<PAGE>
497(C) File Nos. 2-90518 and 811-4006
PROSPECTUS
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MAY 1, 1996
AS SUPPLEMENTED DECEMBER 31, 1996
LANDMARK BALANCED FUND
LANDMARK EQUITY FUND
LANDMARK SMALL CAP EQUITY FUND
(Members of the Landmark(SM) Family of Funds)
Class A and B Shares
This Prospectus describes three mutual funds in the Landmark Family of
Funds: Landmark Balanced Fund, Landmark Equity Fund, and Landmark Small Cap
Equity Fund. Each Fund has its own investment objectives and policies.
Citibank, N.A. is the investment adviser.
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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 THE PREMIUM
PORTFOLIOS. EACH PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVES AND POLICIES AS
ITS CORRESPONDING FUND. SEE "SPECIAL INFORMATION CONCERNING INVESTMENT
STRUCTURE" ON PAGE 11.
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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 May 1, 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 contacting the investor's Shareholder
Servicing Agent (see inside back cover for address and phone number).
<PAGE>
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TABLE OF CONTENTS
2 Prospectus Summary
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4 Expense Summary
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6 Condensed Financial Information
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9 Investment Information
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10 Risk Considerations
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13 Valuation of Shares
Classes of Shares
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14 Purchases
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18 Exchanges
Redemptions
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19 Dividends and Distributions
Management
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23 Tax Matters
Performance Information
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24 General Information
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25 Appendix -- Permitted Investments
and Investment Practices
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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.
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INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
PROSPECTUS SUMMARY
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See the body of the Prospectus for more information on the topics discussed
in this summary.
THE FUNDS: This Prospectus describes three mutual funds: Landmark Balanced
Fund, Landmark Equity Fund, and Landmark Small Cap Equity Fund. Each Fund has
its own investment objectives and policies. There can be no assurance that any
Fund will achieve its objectives.
INVESTMENT OBJECTIVES AND POLICIES:
LANDMARK BALANCED FUND. The Fund's objectives are to earn high current income by
investing in a broad range of securities, to preserve capital, and to provide
growth potential with reduced risk. Through Balanced Portfolio, the Fund invests
in a broadly diversified portfolio of income-producing securities, including
common and preferred stocks and bonds. In selecting common stocks for Balanced
Portfolio, the Adviser emphasizes securities issued by established companies
with medium to large capitalizations, i.e., $750 million or more, and seasoned
management teams ("Established Companies").
LANDMARK EQUITY FUND. The Fund's objective is long-term capital growth;
dividend income, if any, is incidental to this investment objective. Through
Equity Portfolio, the Fund invests primarily in common stocks of U.S. issuers,
with an emphasis on Established Companies.
LANDMARK SMALL CAP EQUITY FUND. The Fund's objective is long-term capital
growth; dividend income, if any, is incidental to this investment objective.
Through Small Cap Equity Portfolio, the Fund invests primarily in stocks of U.S.
issuers that have small market capitalizations (i.e., $750 million or less). In
this Prospectus these companies are called "small cap companies." In addition,
the Fund may invest in companies that are believed to be emerging companies
relative to their potential markets.
INVESTMENT ADVISER AND DISTRIBUTOR: Citibank, N.A. ("Citibank" or the
"Adviser"), a wholly-owned subsidiary of Citicorp, is the investment adviser.
Citibank and its affiliates manage more than $83 billion in assets worldwide.
The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS" or the "Distributor")
is the distributor of shares of each Fund. See "Management."
PURCHASES AND REDEMPTIONS: Customers of Shareholder Servicing Agents may
purchase and redeem shares of the Funds on any Business Day. See "Purchases"
and "Redemptions."
PRICING: Investors may select Class A or Class B shares, with different
expense levels and sales charges (if available through the investors'
Shareholder Servicing Agents). See "Classes of Shares," "Purchases" and
"Management -- Distribution Arrangements."
CLASS A SHARES. Offered at net asset value plus any applicable initial sales
charge (maximum of 4.75% of the public offering price) and subject to a
distribution fee at the annual rate of 0.05% of the average daily net assets
represented by the Class A shares. Purchases of $1 million 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.
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 "Redemptions."
CLASS B SHARES. Offered at net asset value (a maximum contingent deferred sales
charge of 5.00% of the lesser of the shares' net asset value at redemption or
their original purchase price is imposed on certain redemptions made within six
years of the date of purchase) and subject to a distribution fee at the annual
rate of 0.75% of the average daily net assets represented by the Class B shares
and a service fee at the annual rate of 0.05% of the average daily net assets
represented by Class B shares. Class B shares automatically convert into Class A
shares (which have a lower distribution fee) approximately eight years after
purchase.
EXCHANGES: Shares may be exchanged for shares of the corresponding class of
most other Landmark Funds. See "Exchanges."
DIVIDENDS: Dividends are declared and paid quarterly for the Balanced Fund.
Dividends, if any, are declared and paid semi-annually for the Equity Fund and
the Small Cap Equity Fund (together, the "Equity Funds"). Net capital gains
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 at net asset value, subject
to the policies of a shareholder's Shareholder Servicing Agent. See "Dividends
and Distributions."
WHO SHOULD INVEST: Each Fund has its own suitability considerations and risk
factors, as summarized below and described in more detail in "Investment
Information" and "Risk Considerations." No single Fund is intended to provide a
complete investment program.
BALANCED FUND. Investing in a broadly diversified portfolio of income-producing
securities, the Fund is designed for investors seeking high current income with
preservation of capital, and growth potential with reduced risk.
EQUITY FUNDS. Investing primarily in common stock of U.S. issuers, the Equity
Funds are designed for investors seeking long-term capital growth and for whom
current income is not a primary consideration. The Equity Funds are designed for
long-term investors who are willing to accept the risks of potential loss
associated with opportunities for above-average growth, who can tolerate
substantial changes in the value of their investment and who do not require
current income from their investment.
RISK FACTORS: There can be no assurance that any Fund will achieve its
investment objectives, 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, an investor's shares may be worth more
or less at redemption than at the time of purchase.
Investors in the Funds, particularly the Small Cap Equity Fund, 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 investing primarily
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, and all of these risks are increased for investments in issuers in
developing countries.
Certain investment practices, such as the use of forward non-U.S. currency
exchange contracts, also may entail special risks. Investors should read "Risk
Considerations" for more information about risk factors.
<PAGE>
EXPENSE SUMMARY
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The following table summarizes estimated shareholder transaction and annual
operating expenses for Class A and B shares of each Fund. Each Fund invests
all of its investable assets in its corresponding Portfolio. The Trustees of
the Funds believe that 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 19 and "General
Information -- Expenses" -- page 24.*
<TABLE>
<CAPTION>
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SMALL CAP
BALANCED FUND EQUITY FUND EQUITY FUND
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
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<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) .............. 4.75% None 4.75% None 4.75% None
Maximum Contingent Deferred Sales Charge (as a
percentage of original purchase price or See See See
redemption proceeds, whichever is less) .......... Below(1) 5.00% Below(1) 5.00% Below(1) 5.00%
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS
(AS A PERCENTAGE OF AVERAGE NET ASSETS):
Investment Management Fee .......................... .40% .40% .50% .50% .65%(2) .65%(2)
12b-1 Fees (including service fees for Class B
shares)(2)(3) .................................... .05% .80% .05% .80% .05% .80%
Other Expenses
Administrative Services Fees(2) .................. .25% .25% .15% .15% .15% .15%
Shareholder Servicing Agent Fees ................. .25% .25% .25% .25% .25% .25%
Other Operating Expenses(4) ...................... .07% .07% .10% .10% .25%(2) .25%(2)
Total Fund Operating Expenses(2) ................... 1.02% 1.77% 1.05% 1.80% 1.35% 2.10%
<FN>
* 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 Class B shares were not offered during the most recent fiscal year of the Funds,
certain figures in the table are based on estimated amounts for the current fiscal year. The table shows the fees paid to
various service providers after giving effect to expected voluntary partial fee waivers.
(1) Purchases of $1 million or more are not subject to an intial sales charge; however, a contingent deferred sales charge of
1.00% will be imposed in the event of certain redemptions within 12 months following purchase. See "Classes of Shares" and
"Purchases."
(2) Absent fee waivers and reimbursements, administrative services fees, 12b-1 fees and total fund operating expenses would be
.30%, .20% and 1.22% for Landmark Balanced Fund -- Class A and .30%, .95% and 1.97% for Landmark Balanced Fund -- Class B.
Absent fee waivers and reimbursements, administrative service fees, 12b-1 fees, and total fund operating expenses would be
.30%, .20% and 1.35% for Landmark Equity Fund -- Class A and .30%, .95% and 2.10% for Landmark Equity Fund -- Class B. Absent
fee waivers and reimbursements, investment management fees, administrative service fees, rule 12b-1 fees, other operating
expenses and total fund operating expenses would be .75%, .30%, .20%, 1.00% and 2.50% for Landmark Small Cap Equity Fund --
Class A; .75%, .30%, .95%, 1.00% and 3.25% for Landmark Small Cap Equity Fund -- Class B. There can be no assurance that the
fee waivers and reimbursements reflected in the table will continue at their present levels. Under each Fund's administrative
services plan, the aggregate of the fee paid to the Administrator, the fees paid to the Shareholder Servicing Agents and the
fee paid to the Distributor under the rule 12b-1 distribution plan (not including the .05% portion of the fee for Class A
shares that may be charged in anticipation of or reimbursements for print or electronic media advertising, see "Distribution
Arrangements" below) may not exceed .65% of each Fund's average daily net assets on an annualized basis for the then-current
fiscal year. Individual components of the aggregate may vary from time to time.
(3) 12b-1 distribution fees are asset-based sales charges. 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. The figures for Class B shares include service fees, which are payable at the annual rate of 0.05% of the average daily
net assets represented by Class B shares.
(4) LFBDS has agreed to pay the ordinary operating expenses of the Balanced Fund and the Equity Fund, subject to certain
exceptions. LFBDS receives a fee from each of these Funds. See "General Information -- Expenses."
</FN>
</TABLE>
<PAGE>
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:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
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<S> <C> <C> <C> <C>
BALANCED FUND
Class A shares(1) ................................... $57 $78 $101 $166
Class B shares:
Assuming complete redemption at end of period(2)(3) $68 $86 $116 $188
Assuming no redemption(3) ......................... $18 $56 $ 96 $188
EQUITY FUND
Class A shares(1) ................................... $58 $79 $103 $170
Class B shares:
Assuming complete redemption at end of period(2)(3) $68 $87 $117 $192
Assuming no redemption(3) ......................... $18 $57 $ 97 $192
SMALL CAP EQUITY FUND
Class A shares(1) ................................... $61 $88 $118 $202
Class B shares:
Assuming complete redemption at end of period(2) .. $71 $96 $133 $220
Assuming no redemption ............................ $21 $66 $113 $220
<FN>
(1) Assumes deduction at the time of purchase of the maximum 4.75% sales load.
(2) Assumes deduction at the time of redemption of the maximum applicable contingent deferred sales charge.
(3) Ten-year figures assume conversion of Class B shares to Class A shares approximately eight years after purchase.
</FN>
</TABLE>
The Example assumes that all dividends are reinvested and reflects certain
voluntary fee waivers. If waivers were not in place, the amounts in the
example would be $59, $84, $111 and $188 for Balanced Fund -- Class A; $70,
$92, $126 and $206 for Balanced Fund -- Class B (assuming complete redemption
at the end of each period); $61, $88, $118 and $202 for Equity Fund -- Class
A; $71, $96, $133 and $220 for Equity Fund -- Class B (assuming complete
redemption at the end of each period); $72, $122, $174 and $318 for Small Cap
Equity Fund -- Class A and $83, $130, $190 and $334 for Small Cap Equity Fund
- -- Class B (assuming complete redemption at the end of each period). Expenses
for Class A shares are based on each Fund's fiscal year ended December 31,
1995. Expenses for Class B shares are estimated, because Class B shares were
not offered during the fiscal year ended December 31, 1995. 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 OF ANY FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
CONDENSED FINANCIAL INFORMATION
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The following tables provide condensed financial information about the Funds
for the periods indicated. The information below should be read in conjunction
with the financial statements appearing in the Funds' Annual Reports to
Shareholders, which are incorporated by reference in the Statement of
Additional Information. The financial statements and notes, as well as the
tables below, have been audited by Price Waterhouse LLP, independent
accountants. The report of Price Waterhouse LLP is included in each of the
Fund's Annual Reports. Copies of the Annual Reports may be obtained without
charge from an investor's Shareholder Servicing Agent (see inside of back
cover for address and phone number).
<TABLE>
<CAPTION>
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BALANCED FUND
FINANCIAL HIGHLIGHTS
CLASS A SHARES
(No Class B shares were outstanding during these periods.)
OCTOBER 19, 1990
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
OPERATIONS) TO
1995 1994++ 1993 1992 1991 DECEMBER 31, 1990
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ......... $13.52 $14.24 $13.54 $12.93 $10.27 $ 9.75
------ ------ ------ ------ ------ ------
Income from Operations:
Net investment income ........................ 0.486 0.399 0.336** 0.266 0.336 0.081
Net realized and unrealized gain (loss) on
investments ................................ 2.540 (0.695) 0.803 0.600 2.665 0.513
------ ------ ------ ------ ------ ------
Total from operations .................... 3.026 (0.296) 1.139 0.866 3.001 0.594
------ ------ ------ ------ ------ ------
Less Dividends and Distributions From:
Net investment income ...................... (0.495) (0.394) (0.319) (0.256) (0.341) (0.074)
Net realized gain on investments ........... (0.341) (0.030) (0.120) -- -- --
------ ------ ------ ------ ------ ------
Total from dividends and distributions ... (0.836) (0.424) (0.439) (0.256) (0.341) (0.074)
------ ------ ------ ------ ------ ------
Net Asset Value, end of period ............... $15.71 $13.52 $14.24 $13.54 $12.93 $10.27
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) .... $246,002 $227,309 $265,216 $15,296 $10,239 $6,855
Ratio of expenses to average net assets ...... 1.02%(A) 1.02%(A) 1.04% 1.40% 1.40% 1.40%*
Ratio of net investment income to average net
assets ..................................... 3.21% 2.82% 2.46% 2.07% 2.88% 4.06%*
Portfolio turnover(B) ........................ -- 29% 101% 102% 117% 12%
Total return ................................. 22.66% (2.06)% 8.48% 6.82% 29.61% 6.09%+
Note: If agents of the Balanced Fund for the periods indicated had not waived a portion of their fees and had expenses been limited
as required by certain state securities laws, the net investment income per share and the ratios would have been as follows:
Net investment income per share .............. $ 0.463 $ 0.378 $0.310** $0.148 $0.211 $0.059
RATIOS:
Expenses to average net assets ............... 1.17%(A) 1.17%(A) 1.23% 2.32% 2.47% 2.50%*
Net investment income to average net assets .. 3.06% 2.67% 2.27% 1.15% 1.81% 2.96%*
<FN>
* Annualized.
** The per share amounts were computed using a monthly average number of shares outstanding during the year.
(A) Includes the Fund's share of Balanced Portfolio's allocated expenses for the periods subsequent to May 1, 1994.
(B) Represents the rate of portfolio activity for the period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred all of its investable assets to the Portfolio is included
elsewhere in this Prospectus.
+ Not Annualized.
++ On May 1, 1994 the Fund began investing all of its investable assets in Balanced Portfolio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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EQUITY FUND
FINANCIAL HIGHLIGHTS
CLASS A SHARES
(No Class B shares were outstanding during these periods.)
OCTOBER 19, 1990
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
1995 1994+ 1993 1992 1991 DECEMBER 31, 1990
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<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ......... $14.13 $14.80 $13.23 $12.36 $ 9.57 $ 9.14
------ ------ ------ ------ ------ ------
Income from Operations:
Net investment income ........................ 0.211 0.173 0.071** 0.065 0.126 0.065
Net realized and unrealized gain (loss) on
investments ................................ 3.651 (0.245) 1.550 0.868 2.797 0.423
------ ------ ------ ------ ------ ------
Total from operations .................... 3.862 (0.072) 1.621 0.933 2.923 0.488
------ ------ ------ ------ ------ ------
Less Dividends and Distributions From:
Net investment income ...................... (0.210) (0.169) (0.051) (0.063) (0.133) (0.058)
Net realized gain on investments ........... (0.582) (0.429) -- -- -- --
------ ------ ------ ------ ------
Total from dividends and distributions ... (0.792) (0.598) (0.051) (0.063) (0.133) (0.058)
------ ------ ------ ------ ------ ------
Net Asset Value, end of period ............... $17.20 $14.13 $14.80 $13.23 $12.36 $ 9.57
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) .... $213,729 $183,975 $200,903 $10,973 $9,181 $6,026
Ratio of expenses to average net assets ...... 1.05%(A) 1.05%(A) 1.07% 1.40% 1.40% 1.40%*
Ratio of net investment income to average
net assets ................................. 1.30% 1.15% 0.52% 0.53% 1.12% 3.48%*
Portfolio turnover (B) ....................... -- 1% 23% 79% 68% 0%
Total return ................................. 27.55% (0.41%) 12.26% 7.60% 30.73% 5.34%
Note: If agents of the Equity Fund for the periods indicated had not waived a portion of their fees and had expenses been limited
as required by certain state securities laws, the net investment income (loss) per share and the ratios would have been as follows:
Net investment income (loss) per share ....... $ 0.170 $ 0.136 $0.029** $(0.070) $0.002 $0.044
RATIOS:
Expenses to average net assets ............... 1.30%(A) 1.29%(A) 1.37% 2.50% 2.50% 2.50%*
Net investment income (loss) to average net
assets 1.05% 0.91% 0.21% (0.57)% 0.02% 2.38%*
<FN>
* Annualized.
** The per share amounts were computed using a monthly average number of shares outstanding during the year.
(A) Includes the Fund's share of Equity Portfolio's allocated expenses for the periods subsequent to May 1, 1994.
(B) Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover rate for the period since the Fund transferred all of its investable assets to the
Portfolio is included elsewhere in this Prospectus.
+ On May 1, 1994 the Fund began investing all of its investable assets in Equity Portfolio.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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SMALL CAP EQUITY FUND
FINANCIAL HIGHLIGHTS
CLASS A SHARES
(No Class B shares were outstanding during these periods.)
JUNE 21, 1995
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of period ...................... $10.00
------
Income from Operations:
Net investment income ..................................... 0.05
Net realized and unrealized gain .......................... 4.42
------
Total from operations ................................. 4.47
------
Less Distributions From:
Net investment income ................................... (0.05)
Net realized gain ....................................... (0.10)
======
Total from distributions .............................. (0.15)
======
Net Asset Value, end of period ............................ $14.32
======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) ................. $5,148
Ratio of expenses to average net assets (A) ............... 0%
Ratio of net investment income to average net assets ...... 1.21%*
Total return .............................................. 44.78%**
Note: If Agents of the Fund for the periods indicated and Agents of Small Cap Equity Portfolio for the period June 21,
1995 (commencement of operations) to December 31, 1995 had not voluntarily waived all of their fees, assumed Fund
expenses and had expenses been limited to that required by certain state securities laws, the net investment income
(loss) per share and the ratios would have been as follows:
Net investment income per share ........................... $(0.288)
RATIOS:
Expenses to average net assets (A) ........................ 2.50%*
Net investment income to average net assets ............... (1.29)%*
<FN>
* Annualized.
** Not annualized.
(A) Includes the Fund's share of Small Cap Equity Portfolio's allocated expenses for the period indicated.
</FN>
</TABLE>
<PAGE>
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES: The investment objectives of the BALANCED FUND are to
earn high current income by investing in a broad range of securities, to
preserve capital, and to provide growth potential with reduced risk.
The investment objective of the EQUITY FUND and the SMALL CAP EQUITY FUND is
long-term capital growth. Dividend income, if any, is incidental to this
investment objective.
The investment objectives 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 objectives.
INVESTMENT POLICIES: The BALANCED FUND seeks its objectives by investing, under
normal circumstances, in a broadly diversified portfolio of income-producing
securities, including common and preferred stocks, bonds and short-term
obligations. Under normal circumstances, at least 25% of the Fund's total assets
is invested in fixed income securities. The Adviser determines the mix of
investments among equity and fixed income securities based on its analysis of
current economic and market conditions and underlying securities values.
The Adviser selects equity securities that, in the Adviser's judgment, offer
the prospect for above-average growth. Equity securities include common stocks,
preferred stocks and warrants for the purchase of stock. In selecting common
stocks the Adviser emphasizes securities issued by established companies with
medium to large market capitalizations, i.e., $750 million or more, and seasoned
management teams ("Established Companies"). The Fund's fixed income investments
include corporate bonds and notes, preferred securities and government
obligations. All of the Fund's long-term non-convertible debt investments are
investment grade securities (rated Baa or better by Moody's Investors Service,
Inc. ("Moody's") or BBB or better by Standard & Poor's Ratings Group ("S&P")) or
unrated securities which the Adviser believes to be of comparable quality. Less
than 5% of the Portfolio's investments consist of securities rated Baa by
Moody's or BBB by S&P. Securities with these ratings may have speculative
characteristics.
The EQUITY FUND seeks its objective by investing in a broadly diversified
portfolio of equity securities consisting mainly of common stocks of U.S.
issuers. Under normal circumstances, at least 65% of the Fund's total assets is
invested in equity securities.
In selecting equity securities the Adviser emphasizes securities issued by
Established Companies which the Adviser believes possess above-average prospects
for growth. The Adviser may also select other securities which it believes
provide an opportunity for appreciation, such as fixed income securities and
convertible and non-convertible bonds, preferred stocks and warrants. All of the
Fund's long-term non-convertible debt investments are investment grade
securities or unrated securities which the Adviser believes to be of comparable
quality. Less than 5% of the Fund's investments consist of securities rated Baa
by Moody's or BBB by S&P.
The SMALL CAP EQUITY FUND seeks its objective by investing in a diversified
portfolio consisting primarily of equity securities of U.S. companies that have
small market capitalizations. Under normal circumstances, at least 65% of the
Fund's total assets is invested in equity securities of these companies. Small
market capitalization companies are those with market capitalizations of $750
million or less at the time of the Fund's investment. In addition, the Fund may
invest in companies that are believed to be emerging companies relative to their
potential markets.
The Adviser may also select other securities for the Fund that it believes
provide an opportunity for appreciation, such as fixed income securities and
convertible and non-convertible bonds. Most of the Fund's long-term
non-convertible debt investments are investment grade securities, and less than
5% of the Fund's investments consist of securities rated Baa by Moody's or BBB
by S&P.
CERTAIN ADDITIONAL INVESTMENT POLICIES: NON-U.S. SECURITIES. While the Funds
emphasize U.S. securities, each Fund may invest a portion of its assets in
non-U.S. equity and debt securities, including depository receipts. None of
the Funds intends to invest more than 25% of its assets in non-U.S.
securities, including sponsored American Depositary Receipts, which represent
the right to receive securities of non-U.S. issuers deposited in a U.S. or
correspondent bank. Each Fund may invest up to 5% of its assets in closed-end
investment companies which primarily hold non-U.S. securities.
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 the Appendix -- Permitted
Investments and Investment Practices on page 25. The Funds will not necessarily
invest or engage in each of the investments and investment practices in the
Appendix 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 33 1/3% of the Fund's net assets for extraordinary or
emergency purposes (e.g., to meet redemption requests). Certain of these
specific restrictions may not be changed without shareholder approval. 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 the
Adviser believes it is appropriate to do so in light of the Fund's investment
objectives, without regard to the length of time a particular security may have
been held. For the period January 1, 1994 to April 30, 1994, the turnover rate
for the Balanced Fund was 29%. For the period May 1, 1994 to December 31, 1994
and for the fiscal year ended December 31, 1995, the turnover rates for Balanced
Portfolio were 105% and 210%, respectively. For the period January 1, 1994 to
April 30, 1994 the turnover rate for the Equity Fund was 1%. For the period May
1, 1994 to December 31, 1994 and for the fiscal year ended December 31, 1995,
the turnover rates for Equity Portfolio were 35% and 67%, respectively. For the
period June 21, 1995 (commencement of operations) to December 31, 1995, the
turnover rate for the Small Cap Equity Portfolio was 41%. The amount of
brokerage commissions and realization of taxable capital gains will tend to
increase as the level of portfolio activity increases.
BROKERAGE TRANSACTIONS. The primary consideration in placing each Fund's
security transactions with broker-dealers for execution is to obtain and
maintain the availability of execution at the most favorable prices and in the
most effective manner possible.
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 unrated 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.
SMALL CAP COMPANIES. Investors in the Funds, particularly the Small Cap
Equity Fund, 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
investing primarily in securities of larger, more established companies.
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.
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 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 attributable to 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.
Each Fund may invest in securities of issuers in developing countries, and
all of these risks are increased for investments in issuers in developing
countries.
INVESTMENT PRACTICES. Certain of the investment practices employed for the
Funds may entail certain risks. These risks are in addition to risks described
above and are described in the Appendix. See the Appendix -- Permitted
Investments and Investment Practices on page 25.
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 objectives by investing all of its investable assets
in its corresponding Portfolio, a registered investment company. Each of the
Portfolios has the same investment objectives 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.
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 Objective, Policies and Restrictions
- - 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
(the "1940 Act")) 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.
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.
For a description of the management of the Portfolios, see "Management" --
page 19. For descriptions of the expenses of the Portfolios, see "Management"
and "General Information -- Expenses" -- page 24. For a description of the
investment objectives, policies and restrictions of the Portfolios, see
"Investment Information" -- page 9.
VALUATION OF SHARES
- --------------------------------------------------------------------------------
Net asset value per share of each class of shares 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
the class, and then dividing the result by the number of outstanding shares of
the class. Per share net asset value of each class of a Fund's shares may differ
because Class B shares bear higher expenses than Class A shares. The net asset
value per share is effective for orders received and accepted by the Distributor
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 AMONG THE CLASSES: Class A and B shares of a Fund represent
interests in the same mutual fund. The primary distinctions between the classes
of each Fund's shares are their initial and contingent deferred sales charge
structures and their ongoing expenses, including service fees and asset-based
sales charges in the form of distribution fees. These differences are summarized
in the following table. Each class has distinct advantages and disadvantages for
different investors, and investors may choose the class that best suits their
circumstances and objectives.
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
(AS A PERCENTAGE OF
SALES CHARGE AVERAGE DAILY NET ASSETS) OTHER INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A Maximum initial sales charge of 4.75% Distribution fee of 0.05% Initial sales charge waived or reduced for
of the public offering price certain purchases; a contingent deferred
sales charge may apply in certain instances
where the initial sales charge is waived
CLASS B Maximum contingent deferred sales Distribution fee of 0.75%. Shares convert to Class A shares approximately
charge of 5.00% of the lesser of Service fee of 0.05%. eight years after issuance
redemption proceeds or original
purchase price; declines to zero
after six years
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES: In deciding which class of
shares to purchase, investors should consider the cost of sales charges together
with the cost of the ongoing annual expenses described below, as well as any
other relevant facts and circumstances.
SALES CHARGES. Class A shares are sold at net asset value plus an initial
sales charge of up to 4.75% 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 B shares are sold with no initial sales charge, so the
entire amount of a Class B shareholder's purchase price is immediately invested
in a Fund. A contingent deferred sales charge (up to 5.00% of the lesser of the
shares' net asset value at redemption or their original purchase price) applies
to redemptions made within six years of purchase.
WAIVERS AND REDUCTIONS OF SALES CHARGES. Class A share purchases of at least
$25,000 and Class A share purchases made under a Fund's reduced sales charge
plan may be made at a reduced sales charge. In considering the combined cost of
sales charges and ongoing annual expenses, investors should take into account
any reduced sales charges on Class A shares for which they may be eligible.
The entire initial sales charge on Class A shares is waived for certain
eligible purchasers. 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 B shares, in most cases investors eligible for reduced initial sales
charges should purchase Class A shares.
The contingent deferred sales charge may be waived upon redemption of
certain Class B shares. See "Purchases."
ONGOING ANNUAL EXPENSES. Class A shares pay an annual 12b-1 distribution fee
of 0.05% of average daily net assets. Class B shares pay an annual 12b-1
distribution fee of 0.75% of average daily net assets. In addition, Class B
shares are subject to a service fee at the annual rate of 0.05% of the average
daily net assets represented by Class B shares. Annual 12b-1 distribution fees
are a form of asset-based sales charge.
CONVERSION OF CLASS B SHARES: A shareholder's Class B shares will automatically
convert to Class A shares in the same Fund approximately eight years after the
date of issuance, together with a pro rata portion of all Class B shares
representing dividends and other distributions paid in additional Class B
shares. The conversion will be effected at the relative net asset values per
share of the two classes on the first Business Day of the month in which the
eighth anniversary of the issuance of the Class B shares occurs. If a
shareholder effects one or more exchanges among Class B shares of the Landmark
Funds during the eight-year period, the holding periods for the shares so
exchanged will be counted toward the eight-year period. Because the per share
net asset value of the Class A shares may be higher than that of the Class B
shares at the time of conversion, a shareholder may receive fewer Class A shares
than the number of Class B shares converted, although the dollar value will be
the same. See "Valuation of Shares." The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service or an opinion of counsel that the conversion will not constitute
a taxable event for federal tax purposes. There can be no assurance that such a
ruling or opinion will be available, and the conversion of Class B shares to
Class A shares will not occur if such ruling or opinion is not available. In
that event, Class B shares would continue to be subject to higher expenses than
Class A shares for an indefinite period.
OTHER INFORMATION: See "Purchases," "Redemptions" and "Management --
Distribution Arrangements" for a more complete description of the initial and
contingent deferred 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
- --------------------------------------------------------------------------------
Each Fund offers two classes of shares, Class A and B shares, with different
expense levels and sales charges. See "Classes of Shares" for more information.
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B 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 either through a securities broker
which has a sales agreement with the Distributor or through a bank or other
financial institution which has an agency agreement with the Distributor. Such a
bank or financial institution will receive transaction fees that are equal to
the commissions paid to securities brokers. Shares of the Funds are being
offered exclusively to customers of a Shareholder Servicing Agent (i.e., a
financial institution, such as a federal or state-chartered bank, trust company,
savings and loan association or savings bank, or a securities broker, that has
entered into a shareholder servicing agreement concerning a Fund). A securities
broker may receive both commissions and shareholder servicing fees. An
investor's Shareholder Servicing Agent may not make available both classes of
shares. The public offering price is the net asset value next determined after
an order is transmitted to and accepted by the Distributor, plus any applicable
sales charge for Class A shares. Each Shareholder Servicing Agent is required to
promptly forward orders for Fund shares to the Distributor. Each Fund and the
Distributor reserve the right to reject any purchase order and to suspend the
offering of Fund shares for a period of time.
Each shareholder's account is established and maintained by his or her
Shareholder Servicing Agent, which will be the shareholder of record of the
Fund. Each Shareholder Servicing 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 Shareholder Servicing Agent.
Shareholder Servicing Agents will not transmit purchase orders to the
Distributor until they have received the purchase price in federal or other
immediately available funds. If Fund shares are purchased by check, there will
be a delay (usually not longer than two business days) in transmitting the
purchase order until the check is converted into federal funds.
PURCHASING CLASS A SHARES: INITIAL SALES CHARGE -- CLASS A SHARES. Each Fund's
public offering price of Class A shares 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 BROKER
--------------------- COMMISSION
PUBLIC NET AS PERCENTAGE
AMOUNT OF PURCHASE AT THE OFFERING AMOUNT OF THE PUBLIC
PUBLIC OFFERING PRICE PRICE INVESTED OFFERING PRICE
- --------------------------------------------------------------------------
Less than $25,000 .............. 4.75% 4.99% 4.23%
$25,000 to less than $50,000 ... 4.50% 4.71% 4.01%
$50,000 to 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* none
- ------------
*A contingent deferred sales charge may apply in certain instances.
- --------------------------------------------------------------------------------
SALES CHARGE ELIMINATION -- CLASS A SHARES. Class A shares of the Funds are
available without a sales charge through exchanges for Class A shares of most
other Landmark Funds. See "Exchanges." Also, the sales charge does not apply to
Class A shares acquired through the reinvestment of dividends and capital gains
distributions. Class A shares may be purchased without a 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 or through other programs accessed through
the Private Client Division of Citicorp Investment Services, 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 investment adviser or as a shareholder
servicing agent,
(vii) any affiliated person of a Fund, the Adviser, the Distributor, the
Administrator or any Shareholder Servicing 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 Landmark Fund the terms of which entitle
those shareholders to purchase shares of a Fund or any other Landmark
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 50 eligible employees or
(b) the amount invested by such qualified plan in a Fund or in any
combination of Landmark Funds totals a minimum of $500,000,
(x) investors purchasing $1 million 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
Landmark 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 Class A
shares so acquired through an exchange will be aggregated with the period
during which the original Class A shares were held. The contingent
deferred sales charge on Class A shares will be waived under the same
circumstances as the contingent deferred sales charge on Class B shares
will be waived. See "Sales Charge Waivers -- Class B Shares." 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 Landmark
Fund) if: (i) the redeemed 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 shares of the Fund sold to that
investor without a sales charge does not exceed the proceeds of such
redemption.
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. An individual who is a member
of a qualified group may purchase Class A shares of a Fund at the reduced 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 Landmark
Funds. The Right of Accumulation may be amended or terminated at any time.
If an investor anticipates purchasing $25,000 or more of Class A shares of a
Fund alone or in combination with Class B shares of the Fund or any of the
classes of other Landmark 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 Shareholder Servicing Agents for
more information about Rights of Accumulation and Letters of Intent.
PURCHASING CLASS B SHARES: CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES.
Each Fund's public offering price of Class B shares is the next determined net
asset value, and no initial sales charge is imposed. A contingent deferred sales
charge, however, is imposed upon certain redemptions of Class B shares.
Class B shares of a Fund that are redeemed will not be subject to a
contingent deferred sales charge to the extent that the value of such shares
represents (i) capital appreciation of Fund assets, (ii) reinvestment of
dividends or capital gains distributions or (iii) shares redeemed more than six
years after their purchase. Otherwise, redemptions of Class B shares will be
subject to a contingent deferred sales charge. The amount of any applicable
contingent deferred sales charge will be calculated by multiplying the lesser of
net asset value of such shares at the time of redemption or their original
purchase price by the applicable percentage shown in the following table.
- --------------------------------------------------------------------------------
CONTINGENT
DEFERRED
REDEMPTION DURING SALES CHARGE
- ------------------------------------------------------
lst Year Since Purchase ............ 5.00%
2nd Year Since Purchase ............ 4.00%
3rd Year Since Purchase ............ 3.00%
4th Year Since Purchase ............ 3.00%
5th Year Since Purchase ............ 2.00%
6th Year Since Purchase ............ 1.00%
7th Year (or Later) Since Purchase . None
- --------------------------------------------------------------------------------
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption is made first of Class B shares
representing capital appreciation, next of shares representing the reinvestment
of dividends and capital gains distributions and finally of other shares held by
the shareholder for the longest period of time. The holding period of Class B
shares of a Fund acquired through an exchange with another Landmark Fund will be
calculated from the date that the Class B shares were initially acquired in one
of the other Landmark Funds, and Class B shares being redeemed will be
considered to represent, as applicable, capital appreciation or dividend and
capital gains distribution reinvestments in such other funds. This will result
in any contingent deferred sales charge being imposed at the lowest possible
rate. For federal income tax purposes, the amount of the contingent deferred
sales charge will reduce the gain or increase the loss, as the case may be, on
the amount realized on redemption. Any contingent deferred sales charges will be
paid to the Distributor.
SALES CHARGE WAIVERS -- CLASS B SHARES. The contingent deferred sales charge
will be waived for exchanges. In addition, the contingent deferred sales charge
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 by a shareholder's Shareholder Servicing Agent of the shareholder's
status or holdings, as the case may be.
Securities dealers and other financial institutions may receive different
compensation with respect to sales of Class A and Class B shares. The
Distributor may from time to time make payments for distribution and/or
shareholder servicing activities and provide additional promotional incentives
to brokers who sell shares of a Fund. In some instances, incentives may be
offered to certain brokers who have sold or may sell significant numbers of
shares of a Fund. The Distributor may make these payments out of its past
profits or any other sources available to it.
EXCHANGES
- --------------------------------------------------------------------------------
Shares of each Fund may be exchanged for shares of the same class of other
Landmark Funds that are made available by a shareholder's Shareholder Servicing
Agent, or may be acquired through an exchange of shares of the same class of
those funds. No initial sales charge is imposed on shares being acquired through
an exchange unless Class A shares are being acquired and the sales charge of the
fund being exchanged into is greater than the current sales charge of the Fund
(in which case an initial sales charge will be imposed at a rate equal to the
difference). No contingent deferred sales charge is imposed on shares being
disposed of through an exchange.
Shareholders must place exchange orders through their Shareholder Servicing
Agents, 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 is received by the Distributor. See "Valuation of
Shares." Shares of the Funds may be exchanged only after payment in federal
funds for the shares has been made.
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. Before making
any exchange, shareholders should contact their Shareholder Servicing Agents to
obtain more information and prospectuses of the Landmark Funds to be acquired
through the exchange.
An exchange is treated as a sale of the shares exchanged and could result in
taxable gain or loss to the shareholder making the exchange.
REDEMPTIONS
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value next determined after a
redemption request in proper form is received by a shareholder's Shareholder
Servicing Agent (subject to any applicable contingent deferred sales charge).
Shareholders may redeem shares of a Fund only by authorizing their Shareholder
Servicing Agents to redeem such shares on their behalf through the Distributor.
If a redeeming shareholder owns shares of more than one class, Class A shares
will be redeemed first unless the shareholder specifically requests otherwise.
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 a shareholder's Shareholder
Servicing Agent) to their Shareholder Servicing Agents. 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 their Shareholder
Servicing Agents. 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 and each Shareholder Servicing 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 reasonable procedures are not followed, the Fund or the
Shareholder Servicing 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
their Shareholder Servicing Agents in writing at the time the privilege is
exercised.
Questions about redemption requirements should be referred to the
shareholder's Shareholder Servicing 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, if
any, is paid to its shareholders of record as a dividend as follows:
For the BALANCED FUND, QUARTERLY on or about the last day of each MARCH,
JUNE, SEPTEMBER and DECEMBER.
For the EQUITY FUND and SMALL CAP EQUITY FUND, SEMIANNUALLY on or about the
last day of each JUNE and 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.
Subject to the policies of the shareholder's Shareholder Servicing Agent, 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
without a sales charge. Distributions paid by each Fund with respect to Class A
shares generally will be higher than those paid with respect to Class B shares
because expenses attributable to Class B shares generally will be higher.
MANAGEMENT
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS: Each Fund is supervised by a Board of Trustees. The
Portfolios are also supervised by a Board of Trustees. In each case, a majority
of the Trustees are not affiliated with the Adviser. In addition, a majority of
the disinterested Trustees of each of the Funds are different from a majority of
the disinterested Trustees of their corresponding Portfolios. More information
on the Trustees and officers of the Funds and the Portfolios appears under
"Management" in the Statement of Additional Information.
INVESTMENT ADVISER: CITIBANK. 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 manages the Funds' assets pursuant to separate Investment Advisory
Agreements. Subject to policies set by the Trustees, Citibank makes investment
decisions. Citibank's address is 153 East 53rd Street, New York, New York 10043.
BALANCED FUND. Grant D. Hobson, Richard Goldman and Mark Lindbloom are the
managers of the Balanced Fund. Mr. Hobson and Mr. Goldman manage the equity
portion of the portfolio. Mr. Hobson is responsible for managing U.S. equity
portfolios for trust and pension accounts of Citibank Global Asset Management
and currently manages more than $1 billion of total assets at Citibank. Prior
to joining Citibank in 1993, Mr. Hobson was a Sector Portfolio Manager for Axe
Houghton, formerly a division of USF&G, where he was responsible for equity
investments for pension accounts and mutual funds. Mr. Goldman is responsible
for managing approximately $600 million of total assets for quantitative
equity research for the U.S. institutional business of Citibank Global Asset
Management. He joined Citicorp's Investment Management Division in 1985 and
from 1988 to 1994 was responsible for running Citicorp's Institutional
Investor Relations Department. Mr. Lindbloom manages the fixed income portion
of the portfolio. He came to Citibank in 1986 from Brown Brothers Harriman &
Co., where he managed fixed income assets for discretionary corporate
portfolios.
EQUITY FUND. Mr. Hobson and Mr. Goldman serve as managers of the Equity
Fund. Their investment management experience is described above.
SMALL CAP EQUITY FUND. David N. Pearl manages the Small Cap Equity Fund.
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 both Fleming Capital Management and Bankers Trust
Company.
Management's discussion of each Fund's performance is included in the Fund's
Annual Report to Shareholders, which investors may obtain without charge by
contacting their Shareholder Servicing Agents.
ADVISORY FEES. For its services under the Investment Advisory Agreements,
the Adviser receives the following investment advisory fees, which are accrued
daily and paid monthly, expressed as a percentage of the applicable Fund's
average daily net assets on an annualized basis for that Fund's then-current
fiscal year:
Balanced Fund 0.40%
Equity Fund 0.50%
Small Cap Equity Fund 0.75%
The investment advisory fees of the Small Cap Equity Fund are higher than those
paid by most investment companies. The Adviser may voluntarily agree to waive a
portion of its investment advisory fees.
For the fiscal year ended December 31, 1995, the investment advisory fees
paid to Citibank were: for the Balanced Fund, $956,408 (0.40% of the Fund's
average daily net assets for that fiscal year); for the Equity Fund, $1,049,008
(0.50% of the Fund's average daily net assets for that fiscal year); and for the
Small Cap Equity Fund $10,222, all of which was voluntarily waived.
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 Investment Advisory Agreements and the activities performed by it or
its affiliates as Shareholder Servicing Agents and sub-administrator 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
sub-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 Adviser,
sub-administrator or a Shareholder Servicing 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.
ADMINISTRATIVE SERVICES PLANS: The Funds and the Portfolios have Administrative
Services Plans which provide that the Funds and the Portfolios may obtain the
services of an administrator, a transfer agent, a custodian, and, in the case of
the Funds, one or more Shareholder Servicing Agents, and may enter into
agreements providing for the payment of fees for such services. Under the Funds'
Administrative Services Plans, the total of the fees paid to the Funds'
Administrator and Shareholder Servicing Agents may not exceed 0.65% of each
Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year. Any distribution fees or service fees (other than any
fee concerning electronic or other media advertising) payable under the
Distribution Plans for the Class A shares of the Balanced and Equity Funds are
included in this percentage limitation for those shares. This limitation does
not include any amounts payable under the Distribution Plans for the Class A
shares of the Small Cap Equity Fund and for the Class B shares of each Fund.
Within this overall limitation, individual fees may vary. Under the Portfolios'
Administrative Services Plan, fees paid to the Portfolios' Administrator may not
exceed 0.05% of each Portfolio's average daily net assets on an annualized basis
for the Portfolio's then-current fiscal year. See "Administrators," "Shareholder
Servicing Agents" and "Transfer Agent, Custodian and Fund Accountant."
ADMINISTRATORS: LFBDS and Signature Financial Group (Cayman) Ltd. ("SFG")
provide certain administrative services to the Funds and the Portfolios under
administrative services agreements. These administrative services include
providing general office facilities, supervising the overall administration of
the Funds and the Portfolios, and providing persons satisfactory to the Boards
of Trustees to serve as Trustees and officers of the Funds and Portfolios. These
Trustees and officers may be directors, officers or employees of LFBDS, SFG or
their affiliates.
For these services, the Administrators receive fees accrued daily and paid
monthly of 0.25% of the average daily net assets of each Fund and 0.05% of the
assets of each Portfolio, in each case on an annualized basis for the Fund's or
the Portfolio's then-current fiscal year. However, each of the Administrators
has voluntarily agreed to waive a portion of the fees payable to it as necessary
to maintain the projected rate of total operating expenses. LFBDS has agreed to
pay certain ordinary operating expenses of the Balanced Fund and the Equity
Fund. See "General Information -- Expenses."
LFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. "Landmark" is a service mark of LFBDS.
SUB-ADMINISTRATOR: Pursuant to sub-administrative services agreements, Citibank
performs such sub-administrative duties for the Funds and Portfolios as from
time to time are agreed upon by Citibank and LFBDS or SFG. Citibank's
compensation as sub-administrator is paid by LFBDS or SFG.
SHAREHOLDER SERVICING AGENTS: The Funds have entered into separate shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which
that Shareholder Servicing Agent provides shareholder services, including
answering customer inquiries, assisting in processing purchase, exchange and
redemption transactions and furnishing Fund communications to shareholders. For
these services, each Shareholder Servicing Agent receives a fee from each Fund
at an annual rate of 0.25% of the average daily net assets of the Fund
represented by shares owned by investors for whom such Shareholder Servicing
Agent maintains a servicing relationship.
Some Shareholder Servicing Agents may impose certain conditions on their
customers in addition to or different from those imposed by the Funds, such as
requiring a minimum initial investment or charging their customers a direct fee
for their services. Each Shareholder Servicing 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 and to provide written
notice at least 30 days prior to imposition of any transaction fees.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT: State Street Bank and Trust
Company acts as transfer agent and dividend disbursing agent for each Fund. The
principal business address of State Street Bank and Trust Company is 225
Franklin Street, Boston, Massachusetts 02110. Investors Bank & Trust Company
acts as the custodian of each Fund's and each Portfolio's assets. Securities may
be held by a sub-custodian bank approved by the Trustees. Signature Financial
Services, Inc. provides fund accounting services and calculates the daily net
asset value for the Funds.
DISTRIBUTION ARRANGEMENTS: LFBDS, 6 St. James Avenue, Boston, MA 02116, (617)
423-1769, is the distributor of shares of each Fund and also serves as
distributor for each of the other Landmark Funds and as a Shareholder Servicing
Agent for certain investors. LFBDS receives distribution fees from the Funds
pursuant to Distribution Plans adopted in accordance with Rule 12b-1 under the
1940 Act. LFBDS also collects the sales charges imposed on purchases of Class A
shares and collects any contingent deferred sales charges imposed on redemptions
of Class A and Class B shares. In those states where LFBDS is not a registered
broker-dealer, shares of the Funds are sold through Signature Broker-Dealer
Services, Inc., as dealer.
The Funds maintain separate Distribution Plans pertaining to Class A shares
and Class B shares. The Class A Plans provide that the Funds may pay the
Distributor a monthly distribution fee and a monthly service fee at annual rates
not to exceed, respectively, 0.15% and 0.25% of the average daily net assets
represented by Class A shares. However, none of the Funds has entered into any
agreement to pay this service fee to the Distributor. The Class A Plans also
permit the Funds to pay the Distributor an additional fee (not to exceed 0.05%
of the average daily net assets represented by Class A shares) in anticipation
of or as reimbursement for print or electronic media advertising expenses
incurred in connection with the sale of Class A shares. The Funds did not pay
anything under this provision during 1995, and do not anticipate doing so during
the current fiscal year.
The Class B Plans provide that the Funds will pay the Distributor a monthly
distribution fee and a monthly service fee at annual rates not to exceed,
respectively, 0.75% and 0.25% of the average daily net assets represented by
Class B shares. The Funds have agreed that they will not pay service fees in an
amount in excess of 0.20% of the average daily net assets represented by Class B
shares during the 1996 fiscal year. Currently, the service fee for Class B
shares is 0.05% per annum of the average daily net assets represented by Class B
shares.
The Distributor uses the distribution fees under the Plans to offset each
Fund's marketing costs attributable to the classes, such as preparation of sales
literature, advertising, and printing and distributing prospectuses and other
shareholder materials to prospective investors. In addition, the Distributor may
use the distribution fees to pay costs related to distribution activities,
including employee salaries, bonuses and other overhead expenses. The
Distributor also uses the distribution fees under the Class B Plans to offset
the commissions it pays to brokers and other institutions for selling the Funds'
Class B shares. The Funds and the Distributor provide to the Trustees quarterly
a written report of amounts expended pursuant to the Plans and the purposes for
which the expenditures were made.
During the period they are in effect, the Plans and related Distribution
Agreements pertaining to each class of shares obligate the Funds to pay
distribution fees to LFBDS as compensation for its distribution activities, not
as reimbursement for specific expenses incurred. Thus, even if LFBDS's expenses
exceed its distribution fees for any Fund, the Fund will not be obligated to pay
more than those fees and, if LFBDS's expenses are less than such fees, it will
retain its full fees and realize a profit. Each Fund will pay the distribution
fees to LFBDS until either the applicable Plan or Distribution Agreement is
terminated or not renewed. In that event, LFBDS's expenses in excess of
distribution fees received or accrued through the termination date will be
LFBDS's sole responsibility and not obligations of the Fund. In their annual
consideration of the continuation of the Plans for each Fund, the Trustees will
review each Plan and LFBDS's expenses for each class separately.
Each class of shares of each Fund has exclusive voting rights with respect
to the 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 yield, effective yield or total rate of return. All
performance information is historical and is not intended to indicate future
performance. Yields and 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 which was made at the maximum public
offering price 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. These total rate of return
quotations may be accompanied by quotations which do not reflect the reduction
in value of the investment due to the initial or contingent deferred sales
charges, and which are thus higher.
Each Fund may provide annualized "yield" and "effective yield" quotations.
The "yield" of a Fund refers to the income generated by an investment in the
Fund over a 30-day or one-month period (which period is stated in any such
advertisement or communication). This income is then annualized; that is, the
amount of income generated by the investment over that period is assumed to be
generated each month over a one-year period and is shown as a percentage of the
maximum public offering price on the last day of that period. The "effective
yield" is calculated similarly, but when annualized the income earned by the
investment during that 30-day or one-month period is assumed to be reinvested.
The effective yield is slightly higher than the yield because of the compounding
effect of this assumed reinvestment. A "yield" quotation, unlike a total rate of
return quotation, does not reflect changes in net asset value.
Each Fund will include performance data for each class of Fund shares in any
advertisements, reports or communications including Fund performance data. Of
course, any fees charged by a shareholder's Shareholder Servicing Agent will
reduce that shareholder's net return on his or her investment. See the Statement
of Additional Information for more information concerning the calculation of
yield and total rate of return quotations for the Funds.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
ORGANIZATION: The Balanced Fund is a series of Landmark Funds I; each of the
Equity Funds is a series of Landmark Funds II. Landmark Funds I and Landmark
Funds II are Massachusetts business trusts which were organized on April 13,
1984; they also are open-end management investment companies registered under
the 1940 Act.
Each Fund is a diversified mutual fund. Under the 1940 Act, a diversified
series or 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 The Premium Portfolios, a trust organized
under the laws of the State of New York. The Declaration of Trust of The Premium
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: Each of Landmark Funds I and Landmark Funds II (in this
section called the "Trusts") 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 a Trust
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 Shareholder Servicing 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 Shareholder
Servicing Agent is the holder of record.
Each Fund's activities are supervised by its Board of Trustees. As
Massachusetts business trusts, the Funds 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 B shares
than for Class A shares.
CERTIFICATES: The Funds' Transfer Agent maintains a share register for
shareholders of record, i.e., Shareholder Servicing Agents. 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 Shareholder Servicing Agents and tax and retirement advisers.
EXPENSES: LFBDS has agreed to pay the ordinary operating expenses of the
Balanced Fund and the Equity Fund (excluding interest, taxes, brokerage
commissions, litigation costs or other extraordinary costs or expenses and
except for the fees paid under the Fund's Investment Advisory Agreement,
Administrative Services Agreement, Distribution Agreement and Shareholder
Servicing Agreements). LFBDS receives a fee from each of the Balanced Fund and
the Equity Fund, in addition to the administrative services and distribution
fees, estimated and accrued daily and paid monthly in an amount such that
immediately after any such payment the aggregate ordinary operating expenses of
the Fund would not on a per annum basis exceed an agreed upon rate, currently
1.02% of the Balanced Fund's average daily net assets and 1.05% of the Equity
Fund's average daily net assets. For the fiscal year ended December 31, 1995,
LFBDS paid expenses in the amount in the left column of the following table with
respect to the Balanced and Equity Funds, and the Balanced and Equity Funds paid
LFBDS under this agreement the amount in the center column. The expenses paid by
LFBDS are expressed as a percentage of average daily net assets in the right
column.
- --------------------------------------------------------------------------------
EXPENSES AS
PERCENTAGE
EXPENSES FUND'S OF AVERAGE
PAID BY PAYMENT DAILY
LFBDS TO LFBDS NET ASSETS
- ----------------------------------------------------------------------------
Balanced Fund ............. $161,308 $103,747 1.02%
Equity Fund ............... $144,095 $196,232 1.05%
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The agreement of LFBDS to pay the ordinary operating expenses of the
Balanced Fund and the Equity Fund, as well as the obligation of these Funds to
pay the fee to LFBDS, may be terminated by either LFBDS or the applicable Fund
upon not less than 30 days nor more than 60 days written notice.
In addition to amounts payable under the Investment Advisory Agreements, the
Administrative Services Plans and the Distribution Plans, the Small Cap Equity
Fund is responsible for its own expenses, including, among other things, the
costs of securities transactions, the compensation of Trustees that are not
affiliated with the Adviser, 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, located at 160
Federal Street, Boston, MA 02110, serves as independent auditors for each of the
Funds.
----------------
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, Adviser and Administrators, (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.
APPENDIX
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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, a
repurchase agreement or a reverse repurchase agreement, the 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 the Adviser determines 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 15%
of its net assets in securities for which there is no readily available market.
These illiquid securities may include privately placed restricted securities for
which no institutional market exists. The absence of a trading market can make
it difficult to ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal expenses,
and it may be difficult or impossible for a Fund to sell them promptly at an
acceptable price.
"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.
FUTURES CONTRACTS. The Balanced Fund 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.
Each of the Funds may purchase stock index 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.
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 market value of the Fund's total assets other than
its futures contracts 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 the Adviser's ability to predict interest rate or stock price 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
the Adviser's view as to interest rate or stock price 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 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. The use of futures contracts may
increase the amount of taxable income of a Fund and may affect in other ways the
amount, timing and character of a Fund's income for tax purposes, as more fully
discussed in the section entitled "Certain Additional Tax Matters" in the
Statement of Additional Information.
The use of futures by the Funds and some of their risks are described more
fully in the Statement of Additional Information.
SECURITIES OF ISSUERS IN DEVELOPING COUNTRIES. Shareholders should be aware
that investing in the equity and fixed income markets of developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability,
than those of developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the markets of
developed countries with more mature economies; such markets often have provided
higher rates of return and greater risks. 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.
CURRENCY EXCHANGE CONTRACTS. Forward currency exchange contracts may be
entered into for each Fund for the purchase or sale of non-U.S. currency for
hedging purposes 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.
LOWER-RATED DEBT SECURITIES. Each Fund may purchase lower-rated securities
(those rated Baa or better by Moody's or BBB or better 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.
SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. Each Fund may engage in short sales only if at the time of
the short sale it owns or has the right to obtain, at no additional cost, an
equal amount of the security being sold short. This investment technique is
known as a short sale "against the box." A Fund may make a short sale as a
hedge, when it believes that the value of a security owned by the Fund (or a
security convertible or exchangeable for such security) may decline, or when the
Fund wants to sell the security at an attractive current price but wishes to
defer recognition of gain or loss for tax purposes. Not more than 40% of a
Fund's total assets would be involved in short sales "against the box."
ASSET-BACKED SECURITIES. The Balanced Fund 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.
<PAGE>
SHAREHOLDER
SERVICING AGENTS
- --------------------------------------------------------------------------------
FOR CITIBANK NEW YORK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
450 West 33rd Street, New York, NY 10001
(212) 564-3456 or (800) 846-5300
FOR CITIGOLD CLIENTS:
Citigold
P.O. Box 5130, New York, NY 10126-5130
Call Your Citigold Executive, or in NY or CT (800) 285-1701
or for all other states, (800) 285-1707
FOR PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Registered Representative or (212) 559-5959
FOR CITIGOLD GLOBAL ASSET MANAGEMENT CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY l0043
(212) 559-7117
FOR NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10094
Call Your Account Manager or (212) 657-9100
FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200
(212) 736-8170 in New York City
[LOGO] LANDMARK
FUNDS
MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves
U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves
Tax Free Reserves
California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves
STOCK & BOND FUNDS:
U.S. Government Income Fund
Intermediate Income Fund
National Tax Free Income Fund
New York Tax Free Income Fund
Balanced Fund
Equity Fund
International Equity Fund
Small Cap Equity Fund
Emerging Asian Markets Equity Fund
<PAGE>
[LOGO] LANDMARK(SM) FUNDS
Advised by Citibank, N.A.
--------------------------
LANDMARK
BALANCED FUND
--------------------------
LANDMARK
EQUITY FUND
--------------------------
LANDMARK
SMALL CAP
EQUITY FUND
--------------------------
PROSPECTUS
May 1, 1996
As Supplemented
December 31, 1996
EQ/P.1/96 Printed on Recycled Paper [recycled symbol]
