, Inc.
Executive Vice President and Director, Franklin/
Templeton Distributors, Inc.
Secretary, Franklin Management, Inc. (1980-93)
Director, Franklin/Templeton Investor Services,
Inc.
Director, Franklin Institutional Services
Corporation
Director, Franklin Templeton Trust Company
Director, Franklin Properties, Inc.
Director, Franklin Real Estate Management, Inc.
Director, Franklin Bank
Director, Franklin Capital Corporation
Director, FCC Receivables Corporation
<PAGE>
Executive Vice President and Director, Franklin/
Templeton Travel, Inc.
Director, F.S. Capital Group
Director, F.S. Properties
Secretary, Franklin Agency, Inc.
Director, Templeton Global Investors, Inc.
Executive Vice President and Director, Templeton/
Franklin Investment Services, Inc.
Secretary and Treasurer, Franklin Asset
Management Systems (1982-95)
Executive Vice President, Franklin Energy
Corporation (1983-95)
Kenneth Vernon Domingues Senior Vice President, Franklin Resources, Inc.
Senior Vice President Senior Vice President, Franklin/Templeton
Distributors, Inc.
Director, F.S. Capital Group
Director, F.S. Properties
Treasurer, Franklin Asset Management Systems
(1989-95)
Treasurer, Franklin Management, Inc. (1987-93)
Treasurer, Franklin Institutional Services
Corporation (1991-93)
Treasurer, Franklin Trust Company (1989-93)
Martin Lawrence Flanagan Senior Vice President, Chief Financial Officer
Senior Vice President and and Treasurer, Franklin Resources, Inc.
Treasurer Executive Vice President and Director, Templeton
Worldwide, Inc.
Treasurer, Franklin Management, Inc.
Senior Vice President and Treasurer, Franklin
Institutional Services Corporation
Treasurer, Franklin Templeton Trust Company
Senior Vice President, Franklin/Templeton
Investor Services, Inc.
Vice President and Chief Financial Officer,
Property Resources, Inc.
Vice President and Chief Financial Officer,
Franklin Properties, Inc.
Vice President and Chief Financial Officer,
Franklin Real Estate Management, Inc.
Treasurer, Franklin Capital Corporation
President, FCC Receivables Corporation
Vice President and Treasurer, Franklin/Templeton
Travel, Inc.
Senior Vice President, Franklin Agency, Inc.
President, Chief Executive Officer and Chairman
of Board, Templeton Global Investors, Inc.
Executive Vice President, Chief Operating Officer
and Director, Templeton International, Inc.
Director, Templeton Quantitative Advisors, Inc.
<PAGE>
Director, Templeton/Franklin Investment Services,
Inc.
Director, Templeton Funds Trust Company
Director and Treasurer, Templeton Funds Annuity
Company
Executive Vice President, Chief Operating Officer
and Director, Templeton Investment Counsel,
Inc.
Director, Templeton Management Ltd.
Director, Templeton Investment Management (Hong
Kong), Ltd.
Director, Templeton Investment Management
(Singapore) Plc. Ltd.
Managing Director, Templeton Global Investors,
Ltd.
Chairman of Board, Templeton Global Strategic
Services, S.A.
Director, Templeton Management (Lux) S.A.
Executive Vice President, Chief Operating Officer
and Director, T.G.H. Holdings, Ltd.
Director, Templeton Heritage, LTD.
Director, Templeton Investment Management, Ltd.
Director, Templeton Unit Trust Managers, Ltd.
Director, Templeton Holdings Ltd.
Director, Templeton/National Bank of Greece
Management (Lux) S.A.
Executive Vice President and Director, Templeton,
Galbraith and Hansberger Ltd. (Bahamian Corp.)
Senior Vice President and Treasurer, Franklin/
Templeton Distributors, Inc. (1993-95)
Treasurer, Franklin Energy Corporation (1994-95)
Director, Templeton Life Assurance Ltd. (1990-94)
Director, Templeton Funds Management, Inc.
(1992-94)
Director, Templeton Funds Distributor, Inc.
(1992-93)
Director, The DAIS Group, Inc. (1990-93)
Vice-Chairman of Board, Templeton Global Bond
Managers, Inc. (1990-93)
Edward Burton Jamieson Portfolio Manager, Franklin Institutional
Senior Vice President Services Corporation
Thomas Joseph Kenny None
Senior Vice President and
Director of Municipal
Development
Leslie Michael Kratter Vice President and Assistant Secretary, Franklin
Secretary Resources, Inc.
Secretary, Templeton Worldwide, Inc.
Secretary, Franklin/Templeton Distributors, Inc.
Secretary, Franklin Management, Inc.
Vice President and Secretary, Franklin
Institutional Services Corporation
Secretary, Franklin/Templeton Investor Services,
Inc.
<PAGE>
Secretary, FCC Receivables Corporation
President and Director, Franklin/Templeton
Travel, Inc.
Secretary, Franklin Agency, Inc.
Secretary, Templeton Global Investors
Secretary, Templeton International, Inc.
Secretary, Templeton/Franklin Investment
Services, Inc.
Secretary, Franklin Energy Corporation (1994-95)
Executive Vice President, International Air
Service Co. Ltd. (1979-92)
Jack Henry Lemein Employee, Franklin Resources, Inc.
Senior Vice President Vice President, Franklin/Templeton Distributors,
Inc.
Vice President, Franklin Management, Inc.
Portfolio Manager, Franklin Institutional
Services Corporation
William Jennings Lippman Senior Vice President, Franklin Resources, Inc.
Senior Vice President Senior Vice President, Franklin/Templeton
Distributors, Inc.
Senior Vice President, Franklin Management, Inc.
Portfolio Manager, Franklin Institutional
Services Corporation
Rico Martin Wiskemann Employee, Franklin/Templeton Distributors, Inc.
Senior Vice President and Senior Vice President, Franklin Management, Inc.
Director Vice President, Treasurer and Director, ILA
Financial Services, Inc.
Vice President and Director, Arizona Life
Insurance Company of America
Pacific Investment Management Company ("PIMCO"), a sub-adviser of the
Registrant, maintains its principal office at 840 Newport Center Drive, Suite
360, P.O. Box 6480, Newport Beach, California 92658-9030. PIMCO is a registered
investment adviser under the Investment Company Act of 1940.
Lee R. Thomas, III joined PIMCO in 1995 and is the Senior International
Portfolio Manager at PIMCO. Previously he was a member of Investcorp's
Management Committee, where he was responsible for global securities and
foreign exchange trading. Prior to Investcorp, he was associated with Goldman
Sachs, where he was an Executive Director in the fixed income division of their
London office.
Each of the individuals named below is a Managing Director of PIMCO and
has the affiliations indicated:
<PAGE>
Name and Position: Other Affiliations:
William H. Gross, CFA None
Senior Fixed Income Portfolio
Manager
David H. Edington None
Senior Fixed Income Portfolio
Manager
John L. Hague None
Senior Fixed Income Portfolio
Manager
Brent R. Harris, CFA None
Director of Marketing
Dean S. Meiling, CFA None
Account Manager
James F. Muzzy, CFA None
Account Manager
William F. Podlich, III None
William C. Powers None
Senior Fixed Income Portfolio
Manager
Frank B. Rabinovitch None
Senior Fixed Income Portfolio
Manager
William S. Thompson Director, Spieker Properties Inc.
Chief Executive Officer
Hotchkis & Wiley ("Hotchkis"), a sub-adviser of the Registrant, maintains
its principal office at 800 West Sixth Street, Fifth Floor, Los Angeles,
California 90017. Hotchkis is a registered investment adviser founded in 1980.
Sarah Ketterer, Vice President, will be responsible for the daily management of
international equity securities of the Registrant. Ms. Ketterer manages
international equity accounts and is also responsible for international
investment research. She serves on the Investment Policy Committee at Hotchkis.
Prior to joining Hotchkis, Ms. Ketterer was an associate with Bankers Trust and
an analyst at Dean Witter.
Each of the individuals named below is a Managing Director and general
partner of Hotchkis and has the affiliations indicated:
<PAGE>
Name and Position: Other Affiliations:
Gail L. Bardin None
Portfolio Manager
Michael F. Baxter None
Portfolio Manager
George H. Davis, Jr. None
Portfolio Manager
Dr. Roger DeBard Executive Vice President, Hotchkis and Wiley
Portfolio Manager Funds
John F. Hotchkis Trustee, Hotchkis and Wiley Funds
Portfolio Manager Governor, The Music Center
Director and Treasurer, The Music Center
Foundation
Director, Los Angeles World Affairs Council
Director, Los Angeles Philharmonic Orchestra
Director, Big Brothers of Greater Los Angeles
Director, Executive Service Corps of Southern
California
Director, KCET
Trustee, The Lawrenceville School
Trustee, Robert Louis Stevenson School
Director, Fountainhead Water Company, Inc.
George Wiley Trustee, Hotchkis and Wiley Funds
Portfolio Manager
Miller Anderson & Sherrerd, LLP ("MAS"), a sub-adviser of the Registrant,
maintains its principal office at One Tower Bridge, West Conshohocken,
Pennsylvania 19428. MAS has been a registered investment adviser under the
Investment Company Act of 1940 since 1974. MAS serves as the Fund Administrator
for the MAS Funds and is also the parent company of MAS Fund Distribution, Inc.
("MASDI"), a registered limited purpose broker-dealer that was formed in 1992
solely to distribute shares of the MAS Funds. All registered representatives of
MASDI are also employees of MAS. MAS Fixed Income Partnership I, L.P. ("MAS I")
and MAS Fixed Income Partnership II, L.P. ("MAS II") are investment
partnerships established by MAS. MAS has established MAS Fixed Income I,
L.L.C., MAS Fixed Income II, L.L.C., MAS Management, Inc., and MAS Investors I,
LLP to administer and manage the investment partnerships. MAS also participates
in a joint venture with LTCB Capital Markets, Inc. that owns LTCB-MAS
Investment Management, Inc., a registered investment company.
The primary portfolio managers for MAS's Value Portfolio are A. Morris
Williams, Jr., CFA and Robert J. Marcin, CFA. Richard M. Behler is the most
recent addition to the value team. All other members of the MAS equity
investment management department serve as analyst resources for the value team
in the management of the portfolio while maintaining responsibility for other
MAS equity related portfolios. Each of the individuals named below is a member
<PAGE>
of the MAS equity investment management team and has the affiliations
indicated:
Name: Other Affiliations:
A. Morris Williams, Jr., CFA See below
Dean Williams See below
Gary G. Schlarbaum, CFA See below
Arden C. Armstrong, CFA See below
Nicholas J. Kovich, CFA See below
Robert J. Marcin, CFA See below
Horacio A. Valeiras, CFA See below
Richard M. Behler Moore Capital Management, Portfolio Manager,
Equity Portfolio Manager 1992-95
Timothy G. Connors, CFA CoreStates Investment Advisers, 1980-94
Equity Portfolio Manager Senior Vice President and Managing
Director, 1986
Boykin Curry None
International Equity Analyst
Bradley S. Daniels, CFA None
Equity Portfolio Manager
Hassan Elmasry Mitchell Hutchins Asset Management, 1987-95
International Equity Portfolio First Vice President & International
Manager Equity Portfolio Manager, 1989-95
Family Support Center of Brooklyn, Board
Member
Gary D. Hanbold, CFA Wood, Struthers & Winthrop, 1986-93
Equity Portfolio Manager Portfolio Manager, 1989-93
Senior Vice President, 1993
James Jolinger Oppenheimer Capital, Equity Analyst, 1987-94
Equity Analyst Assistant Vice President, 1992-94
Vice President, 1994
Abbi Y. Kanitkar Newbold's Asset Management, 1993
Equity Analyst Investment Analyst - International Banks
James M. Oiness None
International Equity Analyst
Each of the individuals named below is a partner of MAS and has the
affiliations indicated:
<PAGE>
Name: Other Affiliations:
A. Morris Williams, Jr., CFA C.A.R.E. Council of Trustees
Duke University, Trustee
The Salvation Army Advisory Board of
Greater Philadelphia
Philadelphia Scholars Fund Advisory
Committee, Chairman
Philadelphia Schools Collaborative,
Board of Directors
Richard B. Worley University of Pennsylvania, Trustee
Medical Center of the University of
Pennsylvania, Trustee
Pennsylvania Academy of Fine Arts, Trustee
Thomas L. Bennett, CFA MAS Funds, Chairman
Robert L. Hagin Society of Quantitative Analysts,
Advisory Board
T. Dean Williams International Society of Financial Analysts,
Board of Governors
Shanghai Dazhong Co., Director
Kenneth B. Dunn Journal of Fixed Income, Associate Editor
Institute for the Study of Security Markets,
Board of Directors
Ellen D. Harvey, CFA St. Timothy's School, Trustee, 1985-94
Investment Chairman
Bryn Mawr Rehabilitation Hospital, Trustee
Main Line Health System, Trustee
Owosso Corporation, Director
Gary G. Schlarbaum, CFA Coe College, Trustee
James D. Schmid None
Manager, Service Core &
Administration
Arden C. Armstrong, CFA American Friends Service Committee,
Investment Committee
Wharton Fellow's Fund, Board of Overseers
Stephen F. Esser, CFA None
J. David Germany None
Nicholas J. Kovich None
<PAGE>
Robert J. Marcin, CFA None
Mary Ann Milias Financial Executives Institute, Education
Committee
California Pacific Medical Center
Foundation, Director
Schools of the Sacred Heart, Trustee
Sisters of the Presentation - Investment
Advisory Committee
Marin Community Foundation - Investment
Advisory Committee
Scott F. Richard Journal of Portfolio Management, Associate
Editor
Journal of Fixed Income, Associate Editor
Horacio A. Valeiras, CFA None
Glenn E. Becker Germantown Academy, Education Committee
The Salvation Army Advisory Board of Greater
Philadelphia
Philadelphia Leadership Foundation, Director
Steven K. Kreider, CFA Lehigh University, Investment Committee
Item 29. Principal Underwriters.
(a) The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), the
Registrant's Distributor, is also the distributor for Landmark International
Equity Fund, Landmark Emerging Asian Markets Equity Fund, Landmark U.S.
Treasury Reserves, Landmark Cash Reserves, Premium U.S. Treasury Reserves,
Premium Liquid Reserves, Landmark Institutional U.S. Treasury Reserves,
Landmark Institutional Liquid Reserves, Landmark Tax Free Reserves, Landmark
California Tax Free Reserves, Landmark Connecticut Tax Free Reserves, Landmark
New York Tax Free Reserves, Landmark U.S. Government Income Fund, Landmark
Intermediate Income Fund, Landmark Balanced Fund, Landmark Equity Fund,
Landmark Small Cap Equity Fund, Landmark National Tax Free Income Fund,
Landmark New York Tax Free Income Fund, and Landmark VIP Funds (Landmark VIP
U.S. Government Portfolio, Landmark VIP Balanced Portfolio, Landmark VIP Equity
Portfolio and Landmark VIP International Equity Portfolio). LFBDS is also the
placement agent for International Equity Portfolio, Balanced Portfolio, Equity
Portfolio, Small Cap Equity Portfolio, Government Income Portfolio, Emerging
Asian Markets Equity Portfolio, Tax Free Reserves Portfolio, Cash Reserves
Portfolio, and U.S. Treasury Reserves Portfolio.
(b) The information required by this Item 29 with respect to each director
and officer of LFBDS is incorporated by reference to Schedule A of Form BD
filed by LFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
<PAGE>
part, at the office of the Registrant and the following locations:
NAME ADDRESS
The Landmark Funds Broker-Dealer Services, Inc. 6 St. James Avenue
(distributor) Boston, MA 02116
Investors Bank & Trust Company One Lincoln Plaza
(custodian) Boston, MA 02111
State Street Bank and Trust Company 1776 Heritage Drive
(transfer agent) North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment manager) New York, NY 10043
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) The Registrant hereby undertakes to file a post-effective amendment to
this Registration Statement, containing reasonably current financial statements
that need not be certified, within four to six months following the
commencement of operations of the Funds.
(b) The Registrant hereby undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of one or more of the
Trust's Trustees when requested in writing to do so by the holders of at least
10% of the Registrant's outstanding shares, and in connection therewith to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communication.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus of CitiSelectSM Folio 200, CitiSelectSM Folio 300, CitiSelectSM
Folio 400 and CitiSelect SM Folio 500 is delivered with a copy of its latest
Annual Report to Shareholders, upon request without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts on the 9th day of May, 1996.
LANDMARK FUNDS I
By: Philip W. Coolidge
Philip W. Coolidge
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below
by the following persons in the capacities indicated below on May 9, 1996.
Signature Title
Philip W. Coolidge President, Principal Executive Officer
Philip W. Coolidge and Trustee
John R. Elder Principal Financial Officer and Principal
John R. Elder Accounting Officer
H.B. Alvord* Trustee
H.B. Alvord
Riley C. Gilley* Trustee
Riley C. Gilley
Diana R. Harrington* Trustee
Diana R. Harrington
Susan B. Kerley* Trustee
Susan B. Kerley
C. Oscar Morong, Jr.* Trustee
C. Oscar Morong, Jr.
Donald B. Otis* Trustee
Donald B. Otis
E. Kirby Warren* Trustee
Kirby Warren
William S. Woods, Jr.* Trustee
William S. Woods, Jr.
*By: Philip W. Coolidge
Philip W. Coolidge
Executed by Philip W. Coolidge
on behalf of those indicated
pursuant to Powers of Attorney.
<PAGE>
SIGNATURES
Asset Allocation Portfolios has duly caused this Post-Effective Amendment
to the Registration Statement on Form N-1A of Landmark Funds I to be signed on
its behalf by the undersigned, thereunto duly authorized, in George Town, Grand
Cayman, Cayman Islands, BWI on the 9th day of May, 1996.
ASSET ALLOCATION PORTFOLIOS
By: Susan Jakuboski
Susan Jakuboski
Assistant Treasurer
This Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Funds I has been signed by the following persons in the capacities
indicated on May 9, 1996.
Signature Title
Philip W. Coolidge* President, Principal Executive Officer
Philip W. Coolidge and Trustee
John R. Elder* Principal Accounting and Financial Officer
John R. Elder
Elliott J. Berv* Trustee
Elliott J. Berv
Mark T. Finn* Trustee
Mark T. Finn
Walter E. Robb, III* Trustee
Walter E. Robb, III
*By: Susan Jakuboski
Susan Jakuboski
Executed by Susan Jakuboski on
behalf of those indicated
pursuant to Powers of Attorney.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
1(b) Amendment to Amended and Restated Declaration of Trust of
the Registrant
6(a) Form of Amended and Restated Distribution Agreement, with
respect to Class A Shares, between the Registrant and LFBDS,
as distributor
6(b) Form of Distribution Agreement, with respect to Class C Shares,
between the Registrant and LFBDS, as distributor
15(a) Form of Amended and Restated Service Plan of the Registrant with
respect to Class A Shares
15(b) Form of Service Plan of the Registrant with respect to Class C
Shares
18 Form of Multiple Class Plan
Exhibit 1(b)
LANDMARK FUNDS I
FORM OF ESTABLISHMENT AND DESIGNATION OF CLASSES
The undersigned, being a majority of the Trustees of Landmark Funds I, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 6.10 of
the Trust's Declaration of Trust dated April 13, 1984, as amended (the
"Declaration"), do hereby divide the Shares of its series CitiSelect Folio
200SM, CitiSelect Folio 300SM, CitiSelect Folio 400SM and CitiSelect Folio
500SM (the "Series") into two Classes of Shares, as follows:
1. The two Classes of Shares are designated "Class A Shares" and "Class C
Shares."
2. Class A Shares and Class C Shares shall be entitled to all the rights
and preferences accorded to Shares under the Declaration.
3. The number of Shares of each Class designated hereby shall be
unlimited.
4. The purchase price of Class A Shares and Class C Shares, the method of
determination of the net asset value of Class A Shares and Class C Shares, the
price, terms and manner of redemption of Class A Shares and Class C Shares, any
conversion or exchange feature or privilege of the Class A Shares and Class C
Shares, and the relative dividend rights of the holders of Class A Shares and
Class C Shares shall be established by the Trustees of the Trust in accordance
with the Declaration and shall be set forth in the current prospectus and
statement of additional information of the applicable Series, as amended from
time to time, contained in the Trust's registration statement under the
Securities Act of 1933, as amended.
5. Each of the Class A Shares and Class C Shares shall bear the expenses
of payments under any distribution, service, and shareholder servicing
agreements entered into by or on behalf of the Series with respect to that
Class, and any other expenses that are properly allocated to such Class in
accordance with the Investment Company Act of 1940, as amended, or any rule or
order issued thereunder and applicable to the Trust or the Series (the "1940
Act").
6. As to any matter on which shareholders are entitled to vote, Class A
Shares and Class C Shares of each of the Series shall vote together as a single
<PAGE>
class; provided however, that notwithstanding the provisions of Section 6.9 of
the Declaration to the contrary, (a) as to any matter with respect to which a
separate vote of any Class is required by the 1940 Act or is required by a
separate agreement applicable to such Class, such requirements as to a separate
vote by the Class shall apply, (b) except as required by (a) above, to the
extent that a matter affects more than one Class and the interests of the
Classes in the matter are not materially different, then the Shares of those
Classes whose interests in the matter are not materially different shall vote
together as a single Class, but to the extent that a matter affects more than
one Class and the interests of a Class in the matter are materially different
from that of each other Class, then the Shares of such Class shall vote as a
separate class; and (c) except as required by (a) above or as otherwise
required by the 1940 Act, as to any matter which does not affect the interests
of a particular Class, only the holders of Shares of the affected Class shall
be entitled to vote.
7. The designation of Class A Shares and Class C Shares hereby shall not
impair the power of the Trustees from time to time to designate additional
classes of Shares of the Series.
8. Subject to the applicable provisions of the 1940 Act and the
Declaration, the Trustees may from time to time modify the preferences, voting
powers, rights and privileges of any of the Classes designated hereby without
any action or consent of the Shareholders.
9. At any time that there are no Shares outstanding of a particular Class
of any of the Series previously established and designated, the Trustees may by
an instrument executed by a majority of their number abolish that Class.
10. This Establishment and Designation of Classes shall become effective
as of the date determined by any officer of the Trust.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Establishment and
Designation of Classes as of the _______ day of ____________, 1996.
-------------------- --------------------
H. B. Alvord Susan B. Kerley
-------------------- --------------------
Philip W. Coolidge C. Oscar Morong, Jr.
-------------------- --------------------
Riley C. Gilley Donald B. Otis
-------------------- --------------------
Diana R. Harrington E. Kirby Warren
--------------------
William S. Woods, Jr.
Exhibit 6(a)
FORM OF AMENDED AND RESTATED
DISTRIBUTION AGREEMENT WITH RESPECT TO
CLASS A SHARES
AGREEMENT , dated as of February 9, 1996, as amended and restated as of
__________ __, 1996, by and between Landmark Funds I, a Massachusetts business
trust (the "Trust"), and The Landmark Funds Broker-Dealer Services, Inc., a
Massachusetts corporation ("Distributor"), with respect to shares of beneficial
interest of each of the Trust's series listed on Exhibit A hereto (the
"Series") designated as Class A Shares ("Shares").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and
other assets;
WHEREAS, the Trust wishes to retain the services of a distributor for
Shares of each of the Series and has registered the Shares of each of the
Series under the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Trust has adopted an Amended and Restated Service Plan with
respect to Class A Shares pursuant to Rule 12b-1 under the 1940 Act (the
"Service Plan") and may enter into related agreements providing for the
distribution and servicing of Shares of the Series;
WHEREAS, Distributor has agreed to act as distributor of the Shares of the
Series for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of Shares of the Series in jurisdictions wherein such Shares may
be legally offered for sale; provided, however, that the Trust in its absolute
discretion may issue Shares of the Series in connection with (i) the payment or
reinvestment of dividends or distributions; (ii) any merger or consolidation of
the Trust or any of the Series with any other investment company or trust or
<PAGE>
any personal holding company, or the acquisition of the assets of any such
entity or another series of the Trust; or (iii) any offer of exchange permitted
by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of Shares of the Series and agrees that it will sell such Shares
as agent for the Trust at prices determined as hereinafter provided and on the
terms hereinafter set forth, all according to the then-current prospectus and
statement of additional information of each Series (collectively, the
"Prospectus" and the "Statement of Additional Information"), applicable laws,
rules and regulations and the Declaration of Trust of the Trust. Distributor
agrees to use its best efforts to solicit orders for the sale of Shares of the
Series, and agrees to transmit promptly to the Trust (or to the transfer agent
of the applicable Series, if so instructed in writing by the Trust) any orders
received by it for purchase or redemption of Shares.
(c) Distributor may sell Shares of the Series to or through qualified
securities dealers, financial institutions or others. Distributor will require
each dealer or other such party to conform to the provisions of this Agreement,
the Prospectus, the Statement of Additional Information and applicable law; and
neither Distributor nor any such dealers or others shall withhold the placing
of purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares of the Series from the Trust only to
the extent that it shall have received unconditional purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make: (i) any
short sales of Shares; or (ii) any sales of Shares to any Trustee or officer of
the Trust, any officer or director of Distributor or any corporation or
association furnishing investment advisory, managerial or supervisory services
to the Trust, or to any such corporation or association, unless such sales are
made in accordance with the Prospectus and the Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding Shares of the Series, except such
information or representations as are contained in the Prospectus, the
Statement of Additional Information or advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) The Trust agrees to execute any and all documents, to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Trust's officers in connection with the
<PAGE>
qualification of Shares of each Series for sale in such states as Distributor
and the Trust agree.
(g) No Shares of any Series shall be offered by either Distributor or the
Trust under this Agreement, and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Trust, if and so long as the
effectiveness of the Trust's then current registration statement as to Shares
of that Series or any necessary amendments thereto shall be suspended under any
of the provisions of the 1933 Act, or if and so long as a current prospectus
for Shares of that Series as required by Section 10 of the 1933 Act is not on
file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph (g) shall in any way restrict the Trust's
obligation to repurchase any Shares from any shareholder in accordance with the
provisions of the applicable Series' Prospectus or charter documents.
(h) Notwithstanding any provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares of any Series whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Shares sold under this Agreement shall be
sold at the public offering price per Share in effect at the time of the sale,
as described in the Prospectus. The excess, if any, of the public offering
price over the net asset value of the Shares sold by Distributor as agent, and
any contingent deferred sales charge applicable to Shares of any Series as set
forth in the applicable Series' Prospectus, shall be retained by Distributor as
a commission for its services hereunder. Out of such commission Distributor may
allow commissions, concessions or agency fees to dealers or other financial
institutions, including banks, and may allow them to others in its discretion
in such amounts as Distributor shall determine from time to time. Except as may
be otherwise determined by Distributor from time to time, such commissions,
concessions or agency fees shall be uniform to all dealers and other financial
institutions. At no time shall the Trust receive less than the full net asset
value of the Shares of each Series, determined in the manner set forth in the
Prospectus and the Statement of Additional Information. Distributor also may
receive such compensation under the Trust's Service Plan as may be authorized
by the Trustees of the Trust from time to time.
3. Furnishing of Information.
(a) The Trust shall furnish to Distributor copies of any information,
financial statements and other documents that Distributor may reasonably
request for use in connection with the sale of Shares of the Series under this
<PAGE>
Agreement. The Trust shall also make available a sufficient number of copies of
the Series' Prospectus and Statement of Additional Information for use by the
Distributor.
(b) The Trust agrees to advise Distributor immediately in writing:
(i) of any request by the Securities and Exchange Commission for
amendments to any registration statement concerning a Series or to a
Prospectus or for additional information;
(ii) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of any such
registration statement or Prospectus or the initiation of any proceeding
for that purpose;
(iii)of the happening of any event which makes untrue any statement
of a material fact made in any such registration statement or Prospectus
or which requires the making of a change in such registration statement
or Prospectus in order to make the statements therein not misleading; and
(iv) of all actions of the Securities and Exchange Commission with
respect to any amendments to any such registration statement or
Prospectus which may from time to time be filed with the Securities and
Exchange Commission.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses:
organization costs of the Series; compensation of Trustees who are not
"interested persons" of the Trust; governmental fees; interest charges; loan
commitment fees; taxes; membership dues in industry associations allocable to
the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of issuing and redeeming shares of
beneficial interest and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to existing shareholders of the
Series; expenses connected with the execution, recording and settlement of
security transactions; insurance premiums; fees and expenses of the custodian
for all services to the Series, including safekeeping of funds and securities
and maintaining required books and accounts; expenses of calculating the net
<PAGE>
asset value of the Series (including but not limited to the fees of independent
pricing services); expenses of meetings of shareholders; expenses relating to
the issuance, registration and qualification of shares; and such non-recurring
or extraordinary expenses as may arise, including those relating to actions,
suits or proceedings to which the Trust may be a party and the legal obligation
which the Trust may have to indemnify its Trustees and officers with respect
thereto.
(b) Except as otherwise provided in this Agreement and except to the
extent such expenses are borne by the Trust pursuant to the Service Plan,
Distributor will pay or cause to be paid all expenses connected with its own
qualification as a dealer under state and federal laws and all other expenses
incurred by Distributor in connection with the sale of Shares of each Series as
contemplated by this Agreement.
(c) Distributor shall prepare and deliver reports to the Trustees of the
Trust on a regular basis, at least quarterly, showing the expenditures with
respect to each Series pursuant to the Distribution Plan and the purposes
therefor, as well as any supplemental reports that the Trustees of the Trust,
from time to time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of the
Trust may repurchase Shares of the Series offered for resale to it and redeem
such Shares at their net asset value.
6. Indemnification by the Trust. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor, its officers and directors, and any person which controls
Distributor within the meaning of the 1933 Act against any and all claims,
demands, liabilities and expenses that any such indemnified party may incur
under the 1933 Act, or common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the registration
statement for any Series, any Prospectus or Statement of Additional
Information, or any advertisements or sales literature prepared by or on behalf
of the Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust in connection therewith by
or on behalf of Distributor. Nothing herein contained shall require the Trust
to take any action contrary to any provision of its Declaration of Trust or any
applicable statute or regulation.
<PAGE>
7. Indemnification by Distributor. Distributor agrees to indemnify the
Trust, its officers and Trustees and any person which controls the Trust within
the meaning of the 1933 Act against any and all claims, demands, liabilities
and expenses that any such indemnified party may incur under the 1933 Act, or
common law or otherwise, arising out of or based upon (i) any alleged untrue
statement of a material fact contained in the registration statement for any
Series, any Prospectus or Statement of Additional Information, or any
advertisements or sales literature prepared by or on behalf of the Trust for
Distributor's use, or any omission to state a material fact therein, the
omission of which makes any statement contained therein misleading, if such
statement or omission was made in reliance upon and in conformity with
information furnished to the Trust in connection therewith by or on behalf of
Distributor; and (ii) any act or deed of Distributor or its sales
representatives that has not been authorized by the Trust in any Prospectus or
Statement of Additional Information or by this Agreement.
8. Term and Termination.
(a) Unless terminated as herein provided, this Agreement shall continue in
effect as to any Series until ____________ __, 1997 and shall continue in full
force and effect as to Shares of any Series for successive periods of one year
thereafter, but only so long as each such continuance is approved (i) by either
the Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of Shares of the particular Series, or
(ii) by vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this Agreement
or in the operation of the Service Plan or in any agreement related thereto
("Independent Trustees"), cast at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated as to any Series on not less than
thirty days' nor more than sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the particular
Series in question, and not any other Series or series of the Trust. The term
"Landmark Funds I" means and refers to the Trustees from time to time serving
<PAGE>
under the Declaration of Trust of the Trust, a copy of which is on file with
the Secretary of the Commonwealth of Massachusetts. The execution and delivery
of this Agreement has been authorized by the Trustees, and this Agreement has
been signed on behalf of the Trust by an authorized officer of the Trust,
acting as such and not individually, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Trust as
provided in the Declaration of Trust.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
provisions of the 1940 Act.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of _________ __, 1996.
Landmark Funds I
By:_______________________________
The Landmark Funds Broker-Dealer
Services, Inc.
By:_______________________________
<PAGE>
Exhibit A
Series
CitiSelectSM Folio 200
CitiSelectSM Folio 300
CitiSelectSM Folio 400
CitiSelectSM Folio 500
Exhibit 6(b)
FORM OF DISTRIBUTION AGREEMENT
WITH RESPECT TO
CLASS C SHARES
AGREEMENT , dated as of __________ __, 1996, by and between Landmark Funds
I, a Massachusetts business trust (the "Trust"), and The Landmark Funds
Broker-Dealer Services, Inc., a Massachusetts corporation ("Distributor"), with
respect to shares of beneficial interest of each of the Trust's series listed
on Exhibit A hereto (the "Series") designated as Class C Shares ("Shares").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and
other assets;
WHEREAS, the Trust wishes to retain the services of a distributor for
Shares of each of the Series and has registered the Shares of each of the
Series under the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Trust has adopted a Service Plan with respect to Class C
Shares pursuant to Rule 12b-1 under the 1940 Act (the "Service Plan") and may
enter into related agreements providing for the distribution and servicing of
Shares of the Series;
WHEREAS, Distributor has agreed to act as distributor of the Shares of the
Series for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of Shares of the Series in jurisdictions wherein such Shares may
be legally offered for sale; provided, however, that the Trust in its absolute
discretion may issue Shares of the Series in connection with (i) the payment or
reinvestment of dividends or distributions; (ii) any merger or consolidation of
the Trust or any of the Series with any other investment company or trust or
any personal holding company, or the acquisition of the assets of any such
<PAGE>
entity or another series of the Trust; or (iii) any offer of exchange permitted
by Section 11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of Shares of the Series and agrees that it will sell such Shares
as agent for the Trust at prices determined as hereinafter provided and on the
terms hereinafter set forth, all according to the then-current prospectus and
statement of additional information of each Series (collectively, the
"Prospectus" and the "Statement of Additional Information"), applicable laws,
rules and regulations and the Declaration of Trust of the Trust. Distributor
agrees to use its best efforts to solicit orders for the sale of Shares of the
Series, and agrees to transmit promptly to the Trust (or to the transfer agent
of the applicable Series, if so instructed in writing by the Trust) any orders
received by it for purchase or redemption of Shares.
(c) Distributor may sell Shares of the Series to or through qualified
securities dealers, financial institutions or others. Distributor will require
each dealer or other such party to conform to the provisions of this Agreement,
the Prospectus, the Statement of Additional Information and applicable law; and
neither Distributor nor any such dealers or others shall withhold the placing
of purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares of the Series from the Trust only to
the extent that it shall have received unconditional purchase orders therefor.
Distributor will not make, or authorize any dealers or others to make: (i) any
short sales of Shares; or (ii) any sales of Shares to any Trustee or officer of
the Trust, any officer or director of Distributor or any corporation or
association furnishing investment advisory, managerial or supervisory services
to the Trust, or to any such corporation or association, unless such sales are
made in accordance with the Prospectus and the Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding Shares of the Series, except such
information or representations as are contained in the Prospectus, the
Statement of Additional Information or advertisements and sales literature
prepared by or on behalf of the Trust for Distributor's use.
(f) The Trust agrees to execute any and all documents, to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Trust's officers in connection with the
<PAGE>
qualification of Shares of each Series for sale in such states as Distributor
and the Trust agree.
(g) No Shares of any Series shall be offered by either Distributor or the
Trust under this Agreement, and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Trust, if and so long as the
effectiveness of the Trust's then current registration statement as to Shares
of that Series or any necessary amendments thereto shall be suspended under any
of the provisions of the 1933 Act, or if and so long as a current prospectus
for Shares of that Series as required by Section 10 of the 1933 Act is not on
file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph (g) shall in any way restrict the Trust's
obligation to repurchase any Shares from any shareholder in accordance with the
provisions of the applicable Series' Prospectus or charter documents.
(h) Notwithstanding any provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares of any Series whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Shares sold under this Agreement shall be
sold at the public offering price per Share in effect at the time of the sale,
as described in the Prospectus. The excess, if any, of the public offering
price over the net asset value of the Shares sold by Distributor as agent, and
any contingent deferred sales charge applicable to Shares of any Series as set
forth in the applicable Series' Prospectus, shall be retained by Distributor as
a commission for its services hereunder. Out of such commission Distributor may
allow commissions, concessions or agency fees to dealers or other financial
institutions, including banks, and may allow them to others in its discretion
in such amounts as Distributor shall determine from time to time. Except as may
be otherwise determined by Distributor from time to time, such commissions,
concessions or agency fees shall be uniform to all dealers and other financial
institutions. At no time shall the Trust receive less than the full net asset
value of the Shares of each Series, determined in the manner set forth in the
Prospectus and the Statement of Additional Information. Distributor also may
receive such compensation under the Trust's Service Plan as may be authorized
by the Trustees of the Trust from time to time.
3. Furnishing of Information.
(a) The Trust shall furnish to Distributor copies of any information,
financial statements and other documents that Distributor may reasonably
request for use in connection with the sale of Shares of the Series under this
<PAGE>
Agreement. The Trust shall also make available a sufficient number of copies of
the Series' Prospectus and Statement of Additional Information for use by the
Distributor.
(b) The Trust agrees to advise Distributor immediately in writing:
(i) of any request by the Securities and Exchange Commission for
amendments to any registration statement concerning a Series or to a
Prospectus or for additional information;
(ii) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of any such
registration statement or Prospectus or the initiation of any proceeding
for that purpose;
(iii)of the happening of any event which makes untrue any statement
of a material fact made in any such registration statement or Prospectus
or which requires the making of a change in such registration statement
or Prospectus in order to make the statements therein not misleading; and
(iv) of all actions of the Securities and Exchange Commission with
respect to any amendments to any such registration statement or
Prospectus which may from time to time be filed with the Securities and
Exchange Commission.
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses:
organization costs of the Series; compensation of Trustees who are not
"interested persons" of the Trust; governmental fees; interest charges; loan
commitment fees; taxes; membership dues in industry associations allocable to
the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of issuing and redeeming shares of
beneficial interest and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to existing shareholders of the
Series; expenses connected with the execution, recording and settlement of
security transactions; insurance premiums; fees and expenses of the custodian
for all services to the Series, including safekeeping of funds and securities
and maintaining required books and accounts; expenses of calculating the net
<PAGE>
asset value of the Series (including but not limited to the fees of independent
pricing services); expenses of meetings of shareholders; expenses relating to
the issuance, registration and qualification of shares; and such non-recurring
or extraordinary expenses as may arise, including those relating to actions,
suits or proceedings to which the Trust may be a party and the legal obligation
which the Trust may have to indemnify its Trustees and officers with respect
thereto.
(b) Except as otherwise provided in this Agreement and except to the
extent such expenses are borne by the Trust pursuant to the Service Plan,
Distributor will pay or cause to be paid all expenses connected with its own
qualification as a dealer under state and federal laws and all other expenses
incurred by Distributor in connection with the sale of Shares of each Series as
contemplated by this Agreement.
(c) Distributor shall prepare and deliver reports to the Trustees of the
Trust on a regular basis, at least quarterly, showing the expenditures with
respect to each Series pursuant to the Distribution Plan and the purposes
therefor, as well as any supplemental reports that the Trustees of the Trust,
from time to time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of the
Trust may repurchase Shares of the Series offered for resale to it and redeem
such Shares at their net asset value.
6. Indemnification by the Trust. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify
Distributor, its officers and directors, and any person which controls
Distributor within the meaning of the 1933 Act against any and all claims,
demands, liabilities and expenses that any such indemnified party may incur
under the 1933 Act, or common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the registration
statement for any Series, any Prospectus or Statement of Additional
Information, or any advertisements or sales literature prepared by or on behalf
of the Trust for Distributor's use, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Trust in connection therewith by
or on behalf of Distributor. Nothing herein contained shall require the Trust
to take any action contrary to any provision of its Declaration of Trust or any
applicable statute or regulation.
<PAGE>
7. Indemnification by Distributor. Distributor agrees to indemnify the
Trust, its officers and Trustees and any person which controls the Trust within
the meaning of the 1933 Act against any and all claims, demands, liabilities
and expenses that any such indemnified party may incur under the 1933 Act, or
common law or otherwise, arising out of or based upon (i) any alleged untrue
statement of a material fact contained in the registration statement for any
Series, any Prospectus or Statement of Additional Information, or any
advertisements or sales literature prepared by or on behalf of the Trust for
Distributor's use, or any omission to state a material fact therein, the
omission of which makes any statement contained therein misleading, if such
statement or omission was made in reliance upon and in conformity with
information furnished to the Trust in connection therewith by or on behalf of
Distributor; and (ii) any act or deed of Distributor or its sales
representatives that has not been authorized by the Trust in any Prospectus or
Statement of Additional Information or by this Agreement.
8. Term and Termination.
(a) Unless terminated as herein provided, this Agreement shall continue in
effect as to any Series until ____________ __, 1997 and shall continue in full
force and effect as to Shares of any Series for successive periods of one year
thereafter, but only so long as each such continuance is approved (i) by either
the Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of Shares of the particular Series, or
(ii) by vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons (as defined in the 1940 Act) of any such
party and who have no direct or indirect financial interest in this Agreement
or in the operation of the Service Plan or in any agreement related thereto
("Independent Trustees"), cast at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated as to any Series on not less than
thirty days' nor more than sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the particular
Series in question, and not any other Series or series of the Trust. The term
"Landmark Funds I" means and refers to the Trustees from time to time serving
<PAGE>
under the Declaration of Trust of the Trust, a copy of which is on file with
the Secretary of the Commonwealth of Massachusetts. The execution and delivery
of this Agreement has been authorized by the Trustees, and this Agreement has
been signed on behalf of the Trust by an authorized officer of the Trust,
acting as such and not individually, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Trust as
provided in the Declaration of Trust.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
provisions of the 1940 Act.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of _________ __, 1996.
Landmark Funds I
By:_______________________________
The Landmark Funds Broker-Dealer
Services, Inc.
By:_______________________________
<PAGE>
Exhibit A
Series
CitiSelectSM Folio 200
CitiSelectSM Folio 300
CitiSelectSM Folio 400
CitiSelectSM Folio 500
Exhibit 15(a)
FORM OF AMENDED AND RESTATED
SERVICE PLAN WITH RESPECT TO
CLASS A SHARES
SERVICE PLAN, dated as of February 9, 1996, as amended and restated as of
_______ __, 1996, of Landmark Funds I, a Massachusetts business trust (the
"Trust"), with respect to shares of beneficial interest of its series
CitiSelect Folio 200SM, CitiSelect Folio 300SM, CitiSelect Folio 400SM and
CitiSelect Folio 500SM (the "Series") designated as Class A shares ("Shares").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and
other assets;
WHEREAS, the Trust intends to distribute Shares in accordance with Rule
12b-1 under the 1940 Act, and wishes to adopt this Plan as a plan of
distribution pursuant to Rule 12b-1;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of this Plan or in
any agreement relating hereto (the "Non-Interested Trustees"), having
determined, in the exercise of reasonable business judgment and in light of
their fiduciary duties under state law and under Section 36(a) and (b) of the
1940 Act, that there is a reasonable likelihood that this Plan will benefit the
Trust and the shareholders of the Series, have approved this Plan by votes cast
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan as a plan of
distribution in accordance with Rule 12b-1 under the 1940 Act, with the terms
of the Plan being as follows:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may:
(a) engage, directly or indirectly, in any activities primarily
intended to result in the sale of Shares of the Series, which activities
<PAGE>
may include, but are not limited to (i) payments to the Trust's
Distributor for distribution services, (ii) payments to securities
dealers, financial institutions (which may include banks) and others in
respect of the sale of Shares of the Series, (iii) payments for
advertising, marketing or other promotional activity, and (iv) payments
for preparation, printing, and distribution of prospectuses and
statements of additional information and reports of the Trust for
recipients other than regulators and existing shareholders of the Trust;
and
(b) make payments, directly or indirectly, to the Trust's
Distributor, securities dealers, financial institutions (which may
include banks) and others for providing personal service and/or the
maintenance of shareholder accounts.
The Trust is authorized to engage in the activities listed above either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures
will be made shall be determined by the Trustees of the Trust, but in no event
may such expenditures exceed an amount calculated at the rate of 0.50% per
annum of the average daily net assets of each Series attributable to Shares of
that Series. Payments pursuant to this Plan may be made directly by the Trust
or to other persons with which the Trust has entered into agreements related to
this Plan. For purposes of determining the fees payable under this Plan, the
value of each Series' average daily net assets attributable to Shares of that
Series shall be computed in the manner specified in the applicable Series'
then-current prospectus and statement of additional information.
3. Trust's Expenses. The Trust shall pay all expenses of its operations,
including the following, and such expenses shall not constitute expenditures
under this Plan: organization costs of each series; compensation of Trustees
who are not "interested persons" of the Trust; governmental fees; interest
charges; loan commitment fees; taxes; membership dues in industry associations
allocable to the Trust; fees and expenses of independent auditors, legal
counsel and any transfer agent, distributor, shareholder servicing agent,
registrar or dividend disbursing agent of the Trust; expenses of issuing and
redeeming shares of beneficial interest and servicing shareholder accounts;
expenses of preparing, typesetting, printing and mailing prospectuses,
statements of additional information, shareholder reports, notices, proxy
<PAGE>
statements and reports to governmental officers and commissions and to existing
shareholders of the Series; expenses connected with the execution, recording
and settlement of security transactions; insurance premiums; fees and expenses
of the custodian for all services to the Series, including safekeeping of funds
and securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Series (including but not limited to the
fees of independent pricing services); expenses of meetings of shareholders;
expenses relating to the issuance, registration and qualification of shares;
and such non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Trust may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
4. Term and Termination. (a) This Plan shall become effective as to a
Series upon (i) approval by a vote of at least a majority of the outstanding
voting securities (as defined in the 1940 Act) of Shares of the particular
Series, and (ii) approval by a majority of the Trustees of the Trust and a
majority of the Non-Interested Trustees cast in person at a meeting called for
the purpose of voting on this Plan. Unless terminated as herein provided, this
Plan shall continue in effect for one year from the date hereof and shall
continue in effect for successive periods of one year thereafter, but only so
long as each such continuance is specifically approved by votes of a majority
of both the Trustees of the Trust and the Non-Interested Trustees, cast in
person at a meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to any Series by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities, as defined in the 1940 Act, of Shares of
the applicable Series.
5. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities, as
defined in the 1940 Act, of Shares of the applicable Series, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 4(a) hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of the Non-Interested Trustees of the Trust shall be
<PAGE>
committed to the discretion of such Non-Interested Trustees.
7. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
9. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
provisions of the 1940 Act.
Exhibit 15(b)
FORM OF SERVICE PLAN
WITH RESPECT TO CLASS C SHARES
SERVICE PLAN, dated as of _______ __, 1996, of Landmark Funds I, a
Massachusetts business trust (the "Trust"), with respect to shares of
beneficial interest of its series CitiSelect Folio 200SM, CitiSelect Folio
300SM, CitiSelect Folio 400SM and CitiSelect Folio 500SM (the "Series")
designated as Class C shares ("Shares").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and
other assets;
WHEREAS, the Trust intends to distribute Shares in accordance with Rule
12b-1 under the 1940 Act, and wishes to adopt this Plan as a plan of
distribution pursuant to Rule 12b-1;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of this Plan or in
any agreement relating hereto (the "Non-Interested Trustees"), having
determined, in the exercise of reasonable business judgment and in light of
their fiduciary duties under state law and under Section 36(a) and (b) of the
1940 Act, that there is a reasonable likelihood that this Plan will benefit the
Trust and the shareholders of the Series, have approved this Plan by votes cast
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan as a plan of
distribution in accordance with Rule 12b-1 under the 1940 Act, with the terms
of the Plan being as follows:
1. Distribution and Servicing Activities. Subject to
the supervision of the Trustees of the Trust, the Trust may:
(a) engage, directly or indirectly, in any activities primarily
intended to result in the sale of Shares of the Series, which activities
may include, but are not limited to (i) payments to the Trust's
Distributor for distribution services, (ii) payments to securities
<PAGE>
dealers, financial institutions (which may include banks) and others in
respect of the sale of Shares of the Series, (iii) payments for
advertising, marketing or other promotional activity, and (iv) payments
for preparation, printing, and distribution of prospectuses and
statements of additional information and reports of the Trust for
recipients other than regulators and existing shareholders of the Trust;
and
(b) make payments, directly or indirectly, to the Trust's
Distributor, securities dealers, financial institutions (which may
include banks) and others for providing personal service and/or the
maintenance of shareholder accounts.
The Trust is authorized to engage in the activities listed above either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust pursuant
to this Plan shall be determined by the Trustees of the Trust, but (a) in no
event may such expenditures for the purposes set forth in Section 1(b) above
exceed an amount calculated at the rate of 0.25% per annum of the average daily
net assets of each Series attributable to Shares of that Series and (b) in no
event may such expenditures for the purposes set forth in Section 1(a) above
exceed an amount calculated at the rate of 0.75% per annum of the average daily
net assets of each Series attributable to Shares of that Series. Payments
pursuant to this Plan may be made directly by the Trust or to other persons
with which the Trust has entered into agreements related to this Plan. For
purposes of determining the fees payable under this Plan, the value of each
Series' average daily net assets attributable to Shares shall be computed in
the manner specified in the applicable Series' then-current prospectus and
statement of additional information.
3. Trust's Expenses. The Trust shall pay all expenses of its operations,
including the following, and such expenses shall not constitute expenditures
under this Plan: organization costs of each series; compensation of Trustees
who are not "interested persons" of the Trust; governmental fees; interest
charges; loan commitment fees; taxes; membership dues in industry associations
allocable to the Trust; fees and expenses of independent auditors, legal
counsel and any transfer agent, distributor, shareholder servicing agent,
registrar or dividend disbursing agent of the Trust; expenses of issuing and
redeeming shares of beneficial interest and servicing shareholder accounts;
<PAGE>
expenses of preparing, typesetting, printing and mailing prospectuses,
statements of additional information, shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to existing
shareholders of the Series; expenses connected with the execution, recording
and settlement of security transactions; insurance premiums; fees and expenses
of the custodian for all services to the Series, including safekeeping of funds
and securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Series (including but not limited to the
fees of independent pricing services); expenses of meetings of shareholders;
expenses relating to the issuance, registration and qualification of shares;
and such non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Trust may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
4. Term and Termination. (a) This Plan shall become effective as to a
Series upon (i) approval by a vote of at least a majority of the outstanding
voting securities (as defined in the 1940 Act) of Shares of the particular
Series, and (ii) approval by a majority of the Trustees of the Trust and a
majority of the Non-Interested Trustees cast in person at a meeting called for
the purpose of voting on this Plan. Unless terminated as herein provided, this
Plan shall continue in effect for one year from the date hereof and shall
continue in effect for successive periods of one year thereafter, but only so
long as each such continuance is specifically approved by votes of a majority
of both the Trustees of the Trust and the Non-Interested Trustees, cast in
person at a meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to any Series by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities, as defined in the 1940 Act, of Shares of
the applicable Series.
5. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities, as
defined in the 1940 Act, of Shares of the applicable Series, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 4(a) hereof.
<PAGE>
6. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of the Non-Interested Trustees of the Trust shall be
committed to the discretion of such Non-Interested Trustees.
7. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
9. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
provisions of the 1940 Act.
Exhibit 18
LANDMARK FUNDS I
FORM OF MULTIPLE CLASS PLAN
MULTIPLE CLASS PLAN, dated as of ________ ___, 1996, of Landmark Funds I,
a Massachusetts business trust (the "Trust"), on behalf of its series
CitiSelect Folio 200SM, CitiSelect Folio 300SM, CitiSelect Folio 400SM and
CitiSelect Folio 500SM (the "Series").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (collectively with the rules and regulations promulgated thereunder,
the "1940 Act"); and
WHEREAS, the shares of beneficial interest (without par value) of the
Trust (the "Shares") are divided into separate series and may be divided into
one or more separate classes;
WHEREAS, the Trust desires to adopt this Multiple Class Plan (the "Plan")
on behalf of each of the Series as a plan pursuant to Rule 18f-3 in order that
each of the Series may issue multiple classes of Shares;
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information and
considered such pertinent factors as it deemed necessary to an informed
evaluation of this Plan and determination as to whether this Plan should be
adopted and implemented, and has determined that the adoption and
implementation of this Plan, including the expense allocation contemplated
herein, are in the best interests of each class of Shares individually, as well
as the Trust and the Series;
NOW THEREFORE, the Trust hereby adopts this Plan pursuant to Rule 18f-3
under the 1940 Act, on the following terms and conditions:
1. Each of the Series may issue Shares in one or more classes (each, a
"Class" and collectively, the "Classes"). Shares so issued will have
the rights and preferences set forth in the Establishment and
<PAGE>
Designation of Classes and the Trust's then current registration
statement relating to the applicable Series.
2. Shares issued in Classes will be issued subject to and in accordance
with the terms of Rule 18f-3 under the 1940 Act, including, without
limitation:
(a) Each Class shall have a different arrangement for shareholder
services or the distribution of securities or both, and shall
pay all of the expenses of that arrangement;
(b) Each Class may pay a different share of other
expenses, not including advisory or custodial
fees or other expenses related to the
management of the Trust's assets, if these
expenses are actually incurred in a different
amount by that Class, or if the Class
receives services of a different kind or to a
different degree than other Classes;
(c) Each Class shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its
arrangement;
(d) Each Class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one Class
differ from the interests of any other Class; and
(e) Except as otherwise permitted under Rule 18f-3 under the 1940
Act, each Class shall have the same rights and obligations of
any other Class.
3. Nothing herein contained shall be deemed to
require the Trust to take any action contrary to
its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to
which it is subject or by which it is bound, or to
relieve or deprive the Board of Trustees of the
responsibility for and control of the conduct of
the affairs of the Trust.
4. This Plan shall become effective as to each Series upon approval by
a vote of the Board of Trustees and vote of a majority of the
<PAGE>
Trustees who are not "interested persons" of the Trust (the
"Qualified Trustees").
5. This Plan shall continue in effect indefinitely unless terminated by
a vote of the Board of Trustees of the Trust. This Plan may be
terminated at any time with respect to any Series by a vote of the
Board of Trustees of the Trust.
6. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees.
7. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the
1940 Act.
8. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Plan shall not be affected thereby.
