<PAGE>
As filed with the Securities and Exchange Commission on February 24, 1998
File Nos. 2-90518
811-4006
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 27
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
AMENDMENT NO. 28
LANDMARK FUNDS I+
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM DANA LLP, 150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective on March 2, 1998
pursuant to paragraph (b) of Rule 485.
The Premium Portfolios, on behalf of Balanced Portfolio, has also
executed this Registration Statement.
- -------------------------------------------------------------------------------
+This filing relates only to shares of Landmark Balanced Fund.
<PAGE>
LANDMARK FUNDS I
(Landmark Balanced Fund)
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
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N-1A
- ----
ITEM NO. N-1A ITEM LOCATION
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PART A PROSPECTUS
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Item 1. Cover Page............................................. Cover Page
Item 2. Synopsis............................................... Expense Summary
Item 3. Condensed Financial Information........................ Condensed Financial Information
Item 4. General Description of Registrant...................... Investment Information; General
Information; Appendix
Item 5. Management of the Fund................................. Management; Expenses
Item 5A. Management's Discussion of Fund Performance............ Not Applicable
Item 6. Capital Stock and Other Securities..................... General Information;
Voting and Other Rights; Purchases;
Exchanges; Redemptions; Dividends and
Distributions; Tax Matters
Item 7. Purchase of Securities Being Offered................... Purchases; Exchanges; Redemptions
Item 8. Redemption or Repurchase............................... Purchases; Exchanges; Redemptions
Item 9. Pending Legal Proceedings.............................. Not Applicable
STATEMENT OF
ADDITIONAL
PART B INFORMATION
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Item 10. Cover Page............................................. Cover Page
Item 11. Table of Contents...................................... Cover Page
Item 12. General Information and History........................ The Trust
Item 13. Investment Objectives and Policies..................... Investment Objectives; Description of
Permitted Investments and Investment
Practices; Investment Restrictions
Item 14. Management of the Fund................................. Management
Item 15. Control Persons and Principal Holders of Securities.... Management
Item 16. Investment Advisory and Other Services................. Management
Item 17. Brokerage Allocation and Other Practices............... Portfolio Transactions
Item 18. Capital Stock and Other Securities..................... Description of Shares, Voting Rights and
Liabilities
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered.......................................... Description of Shares, Voting Rights and
Liabilities; Determination of Net Asset
Value; Valuation of Securities;
Additional Redemption
Information
Item 20. Tax Status............................................. Certain Additional Tax Matters
Item 21. Underwriters........................................... Management
Item 22. Calculation of Performance Data........................ Performance Information
Item 23. Financial Statements................................... Independent Accountants and Financial
Statements
PART C Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this
Registration Statement.
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<PAGE>
Prospectus March 2, 1998
CitiFunds SM Balanced Portfolio
This Prospectus describes CitiFunds(SM) Balanced Portfolio, a diversified
mutual fund in the CitiFunds Family of Funds. Citibank, N.A. is the investment
adviser.
Unlike other mutual funds which directly acquire and manage their own portfolios
of securities, the Fund seeks its investment objectives by investing all of its
investable assets in a portfolio with the same investment objectives and
policies. See "Special Information Concerning Investment Structure" on page 10.
This Prospectus concisely sets forth information about the Fund that a
prospective investor should know before investing. A Statement of Additional
Information dated the date of this Prospectus (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 Fund may be made, by contacting the
Investor's Shareholder Servicing Agent or by calling 1-800-625-4554. The
Statement of Additional Information and other related materials are available on
the SEC's Internet web site (http://www.sec.gov).
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REMEMBER THAT SHARES OF THE FUND:
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.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS
Prospectus Summary 3
..............................................................................
Expense Summary 5
..............................................................................
Condensed Financial Information 6
..............................................................................
Investment Information 7
..............................................................................
Risk Considerations 9
..............................................................................
Valuation of Shares 11
..............................................................................
Purchases 11
..............................................................................
Exchanges 12
..............................................................................
Redemptions 12
..............................................................................
Dividends and Distributions 13
..............................................................................
Management 14
..............................................................................
Tax Matters 17
..............................................................................
Performance Information 18
..............................................................................
General Information 19
..............................................................................
Appendix -- Permitted Investments and Investment Practices 21
..............................................................................
<PAGE>
PROSPECTUS SUMMARY See the body of the Prospectus for more information on the
topics discussed in this summary.
THE FUND: This Prospectus describes CitiFunds Balanced Portfolio. The Fund is
a diversified mutual fund.
INVESTMENT OBJECTIVES AND POLICIES: The Fund's investment objectives are to
provide 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 equity securities for the Portfolio, the Adviser uses a value oriented
approach, emphasizing securities issued by large, established companies (those
with market capitalizations within the top 1,000 stocks of the equity market)
that, in the opinion of the Adviser, are temporarily out of favor but have good
longer term business prospects. All references in this Prospectus to the Fund
include the Portfolio, except as otherwise noted.
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 $88 billion in assets worldwide.
CFBDS, Inc. ("CFBDS" or the "Distributor") is the distributor of shares of the
Fund. See "Management."
PURCHASES AND REDEMPTIONS: Customers of Shareholder Servicing Agents may
purchase and redeem shares of the Fund on any day the New York Stock Exchange
is open for trading. See "Purchases" and "Redemptions."
PRICING: Shares of the Fund are purchased and redeemed at net asset value
without a sales load or redemption fees. Shares are subject to a distribution
fee at the annual rate of 0.20% of the average daily net assets of the Fund.
See "Purchases" and "Management -- Distribution Arrangements."
EXCHANGES: Shares may be exchanged for shares of the CitiSelect(R) Portfolios
and certain other CitiFunds. See "Exchanges."
DIVIDENDS: Dividends, if any, are declared and paid at least quarterly for the
Fund. Net capital gains, if any, are distributed annually. See "Dividends and
Distributions."
REINVESTMENT: All dividends and capital gains distributions may be received
either in cash or in Fund shares at net asset value, subject to the policies
of a shareholder's Shareholder Servicing Agent. See "Dividends and
Distributions."
WHO SHOULD INVEST: 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.
RISK FACTORS: There can be no assurance that the Fund will achieve its
investment objectives, and the 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.
The 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 Fund's 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. The 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.
EXPENSE SUMMARY
The following table summarizes estimated shareholder transaction and annual
operating expenses for shares of the Fund and for the Portfolio. For more
information on costs and expenses, see "Management" -- page 14 and "General
Information -- Expenses" -- page 20.*
CITIFUNDS
BALANCED
PORTFOLIO
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SHAREHOLDER TRANSACTION EXPENSES None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS):
Management Fees 0.40%
12b-1 Fees (after fee waivers and reimbursements) (1)(2) 0.05%
Other Expenses
Administrative Services Fees (after fee waivers and reimbursements) (2) 0.25%
Shareholder Servicing Agent Fees 0.25%
Other Operating Expenses (3) 0.07%
- --------------------------------------------------------------------------------
Total Fund Operating Expenses (2) 1.02%
- --------------------------------------------------------------------------------
* This table is intended to assist investors in understanding the various
costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. The table shows the fees paid to various service
providers after giving effect to expected voluntary partial fee waivers and
reimbursements. There can be no assurance that the fee waivers and
reimbursements reflected in the table will continue at these levels.
(1) 12b-1 distribution fees are asset-based sales charges. Long-term
shareholders in the 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.
(2) Absent fee waivers and reimbursements, administrative services fees, 12b-1
fees and total fund operating expenses would be 0.30%, 0.20% and 1.22%,
respectively. The foregoing 12b-1 fees assume a 0.05% charge for print or
electronic media expenses.
(3) CFBDS has agreed to pay the ordinary operating expenses of the Fund,
subject to certain exceptions. CFBDS receives a fee from the Fund. See
"General Information -- Expenses."
EXAMPLE: A shareholder would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption at the end of each
period indicated below:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
- --------------------------------------------------------------------------------
CITIFUNDS BALANCED PORTFOLIO $10 $32 $56 $125
- --------------------------------------------------------------------------------
The Example assumes that all dividends are reinvested and reflects certain
voluntary fee waivers. Expenses are based on the fiscal year ended December 31,
1997. If fee waivers were not made, the amounts in the example would be $13,
$39, $67 and $148. 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 the Fund's future performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE FUND. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
CONDENSED FINANCIAL INFORMATION
The following table provides condensed financial information about CitiFunds
Balanced Portfolio (formerly Landmark Balanced Fund) for the periods indicated.
The information below should be read in conjunction with the financial
statements appearing in the Fund's Annual Report to Shareholders, which are
incorporated by reference in the Statement of Additional Information. The
financial statements and notes for the year ended December 31, 1997, as well as
the table below, have been audited by Price Waterhouse LLP, independent
accountants. The report of Price Waterhouse LLP is included in the Fund's Annual
Report. Copies of the Annual Report may be obtained without charge from an
investor's Shareholder Servicing Agent or by calling 1-800-625-4554.
<PAGE>
<TABLE>
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CITIFUNDS BALANCED PORTFOLIO FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
OCTOBER 19, 1990
(COMMENCEMENT OF
OPERATIONS) TO
1997 1996 1995 1994++ 1993 1992 1991 DECEMBER 31, 1990
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
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beginning of period $15.61 $15.71 $13.52 $14.24 $13.54 $12.93 $10.27 $ 9.75
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Income from
Operations:
Net investment
income 0.421 0.497 0.486 0.399 0.336** 0.266 0.336 0.081
Net realized and
unrealized gain
(loss) on
investments 2.726 0.680 2.540 (0.695) 0.803** 0.600 2.665 0.513
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Total from operations 3.147 1.177 3.026 (0.296) 1.139 0.866 3.001 0.594
- ---------------------------------------------------------------------------------------------------------------------------------
Less Dividends and
Distributions From:
Net investment income (0.421) (0.497) (0.495) (0.394) (0.319) (0.256) (0.341) (0.074)
Net realized gain
on investments (2.566) (0.780) (0.341) (0.030) (0.120) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends
and distributions (2.987) (1.277) (0.836) (0.424) (0.439) (0.256) (0.341) (0.074)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end
of period $15.77 $15.61 $15.71 $13.52 $14.24 $13.54 $12.93 $10.27
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's omitted) $226,790 $230,382 $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) 1.02%(A) 1.02%(A) 1.04% 1.40% 1.40% 1.40%*
Ratio of net
investment income to
average net assets 2.44% 3.04% 3.21% 2.82% 2.46% 2.07% 2.88% 4.06%*
Portfolio turnover(B) -- -- -- 29% 101% 102% 117% 12%
Total return 20.85% 7.59% 22.66% (2.06)% 8.48% 6.82% 29.61% 6.09%+
Note:If agents of the 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 for the period ended December 31, 1990, the net investment income per share
and the ratios would have been as follows:
Net investment income
per share $0.387 $0.464 $0.463 $0.378 $0.310** $0.148 $0.211 $0.059
RATIOS:
Expenses to average
net assets 1.22%(A) 1.22%(A) 1.17%(A) 1.17%(A) 1.23% 2.32% 2.47% 2.50%*
Net investment income
to average net assets 2.24% 2.84% 3.06% 2.67% 2.27% 1.15% 1.81% 2.96%*
*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 the 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 rates for the fiscal years on or after December 31, 1995 are included under "Investment Information --
Certain Additional Invest ment Policies."
+Not annualized. ++On May 1, 1994 the Fund began investing all of its investable assets in the Portfolio.
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<PAGE>
INVESTMENT INFORMATION
INVESTMENT OBJECTIVES: The investment objectives of the Fund are to provide high
current income by investing in a broad range of securities, to preserve capital,
and to provide growth potential with reduced risk.
The investment objectives of the Fund may be changed by its Trustees without
approval by the Fund's shareholders, but shareholders will be given written
notice at least 30 days before any change is implemented. Of course, there can
be no assurance that the Fund will achieve its investment objectives.
INVESTMENT POLICIES: The 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 equity portion of the Fund is invested primarily in the equity securities of
large, established companies (those with market capitalizations within the top
1,000 stocks of the equity market). In selecting equity securities, the Adviser
uses a value oriented approach, emphasizing securities of issuers that, in the
opinion of the Adviser, are temporarily out of favor but have good longer term
business prospects. Equity securities include common stocks, preferred stocks,
convertible securities and warrants for the purchase of stock. Convertible
securities purchased by the Adviser for the equity portion of the Fund are not
subject to the rating requirements applicable to the Fund's purchase of fixed
income investments (described below).
The Adviser evaluates securities using fundamental analysis and seeks to
purchase securities that are believed to be undervalued relative to a company's
cash flow, earnings prospects, growth rate and/or dividend paying ability. The
Adviser believes that securities of companies which are temporarily out of favor
due to earnings declines, cyclical business downturns or other adverse factors
may provide a higher total return over time than securities of companies whose
positive attributes are more accurately reflected in the security's current
price.
The Fund seeks to invest primarily in companies with a record of earnings and
dividend payments but may, from time to time, invest in securities that pay no
dividends or interest.
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. or BBB or better by Standard & Poor's
Ratings Group) or 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. Securities with these ratings may have speculative
characteristics.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
Non-U.S. Securities. While the Fund emphasizes U.S. securities, the Fund may
invest a portion of its assets in non-U.S. equity and debt securities,
including depositary receipts. The Fund does not intend 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. The 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, the Fund may invest without
limit in cash and in U.S. dollar-denominated high quality money market and
short-term instruments. These investments may result in a lower yield than would
be available from investments with a lower quality or longer term.
Other Permitted Investments. For more information regarding the Fund's permitted
investments and investment practices, see the Appendix -- Permitted Investments
and Investment Practices on page 21. The Fund will not necessarily invest or
engage in each of the investments and investment practices in the Appendix but
reserves 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
Fund, including a limitation that the Fund may borrow money from banks in an
amount not to exceed 1/3 of the Fund's net assets for extraordinary or emergency
purposes (e.g., to meet redemption requests). Except as otherwise indicated, the
Fund's 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 the Fund's securities will not be
a violation of policy.
Portfolio Turnover. Securities of the 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 fiscal years ended December 31, 1995, 1996 and 1997, the
turnover rates for the Portfolio were 210%, 241% and 134%, respectively. The
amount of brokerage commissions and realization of taxable capital gains will
tend to increase as the level of portfolio activity increases.
Brokerage Transactions. In connection with the selection of brokers or dealers
for securities transactions for the Fund and the placing of such orders, brokers
or dealers may be selected who also provide brokerage and research services to
the Fund or the other accounts over which Citibank or its affiliates exercise
investment discretion. Citibank is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if Citibank determines in good faith that such amount of commission
is reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer.
RISK CONSIDERATIONS
The risks of investing in the 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. The Fund's net asset value will fluctuate based on
changes in the values of the underlying portfolio securities. This means that an
investor's shares may be worth more or less at redemption than at the time of
purchase. Equity securities fluctuate in response to general market and economic
conditions and other factors, including actual and anticipated earnings, changes
in management, political developments and the potential for takeovers and
acquisitions. During periods of rising interest rates the value of debt
securities generally declines, and during periods of falling rates the value of
these securities generally increases. Changes by recognized rating agencies in
the rating of any debt security, and actual or perceived changes in an issuer's
ability to make principal or interest payments, also affect the value of these
investments.
Credit Risk of Debt Securities. Investors should be aware that securities
offering above average yields may at times involve above average risks.
Securities rated Baa by Moody's or BBB by S&P and equivalent securities may have
speculative characteristics. Adverse economic or changing circumstances are more
likely to lead to a weakened capacity to make principal and interest payments
than is the case for higher grade obligations.
Non-U.S. Securities. Investments in non-U.S. securities involve risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S. and
non-U.S. issuers and markets are subject. These risks may include
expropriation, confiscatory taxation, withholding taxes on dividends and
interest, limitations on the use or transfer of portfolio assets and political
or social instability. Enforcing legal rights may be difficult, costly and
slow in non-U.S. countries, and there may be special problems enforcing claims
against non-U.S. governments. In addition, non-U.S. companies may not be
subject to accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their operations.
Non-U.S. markets may be less liquid and more volatile than U.S. markets, and
may offer less protection to investors such as the Fund. Prices at which the
Fund may acquire securities may be affected by trading by persons with
material non-public information and by securities transactions by brokers in
anticipation of transactions by the Fund.
Because non-U.S. securities often are denominated in currencies other than the
U.S. dollar, changes in currency exchange rates will affect the 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 Fund may be higher than those of investment companies investing
exclusively in U.S. securities.
The 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
Fund 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 21.
Special Information Concerning Investment Structure. The Fund does not invest
directly in securities. Instead, the Fund invests its investable assets in the
Portfolio, which is a mutual fund having the same investment objectives and
policies as the Fund. The Portfolio, in turn, buys, holds, and sells securities
in accordance with these objectives and policies. Of course, there can be no
assurance that the Fund or the Portfolio will achieve its objectives. The
Trustees of the Fund believe that the aggregate per share expenses of the Fund
and the Portfolio will be less than or approximately equal to the expenses that
the Fund would incur if the assets of the Fund were invested directly in the
types of securities held by the Portfolio. The Fund may withdraw its investment
in the Portfolio at any time, and will do so if the Fund's Trustees believe it
to be in the best interest of the Fund's shareholders. If the Fund were to
withdraw its investment in the Portfolio, the Fund could either invest directly
in securities in accordance with the investment policies described above or
invest in another mutual fund or pooled investment vehicle having the same
investment objectives and policies. If the Fund were to withdraw, the Fund could
receive securities from the Portfolio instead of cash, causing the Fund to incur
brokerage, tax and other charges or leaving it with securities which may or may
not be readily marketable or widely diversified.
The Portfolio may change its investment objectives and certain of its investment
policies and restrictions without approval by its investors, but the Portfolio
will notify the Fund (which in turn will notify its shareholders) and its other
investors at least 30 days before implementing any change in its investment
objectives. A change in investment objectives, policies or restrictions may
cause the Fund to withdraw its investment in the Portfolio.
Certain investment restrictions of the Portfolio cannot be changed without
approval by the investors in the Portfolio. These policies are described in the
Statement of Additional Information. When the Fund is asked to vote on matters
concerning the Portfolio (other than a vote to continue the Portfolio following
the withdrawal of an investor), the Fund will hold a shareholder meeting and
vote in accordance with shareholder instructions. Of course, the Fund could be
outvoted, or otherwise adversely affected, by other investors in the Portfolio.
The Portfolio may sell interests to investors in addition to the Fund. These
investors may be mutual funds which offer shares to their shareholders with
different costs and expenses than the Fund. Therefore, the investment returns
for all investors in funds investing in the Portfolio may not be the same. These
differences in returns are also present in other mutual fund structures.
Information about other holders of interests in the Portfolio is available from
the Fund's distributor, CFBDS, at (617) 423-1679.
VALUATION OF SHARES
Net asset value per share of the 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 of
the Fund (including the Fund's interest in the Portfolio), then subtracting the
Fund's liabilities, and then dividing the result by the number of the Fund's
outstanding 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 the Fund's investments, trading may take place
in securities held by the Fund on days which are not Business Days and on which
it will not be possible to purchase or redeem shares of the Fund.
PURCHASES
Shares of the Fund are offered continuously and may be purchased on any Business
Day at the public offering price. The public offering price is the net asset
value next determined after an order is transmitted to and accepted by the
Distributor. The 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.
Shares may be purchased 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 Fund 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 the Fund). A securities broker may
receive both commissions and shareholder servicing fees. Each Shareholder
Servicing Agent is required to promptly forward orders for Fund shares to the
Distributor.
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 unless they are in proper form.
EXCHANGES
Shares may be exchanged for shares of the CitiSelect Portfolios and certain
other CitiFunds that are made available by a shareholder's Shareholder Servicing
Agent, or may be acquired through an exchange of shares of those funds.
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 and accepted by the Distributor. See
"Valuation of Shares."
This exchange privilege may be modified or terminated at any time, upon at least
60 days' notice when such notice is required by Securities and Exchange
Commission 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
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. Shareholders may redeem shares of the Fund only by authorizing
their Shareholder Servicing Agents to redeem such shares on their behalf through
the Distributor.
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 Fund 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, the
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
Redemption Information" in the Statement of Additional Information regarding the
Fund's right to pay the redemption price in kind with securities (instead of
cash).
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 the Fund's net income from dividends and interest, if any,
is paid to its shareholders of record as a dividend, quarterly on or about the
last day of each March, June, September and December.
The Fund's net realized short-term and long-term capital gains, if any, will be
distributed to the Fund's shareholders at least annually. The 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 issued at net asset value.
MANAGEMENT
TRUSTEES AND OFFICERS: The Fund is supervised by a Board of Trustees. The
Portfolio is 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 the Fund are different from a majority of the
disinterested Trustees of the Portfolio. More information on the Trustees and
officers of the Fund and the Portfolio appears under "Management" in the
Statement of Additional Information.
INVESTMENT ADVISER: CITIBANK. The 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 $88 billion in assets worldwide. Citibank is a wholly-owned
subsidiary of Citicorp. Citibank's address is 153 East 53rd Street, New York,
New York 10043.
Citibank manages the Fund's assets pursuant to an Investment Advisory Agreement.
Subject to policies set by the Trustees, Citibank makes investment decisions for
the Fund.
Barbara G. Marcin and Mark Lindbloom are the managers of the Fund. Ms. Marcin,
a Senior Portfolio Manager responsible for managing over $730 million in U.S.
equity and balanced accounts for individuals, has managed the equity portion
of the portfolio since January 1998. She is a member of Citibank's Global
Investment Committee. Ms. Marcin has over ten years of investment experience.
Prior to joining Citibank as a Vice President and portfolio manager in 1993,
she was a Vice President and portfolio manager at Fiduciary Trust Company
International. She previously worked for three years in the Personal Financial
Management Group at E.F. Hutton. Mr. Lindbloom, a Vice President of Citibank,
N.A. and a portfolio manager, has managed the fixed income portion of the
portfolio since June 1993. He came to Citibank in 1986 from Brown Brothers
Harriman & Co., where he managed fixed income assets for discretionary
corporate portfolios.
Management's discussion of the performance of the Fund 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 Agreement, the
Adviser receives an investment advisory fee, which is accrued daily and paid
monthly, of 0.40% of the Fund's average daily net assets on an annualized basis
for the Fund's then-current fiscal year.
For the fiscal year ended December 31, 1997, the investment advisory fees paid
to Citibank were 0.40% of the Fund's average daily net assets for that fiscal
year.
Banking Relationships. Citibank and its affiliates may have deposit, loan and
other relationships with the issuers of securities purchased on behalf of the
Fund, 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 Fund 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 Fund. Citibank believes that its services
under the Investment Advisory Agreement 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 Fund would seek
alternative means for obtaining these services. The Fund does not expect that
shareholders would suffer any adverse financial consequences as a result of any
such occurrence.
ADMINISTRATIVE SERVICES PLANS: The Fund and the Portfolio have Administrative
Services Plans which provide that the Fund and the Portfolio may obtain the
services of an administrator, a transfer agent, a custodian, and, in the case of
the Fund, one or more Shareholder Servicing Agents, and may enter into
agreements providing for the payment of fees for such services. Under the Fund's
Administrative Services Plan, the total of the fees paid to the Fund's
Administrator and Shareholder Servicing Agents may not exceed 0.65% of the
Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year. Any distribution fees or service fees (other than any
fee concerning electronic or other media advertising) payable under the
Distribution Plan for shares of the Fund are included in this percentage
limitation. Within this overall limitation, individual fees may vary. Under the
Portfolio's Administrative Services Plan, fees paid to the Portfolio's
Administrator may not exceed 0.05% of the 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: CFBDS and Signature Financial Group (Cayman) Ltd. ("SFG")
provide certain administrative services to the Fund and the Portfolio under
administrative services agreements. These administrative services include
providing general office facilities, supervising the overall administration of
the Fund and the Portfolio, and providing persons satisfactory to the Boards of
Trustees to serve as Trustees and officers of the Fund and Portfolio. These
Trustees and officers may be directors, officers or employees of CFBDS, 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 the Fund and 0.05% of the
assets of the 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. CFBDS has agreed to
pay certain ordinary operating expenses of the Fund. See "General Information --
Expenses."
CFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group, Inc.
SUB-ADMINISTRATOR: Pursuant to sub-administrative services agreements, Citibank
performs such sub-administrative duties for the Fund and Portfolio as from time
to time are agreed upon by Citibank and CFBDS or SFG. Citibank's compensation as
sub-administrator is paid by CFBDS or SFG.
SHAREHOLDER SERVICING AGENTS: The Fund has 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 the 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 Fund, 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 the Fund appropriate prior written
disclosure of any fees that it may charge them directly and to provide written
notice at least 30 days prior to imposition of any transaction fees.
TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANT: State Street Bank and Trust
Company acts as transfer agent, dividend disbursing agent and custodian for the
Fund. Securities may be held by a sub-custodian bank approved by the Trustees.
State Street also provides fund accounting services and calculates the daily net
asset value for the Fund. The principal business address of State Street is 225
Franklin Street, Boston, MA 02110.
DISTRIBUTION ARRANGEMENTS: CFBDS, 6 St. James Avenue, Boston, MA 02116,
(telephone (617) 423-1679), is the distributor of the Fund's shares and also
serves as a Shareholder Servicing Agent for certain investors. CFBDS receives
distribution fees from the Fund pursuant to a Distribution Plan adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940. In those
states where CFBDS is not a registered broker-dealer, shares of the Fund are
sold through Signature Broker-Dealer Services, Inc., as dealer.
The Fund's Distribution Plan provides that the Fund 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 of the
Fund. The Fund has not entered into any agreement to pay this service fee to the
Distributor. The Distribution Plan also permits the Fund to pay the Distributor
an additional fee (not to exceed 0.05% of the average daily net assets of the
Fund) in anticipation of or as reimbursement for print or electronic media
advertising expenses incurred in connection with the sale of shares. The Fund
did not pay anything under this provision during 1997, and does not anticipate
doing so during the current fiscal year.
The Distributor uses the distribution fees under the Plan to offset the Fund's
marketing costs, such as preparation of sales literature, advertising, and
printing and distributing prospectuses and other shareholder materials to
prospective investors. 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 Fund and the Distributor
provide to the Trustees quarterly a written report of amounts expended pursuant
to the Plan and the purposes for which the expenditures were made.
During the period they are in effect, the Plan and related Distribution
Agreement obligate the Fund to pay distribution fees to CFBDS as compensation
for its distribution activities, not as reimbursement for specific expenses
incurred. Thus, even if CFBDS's expenses exceed its distribution fees for the
Fund, the Fund will not be obligated to pay more than those fees and, if CFBDS's
expenses are less than such fees, it will retain its full fees and realize a
profit. The Fund will pay the distribution fees to CFBDS until either the Plan
or Distribution Agreement is terminated or not renewed. In that event, CFBDS's
expenses in excess of distribution fees received or accrued through the
termination date will be CFBDS's sole responsibility and not obligations of the
Fund.
TAX MATTERS
This discussion of taxes is for general information only. Investors should
consult their own tax advisers about their particular situations.
The 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 or state income or federal excise taxes. The Fund may pay
withholding or other taxes to foreign governments during the year, however, and
these taxes will reduce the Fund's 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 the 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 shares
of the Fund have been held. Such capital gains may be taxable to shareholders
that are individuals, estates, or trusts at maximum rates of 20%, 25%, or 28%,
depending upon the source of the gains.
Fund distributions will reduce the Fund's net asset value per share.
Shareholders who buy shares just before the 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.
By January 31 of each year, the 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 the Fund's shares when redeemed
may be more or less than their original cost.
The 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, 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.
The Fund may provide annualized "yield" and "effective yield" quotations. The
"yield" of the 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
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.
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 Fund.
GENERAL INFORMATION
ORGANIZATION: The Fund is a series of CitiFunds Trust I, a Massachusetts
business trust that was organized on April 13, 1984. The Trust is also an
open-end management investment company registered under the 1940 Act. Prior to
March 2, 1998, the Fund was called Landmark Balanced Fund and CitiFunds Trust I
was called Landmark Funds I.
The 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.
The 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 the Fund and other entities investing in the Portfolio
are each liable for all obligations of the Portfolio. It is not expected that
the liabilities of the Portfolio would ever exceed its assets.
VOTING AND OTHER RIGHTS: CitiFunds Trust I may issue an unlimited number of
shares, may create new series of shares and may divide shares in each series
into classes. Each share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
each series of CitiFunds Trust I have equal voting rights except that, in
matters affecting only a particular series or class, only shares of that
particular series or class are entitled to vote.
At any meeting of shareholders of the 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.
As a Massachusetts business trust, CitiFunds Trust I is not required to hold
annual shareholder meetings. Shareholder approval will usually be sought only
for changes in the Fund's or the 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 the Fund is
entitled to participate equally in dividends and other distributions and the
proceeds of any liquidation of the Fund.
CERTIFICATES: The Fund's 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 the 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: CFBDS has agreed to pay the ordinary operating expenses of the 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). CFBDS receives a fee from the
Fund, in addition to the administrative services and distribution fees,
estimated and accrued daily and paid monthly in an amount such that immediately
after any such payment the aggregate ordinary operating expenses of the Fund
would not on a per annum basis exceed an agreed upon rate, currently 1.02% of
the Fund's average daily net assets. For the fiscal year ended December 31,
1997, CFBDS paid expenses of $123,744 with respect to the Fund, and the Fund
paid CFBDS $46,215 under this agreement. The expenses paid by CFBDS amounted to
0.06% of average daily net assets. For the fiscal year ended December 31, 1997,
total expenses for shares of the Fund were 1.02% of average daily net assets for
that period.
The agreement of CFBDS to pay the ordinary operating expenses of the Fund, as
well as the obligation of the Fund to pay the fee to CFBDS, may be terminated by
either CFBDS or the Fund upon not less than 30 days nor more than 60 days
written notice.
All fee waivers are voluntary and may be reduced or terminated at any time.
COUNSEL AND INDEPENDENT AUDITORS: Bingham Dana LLP, 150 Federal Street,
Boston, MA 02110, is counsel for the Fund. Price Waterhouse LLP, located at
160 Federal Street, Boston, MA 02110, are the independent accountants for the
Fund.
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The Statement of Additional Information dated the date hereof contains more
detailed information about the Fund and the Portfolio, including information
relating to (i) investment policies and restrictions, (ii) the Trustees,
officers, Adviser and Administrators, (iii) securities transactions, (iv) the
Fund's shares, including rights and liabilities of shareholders, (v) the method
used to calculate performance information and (vi) 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 Fund or its distributor. This Prospectus does not
constitute an offering by the Fund or its distributor in any jurisdiction in
which such offering may not lawfully be made.
APPENDIX
PERMITTED INVESTMENTS AND
INVESTMENT PRACTICES
Repurchase Agreements. The 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. The 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 the 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, the 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 the 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 or cash. To the extent
that, in the meantime, the value of the securities loaned or sold has increased
or the value of the securities purchased has decreased, the Fund could
experience a loss.
Convertible Securities. The Fund may invest in convertible securities. A
convertible security is a fixed-income security (a bond or preferred stock)
which may be converted at a stated price within a specified period of time into
a certain quantity of common stock or other equity securities of the same or a
different issuer. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to similar
non-convertible securities. While providing a fixed-income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar non-convertible security), a convertible security also
affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price advance in
the convertible security's underlying common stock.
In general, the market value of a convertible security is at least the higher of
its "investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., its value upon conversion into its underlying stock).
As a fixed-income security, a convertible security tends to increase in market
value when interest rates decline and tends to decrease in value when interest
rates increase. However, the price of a convertible security is also influenced
by the market value of the security's underlying common stock. The price of a
convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines. While no securities investment is without some risk, investments
in convertible securities generally entail less risk than investments in the
common stock of the same issuer.
Rule 144A Securities. The 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, 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. The Fund may invest up to 15% of
its net assets in securities for which there is no readily available market.
These illiquid securities may include privately placed restricted securities for
which no institutional market exists. The absence of a trading market can make
it difficult to ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal expenses,
and it may be difficult or impossible for the Fund to sell them promptly at an
acceptable price.
"When-Issued" Securities. In order to ensure the availability of suitable
securities, the 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 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. The Fund 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 Fund 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 considered to be "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 the 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 the Fund's initial margin deposit. The Fund currently does
not intend to enter into a futures contract if, as a result, the initial margin
deposits on all of the Fund's futures contracts would exceed approximately 5% of
the Fund's net assets. Also, the 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 the 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 the Fund's related portfolio position. Also, the futures markets
may not be liquid in all circumstances. As a result, in certain markets, the
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, the 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, the 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 the 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 the Fund's potential for
both gain and loss. As noted above, the Fund 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 the Fund and may affect in other ways
the amount, timing and character of the 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 Fund 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 the Fund's investment opportunities including restrictions on investing
in issuers or industries deemed sensitive to relevant national interests; and
(iv) the absence of developed legal structures. Such characteristics can be
expected to continue in the future.
Currency Exchange Contracts. Forward currency exchange contracts may be entered
into for the 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. The 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, the Fund sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. The 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." The 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. Not more
than 40% of the Fund's total assets would be involved in short sales "against
the box."
Asset-Backed Securities. The 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. When interest rates go
up, mortgage-backed securities experience lower rates of prepayment. This has
the effect of lengthening the expected maturity of a mortgage-backed security.
As a result, prices of mortgage-backed securities may decrease more than prices
of other debt obligations when interest rates go up.
<PAGE>
CFP/BP 398 [Recycle Symbol] Printed on recycled paper
<PAGE>
Statement of
Additional Information
March 2, 1998
CITIFUNDS(SM) BALANCED PORTFOLIO
CitiFunds(SM) Balanced Portfolio (the "Fund") is a series of CitiFunds Trust
I (the "Trust"). The address and telephone number of the Trust are 6 St. James
Avenue, Boston, Massachusetts 02116, (617) 423-1679. The Trust invests all of
the investable assets of the Fund in the Balanced Portfolio (the "Portfolio"),
which is a separate series of The Premium Portfolios (the "Portfolio Trust").
The address of the Portfolio Trust is Elizabethan Square, George Town, Grand
Cayman, British West Indies.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, CITIBANK,
N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS PAGE
1. The Trust ............................................................ 2
2. Investment Objectives ............................................... 2
3. Description of Permitted Investments and Investment Practices ........ 2
4. Investment Restrictions .............................................. 10
5. Performance Information .............................................. 11
6. Determination of Net Asset Value; Valuation of Securities;
Additional Redemption Information .................................... 12
7. Management ........................................................... 13
8. Portfolio Transactions ............................................... 19
9. Description of Shares, Voting Rights and Liabilities ................. 20
10. Certain Additional Tax Matters ....................................... 22
11. Independent Accountants and Financial Statements ..................... 23
This Statement of Additional Information sets forth information which may be
of interest to investors but which is not necessarily included in the Fund's
Prospectus, dated March 2, 1998, by which shares of the Fund are offered. This
Statement of Additional Information should be read in conjunction with the
Prospectus, a copy of which may be obtained by an investor without charge by
contacting the Fund's distributor, CFBDS, Inc., at 6 St. James Avenue, Boston,
MA 02116, (617) 423-1679.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. THE TRUST
CitiFunds Trust I (the "Trust") is an open-end management investment company
that was organized as a business trust under the laws of the Commonwealth of
Massachusetts on April 13, 1984. Prior to March 2, 1998, the Trust was called
Landmark Funds I. This Statement of Additional Information describes CitiFunds
Balanced Portfolio (the "Fund"), a series of the Trust. Prior to March 2, 1998,
the Fund was called Landmark Balanced Fund. References in this Statement of
Additional Information to the "Prospectus" are to the Prospectus, dated March 2,
1998, of the Fund.
The Trust seeks the investment objectives of the Fund by investing all of
its investable assets in the Balanced Portfolio (the "Portfolio"). The Portfolio
is a series of The Premium Portfolios (the "Portfolio Trust") and is an
open-end, diversified management investment company. The Portfolio has the same
investment objectives and policies as the Fund. Because the Fund invests through
the Portfolio, all references in this Statement of Additional Information to the
Fund include the Portfolio, except as otherwise noted. In addition, references
to the Trust include the Portfolio Trust, except as otherwise noted.
Citibank, N.A. ("Citibank" or the "Adviser") is investment adviser to the
Portfolio. The Adviser manages the investments of the Portfolio from day to day
in accordance with the Portfolio's investment objectives and policies. The
selection of investments for the Portfolio and the way it is managed depend on
the conditions and trends in the economy and the financial marketplaces.
CFBDS, Inc. ("CFBDS"), the administrator of the Fund (the "Administrator"),
and Signature Financial Group (Cayman) Ltd. ("SFG"), the administrator of the
Portfolio (the "Portfolio Administrator"), supervise the overall administration
of the Fund and the Portfolio, respectively. The Boards of Trustees of the Trust
and the Portfolio Trust provide broad supervision over the affairs of the Fund
and the Portfolio, respectively. Shares of the Fund are continuously sold by
CFBDS, the Fund's distributor (the "Distributor"), only to investors who are
customers of a financial 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 with the Trust
(collectively, "Shareholder Servicing Agents"). Shares of the Fund are sold at
net asset value. CFBDS may receive distribution fees from the Fund pursuant to a
Distribution Plan adopted with respect to shares of the Fund in accordance with
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act").
2. INVESTMENT OBJECTIVES
The investment objectives of the Fund are to provide high current income by
investing in a broad range of securities, to preserve capital, and to provide
growth potential with reduced risk.
The investment objectives of the Fund may be changed without approval by the
Fund's shareholders, but shareholders will be given written notice at least 30
days before any change is implemented. Of course, there can be no assurance that
the Fund will achieve its investment objectives.
3. DESCRIPTION OF PERMITTED INVESTMENTS AND INVESTMENT PRACTICES
The Prospectus contains a discussion of the various types of securities in
which the Fund and the Portfolio may invest and the risks involved in such
investments. The following supplements the information contained in the
Prospectus concerning the investment objectives, policies and techniques of the
Fund.
The Fund's policy is to invest its assets, 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 Trust has also adopted the following policies with respect to the Fund's
investments in (i) warrants and (ii) securities of issuers with less than three
years' continuous operation. The Trust's purchases of warrants for the Fund will
not exceed 5% of the Fund's net assets. Included within that amount, but not
exceeding 2% of its net assets, may be warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange. Any such warrants will be
valued at their market value except that warrants which are attached to
securities at the time such securities are acquired for the Fund will be deemed
to be without value for the purpose of this restriction. The Trust will not
invest more than 5% of the Fund's assets in companies which, including their
respective predecessors, have a record of less than three years' continuous
operation.
The Trust may withdraw the investment of the Fund from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Fund's assets
would continue to be invested in accordance with the investment policies
described herein. The policies described above and those described below are not
fundamental and may be changed without shareholder approval.
FUTURES CONTRACTS
The Fund may enter into interest rate futures contracts and stock index
futures contracts. These investment strategies will be used for hedging purposes
and for nonhedging purposes, subject to applicable law.
A futures contract is an agreement between two parties for the purchase or
sale for future delivery of securities or for the payment or acceptance of a
cash settlement based upon changes in the value of the securities or of an index
of securities. A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at a
specified price, or to make or accept the cash settlement called for by the
contract, on a specified date. A "purchase" of a futures contract means the
acquisition of a contractual obligation to acquire the securities called for by
the contract at a specified price, or to make or accept the cash settlement
called for by the contract, on a specified date. Futures contracts have been
designed by exchanges which have been designated "contract markets" by the
Commodity Futures Trading Commission ("CFTC") and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on these markets, and the
exchanges, through their clearing organizations, guarantee that the contracts
will be performed as between the clearing members of the exchange.
While futures contracts based on debt securities do provide for the delivery
and acceptance of securities, such deliveries and acceptances are very seldom
made. Generally, a futures contract is terminated by entering into an offsetting
transaction. Brokerage fees will be incurred when the Fund purchases or sells a
futures contract. At the same time such a purchase or sale is made, the Fund
must provide cash or securities as a deposit ("initial deposit") known as
"margin." The initial deposit required will vary, but may be as low as 1% or
less of a contract's face value. Daily thereafter, the futures contract is
valued through a process known as "marking to market," and the Fund may receive
or be required to pay additional "variation margin" as the futures contract
becomes more or less valuable. At the time of delivery of securities pursuant to
such a contract, adjustments are made to recognize differences in value arising
from the delivery of securities with a different interest rate than the specific
security that provides the standard for the contract. In some (but not many)
cases, securities called for by a futures contract may not have been issued when
the contract was entered into.
The Fund may purchase or sell futures contracts to attempt to protect itself
from fluctuations in interest rates, or to manage the effective maturity or
duration of the Fund's portfolio in an effort to reduce potential losses or
enhance potential gain, without actually buying or selling securities. For
example, if interest rates were expected to increase, the Fund might enter into
futures contracts for the sale of debt securities. Such a sale would have much
the same effect as if the Fund sold bonds that it owned, or as if the Fund sold
longer-term bonds and purchased shorter-term bonds. If interest rates did
increase, the value of the Fund's debt securities would decline, but the value
of the futures contracts would increase, thereby keeping the net asset value of
the Fund from declining as much as it otherwise would have. Similar results
could be accomplished by selling bonds, or by selling bonds with longer
maturities and investing in bonds with shorter maturities. However, by using
futures contracts, the Fund avoids having to sell its securities.
Similarly, when it is expected that interest rates may decline, the Fund
might enter into futures contracts for the purchase of debt securities. Such a
purchase would be intended to have much the same effect as if the Fund purchased
bonds, or as if the Fund sold shorter-term bonds and purchased longer-term
bonds. If interest rates did decline, the value of the futures contracts would
increase.
The Fund may enter into stock index futures contracts to gain stock market
exposure while holding cash available for investments and redemptions.
Although the use of futures for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position (e.g., if the Fund
sells a futures contract to protect against losses in the debt securities held
by the Fund), at the same time the futures contracts limits any potential gain
which might result from an increase in value of a hedged position.
In addition, the ability effectively to hedge all or a portion of the Fund's
investments through transactions in futures contracts depends on the degree to
which movements in the value of the securities underlying such contracts
correlate with movements in the value of the Fund's securities. If the security
underlying a futures contract is different than the security being hedged, they
may not move to the same extent or in the same direction. In that event, the
Fund's hedging strategy might not be successful and the Fund could sustain
losses on these hedging transactions which would not be offset by gains on the
Fund's other investments or, alternatively, the gains on the hedging transaction
might not be sufficient to offset losses on the Fund's other investments. It is
also possible that there may be a negative correlation between the security
underlying a futures contract and the securities being hedged, which could
result in losses both on the hedging transaction and the securities. In these
and other instances, the Fund's overall return could be less than if the hedging
transactions had not been undertaken. Similarly, even where the Fund enters into
futures transactions other than for hedging purposes, the effectiveness of its
strategy may be affected by lack of correlation between changes in the value of
the futures contracts and changes in value of the securities which the Fund
would otherwise buy and sell.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, there is the potential that the liquidity of the
futures market may be lacking. Prior to expiration, a futures contract may be
terminated only by entering into a closing purchase or sale transaction, which
requires a secondary market on the contract market on which the futures
contracts was originally entered into. While the Fund will establish a futures
position only if there appears to be a liquid secondary market therefor, there
can be no assurance that such a market will exist for any particular futures
contract at any specific time. In that event, it may not be possible to close
out a position held by the Fund, which could require the Fund to purchase or
sell the instrument underlying the futures contract or to meet ongoing variation
margin requirements. The inability to close out futures positions also could
have an adverse impact on the ability effectively to use futures transactions
for hedging or other purposes.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by the exchanges, which
limit the amount of fluctuation in the price of a futures contract during a
single trading day and prohibit trading beyond such limits once they have been
reached. The trading of futures contracts also is subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Investments in futures contracts also entail the risk that if the Adviser's
investment judgment about the general direction of interest rates or the market
is incorrect, the Fund's overall performance may be poorer than if any such
contract had not been entered into. For example, if the Fund hedged against the
possibility of an increase in interest rates which would adversely affect the
price of the Fund's bonds and interest rates decrease instead, part or all of
the benefit of the increased value of the Fund's bonds which were hedged will be
lost because the Fund will have offsetting losses in its futures positions.
Similarly, if the Fund purchases futures contracts expecting a decrease in
interest rates and interest rates instead increased, the Fund will have losses
in its futures positions which will increase the amount of the losses on the
securities in its portfolio which will also decline in value because of the
increase in interest rates. In addition, in such situations, if the Fund has
insufficient cash, the Fund may have to sell bonds from its investments to meet
daily variation margin requirements, possibly at a time when it may be
disadvantageous to do so.
Each contract market on which futures contracts are traded has established a
number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Adviser
does not believe that these trading and position limits would have an adverse
impact on the Fund's hedging strategies.
CFTC regulations require compliance with certain limitations in order to
assure that the Fund is not deemed to be a "commodity pool" under such
regulations. In particular, CFTC regulations prohibit the Fund from purchasing
or selling futures contracts (other than for bona fide hedging transactions) if,
immediately thereafter, the sum of the amount of initial margin required to
establish the Fund's non-hedging futures positions would exceed 5% of the Fund's
net assets.
The Fund will comply with this CFTC requirement, and the Fund currently
intends to adhere to the additional policies described below. First, an amount
of cash or cash equivalents will be maintained by the Fund in a segregated
account with the Fund's custodian so that the amount so segregated, plus the
initial margin held on deposit, will be approximately equal to the amount
necessary to satisfy the Fund's obligations under the futures contract. The
second is that the Fund will not enter into a futures contract if immediately
thereafter the amount of initial margin deposits on all the futures contracts
held by the Fund would exceed approximately 5% of the net assets of the Fund.
The third is that the aggregate market value of the futures contracts held by
the Fund not exceed approximately 50% of the market value of the Fund's total
assets other than its futures contracts. For purposes of this third policy,
"market value" of a futures contract is deemed to be the amount obtained by
multiplying the number of units covered by the futures contract times the per
unit price of the securities covered by that contract.
The use of futures contracts may increase the amount of taxable income of
the Fund and may affect the amount, timing and character of the Fund's income
for tax purposes, as more fully discussed herein in the section entitled
"Certain Additional Tax Matters."
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements collateralized by securities in
which the Fund may otherwise invest. Repurchase agreements are agreements by
which the Fund purchases a security and simultaneously commits to resell that
security to the seller (which is usually a member bank of the U.S. Federal
Reserve System or a member firm of the New York Stock Exchange (or a subsidiary
thereof)) at an agreed-upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed-upon market rate of interest which is unrelated to the coupon
rate or maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value of the underlying security, usually U.S. Government
or Government agency issues. Under the 1940 Act, repurchase agreements may be
considered to be loans by the buyer. The Fund's risk is limited to the ability
of the seller to pay the agreed-upon amount on the delivery date. If the seller
defaults, the underlying security constitutes collateral for the seller's
obligation to pay although the Fund may incur certain costs in liquidating this
collateral and in certain cases may not be permitted to liquidate this
collateral. All repurchase agreements entered into by the Fund are fully
collateralized, with such collateral being marked to market daily.
SECURITIES OF NON-U.S. ISSUERS
The Fund may invest in securities of non-U.S. issuers. Investing in
securities issued by companies whose principal business activities are outside
the United States may involve significant risks not present in U.S.
investments. For example, the value of such securities fluctuates based on the
relative strength of the U.S. dollar. In addition, there is generally less
publicly available information about non-U.S. issuers, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Non-U.S. issuers are generally not bound by uniform accounting, auditing
and financial reporting requirements comparable to those applicable to U.S.
issuers. Investments in securities of non-U.S. issuers also involve the risk
of possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Fund, political or financial instability or diplomatic and
other developments which would affect such investments. Further, economies of
other countries or areas of the world may differ favorably or unfavorably from
the economy of the U.S.
It is anticipated that in most cases the best available market for
securities of non-U.S. issuers would be on exchanges or in over-the-counter
markets located outside the U.S. Non-U.S. securities markets, while growing in
volume and sophistication, are generally not as developed as those in the
U.S., and securities of some non-U.S. issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. Non-U.S. securities trading practices, including
those involving securities settlement where the Fund's assets may be released
prior to receipt of payments, may expose the Fund to increased risk in the
event of a failed trade or the insolvency of a non-U.S. broker-dealer. In
addition, non-U.S. brokerage commissions are generally higher than commissions
on securities traded in the U.S. and may be non-negotiable. In general, there
is less overall governmental supervision and regulation of non-U.S. securities
exchanges, brokers and listed companies than in the U.S.
Investments in closed-end investment companies which primarily hold
securities of non-U.S. issuers may entail the risk that the market value of such
investments may be substantially less than their net asset value and that there
would be duplication of investment management and other fees and expenses.
American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs") and other forms of depositary
receipts for securities of non-U.S. issuers provide an alternative method for
the Fund to make non-U.S. investments. These securities are not usually
denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs and GDRs, in bearer form, are designed for use in
European and global securities markets. ADRs are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities.
EDRs and GDRs are European and global receipts, respectively, evidencing a
similar arrangement. ADRs, EDRs and GDRs are subject to many of the same risks
that apply to other investments in non-U.S. securities.
ADRs, EDRs, and GDRs may be issued pursuant to sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements to have its
securities traded in the form of depositary receipts. In unsponsored programs,
the issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, in some cases it may be easier to obtain financial
information from an issuer that has participated in the creation of a sponsored
program. Accordingly, there may be less information available regarding issuers
of securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the depositary receipts.
The Fund may invest in securities of non-U.S. issuers that impose
restrictions on transfer within the United States or to United States persons.
Although securities subject to such transfer restrictions may be marketable
abroad, they may be less liquid than securities of non-U.S. issuers of the same
class that are not subject to such restrictions.
CURRENCY EXCHANGE TRANSACTIONS
Because the Fund may buy and sell securities denominated in currencies
other than the U.S. dollar, and receive interest, dividends and sale proceeds
in currencies other than the U.S. dollar, the Fund may enter into currency
exchange transactions to convert U.S. currency to non-U.S. currency and non-
U.S. currency to U.S. currency, as well as convert one non-U.S. currency to
another non-U.S. currency. The Fund either enters into these transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the currency exchange
markets, or uses forward contracts to purchase or sell non-U.S. currencies.
The Fund may also enter into currency hedging transactions in an attempt to
protect the value of its assets as measured in U.S. dollars from unfavorable
changes in currency exchange rates and control regulations. (Although the
Fund's assets are valued daily in terms of U.S. dollars, the Trust does not
intend to convert the Fund's holdings of non-U.S. currencies into U.S. dollars
on a daily basis.) It is not currently intended that the Fund speculate in
currency exchange rates or forward contracts.
The Fund may convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although currency
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
currency at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no fees or
commissions are charged at any stage for trades.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a non-U.S. currency, it may desire to "lock in" the
U.S. dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of non-
U.S. currency involved in the underlying security transaction, the Fund may be
able to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the non-U.S. currency during the
period between the date the security is purchased or sold and the date on
which payment is made or received.
When the Adviser believes that the currency of a particular country may
suffer a substantial decline against the U.S. dollar, the Fund may enter into a
forward contract to sell, for a fixed amount of U.S. dollars, the amount of
non-U.S. currency approximating the value of some or all of the Fund's
securities denominated in such non-U.S. currency. The precise matching of the
forward contract amounts and the value of the securities involved is not
generally possible since the future value of such securities in non-U.S.
currencies changes as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date it
matures. The projection of a short-term hedging strategy is highly uncertain.
The Fund does not enter into such forward contracts or maintain a net exposure
to such contracts where the consummation of the contracts obligates the Fund to
deliver an amount of non-U.S. currency in excess of the value of the Fund's
securities or other assets denominated in that currency. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated in the investment decisions made with regard to overall
diversification strategies. However, the Adviser believes that it is important
to have the flexibility to enter into such forward contracts when it determines
that the best interests of the Fund will be served.
The Fund generally would not enter into a forward contract with a term
greater than one year. At the maturity of a forward contract, the Fund will
either sell the security and make delivery of the non-U.S. currency, or retain
the security and terminate its contractual obligation to deliver the non-U.S.
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
non-U.S. currency. If the Fund retains the security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the non-U.S. currency. Should forward prices decline
during the period between the date the Fund enters into a forward contract for
the sale of the non-U.S. currency and the date it enters into an offsetting
contract for the purchase of such currency, the Fund will realize a gain to the
extent the selling price of the currency exceeds the purchase price of the
currency. Should forward prices increase, the Fund will suffer a loss to the
extent that the purchase price of the currency exceeds the selling price of the
currency.
It is impossible to forecast with precision the market value of the Fund's
securities at the expiration of a forward contract. Accordingly, it may be
necessary for the Fund to purchase additional non-U.S. currency on the spot
market if the market value of the security is less than the amount of non-U.S.
currency the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of such currency. Conversely, it may be necessary to
sell on the spot market some of the non-U.S. currency received upon the sale of
the security if its market value exceeds the amount of such currency the Fund is
obligated to deliver.
The Fund may also purchase put options on a non-U.S. currency in order to
protect against currency rate fluctuations. If the Fund purchases a put option
on a non-U.S. currency and the value of the non-U.S. currency declines, the
Fund will have the right to sell the non-U.S. currency for a fixed amount in
U.S. dollars and will thereby offset, in whole or in part, the adverse effect
on the Fund which otherwise would have resulted. Conversely, where a rise in
the U.S. dollar value of another currency is projected, and where the Fund
anticipates investing in securities traded in such currency, the Fund may
purchase call options on the non-U.S. currency.
The purchase of such options could offset, at least partially, the effects
of adverse movements in exchange rates. However, the benefit to the Fund from
purchases of non-U.S. currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where currency exchange
rates do not move in the direction or to the extent anticipated, the Fund could
sustain losses on transactions in non-U.S. currency options which would require
it to forgo a portion or all of the benefits of advantageous changes in such
rates.
The Fund may write options on non-U.S. currencies for hedging purposes or
otherwise to achieve its investment objectives. For example, where the Fund
anticipates a decline in the value of the U.S. dollar value of a non-U.S.
security due to adverse fluctuations in exchange rates it could, instead of
purchasing a put option, write a call option on the relevant currency. If the
expected decline occurs, the option will most likely not be exercised, and the
diminution in value of the security held by the Fund will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a non-U.S. security to be acquired because
of an increase in the U.S. dollar value of the currency in which the underlying
security is primarily traded, the Fund could write a put option on the relevant
currency which, if rates move in the manner projected, will expire unexercised
and allow the Fund to hedge such increased cost up to the amount of the premium.
However, the writing of a currency option will constitute only a partial hedge
up to the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at a loss which
may not be offset by the amount of the premium. Through the writing of options
on currencies, the Fund also may be required to forgo all or a portion of the
benefits which might otherwise have been obtained from favorable movements in
exchange rates.
Put and call options on non-U.S. currencies written by the Fund will be
covered by segregation of cash, short-term money market instruments or high
quality debt securities in an account with the custodian in an amount sufficient
to discharge the Fund's obligations with respect to the option, by acquisition
of the non-U.S. currency or of a right to acquire such currency (in the case of
a call option) or the acquisition of a right to dispose of the currency (in the
case of a put option), or in such other manner as may be in accordance with the
requirements of any exchange on which, or the counterparty with which, the
option is traded and applicable laws and regulations.
Investing in ADRs and other depositary receipts presents many of the same
risks regarding currency exchange rates as investing directly in securities
denominated in currencies other than the U.S. dollar. Because the securities
underlying these receipts are traded primarily in non-U.S. currencies, changes
in currency exchange rates will affect the value of these receipts. For example,
a decline in the U.S. dollar value of another currency in which securities are
primarily traded will reduce the U.S. dollar value of such securities, even if
their value in the other currency remains constant, and thus will reduce the
value of the receipts covering such securities. The Fund may employ any of the
above described non-U.S. currency hedging techniques to protect the value of its
assets invested in depositary receipts.
The Fund's dealings in non-U.S. currency contracts are limited to the
transactions described above. Of course, the Fund is not required to enter into
such transactions and does not do so unless deemed appropriate by the Adviser.
It should also be realized that these methods of protecting the value of the
Fund's securities against a decline in the value of a currency do not eliminate
fluctuations in the underlying prices of the securities. Additionally, although
such contracts tend to minimize the risk of loss due to a decline in the value
of the hedged currency, they also tend to limit any potential gain which might
result should the value of such currency increase.
The Fund has established procedures consistent with policies of the
Securities and Exchange Commission ("SEC") concerning forward contracts. Since
those policies currently recommend that an amount of the Fund's assets equal to
the amount of the purchase be held aside or segregated to be used to pay for the
commitment, the Fund is expected always to have cash, cash equivalents or high
quality debt securities available sufficient to cover any commitments under
these contracts or to limit any potential risk.
CONVERTIBLE SECURITIES
The Fund may invest in convertible securities. A convertible security is a
fixed-income security (a bond or preferred stock) which may be converted at a
stated price within a specified period of time into a certain quantity of common
stock or other equity securities of the same or a different issuer. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to similar non-convertible securities. While providing
a fixed-income stream (generally higher in yield than the income derivable from
common stock but lower than that afforded by a similar non-covertible security),
a convertible security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation attendant upon a
market price advance in the convertible security's underlying common stock.
In general, the market value of a convertible security is at least the
higher of its "investment value" (i.e., its value as a fixed-income security) or
its "conversion value" (i.e., its value upon conversion into its underlying
stock). As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the security's underlying common stock. The
price of a convertible security tends to increase as the market value of the
underlying stock rises, whereas it tends to decrease as the market value of the
underlying stock declines. While no securities investment is without some risk,
investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.
SHORT SALES "AGAINST THE BOX"
In a short sale, the Fund sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. The Fund, in
accordance with applicable investment restrictions, may engage in short sales
only if at the time of the short sale it owns or has the right to obtain, at no
additional cost, an equal amount of the security being sold short. This
investment technique is known as a short sale "against the box."
In a short sale, the seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
If the Fund engages in a short sale, the collateral for the short position is
maintained for the Fund by the custodian or qualified sub-custodian. While the
short sale is open, an amount of securities equal in kind and amount to the
securities sold short or securities convertible into or exchangeable for such
equivalent securities are maintained in a segregated account for the Fund. These
securities constitute the Fund's long position.
The Fund does not engage in short sales against the box for investment
purposes. The Fund may, however, make a short sale against the box as a hedge,
when it believes that the price of a security may decline, causing a decline in
the value of a security owned by the Fund (or a security convertible or
exchangeable for such security). In such case, any future losses in the Fund's
long position should be reduced by a gain in the short position. Conversely, any
gain in the long position should be reduced by a loss in the short position. The
extent to which such gains or losses are reduced depends upon the amount of the
security sold short relative to the amount the Fund owns. There are certain
additional transaction costs associated with short sales against the box, but
the Fund endeavors to offset these costs with the income from the investment of
the cash proceeds of short sales.
The Adviser does not expect that more than 40% of the Fund's total assets
would be involved in short sales against the box. The Adviser does not currently
intend to engage in such sales.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to generate
income, the Fund may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks of
the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. Either party has the right to terminate a
loan at any time on customary industry settlement notice (which will not usually
exceed three business days). During the existence of a loan, the Fund would
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and with respect to cash collateral would also
receive compensation based on investment of the collateral (subject to a rebate
payable to the borrower). Where the borrower provides the Fund with collateral
consisting of U.S. Treasury obligations, the borrower is also obligated to pay
the Fund a fee for use of the borrowed securities. The Fund would not, however,
have the right to vote any securities having voting rights during the existence
of the loan, but would call the loan in anticipation of an important vote to be
taken among holders of the securities or of the giving or withholding of their
consent on a material matter affecting the investment. As with other extensions
of credit, there are risks of delay in recovery or even loss of rights in the
collateral should the borrower fail financially. However, the loans would be
made only to entities deemed by the Adviser to be of good standing, and when, in
the judgment of the Adviser, the consideration which can be earned currently
from loans of this type justifies the attendant risk. In addition, the Fund
could suffer loss if the borrower terminates the loan and the Fund is forced to
liquidate investments in order to return the cash collateral to the buyer. If
the Adviser determines to make loans, it is not intended that the value of the
securities loaned by the Fund would exceed 30% of the value of its total assets.
WHEN-ISSUED SECURITIES
The Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis. It is expected that, under normal circumstances, the Fund would
take delivery of such securities. When the Fund commits to purchase a security
on a "when-issued" or on a "forward delivery" basis, it sets up procedures
consistent with SEC policies. Since those policies currently require that an
amount of the Fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, the Fund expects always to have
cash, cash equivalents or high quality debt securities sufficient to cover any
commitments or to limit any potential risk. However, even though the Fund does
not intend to make such purchases for speculative purposes and intends to adhere
to the provisions of SEC policies, purchases of securities on such bases may
involve more risk than other types of purchases. For example, the Fund may have
to sell assets which have been set aside in order to meet redemptions. Also, if
the Adviser determines it is advisable as a matter of investment strategy to
sell the "when-issued" or "forward delivery" securities, the Fund would be
required to meet its obligations from the then available cash flow or the sale
of securities, or, although it would not normally expect to do so, from the sale
of the "when- issued" or "forward delivery" securities themselves (which may
have a value greater or less than the Fund's payment obligation).
RULE 144A SECURITIES
The Fund may purchase securities that are not registered ("Rule 144A
securities") under the Securities Act of 1933 (the "Securities Act"), but can be
offered and sold to "qualified institutional buyers" under Rule 144A under the
Securities Act. However, the Fund does not invest more than 15% of its net
assets in illiquid investments, which includes securities for which there is no
readily available market, securities subject to contractual restrictions on
resale and Rule 144A securities, unless the Trustees of the Trust determine,
based on the trading markets for the specific Rule 144A security, that it is
liquid. The Trustees have adopted guidelines and delegated to the Adviser the
daily function of determining and monitoring liquidity of Rule 144A securities.
The Trustees, however, retain oversight and are ultimately responsible for the
determinations.
Since it is not possible to predict with assurance exactly how the market
for Rule 144A securities will develop, the Trustees will carefully monitor the
Fund's investments in Rule 144A securities, focusing on such factors, among
others, as valuation, liquidity and availability of information. The liquidity
of investments in Rule 144A securities 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.
4. INVESTMENT RESTRICTIONS
The Trust, on behalf of the Fund, and the Portfolio Trust, on behalf of the
Portfolio, have each adopted the following policies which may not be changed
with respect to the Fund or the Portfolio without approval by holders of a
majority of the outstanding voting securities of the Fund or Portfolio, which as
used in this Statement of Additional Information means the vote of the lesser of
(i) 67% or more of the outstanding voting securities of the Fund or Portfolio
present at a meeting at which the holders of more than 50% of the outstanding
voting securities of the Fund or Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding voting securities of the Fund or
Portfolio. The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act.
Neither the Fund nor the Portfolio may:
(1) Borrow money, except that as a temporary measure for extraordinary
or emergency purposes it may borrow in an amount not to exceed 1/3 of the
current value of its net assets, including the amount borrowed (nor purchase
any securities at any time at which borrowings exceed 5% of the total assets
of the Fund or Portfolio, taken at market value). It is intended that the
Fund or Portfolio would borrow money only from banks and only to accommodate
requests for the repurchase of shares of the Fund or beneficial interests in
the Portfolio while effecting an orderly liquidation of portfolio
securities.
(2) Make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of the
Fund's or Portfolio's total assets (taken at market value), (b) through the
use of repurchase agreements or the purchase of short-term obligations or
(c) by purchasing all or a portion of an issue of debt securities of types
commonly distributed privately to financial institutions. The purchase of
short-term commercial paper or a portion of an issue of debt securities
which is part of an issue to the public shall not be considered the making
of a loan.
(3) Purchase securities of any issuer if such purchase at the time
thereof would cause with respect to 75% of the total assets of the Fund or
Portfolio more than 10% of the voting securities of such issuer to be held
by the Fund or Portfolio, except that, with respect to the Fund, the Trust
may invest all or substantially all of the Fund's assets in another
registered investment company having the same investment objectives and
policies and substantially the same investment restrictions as those with
respect to the Fund (a "Qualifying Portfolio").
(4) Purchase securities of any issuer if such purchase at the time
thereof would cause as to 75% of the Fund's or Portfolio's total assets more
than 5% of the Fund's or Portfolio's assets (taken at market value) to be
invested in the securities of such issuer (other than securities or
obligations issued or guaranteed by the United States, any state or
political subdivision thereof, or any political subdivision of any such
state, or any agency or instrumentality of the United States or of any state
or of any political subdivision of any state), except that, with respect to
the Fund, the Trust may invest all or substantially all of the Fund's assets
in a Qualifying Portfolio.
(5) Concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of the Fund's or Portfolio's
investment objectives, up to 25% of its assets, at market value at the time
of each investment, may be invested in any one industry.
As an operating policy, the Fund will not invest more than 15% of its net
assets in securities for which there is no readily available market. This policy
is not fundamental and may be changed without shareholder approval.
If a percentage or rating restriction on investment or utilization of assets
set forth above or referred to in the Prospectus is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
resulting from changes in the value of the securities or a later change in the
rating of the securities held for the Fund is not considered a violation of
policy.
5. PERFORMANCE INFORMATION
A total rate of return quotation for the Fund is calculated for any period
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains distributions declared
during such period with respect to a share held at the beginning of such period
and with respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price per share on the first day of
such period, and (b) subtracting 1 from the result. Any annualized total rate of
return quotation is calculated by (x) adding 1 to the period total rate of
return quotation calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting 1
from the result.
Any current yield quotation for the Fund consists of an annualized
historical yield, carried at least to the nearest hundredth of one percent,
based on a 30 calendar day or one month period and is calculated by (a) raising
to the sixth power the sum of 1 plus the quotient obtained by dividing the
Fund's net investment income earned during the period by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends and the public offering price per share on the last day of
the period, (b) subtracting 1 from the result, and (c) multiplying the result by
2.
Set forth below is total rate of return information for shares of the Fund
for the periods indicated, assuming that dividends and capital gains
distributions, if any, were reinvested.
<TABLE>
<CAPTION>
REDEEMABLE VALUE
OF A HYPOTHETICAL
ANNUALIZED $1,000 INVESTMENT
TOTAL RATE AT THE END OF
CITIFUNDS BALANCED PORTFOLIO OF RETURN THE PERIOD
<S> <C> <C>
October 19, 1990 (commencement of operations) to December 31, 1997 ........ 12.73% $2,379
Five Years Ended December 31, 1997 ........................................ 10.05% $1,627
One Year Ended December 31, 1997 .......................................... 15.11% $1,128
</TABLE>
The annualized yield of the shares of the Fund for the 30-day period ended
on December 31, 1997 was 2.17%.
Comparative performance information may be used from time to time in
advertising shares of the Fund, including data from Lipper Analytical Services,
Inc. and other industry sources and publications. From time to time the Fund may
compare its performance against inflation with the performance of other
instruments against inflation, such as FDIC-insured bank money market accounts.
In addition, advertising for the Fund may indicate that investors should
consider diversifying their investment portfolios in order to seek protection of
the value of their assets against inflation. From time to time, advertising
materials for the Fund may refer to or discuss current or past economic or
financial conditions, developments and events. The Fund's advertising materials
also may refer to the integration of the world's securities markets, discuss the
investment opportunities available worldwide and mention the increasing
importance of an investment strategy including non- U.S. investments.
6. DETERMINATION OF NET ASSET VALUE; VALUATION OF
SECURITIES; ADDITIONAL REDEMPTION INFORMATION
The net asset value of each share of the Fund is determined each day during
which the New York Stock Exchange is open for trading (a "Business Day"). As of
the date of this Statement of Additional Information, the Exchange is open for
trading every weekday except for the following holidays (or the days on which
they are observed): New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. This determination 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 of the Fund (including its
interest in the Portfolio), then subtracting the liabilities of the Fund, and
then dividing the result by the number of outstanding shares of the Fund. The
net asset value per share is effective for orders received and accepted by the
Distributor prior to its calculation.
The value of the Portfolio's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued) is
determined at the same time and on the same days as the net asset value per
share of the Fund is determined. The net asset value of the Fund's investment in
the Portfolio is equal to the Fund's pro rata share of the net assets of the
Portfolio.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in non-U.S. currencies will be converted into
U.S. dollars at the prevailing market rates at the time of valuation. Equity
securities are valued at the last sale price on the exchange on which they are
primarily traded or on the NASDAQ system for unlisted national market issues, or
at the last quoted bid price for securities in which there were no sales during
the day or for unlisted securities not reported on the NASDAQ system. Securities
listed on a foreign exchange are valued at the last quoted sale price available
before the time when net assets are valued. Bonds and other fixed income
securities (other than short-term obligations) are valued on the basis of
valuations furnished by a pricing service, use of which has been approved by the
Board of Trustees of the Trust. In making such valuations, the pricing service
utilizes both dealer-supplied valuations and electronic data processing
techniques that take into account appropriate factors such as institutional-size
trading in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data, without exclusive
reliance upon quoted prices or exchange or over-the-counter prices, since such
valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees of the Trust. Futures contracts are normally valued at the settlement
price on the exchange on which they are traded. Securities for which there are
no such valuations are valued at fair value as determined in good faith by or at
the direction of the Board of Trustees of the Trust.
Trading in securities on most foreign exchanges and over-the-counter markets
is normally completed before the close of regular trading on the New York Stock
Exchange and may also take place on days on which the Exchange is closed. If
events materially affecting the value of foreign securities occur between the
time when the exchange on which they are traded closes and the time when the
Fund's net asset value is calculated, such securities may be valued at fair
value in accordance with procedures established by and under the general
supervision of the Board of Trustees of the Trust.
Interest income on long-term obligations held for the Fund is determined on
the basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued less amortization of any premium.
Subject to compliance with applicable regulations, the Trust and the
Portfolio Trust have each reserved the right to pay the redemption price of
shares of the Fund or beneficial interests in the Portfolio, either totally or
partially, by a distribution in kind of readily marketable securities (instead
of cash). The securities so distributed would be valued at the same amount as
that assigned to them in calculating the net asset value for the shares or
beneficial interests being sold. If a holder of shares or beneficial interests
received a distribution in kind, such holder could incur brokerage or other
charges in converting the securities to cash.
The Trust or the Portfolio Trust may suspend the right of redemption or
postpone the date of payment for shares of the Fund or beneficial interests in
the Portfolio more than seven days during any period when (a) trading in the
markets the Fund or Portfolio normally utilizes is restricted, or an emergency,
as defined by the rules and regulations of the SEC, exists making disposal of
the Fund's or Portfolio's investments or determination of its net asset value
not reasonably practicable; (b) the New York Stock Exchange is closed (other
than customary weekend and holiday closings); or (c) the SEC has by order
permitted such suspension.
7. MANAGEMENT
The Trustees and officers of the Trust and the Portfolio Trust, their ages
and their principal occupations during the past five years are set forth below.
Their titles may have varied during that period. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined in the 1940 Act) of
the Trust or the Portfolio Trust. Unless otherwise indicated below, the address
of each Trustee and officer is 6 St. James Avenue, Boston, Massachusetts. The
address of the Portfolio Trust is Elizabethan Square, George Town, Grand Cayman,
British West Indies.
TRUSTEES OF THE TRUST
PHILIP W. COOLIDGE*; 46 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
RILEY C. GILLEY; 71 -- Vice President and General Counsel, Corporate Property
Investors (November 1988 to December 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.
DIANA R. HARRINGTON; 57 -- Professor, Babson College (since September 1993);
Visiting Professor, Kellogg Graduate School of Management, Northwestern
University (September 1992 to September 1993); Professor, Darden Graduate School
of Business, University of Virginia (September 1978 to September 1993); Trustee,
The Highland Family of Funds (since March 1997). Her address is 120 Goulding
Street, Holliston, Massachusetts.
SUSAN B. KERLEY; 46 -- President, Global Research Associates, Inc. (Investment
Research) (since August 1990); Manager, Rockefeller & Co. (March 1988 to July
1990); Trustee, Mainstay Institutional Funds (since December 1990). Her
address is P.O. Box 9572, New Haven, Connecticut.
C. OSCAR MORONG, JR.; 62 -- Chairman of the Board of Trustees of the Trust;
Managing Director, Morong Capital Management (since February 1993); Senior Vice
President and Investment Manager, CREF Investments, Teachers Insurance & Annuity
Association (retired, January 1993); Director, Indonesia Fund; Trustee, MAS
Funds (since 1993). His address is 1385 Outlook Drive West,
Mountainside, New Jersey.
E. KIRBY WARREN; 63 -- Professor of Management, Graduate School of Business,
Columbia University (since 1987); Samuel Bronfman Professor of Democratic
Business Enterprise (1978 to 1987). His address is Columbia University, Graduate
School of Business, 725 Uris Hall, New York, New York.
WILLIAM S. WOODS, JR.; 77 -- Vice President-Investments, Sun Company, Inc.
(retired, April 1984). His address is 35 Colwick Road, Cherry Hill, New
Jersey.
TRUSTEES OF THE PORTFOLIO TRUST
ELLIOTT J. BERV; 54 -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June 1991 to
June 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE*; 46 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
MARK T. FINN; 54 -- President and Director, Delta Financial, Inc. (since June
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April 1990); Director, Vantage
Consulting Group, Inc. (since October 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
C. OSCAR MORONG, JR.; 62 -- Chairman of the Board of Trustees of the Trust;
Managing Director, Morong Capital Management (since February 1993); Senior Vice
President and Investment Manager, CREF Investments, Teachers Insurance & Annuity
Association (retired, January 1993); Director, Indonesia Fund; Trustee, MAS
Funds (since 1993). His address is 1385 Outlook Drive West,
Mountainside, New Jersey.
WALTER E. ROBB, III; 71 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (Corporate Financial Advisors) (since 1978);
President, Benchmark Advisors, Inc. (Corporate Financial Advisors) (since
1989); Trustee of certain registered investment companies in the MFS Family of
Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
OFFICERS OF THE TRUST AND THE PORTFOLIO TRUST
PHILIP W. COOLIDGE*; 46 -- President of the Trust and the Portfolio Trust;
Chief Executive Officer and President, Signature Financial Group, Inc. and
CFBDS.
CHRISTINE A. DRAPEAU*; 27 -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolio Trust; Assistant Vice President, Signature Financial
Group, Inc. (since January 1996); Paralegal and Compliance Officer, various
financial companies (July 1992 to January 1996); Graduate Student, Bentley
College (prior to December 1994).
TAMIE EBANKS-CUNNINGHAM*; 25 -- Assistant Secretary of the Trust and the
Portfolio Trust; Office Manager, Signature Financial Group (Cayman) Ltd. (Since
April 1995); Administrator, Cayman Islands Primary School (prior to April 1995).
Her address is P.O. Box 2494, Elizabethan Square, George Town, Grand Cayman,
Cayman Islands, B.W.I.
JOHN R. ELDER*; 49 -- Treasurer of the Trust and the Portfolio Trust; Vice
President, Signature Financial Group, Inc. (since April 1995); Treasurer,
CFBDS (since April 1995); Treasurer, Phoenix Family of Mutual Funds (Phoenix
Home Life Mutual Insurance Company) (1983 to March 1995).
LINDA T. GIBSON*; 32 -- Secretary of the Trust and the Portfolio Trust; Vice
President, Signature Financial Group, Inc. (since May 1992); Assistant
Secretary, CFBDS (since October 1992).
JOAN R. GULINELLO*; 42 -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolio Trust; Vice President, Signature Financial Group, Inc.
(since October 1993); Secretary, CFBDS (since October 1995); Vice President
and Assistant General Counsel, Massachusetts Financial Services Company (prior
to October 1993).
JAMES E. HOOLAHAN*; 51 -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust and the Portfolio Trust; Senior Vice President,
Signature Financial Group, Inc.
SUSAN JAKUBOSKI*; 33 -- Vice President, Assistant Treasurer and Assistant
Secretary of the Trust and the Portfolio Trust; Vice President, Signature
Financial Group (Cayman) Ltd. (since August 1994); Fund Compliance
Administrator, Concord Financial Group (November 1990 to August 1994). Her
address is Suite 193, 12 Church Street, Hamilton HM11, Bermuda.
MOLLY S. MUGLER*; 46 -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolio Trust; Vice President, Signature Financial Group,
Inc.; Assistant Secretary, CFBDS.
CLAIR TOMALIN*; 29 -- Assistant Secretary of the Trust and the Portfolio Trust;
Office Manager, Signature Financial Group (Europe) Limited (since 1993). Her
address is 117 Charterhouse Street, London ECIM 6AA.
SHARON M. WHITSON*; 49 -- Assistant Secretary and Assistant Treasurer of the
Trust and the Portfolio Trust; Assistant Vice President, Signature Financial
Group, Inc.
JULIE J. WYETZNER*; 38 -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust and the Portfolio Trust; Vice President, Signature
Financial Group, Inc.
The Trustees and officers of the Trust and the Portfolio Trust also hold
comparable positions with certain other funds for which CFBDS, SFG or their
affiliates serve as the distributor or administrator.
The following table shows Trustee compensation for the periods indicated.
TRUSTEE COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE TOTAL
COMPENSATION COMPENSATION
FROM THE FROM TRUST AND
TRUSTEE FUND(1) COMPLEX(2)
<S> <C> <C>
H.B. Alvord(3) ................................................................... $1,619 $32,000
Philip W. Coolidge ............................................................... $ 0 $ 0
Riley C. Gilley .................................................................. $2,435 $50,000
Diana R. Harrington .............................................................. $2,995 $57,000
Susan B. Kerley .................................................................. $3,079 $59,000
C. Oscar Morong, Jr. ............................................................. $3,451 $70,000
E. Kirby Warren .................................................................. $2,540 $50,000
William S. Woods, Jr. ............................................................ $3,016 $58,000
</TABLE>
- ----------
(1) For the fiscal year ended December 31, 1997.
(2) Information relates to the fiscal year ended December 31, 1997. Messrs.
Coolidge, Gilley, Morong, Warren and Woods, and Mses. Harrington and Kerley
are Trustees of 55, 31, 28, 28, 30, 29 and 29 funds and portfolios,
respectively, in the family of open-end registered investment companies
advised or managed by Citibank.
(3) Mr. Alvord retired as a Trustee on May 31, 1997.
As of February 1, 1998, all Trustees and officers as a group owned less than
1% of the outstanding shares of the Fund. As of the same date, more than 95% of
the outstanding shares of the Fund were held of record by Citibank, N.A. or its
affiliates as Shareholder Servicing Agents of the Fund for the accounts of their
respective clients.
The Declaration of Trust of each of the Trust and the Portfolio Trust
provides that each of the Trust and the Portfolio Trust, as the case may be,
will indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because of
their offices with the Trust or the Portfolio Trust, as the case may be, unless,
as to liability to the Trust, the Portfolio Trust or their respective investors,
it is finally adjudicated that they engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in their offices,
or unless with respect to any other matter it is finally adjudicated that they
did not act in good faith in the reasonable belief that their actions were in
the best interests of the Trust or the Portfolio Trust, as the case may be. In
the case of settlement, such indemnification will not be provided unless it has
been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees of the Trust or
the Portfolio Trust, or in a written opinion of independent counsel, that such
officers or Trustees have not engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
ADVISER
Citibank manages the assets of the Portfolio pursuant to an investment
advisory agreement (the "Advisory Agreement"). Subject to such policies as the
Board of Trustees of the Portfolio Trust may determine, the Adviser manages the
securities of the Portfolio and makes investment decisions for the Portfolio.
The Adviser furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
securities transactions for the Portfolio. The Advisory Agreement will continue
as long as such continuance is specifically approved at least annually by the
Board of Trustees of the Portfolio Trust or by a vote of a majority of the
outstanding voting securities of the Portfolio, and, in either case, by a
majority of the Trustees of the Portfolio Trust who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting called
for the purpose of voting on the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable without penalty on not more than 60
days' nor less than 30 days' written notice by the Portfolio Trust when
authorized either by a vote of a majority of the outstanding voting securities
of the Portfolio or by a vote of a majority of the Board of Trustees of the
Portfolio Trust, or by the Adviser on not more than 60 days' nor less than 30
days' written notice, and will automatically terminate in the event of its
assignment. The Advisory Agreement provides that neither the Adviser nor its
personnel shall be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in the execution
of security transactions for the Portfolio, except for willful misfeasance, bad
faith or gross negligence or reckless disregard of its or their obligations and
duties under the Advisory Agreement.
The Prospectus contains a description of the fees payable to the Adviser for
services under the Advisory Agreement. For the four months ended April 30, 1994,
the fee paid to Citibank under a prior investment advisory agreement between the
Fund and Citibank was $340,160. For the period from May 1, 1994 to December 31,
1994 and for the fiscal years ended December 31, 1995, 1996 and 1997, the fees
paid to Citibank under the Advisory Agreement with respect to the Portfolio were
$956,408, $996,840 and $998,042, respectively.
ADMINISTRATOR
Pursuant to administrative services agreements (the "Administrative Services
Agreements"), CFBDS and SFG provide the Trust and the Portfolio Trust,
respectively, with general office facilities and CFBDS and SFG supervise the
overall administration of the Trust or the Portfolio Trust, including, among
other responsibilities, the negotiation of contracts and fees with, and the
monitoring of performance and billings of, the Trust's or the Portfolio Trust's
independent contractors and agents; the preparation and filing of all documents
required for compliance by the Trust or the Portfolio Trust with applicable laws
and regulations; and arranging for the maintenance of books and records of the
Trust or the Portfolio Trust. The Administrator and the Portfolio Administrator
provide persons satisfactory to the Board of Trustees of the Trust or the
Portfolio Trust to serve as Trustees and officers of the Trust and the Portfolio
Trust, respectively. Such Trustees and officers, as well as certain other
employees and Trustees of the Trust and the Portfolio Trust, may be directors,
officers or employees of CFBDS, SFG or their affiliates.
The Prospectus contains a description of the fees payable to the
Administrator and the Portfolio Administrator under the Administrative Services
Agreements. For the fiscal years ended December 31, 1995, 1996 and 1997, the
fees payable by the Fund to CFBDS under the Administrative Services Agreement
with respect to the Fund were $944,624 (of which $354,234 was voluntarily
waived), $592,565 (of which $237,026 was voluntarily waived) and $570,130 (of
which $228,507 was voluntarily waived), respectively. For the fiscal years ended
December 31, 1995, 1996 and 1997, the Portfolio Trust paid the Portfolio
Administrator $119,551, $124,605 and $124,755, respectively, with respect to the
Portfolio under the Portfolio Trust's Administrative Services Agreement.
The Administrative Services Agreement with the Trust continues in effect
with respect to the Fund if such continuance is specifically approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Trust and, in either case, by a majority of
the Trustees who are not parties to the Administrative Services Agreement or
interested persons of any such party. The Administrative Services Agreement with
the Trust terminates automatically if it is assigned and may be terminated
without penalty by vote of a majority of the outstanding voting securities of
the Trust or by either party on not more than 60 days' nor less than 30 days'
written notice. The Administrative Services Agreement with the Trust also
provides that neither CFBDS, as the Administrator, nor its personnel shall be
liable for any error of judgment or mistake of law or for any act or omission in
the administration or management of the Trust, except for willful misfeasance,
bad faith or gross negligence in the performance of its or their duties or by
reason of reckless disregard of its or their obligations and duties under the
Trust's Administrative Services Agreement.
The Administrative Services Agreement with the Portfolio Trust provides that
SFG may render administrative services to others. The Administrative Services
Agreement with the Portfolio Trust terminates automatically if it is assigned
and may be terminated without penalty by a vote of a majority of the outstanding
voting securities of the Portfolio Trust or by either party on not more than 60
days' nor less than 30 days' written notice. The Administrative Services
Agreement with the Portfolio Trust also provides that neither SFG, as the
Portfolio Administrator, nor its personnel shall be liable for any error of
judgment or mistake of law or for any act or omission in the administration or
management of the Portfolio Trust, except for willful misfeasance, bad faith or
gross negligence in the performance of its or their duties or by reason of
reckless disregard of its or their obligations and duties under the Portfolio
Trust's Administrative Services Agreement.
CFBDS and SFG are wholly-owned subsidiaries of Signature Financial Group,
Inc. SFG is a company organized under the laws of the Cayman Islands. Its
principal place of business is in George Town, Grand Cayman, British West
Indies.
Pursuant to a sub-administrative services agreement, Citibank performs such
sub-administrative duties for the Trust and the Portfolio Trust as from time to
time are agreed upon by Citibank and, respectively, CFBDS or SFG. Citibank's
sub-administrative duties may include providing equipment and clerical personnel
necessary for maintaining the Trust's and the Portfolio Trust's organization,
participation in the preparation of documents required for compliance by the
Trust and the Portfolio Trust with applicable laws and regulations, the
preparation of certain documents in connection with meetings of Trustees and
shareholders, and other functions which would otherwise be performed by the
Administrator. For performing such sub-administrative services, Citibank
receives compensation as from time to time is agreed upon by CFBDS or SFG, not
in excess of the amount paid to CFBDS or SFG for its services under the
Administrative Services Agreements with the Trust and the Portfolio Trust. All
such compensation is paid by CFBDS or SFG.
DISTRIBUTOR
CFBDS serves as the Distributor of the Fund's shares pursuant to a
Distribution Agreement with the Trust. Unless otherwise terminated, the
Distribution Agreement will continue from year to year upon annual approval by
the Trust's Board of Trustees or by the vote of a majority of the outstanding
voting securities of the Fund, and by the vote of a majority of the Board of
Trustees of the Trust who are not parties to the Agreement or interested persons
of any party to the Distribution Agreement, cast in person at a meeting called
for the purpose of voting on such approval. The Agreement will terminate in the
event of its assignment, as defined in the 1940 Act.
The Trust has adopted a Distribution Plan (the "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act with respect to shares of the Fund
after concluding that there is a reasonable likelihood that the Distribution
Plan will benefit the Fund and its shareholders. The Distribution Plan provides
that the Fund shall pay a distribution fee to the Distributor at an annual rate
not to exceed 0.15% of the Fund's average daily net assets. The Distributor
receives the distribution fees for its services under the Distribution Agreement
in connection with the distribution of the Fund's shares (exclusive of any
advertising expenses incurred by the Distributor in connection with the sale of
shares of the Fund). The Distributor may use all or any portion of such
distribution fee to pay for expenses of printing prospectuses and reports used
for sales purposes, expenses of the preparation and printing of sales
literature, commissions to dealers who sell shares of the Fund and other such
distribution-related expenses.
The Fund is also permitted to pay the Distributor a service fee at an annual
rate not to exceed 0.25% of the Fund's average daily net assets.
The Distribution Plan also permits the Fund to pay the Distributor an
additional fee (not to exceed 0.05% of the average daily net assets of the Fund)
in anticipation of or as reimbursement for print or electronic media advertising
expenses incurred in connection with the sale of shares.
The Distribution Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trust's Trustees and a majority of the Trustees who are not "interested persons"
of the Trust and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any agreement related to the Plan (for
purposes of this paragraph "Qualified Trustees"). The Distribution Plan requires
that the Trust and the Distributor provide to the Board of Trustees, and the
Board of Trustees review, at least quarterly, a written report of the amounts
expended (and the purposes therefor) under the Distribution Plan. The
Distribution Plan further provides that the selection and nomination of the
Qualified Trustees is committed to the discretion of the disinterested Trustees
(as defined in the 1940 Act) then in office. The Distribution Plan may be
terminated at any time by a vote of a majority of the Trust's Qualified Trustees
or by a vote of a majority of the outstanding voting securities of the Fund. The
Distribution Plan may not be amended to increase materially the amount of the
Fund's permitted expenses thereunder without the approval of a majority of the
outstanding securities of the Fund and may not be materially amended in any case
without a vote of a majority of both the Trustees and Qualified Trustees. The
Distributor will preserve copies of any plan, agreement or report made pursuant
to the Distribution Plan for a period of not less than six years from the date
of the Plan, and for the first two years the Distributor will preserve such
copies in an easily accessible place.
As contemplated by the Distribution Plan, CFBDS acts as the agent of the
Trust in connection with the offering of shares of the Fund pursuant to the
Distribution Agreement. After the prospectuses and periodic reports of the Fund
have been prepared, set in type and mailed to existing shareholders, the
Distributor pays for the printing and distribution of copies thereof which are
used in connection with the offering of shares of the Fund to prospective
investors. The Prospectus contains a description of fees payable to the
Distributor under the Distribution Agreement. For the fiscal years ended
December 31, 1995, 1996 and 1997 the fees payable to CFBDS under the
Distribution Agreement with respect to the Fund were $118,077, $355,539 (of
which $237,026 was voluntarily waived) and $342,078 (of which $228,204 was
voluntarily waived), respectively, no portion of which was applicable to
reimbursement for expenses incurred in connection with print or electronic media
advertising. All of the foregoing amounts paid under the Distribution Plan were
spent on printing and mailing expenses.
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT, CUSTODIAN AND FUND ACCOUNTANTS
The Trust has adopted an administrative services plan (the "Administrative
Services Plan") after having concluded that there is a reasonable likelihood
that the Administrative Services Plan will benefit the Fund and its
shareholders. The Administrative Services Plan provides that the Trust may
obtain the services of an administrator, a transfer agent, a custodian and one
or more Shareholder Servicing Agents, and may enter into agreements providing
for the payment of fees for such services. Under the Trust's Administrative
Services Plan, the total of the fees paid from the Fund to the Trust's
Administrator and Shareholder Servicing Agents may not exceed 0.65% of the
Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year. Any distribution fees or service fees (other than any
fee concerning electronic or other media advertising) payable under the
Distribution Plan are included in this percentage limitation. The Administrative
Services Plan continues in effect if such continuance is specifically approved
at least annually by a vote of both a majority of the Trustees and a majority of
the Trustees who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Administrative
Services Plan or in any agreement related to such Plan (for purposes of this
paragraph "Qualified Trustees"). The Administrative Services Plan requires that
the Trust provide to its Board of Trustees and the Board of Trustees review, at
least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Administrative Services Plan. The Administrative Services
Plan may be terminated at any time by a vote of a majority of the Qualified
Trustees of the Trust or by a vote of a majority of the outstanding voting
securities of the Fund. The Administrative Services Plan may not be materially
amended in any case without a vote of the majority of both the Trustees and the
Qualified Trustees.
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent and a Transfer Agency and
Service Agreement with State Street Bank and Trust Company ("State Street")
pursuant to which State Street (or its affiliate State Street Canada, Inc.) acts
as transfer agent for the Fund. The Trust has entered into a Custodian Agreement
and a Fund Accounting Agreement with State Street pursuant to which custodial
and fund accounting services, respectively, are provided for the Fund. See
"Shareholder Servicing Agents" and "Transfer Agent, Custodian and Fund
Accountant" in the Prospectus for additional information, including a
description of fees paid to the Shareholder Servicing Agents under the Servicing
Agreements. For the fiscal years ended December 31, 1995, 1996 and 1997, the
aggregate fees payable to Shareholder Servicing Agents with respect to the Fund
were $944,624 (of which $354,234 was voluntarily waived), $592,565 and $570,130,
respectively.
The Portfolio Trust has also adopted an administrative services plan (the
"Portfolio Administrative Plan"), which provides that the Portfolio Trust may
obtain the services of an administrator, a transfer agent and a custodian and
may enter into agreements providing for the payment of fees for such services.
Under the Portfolio Administrative Plan, the administrative services fee payable
to the Portfolio Administrator from the Portfolio may not exceed 0.05% of the
Portfolio's average daily net assets on an annualized basis for its then-current
fiscal year.
The Portfolio Administrative Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Portfolio Trust's Trustees and a majority of the Portfolio Trust's Trustees who
are not "interested persons" of the Portfolio and who have no direct or indirect
financial interest in the operation of the Portfolio Administrative Plan or in
any agreement related to such Plan (for purposes of this paragraph "Qualified
Trustees"). The Portfolio Administrative Plan requires that the Portfolio Trust
provide to the Board of Trustees and the Board of Trustees review, at least
quarterly, a written report of the amounts expended (and the purposes therefor)
under the Portfolio Administrative Plan. The Portfolio Administrative Plan may
not be amended to increase materially the amount of permitted expenses
thereunder without the approval of a majority of the outstanding voting
securities of the Portfolio Trust and may not be materially amended in any case
without a vote of the majority of both the Portfolio Trust's Trustees and the
Portfolio Trust's Qualified Trustees.
The Portfolio Trust, on behalf of the Portfolio, has entered into a
Custodian Agreement with State Street pursuant to which State Street acts as
custodian for the Portfolio. The Portfolio Trust, on behalf of the Portfolio,
also has entered into a Fund Accounting Agreement with State Street Cayman Trust
Company, Ltd. ("State Street Cayman") pursuant to which State Street Cayman
provides fund accounting services for the Portfolio. State Street Cayman also
provides transfer agency services to the Portfolio Trust. See "Shareholder
Servicing Agents" and "Transfer Agent, Custodian and Fund Accountant" in the
Prospectus for additional information.
The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of State Street
Cayman is P.O. Box 2508 GT, Grand Cayman, British West Indies.
AUDITORS
Price Waterhouse LLP are the independent accountants for the Fund, providing
audit services and assistance and consultation with respect to the preparation
of filings with the SEC. The address of Price Waterhouse LLP is 160 Federal
Street, Boston, Massachusetts 02110. Price Waterhouse are the chartered
accountants for the Portfolio Trust. The address of Price Waterhouse is Suite
3000, Box 82, Royal Trust Towers, Toronto Dominion Center, Toronto, Ontario,
Canada M5X 1G8.
COUNSEL
Bingham Dana LLP, 150 Federal Street, Boston, MA 02110, acts as counsel for
the Fund.
8. PORTFOLIO TRANSACTIONS
The Trust trades securities for the Fund if it believes that a transaction
net of costs (including custodian charges) will help achieve the Fund's
investment objectives. Changes in the Fund's investments are made without regard
to the length of time a security has been held, or whether a sale would result
in the recognition of a profit or loss. Therefore, the rate of turnover is not a
limiting factor when changes are appropriate. Specific decisions to purchase or
sell securities for the Fund are made by a portfolio manager who is an employee
of the Adviser and who is appointed and supervised by its senior officers. The
portfolio manager may serve other clients of the Adviser in a similar capacity.
In connection with the selection of brokers or dealers and the placing of
portfolio securities transactions, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which Citibank or its affiliates exercise investment discretion.
Citibank is authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if Citibank determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction or
the overall responsibilities which Citibank and its affiliates have with respect
to accounts over which they exercise investment discretion. The Trustees of the
Trust periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
The investment advisory fee that the Fund pays to the Adviser will not be
reduced as a consequence of the Adviser's receipt of brokerage and research
services. While such services are not expected to reduce the expenses of the
Adviser, the Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff or obtain such services
independently.
In certain instances there may be securities that are suitable as an
investment for the Fund as well as for one or more of the Adviser's other
clients. Investment decisions for the Fund and for the Adviser's other clients
are made with a view to achieving their respective investment objectives. It may
develop that a particular security is bought or sold for only one client even
though it might be held by, or bought or sold for, other clients. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the same security. Some simultaneous transactions are
inevitable when several clients receive investment advice from the same
investment adviser, particularly when the same security is suitable for the
investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could adversely affect the
price of or the size of the position obtainable in a security for the Fund. When
purchases or sales of the same security for the Fund and for other portfolios
managed by the Adviser occur contemporaneously, the purchase or sale orders may
be aggregated in order to obtain any price advantages available to large volume
purchases or sales.
For the fiscal years ended December 31, 1995, 1996 and 1997, the Portfolio
paid brokerage commissions of $248,710, $283,659 and $371,439, respectively.
9. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value)
of each series and to divide or combine the shares of any series into a greater
or lesser number of shares of that series without thereby changing the
proportionate beneficial interests in that series. The Trust has reserved the
right to create and issue additional series and classes of shares. Each share of
each class of each series represents an equal proportionate interest in the
series with each other share of that class. Shares of each series participate
equally in the earnings, dividends and distribution of net assets of the
particular series upon liquidation or dissolution (except for any differences
among classes of shares in a series). Shares of each series are entitled to vote
separately to approve advisory agreements or changes in investment policy, but
shares of all series may vote together in the election or selection of Trustees
and accountants for the Trust. In matters affecting only a particular series or
class, only shares of that particular series or class are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust would
not be able to elect any Trustee. The Trust is not required to hold, and has no
present intention of holding, annual meetings of shareholders but the Trust will
hold special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have, under certain circumstances (e.g., upon the application and submission of
certain specified documents to the Trustees by a specified number of
shareholders), the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have under certain circumstances the right to
remove one or more Trustees without a meeting by a declaration in writing by a
specified number of shareholders. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative vote of the holders of a
majority of the outstanding shares of each series affected by the amendment.
(See "Investment Restrictions.") At any meeting of shareholders of any series, 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 received for all other shares of which that
Shareholder Servicing Agent is the holder of record. Shares have no preference,
pre-emptive, conversion or similar rights. Shares, when issued, are fully paid
and non-assessable, except as set forth below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by a vote of the holders of
two-thirds of the Trust's outstanding shares, voting as a single class, or of
the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's (or the
affected series) outstanding shares would be sufficient. The Trust or any series
of the Trust, as the case may be, may be terminated (i) by a vote of a majority
of the outstanding voting securities of the Trust or the affected series or (ii)
by the Trustees by written notice to the shareholders of the Trust or the
affected series. If not so terminated, the Trust will continue indefinitely.
Share certificates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust of the Trust
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Trust property for any shareholder held personally liable for the obligations
of the Trust. The Declaration of Trust of the Trust also provides that the Trust
may maintain appropriate insurance (e.g., fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust of the Trust protects a Trustee
against any liability to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
The Portfolio is a series of the Portfolio Trust, organized as a trust under
the laws of the State of New York. The Portfolio Trust's Declaration of Trust
provides that investors in the Portfolio (e.g., other investment companies
(including the Fund), insurance company separate accounts and common and
commingled trust funds) are each liable for all obligations of the Portfolio.
However, the risk of the Fund incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance existed
and the Portfolio itself was unable to meet its obligations. It is not expected
that the liabilities of the Portfolio would ever exceed its assets.
Each investor in the Portfolio, including the Fund, may add to or withdraw
from its investment in the Portfolio on each Business Day. As of the close of
regular trading on each Business Day, the value of each investor's beneficial
interest in the Portfolio is determined by multiplying the net asset value of
the Portfolio by the percentage, effective for that day, that represents that
investor's share of the aggregate beneficial interests in the Portfolio. Any
additions or withdrawals that are to be effected on that day are then effected.
The investor's percentage of the aggregate beneficial interests in the Portfolio
is then re-computed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of the
close of regular trading on such day plus or minus, as the case may be, the
amount of any additions to or withdrawals from the investor's investment in the
Portfolio effected on such day, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the close of regular trading on
such day plus or minus, as the case may be, the amount of the net additions to
or withdrawals from the aggregate investments in the Portfolio by all investors
in the Portfolio. The percentage so determined is then applied to determine the
value of the investor's interest in the Portfolio as of the close of regular
trading on the next following Business Day.
10. CERTAIN ADDITIONAL TAX MATTERS
The Fund has elected to be treated, and intends to qualify each year, as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements as to the nature of the Fund's gross
income, the amount of Fund distributions, and the composition of the Fund's
portfolio assets. Provided all such requirements are met, no U.S. federal income
or excise taxes generally will be required to be paid by the Fund, although
non-U.S. source income earned by the Fund may be subject to non-U.S. withholding
taxes. If the Fund should fail to qualify as a "regulated investment company"
for any year, the Fund would incur a regular corporate federal income tax upon
its taxable income and Fund distributions would generally be taxable as ordinary
income to shareholders. The Portfolio Trust believes the Portfolio also will not
be required to pay any U.S. federal income or excise taxes on its income.
The portion of the Fund's ordinary income dividends attributable to
dividends received in respect of equity securities of U.S. issuers is normally
eligible for the dividends received deduction for corporations subject to U.S.
federal income taxes. Availability of the deduction for particular shareholders
is subject to certain limitations, and deducted amounts may be subject to the
alternative minimum tax and result in certain basis adjustments. Any Fund
dividend that is declared in October, November or December of any calendar year,
that is payable to shareholders of record in such a month, and that is paid the
following January will be treated as if received by the shareholders on December
31 of the year in which the dividend is declared.
Any Fund distribution will have the effect of reducing the per share net
asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of shares
of the Fund by a shareholder that holds such shares as a capital asset will be
treated as a long-term capital gain or loss if the shares have been held for
more than twelve months and otherwise as a short-term capital gain or loss; a
long-term capital gain realized by an individual shareholder will be eligible
for reduced tax rates if the shares were held for more than eighteen months.
However, any loss realized upon a disposition of shares in the Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The Fund's transactions in options, futures contracts and forward contracts
will be subject to special tax rules that may affect the amount, timing and
character of Fund income and distributions to shareholders. For example, certain
positions held by the Fund on the last business day of each taxable year will be
marked to market (i.e., treated as if closed out) on that day, and any gain or
loss associated with the positions will be treated as 60% long-term and 40%
short-term capital gain or loss. Certain positions held by the Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute "straddles," and may be subject to special tax rules
that would cause deferral of Fund losses, adjustments in the holding periods of
Fund securities, and conversion of short-term into long-term capital losses.
Certain tax elections exist for straddles that may alter the effects of these
rules. The Fund will limit its activities in options, futures contracts and
forward contracts to the extent necessary to meet the requirements of Subchapter
M of the Code.
Special tax considerations apply with respect to non-U.S. investments of the
Fund. Foreign exchange gains and losses realized by the Fund will generally be
treated as ordinary income and loss. Use of non-U.S. currencies for non-hedging
purposes may be limited in order to avoid a tax on the Fund. Investment in
certain "passive foreign investment companies" may also be limited in order to
avoid a tax on the Fund. The Fund may elect to mark to market any investments in
"passive foreign investment companies" on the last day of each taxable year.
This election may cause the Fund to recognize ordinary income prior to the
receipt of cash payments with respect to those investments; in order to
distribute this income and avoid a tax on the Fund, the Fund may be required to
liquidate portfolio securities that it might otherwise have continued to hold.
Investment income received by the Fund from non-U.S. securities may be subject
to non-U.S.taxes. The United States has entered into tax treaties with many
other countries that may entitle the Fund to a reduced rate of tax or an
exemption from tax on such income. The Fund intends to qualify for treaty
reduced rates where available. It is not possible, however, to determine the
Fund's effective rate of non-U.S. tax in advance since the amount of the Fund's
respective assets to be invested within various countries is not known.
Shareholders will not be able to claim any deduction or credit for any part of
the foreign taxes paid by the Fund.
The Fund will withhold tax payments at the rate of 30% (or any lower rate
permitted under an applicable treaty) on taxable dividends and other payments
subject to withholding taxes that are made to persons who are not citizens or
residents of the United States.
The account application asks each new shareholder to certify that the
shareholder's Social Security or taxpayer identification number is correct and
that the shareholder is not subject to 31% backup withholding for failing to
report income to the IRS. If a shareholder fails to provide this information, or
otherwise violates IRS regulations, the Fund may be required to withhold tax at
the rate of 31% on certain distributions and redemption proceeds paid to that
shareholder.
11. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
The audited financial statements of the Fund (Statement of Assets and
Liabilities at December 31, 1997, Statement of Operations for the year ended
December 31, 1997, Statement of Changes in Net Assets for each of the years in
the two-year period ended December 31, 1997, and Financial Highlights for each
of the years in the five-year period ended December 31, 1997, Notes to Financial
Statements and Independent Auditors' Report), each of which is included in the
Annual Report to Shareholders of the Fund, are incorporated by reference into
this Statement of Additional Information and have been so incorporated in
reliance upon the reports of Price Waterhouse LLP, independent accountants, on
behalf of the Fund.
The audited financial statements of the Portfolio (Portfolio of Investments
at December 31, 1997, Statement of Assets and Liabilities at December 31, 1997,
Statement of Operations for the fiscal year ended December 31, 1997, Statement
of Changes in Net Assets for each of the years in the two-year period ended
December 31, 1997, and Financial Highlights for each of the years in the
three-year period ended December 31, 1997 and for the period May 1, 1994
(commencement of operations) to December 31, 1994, Notes to Financial Statements
and Independent Auditors' Report), each of which is included in the Annual
Report to Shareholders of the Fund are incorporated by reference into this
Statement of Additional Information and have been so incorporated in reliance
upon the reports of Price Waterhouse, chartered accountants, on behalf of the
Portfolio.
A copy of the Annual Report to Shareholders of the Fund accompanies this
Statement of Additional Information.
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements Included in Part A:
Condensed Financial Information - Financial Highlights (for
the period from the commencement of operations (October 19,
1990) to December 31, 1990 and for each of the years in the
seven-year period ended December 31, 1996)
Financial Statements Included in Part B:
LANDMARK BALANCED FUND
Statement of Assets and Liabilities at December 31, 1997*
Statement of Operations for the year ended December 31, 1997*
Statement of Changes in Net Assets for each of the years ended
December 31, 1996 and 1997*
Financial Highlights for the years in the five-year period
ended December 31, 1997*
BALANCED PORTFOLIO
Portfolio of Investments at December 31, 1997*
Statement of Assets and Liabilities at December 31, 1997*
Statement of Operations for the year ended December 31, 1997*
Statement of Changes in Net Assets for the years ended
December 31, 1996 and 1997*
Financial Highlights for the period from May 1, 1994
(commencement of operations) to December 31, 1994 and for
each of the years in the three-year period ended December
31, 1997*
- ------------------
* Incorporated by reference to the Registrant's Annual Report to Shareholders
of Landmark Balanced Fund for the fiscal year ended December 31, 1997
(Accession Number 0000950156-98-000156).
<TABLE>
<C> <S>
(b) Exhibits
* 1(a) Amended and Restated Declaration of Trust of the Registrant
** and *** 1(b) Amendments to the Amended and Restated Declaration of Trust of the
Registrant
1(c) Forms of Amendments to the Amended and Restated Declaration of Trust
of the Registrant
*** 2(a) Amended and Restated By-Laws of the Registrant
*** 2(b) Amendments to Amended and Restated By-Laws of the Registrant
6 Amended and Restated Distribution Agreement between the Registrant
and CFBDS, Inc. (formerly known as The Landmark Funds Broker-Dealer
Services, Inc.) ("CFBDS"), as distributor
*** 8(a) Custodian Contract between the Registrant and State Street Bank and
Trust Company ("State Street"), as custodian
*** 8(b) Letter Agreement regarding the Custodian Contract between the
Registrant and State Street
9(a) Amended and Restated Administrative Services Plan of the Registrant
9(b) Administrative Services Agreement between the Registrant and CFBDS,
as administrator
9(c) Sub-Administrative Services Agreement between Citibank, N.A. and CFBDS
9(d)(i) Form of Shareholder Servicing Agreement between the Registrant and
Citibank, N.A., as shareholder servicing agent
9(d)(ii) Form of Shareholder Servicing Agreement between the Registrant and a
federal savings bank, as shareholder servicing agent
9(d)(iii) Form of Shareholder Servicing Agreement between the Registrant and
CFBDS, as shareholder servicing agent
*** 9(e) Transfer Agency Agreement between the Registrant and State Street, as
transfer agent
**** 9(f) Amended Expense Reimbursement Agreement between the Registrant, on
behalf of the Fund, and CFBDS, as administrator
10 Opinion and Consent of Counsel
11(a) Consent of Price Waterhouse LLP, independent auditors of the
Registrant
11(b) Consent of Price Waterhouse, independent auditors of Balanced
Portfolio
15 Amended and Restated Distribution Plan of the Registrant
25(a) Powers of Attorney for the Registrant
25(b) Powers of Attorney for The Premium Portfolios
27 Financial Data Schedule
- ---------------
* Incorporated by reference to Post-Effective Amendment No. 20 to the Registrant's Registration Statement on Form N-1A
(File No. 2-90518) as filed with the Securities and Exchange Commission on December 31, 1996.
** Incorporated by reference to Post-Effective Amendment No. 25 to the Registrant's Registration Statement on Form N-1A
(File No. 2-90518) as filed with the Securities and Exchange Commission on April 18, 1997.
*** Incorporated by reference to Post-Effective Amendment No. 26 to the Registrant's Registration Statement on Form N-1A
(File No. 2-90518) as filed with the Securities and Exchange Commission on December 30, 1997.
**** Incorporated by reference to Post-Effective Amendment No. 14 to the Registrant's Registration Statement on Form N-1A
(File No. 2-90518) as filed with the Securities and Exchange Commission on March 3, 1995.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
Shares of Beneficial Interest As of February 20, 1998
(without par value)
<S> <C>
Landmark Balanced Fund 7
</TABLE>
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's Declaration of
Trust, incorporated by reference herein; (b) Section 4 of the Distribution
Agreement between the Registrant and CFBDS, incorporated by reference herein;
and (c) the undertaking of the Registrant regarding indemnification set forth in
its Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range
of banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, a
registered bank holding company. Citibank also serves as investment adviser to
the following registered investment companies (or series thereof): Asset
Allocation Portfolios (Large Cap Value Portfolio, Small Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio, Intermediate Income Portfolio
and Short-Term Portfolio), The Premium Portfolios (Growth & Income Portfolio,
Balanced Portfolio, Large Cap Growth Portfolio, Government Income Portfolio,
International Equity Portfolio, Emerging Asian Markets Equity Portfolio and
Small Cap Growth Portfolio), Tax Free Reserves Portfolio, U.S. Treasury Reserves
Portfolio, Cash Reserves Portfolio, CitiFundsSM Multi-State Tax Free Trust
(CitiFundsSM New York Tax Free Reserves, CitiFundsSM Connecticut Tax Free
Reserves and CitiFundsSM California Tax Free Reserves), Landmark Tax Free Income
Funds (Landmark National Tax Free Income Fund and Landmark New York Tax Free
Income Fund), Landmark Fixed Income Funds (Landmark Intermediate Income Fund),
CitiFundsSM Institutional Trust (CitiFundsSM Institutional Cash Reserves) and
Variable Annuity Portfolios (CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP
Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP Folio 500 and Landmark
Small Cap Equity VIP Fund). Citibank and its affiliates manage assets in excess
of $88 billion worldwide. The principal place of business of Citibank is located
at 399 Park Avenue, New York, New York 10043.
John S. Reed is the Chairman of the Board and a Director of Citibank.
The following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins and William R. Rhodes. Other Directors of Citibank are D. Wayne
Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.; John M.
Deutch, Institute Professor, Massachusetts Institute of Technology; Reuben Mark,
Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard D.
Parsons, President, Time Warner, Inc.; Rozanne L. Ridgway, Former Assistant
Secretary of State for Europe and Canada; Robert B. Shapiro, Chairman, President
and Chief Executive Officer, Monsanto Company; Frank A. Shrontz, Chairman
Emeritus, The Boeing Company; and Franklin A. Thomas, former President, The Ford
Foundation.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Retired Chairman and Chief Executive
Officer and Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical
Technologies, Inc.
Director, Cummins Engine Company, Inc.
Director, Schlumberger, Ltd.
Reuben Mark Director, Chairman and Chief Executive
Officer Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage
Association
Director, Philip Morris Companies
Incorporated
Member, Board of Representatives,
Time Warner
Entertainment Company, L.P.
Director and President, Time Warner,
Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
Stockholder, Tampa Tank & Welding,
Inc.
William R. Rhodes Director, Private Export Funding
Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
Robert B. Shapiro Director, Chairman and Chief Executive
Officer, Monsanto Company
Director, Silicon Graphics
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director and Chairman Emeritus, Boeing
Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, PepsiCo, Inc.
Item 29. Principal Underwriters.
(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFundsSM International Growth & Income Portfolio, Landmark International
Equity Fund, Landmark Emerging Asian Markets Equity Fund, CitiFundsSM U.S.
Treasury Reserves, CitiFundsSM Cash Reserves, CitiFundsSM Premium U.S. Treasury
Reserves, CitiFundsSM Premium Liquid Reserves, CitiFundsSM Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid Reserves, CitiFundsSM
Institutional Cash Reserves, CitiFundsSM Tax Free Reserves, CitiFundsSM
Institutional Tax Free Reserves, CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves, CitiFundsSM New York Tax Free
Reserves, Landmark National Tax Free Income Fund, Landmark New York Tax Free
Income Fund, Landmark Intermediate Income Fund, Landmark U.S. Government Income
Fund, CitiFundsSM Small Cap Value Portfolio, CitiFundsSM Growth & Income
Portfolio, Landmark Equity Fund, Landmark Small Cap Equity Fund, CitiSelect(R)
VIP Folio 200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400,
CitiSelect(R) VIP Folio 500, Landmark Small Cap Equity VIP Fund, CitiSelect(R)
Folio 200, CitiSelect(R) Folio 300, CitiSelect(R) Folio 400, and CitiSelect(R)
Folio 500. CFBDS is also the placement agent for Large Cap Value Portfolio,
Small Cap Value Portfolio, International Portfolio, Foreign Bond Portfolio,
Intermediate Income Portfolio, Short-Term Portfolio, Growth & Income Portfolio,
Large Cap Growth Portfolio, Small Cap Growth Portfolio, International Equity
Portfolio, Balanced Portfolio, Government Income Portfolio, Emerging Asian
Markets Equity Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio
and U.S. Treasury Reserves Portfolio
(b) The information required by this Item 29 with respect to each
director and officer of CFBDS is incorporated by reference to Schedule A of Form
BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in part,
at the office of the Registrant and the following locations:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
CFBDS, Inc. 6 St. James Avenue
(administrator and distributor) Boston, MA 02116
State Street Bank and Trust Company 1776 Heritage Drive
(transfer agent and custodian) North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
SHAREHOLDER SERVICING AGENTS
Citibank, N.A. 450 West 33rd Street
New York, NY 10001
Citibank, N.A. -- Citigold Citicorp Mortgage Inc. - Citigold
15851 Clayton Road
Ballwin, MO 63011
Citibank, N.A. -- The Citibank 153 East 53rd Street
Private Bank New York, NY 10043
Citibank, N.A. -- Citibank Global 153 East 53rd Street
Asset Management New York, NY 10043
Citibank, N.A. -- North American 111 Wall Street
Investor Services New York, NY 10094
Citicorp Investment Services One Court Square
Long Island City, NY 11120
</TABLE>
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus of the Landmark Balanced Fund is delivered with a copy of its latest
Annual Report to Shareholders, upon request without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
requirements for effectiveness of this Post-Effective Amendment to this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 23rd day of February, 1998.
LANDMARK FUNDS I
By Philip W. Coolidge
-----------------------
Philip W. Coolidge
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below by
the following persons in the capacities indicated below on February 23, 1998.
Signature Title
---------- -----
Philip W. Coolidge President, Principal Executive Officer and Trustee
---------------------
Philip W. Coolidge
John R. Elder Principal Financial Officer and Principal
--------------------- Accounting Officer
John R. Elder
Riley C. Gilley* Trustee
---------------------
Riley C. Gilley
Diana R. Harrington* Trustee
---------------------
Diana R. Harrington
Susan B. Kerley* Trustee
---------------------
Susan B. Kerley
C. Oscar Morong, Jr.* Trustee
---------------------
C. Oscar Morong, Jr.
E. Kirby Warren* Trustee
---------------------
E. Kirby Warren
William S. Woods, Jr.* Trustee
---------------------
William S. Woods, Jr.
*By: Philip W. Coolidge
------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on behalf of those indicated pursuant to
Powers of Attorney.
<PAGE>
SIGNATURES
The Premium Portfolios, on behalf of Balanced Portfolio, has duly
caused this Post-Effective Amendment to the Registration Statement on Form N-1A
of Landmark Funds I to be signed on its behalf by the undersigned, thereunto
duly authorized, in Southampton, Bermuda, on the 20th day of February, 1998.
THE PREMIUM PORTFOLIOS
on behalf of Balanced Portfolio
By: Philip W. Coolidge
--------------------------------
Philip W. Coolidge
President of
The Premium Portfolios
This Post-Effective Amendment to the Registration Statement on Form
N-1A of Landmark Funds I has been signed by the following persons in the
capacities indicated on February 20, 1998.
Signature Title
--------- -----
Philip W. Coolidge President, Principal Executive Officer and Trustee
---------------------
Philip W. Coolidge
John R. Elder* Principal Financial Officer and Principal
--------------------- Accounting Officer
John R. Elder
Elliott J. Berv* Trustee
---------------------
Elliott J. Berv
Mark T. Finn* Trustee
---------------------
Mark T. Finn
C. Oscar Morong, Jr.* Trustee
---------------------------
C. Oscar Morong, Jr.
Walter E. Robb, III* Trustee
---------------------
Walter E. Robb, III
*By: Philip W. Coolidge
---------------------
Philip W. Coolidge
Executed by Philip W. Coolidge on behalf of those indicated as attorney
in fact.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No.: Description:
<S> <C>
1(c) Forms of Amendments to the Amended and Restated Declaration of Trust
of the Registrant
6 Amended and Restated Distribution Agreement between the Registrant
and CFBDS, Inc. (formerly known as The Landmark Funds Broker-Dealer
Services, Inc.) ("CFBDS"), as distributor
9(a) Amended and Restated Administrative Services Plan of the Registrant
9(b) Administrative Services Agreement between the Registrant and CFBDS,
as administrator
9(c) Sub-Administrative Services Agreement between Citibank, N.A. and CFBDS
9(d)(i) Form of Shareholder Servicing Agreement between the Registrant and
Citibank, N.A., as shareholder servicing agent
9(d)(ii) Form of Shareholder Servicing Agreement between the Registrant and a
federal savings bank, as shareholder servicing agent
9(d)(iii) Form of Shareholder Servicing Agreement between the Registrant and
CFBDS, as shareholder servicing agent
10 Opinion of Counsel
11(a) Consent of Price Waterhouse LLP, independent auditors of the
Registrant
11(b) Consent of Price Waterhouse, independent auditors of Balanced
Portfolio
15 Amended and Restated Distribution Plan of the Registrant
25(a) Powers of Attorney for the Registrant
25(b) Powers of Attorney for The Premium Portfolios
27 Financial Data Schedule
</TABLE>
<PAGE>
Exhibit 1(c)
LANDMARK FUNDS I
FORM OF AMENDMENT TO
DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark
Funds I (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts, pursuant to a Declaration of Trust dated April
13, 1984, as amended and restated (the "Declaration"), do hereby amend Section
1.1 of the Declaration by deleting Section 1.1 in its entirety and replacing it
with the following, effective on such date as any officer of the Trust may
select by written notice to the Trust:
Section 1.1. Name. The name of the trust created hereby is "CitiFunds
Trust I."
IN WITNESS WHEREOF, the undersigned have executed this Amendment this
14th day of November, 1997.
- ------------------------------- -------------------------------
PHILIP W. COOLIDGE RILEY C. GILLEY
As trustee and not individually As trustee and not individually
- ------------------------------- -------------------------------
DIANA R. HARRINGTON SUSAN B. KERLEY
As trustee and not individually As trustee and not individually
- ------------------------------- -------------------------------
C. OSCAR MORONG, JR. E. KIRBY WARREN
As trustee and not individually As trustee and not individually
- -------------------------------
WILLIAM S. WOODS, JR.
As trustee and not individually
<PAGE>
CITIFUNDS TRUST I
FORM OF AMENDED AND RESTATED
ESTABLISHMENT AND DESIGNATION OF SERIES OF
SHARES OF BENEFICIAL INTEREST (WITHOUT PAR VALUE)
Pursuant to Section 6.9 of the Declaration of Trust, dated April 13,
1984, as amended and restated (the "Declaration of Trust"), of CitiFunds Trust I
(formerly, Landmark Funds I) (the "Trust"), the undersigned, being a majority of
the Trustees of the Trust, do hereby amend and restate the Trust's existing
Establishment and Designation of Series of Shares of Beneficial Interest
(without par value) in order to change the name of one series of Shares (as
defined in the Declaration of Trust) which was previously established and
designated. No other changes to the special and relative rights of the existing
series are intended by this amendment and restatement. This amendment and
restatement shall become effective on such date as any officer of the Trust may
select by written notice to the Trust.
1. The series shall be as follows:
The series previously designated as Landmark Balanced Fund shall
be redesignated as "CitiFunds Balanced Portfolio."
The remaining series are as follows:
CitiSelect(R) Folio 100;
CitiSelect(R) Folio 200;
CitiSelect(R) Folio 300;
CitiSelect(R) Folio 400; and
CitiSelect(R) Folio 500.
2. Each series shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in the Trust's
then currently effective registration statement under the Securities Act of 1933
to the extent pertaining to the offering of Shares of each series. Each Share of
each series shall be redeemable, shall be entitled to one vote or fraction
thereof in respect of a fractional share on matters on which shares of that
series shall be entitled to vote, shall represent a pro rata beneficial interest
in the assets allocated or belonging to such series, and shall be entitled to
receive its pro rata share of the net assets of such series upon liquidation of
the series, all as provided in Section 6.9 of the Declaration of Trust.
3. Shareholders of each series shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to each series as provided in, Rule 18f-2,
as from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and by the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated to each
series as set forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and expenses or
to change the designation of any series now or hereafter created or otherwise to
change the special and relative rights of any such series.
IN WITNESS WHEREOF, the undersigned have executed this Establishment
and Designation of Series on separate counterparts this 14th day of November,
1997.
- ------------------------------- --------------------------------
PHILIP W. COOLIDGE RILEY C. GILLEY
As Trustee and Not Individually As Trustee and Not Individually
- ------------------------------- --------------------------------
DIANA R. HARRINGTON SUSAN B. KERLEY
As Trustee and Not Individually As Trustee and Not Individually
- ------------------------------- --------------------------------
C. OSCAR MORONG, JR. E. KIRBY WARREN
As Trustee and Not Individually As Trustee and Not Individually
- -------------------------------
WILLIAM S. WOODS, JR.
As Trustee and Not Individually
<PAGE>
Exhibit 6
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of August 21, 1986 and amended and restated
as of August 19, 1994 by and between LANDMARK FUNDS I, a Massachusetts business
trust (the "Trust"), and THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a
Massachusetts corporation ("LFBDS" or the "Distributor") with respect to Shares
of Beneficial Interest to be designated "Class A".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into one
or more separate series (together with any series which may in the future be
established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted an Amended and
Restated Distribution Plan, dated as of August 19, 1994 (the "Distribution
Plan"), which is incorporated herein by reference and pursuant to which the
Trust desires to enter into this Distribution Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain services with
respect to the distribution of shares designated Class A Shares (the "Shares")
of each Fund, and LFBDS is willing to provide such services to the Trust on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the Trust,
to sell Shares of each Fund upon the terms hereinbelow set forth during the
term of this Agreement. While this Agreement is in force, the Distributor
agrees to use its best efforts to find purchasers for Shares of each Fund.
The Distributor shall have the right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed
(except for clerical errors and errors of transmission), to fill
unconditional orders for Shares of each Fund placed with the Distributor by
any dealer, all such orders to be made in the manner set forth in the
Trust's then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional
Information") relating to such Shares. The price which shall be paid to the
Trust for the Shares of each Fund so purchased shall be the net asset value
per Share as determined in accordance with the provisions of the Trust's
Declaration of Trust and By-Laws, as each may from time to time be amended
(collectively, the "Governing Instruments") plus the amount of the
applicable sales charge, as provided in the Trust's currently effective
prospectus relating to the Trust or such Fund. The Distributor shall notify
the Custodian of the Trust, at the end of each business day, or as soon
thereafter as the orders placed with the Distributor have been compiled, of
the number of Shares of each Fund and the prices thereof which have been
ordered through the Distributor since the end of the previous business day.
The right granted to the Distributor to place orders for Shares with the
Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged with and into or consolidated with the Trust or any Fund or in the
event that the Trust or any Fund acquires, by purchase or otherwise, all (or
substantially all) the assets or the outstanding shares of any such company;
nor shall it apply to Shares issued by the Trust as a dividend or stock
split. The exclusive right to place orders for Shares granted to the
Distributor may be waived by the Distributor by notice to the Trust in
writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust
hereby acknowledges that the Distributor may render distribution and other
services to other parties, including other investment companies. In
connection with its duties hereunder, the Distributor shall also arrange for
computation of performance statistics with respect to each Fund and arrange
for publication of current price information in newspapers and other
publications.
2. The Shares may be sold by the Distributor on behalf of the Trust to
or through any dealer having a sales agreement with the Distributor upon the
following terms and conditions:
The public offering price of the Shares, including the Shares of each
Fund, i.e., the price per Share at which the Distributor or dealer
purchasing Shares through the Distributor may sell shares to the public,
shall be the net asset value of such Shares plus the amount of the
applicable sales charge, as provided in the Trust's currently effective
Prospectus relating to the Trust or such Fund. The difference between the
public offering price and net asset value (which amount shall not be in
excess of that set forth in the Prospectus) may be retained by the
Distributor or all or any part thereof may be paid by the Distributor to a
broker-dealer registered as such under the Securities Exchange Act of 1934
in accordance with the Prospectus and the Distribution Plan.
The net asset value of Shares of each Fund shall be determined by the
Trust, or by an agent of the Trust, as of the close of trading on the New
York Stock Exchange on each day on which the New York Stock Exchange is open
for trading (and on such other days as the Trustees deem necessary in order
to comply with Rule 22c-1 under the 1940 Act), in accordance with the method
established pursuant to the Governing Instruments. The Trust shall have the
right to suspend the sale of Shares of any Fund if, because of some
extraordinary condition, the New York Stock Exchange shall be closed, or if
conditions existing during the hours when the Exchange is open render such
action advisable or for any other reason deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval, if any, of its shareholders, take all necessary action
to register such number of Shares of each Fund under the Securities Act of
1933, as amended (the "1933 Act"), as the Distributor may reasonably be
expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its Directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees, officers
and shareholders of the Trust are or may become interested in the
Distributor, as Directors, officers, employees, or otherwise and that
Directors, officers and employees of the Distributor are or may become
similarly interested in the Trust and that the Distributor may be or become
interested in the Trust as a shareholder or otherwise. The Distributor is
responsible for its own conduct and the employment, control and conduct (but
only with respect to the duties and obligations of the Distributor
hereunder) of its agents and employees and for any injury to any of such
agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it will
use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. relating to the sale of Shares, and
will indemnify and hold harmless the Trust and each of its Trustees and
officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act (the "Indemnified Parties") against all
losses, liabilities, damages or expenses (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith)
arising from any claim, demand, action or suit (collectively, "Claims"),
arising by reason of any person's acquiring any of the Shares through the
Distributor, which may be based upon the 1933 Act or any other statute or
common law, on account of any wrongful act of the Distributor or any of its
employees (including any failure to conform with any requirement of any
state or federal law or the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. relating to the sale of Shares) or
on the ground that the registration statement under the 1933 Act, including
all amendments thereto (the "Registration Statement"), or Prospectus or
previous prospectus or Statement of Additional Information or previous
statement of additional information, with respect to such Shares, includes
or included an untrue statement of a material fact or omits or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, if and only if any such act,
statement or omission was made in reliance upon information furnished by the
Distributor to the Trust; provided, however, that in no case (i) is the
indemnity of the Distributor in favor of any Indemnified Party to be deemed
to protect any such Indemnified Party against liability to which such
Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its or his
duties or by reason of its or his reckless disregard of its or his
obligations and duties under this Agreement, or (ii) is the Distributor to
be liable under its indemnity agreement contained in this Section 4 with
respect to any Claim made against any Indemnified Party unless such
Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the Claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Distributor of any such Claim shall not relieve it from any liability which
it may have to any Indemnified Party otherwise than on account of its
indemnity agreement contained in this Section 4. The Distributor shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any such
Claim, and, if the Distributor elects to assume the defense, such defense
shall be conducted by counsel chosen by it and satisfactory to each
Indemnified Party. In the event that the Distributor elects to assume the
defense of any such suit and retain such counsel, each Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it
but, in case the Distributor does not elect to assume the defense of any
such suit, it shall reimburse the Indemnified Parties for the reasonable
fees and expenses of any counsel retained by them. Except with the prior
written consent of the Distributor, no Indemnified Party shall confess any
Claim or make any compromise in any case in which the Distributor will be
asked to indemnify such Indemnified Party. The Distributor agrees promptly
to notify the Trust of the commencement of any litigation or proceeding
against it in connection with the issuance and sale of any of the Shares.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf
of the Trust in connection with the sale of Shares of any Fund, other than
those contained in the Registration Statement or Prospectus or Statement of
Additional Information relating to such Fund.
5. The Trust will pay, or cause to be paid--
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and
filing of the Registration Statement, Prospectus and Statement of
Additional Information with respect to Shares of each Fund, and
preparing and mailing to shareholders Prospectuses, Statements of
Additional Information, statements and confirmations and periodic
reports (including the expense of setting in type the Registration
Statement, Prospectus and Statement of Additional Information or any
periodic report with respect to Shares of each Fund);
(ii) the cost of preparing temporary or permanent certificates for
Shares;
(iii) the cost and expenses of delivering to the Distributor at its
office in Boston, Massachusetts all Shares purchased through it as agent
hereunder;
(iv) a distribution fee periodically at an annual rate not to exceed
0.15% of the portion of the average daily net assets of such Fund that
is represented by Shares for its then-current fiscal year, subject to
the Distribution Plan, and, under certain circumstances, the Distributor
may impose certain deferred sales charges in connection with the
repurchase of Shares of each Fund and the Distributor may retain (or
receive from each Fund, as the case may be) all such deferred sales
charges;
(v) all fees and disbursements of the Transfer Agent and Custodian
with respect to each Fund, subject to the Trust's Administrative
Services Plan;
(vi) a fee to each Shareholder Servicing Agent (pursuant to a
shareholder servicing agreement with each such Agent), subject to the
Trust's Administrative Services Plan;
(vii) a fee to the Administrator of the Trust (pursuant to the
Administrative Services Agreement), subject to the Trust's
Administrative Services Plan; and
(viii) a fee to the investment adviser of each Fund, if any,
(pursuant to the Investment Advisory Agreement with any such Adviser).
The Distributor agrees that, with respect to the sale of Shares of each
Fund, after the Prospectus and Statement of Additional Information and
periodic reports with respect to such Fund have been set in type, it will
bear the expense (other than the cost of mailing to shareholders of the
Trust) of printing and distributing any copies thereof which are to be used
in connection with the offering or sale of Shares of such Fund to any dealer
or prospective investor. The Distributor further agrees that it will bear
the expenses of preparing, printing and distributing any other literature
used by the Distributor or furnished by it for use by any dealer in
connection with the offering of the Shares of such Fund for sale to the
public and any expense of sending confirmations and statements to any dealer
having a sales agreement with the Distributor. The Distributor will also
bear the cost of any compensation paid to dealers in connection with the
sale of Shares of such Fund. The Distributor also agrees to bear the
expenses of qualification of Shares of such Fund for sale in the various
states and, if necessary or advisable in connection therewith, of qualifying
the Trust as a broker or dealer in any such state.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any
recommendation or requirement of the Securities and Exchange Commission or
other governmental authority or to obtain any advantage under Massachusetts
or federal tax laws, it shall notify the Distributor of the form of
amendment which it deems necessary or advisable and the reasons therefor. If
the Distributor declines to assent to such amendment (after a reasonable
time), the Trust may terminate this Agreement forthwith by written notice to
the Distributor without payment of any penalty. If, at any time during the
term of this Agreement, the Distributor requests the Trust to make any
change in its Governing Instruments or in its methods of doing business
which are necessary in order to comply with any requirement of federal law
or regulations of the Securities and Exchange Commission or of a national
securities association of which the Distributor is or may become a member,
relating to the sale of Shares, and the Trust fails (after a reasonable
time) to make any such change as requested, the Distributor may terminate
this Agreement forthwith by written notice to the Trust without payment of
any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of any Fund and that, so far as it can control the
situation, it will prevent any of its Directors or officers from taking any
long or short position in the Shares of such Fund, except as permitted by
the Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force indefinitely unless its continuance thereafter is
specifically approved at least annually (i) by the vote of a majority of the
Trustees of the Trust who are not "interested persons" of the Trust or of
the Distributor at a meeting specifically called for the purpose of voting
on such approval, and (ii) by the Board of Trustees of the Trust, or by the
"vote of a majority of the outstanding voting securities" of the Shares of
each Fund as to which this Agreement is to continue. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act.
This Agreement may be terminated as to any Fund at any time by either
party without payment of any penalty on not more than 60 days' nor less than
30 days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
9. LFBDS may subcontract for the performance of LFBDS' obligations
hereunder with any one or more persons; provided, however, that LFBDS shall
not enter into any such subcontract unless the Trustees of the Trust shall
have found the subcontracting party to be qualified to perform the
obligations sought to be subcontracted; and provided, further, that, unless
the Trust otherwise expressly agrees in writing, LFBDS shall be as fully
responsible to the Trust for the acts and omissions of any subcontractor as
it would be for its own acts or omissions.
10. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least
annually" shall have the respective meanings specified in, and shall be
construed in a manner consistent with, the 1940 Act, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
thereunder, and provided, however, that the term "assignment" shall include
(without limitation) any sale, transfer or conversion of a controlling
interest of any class of voting stock of LFBDS or of any entity which holds
a controlling interest of any class of voting stock of LFBDS or another such
entity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the Trust's
Declaration of Trust, dated April 13, 1984, and the obligations of this
Agreement are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the Trust estate.
LANDMARK FUNDS I THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: /s/Philip Coolidge By: /s/Philip Coolidge
---------------------------- ----------------------------
Title: President Title: Chief Executive Officer
DA/Series Trust/Class A
<PAGE>
Exhibit 9(a)
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES PLAN
AMENDED AND RESTATED ADMINISTRATIVE SERVICES PLAN, dated as of August
21, 1986 and amended and restated as of February 9, 1996, of Landmark Funds I, a
Massachusetts business trust (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest (without par value) of the
Trust (the "Shares") are divided into one or more separate series (together with
any series which may in the future be established, the "Funds"); and
WHEREAS, the Trust desires to adopt this Amended and Restated
Administrative Services Plan (the "Plan") in order to provide for certain
administrative services to the Trust and holders of Shares of each Fund; and
WHEREAS, the Trust desires to enter into a transfer agency agreement
(in such form as may from time to time be approved by the Board of Trustees of
the Trust) with a financial institution, as transfer agent for the Trust (the
"Transfer Agent"), whereby the Transfer Agent will provide transfer agency
services to the Trust (the "Transfer Agency Agreement"); and
WHEREAS, the Trust desires to enter into a custodian agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust)
with a financial institution, as custodian for the Trust (the "Custodian"),
whereby the Custodian will provide custodial services to the Trust with respect
to each Fund (the "Custodian Agreement"); and
WHEREAS, the Trust desires to enter into an administrative services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with The Landmark Funds Broker-Dealer Services, Inc., a
Massachusetts corporation, as administrator of the Trust (the "Administrator"),
whereby the Administrator will provide certain administrative and management
services to the Trust (the "Administrative Services Agreement"); and
WHEREAS, the Trust also desires to enter into shareholder servicing
agreements (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with certain financial institutions, as shareholder
servicing agents ("Shareholder Servicing Agents"), whereby each Shareholder
Servicing Agent will perform certain administrative and service functions (the
"Shareholder Servicing Agreements"); and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders.
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, the Transfer Agent shall
act as dividend disbursing agent for the Trust and perform transfer agency
functions for each Fund. The Trust shall pay to the Transfer Agent such
compensation from the assets of each Fund as may from time to time be agreed to
by the Trust and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall safeguard
and control the cash and securities of each Fund, handle receipt and delivery of
securities for each Fund, determine income and collect interest on the
investments of each Fund, maintain books of original entry for Fund and Trust
accounting and other required books and accounts, calculate the daily net asset
value of Shares of each Fund and, in general, act as the custodian of the assets
of the Trust pertaining to each Fund, but the Custodian shall have no power to
determine the investment policies of the Trust or to determine which securities
the Trust will buy or sell on behalf of any Fund. The Trust shall pay to the
Custodian such compensation as may from time to time be agreed to by the Trust
and the Custodian.
3. As specified in the Administrative Services Agreement, the Administrator
shall perform certain administrative and management services on behalf of the
Trust, including: providing office space, equipment and clerical personnel
necessary for maintaining the organization of the Trust and for providing the
administrative and management services to be performed by the Administrator;
arranging, if desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law; supervising the overall administration of
the Trust, including negotiation of contracts and fees with and the monitoring
of performance and billings of the Trust's Transfer Agent, Shareholder Servicing
Agents, Custodian and other independent contractors or agents; preparing and, if
applicable, filing all documents required for compliance by the Trust with
applicable laws and regulations, including registration statements,
prospectuses, statements of additional information, semi-annual and annual
reports to shareholders, proxy statements and tax returns; preparation of
agendas and supporting documents for and minutes of meetings of Trustees,
committees of Trustees and shareholders; arranging for computation of
performance statistics with respect to each Fund and arranging for publication
of current price information in newspapers and other publications; and arranging
for maintenance of books and records of the Trust and each Fund. As
consideration for services performed under the Administrative Services
Agreement, the Trust shall, subject to paragraph 5 hereof, periodically pay to
the Administrator such fee from the assets of each Fund as may from time to time
be agreed to by the Trust and the Administrator.
4. As specified in each Shareholder Servicing Agreement, each Shareholder
Servicing Agent shall, with respect to one or more Funds, perform certain
administrative and service functions, which may include, among others: answering
customer inquiries or inquiries of broker/dealers which have entered into sales
agreements with the Fund's Distributor or of banks or other financial
institutions which have entered into agency agreements with a Fund's Distributor
(such entities collectively referred to herein as "Third Party Firms") regarding
the manner in which purchases and redemptions of Shares may be effected, and
with regard to certain other matters pertaining to the Trust or such Fund;
assisting customers or Third Party Firms in designating and changing dividend
options, account designations and addresses; providing necessary personnel and
facilities to maintain certain shareholder accounts and records, as specified
from time to time by the Trust; assisting in processing purchase and redemption
transactions; assisting in or arranging for the wiring of funds; transmitting
and receiving funds or assisting in connection with customer orders to purchase
and redeem Shares; verifying and guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnishing periodic statements showing customer
account balances, and to the extent practicable, integrating such information
with other client transactions effected with or through the Shareholder
Servicing Agent; furnishing monthly and annual statements and confirmations of
purchases and redemptions of Shares in a customer's account; transmitting or
assisting in the transmission of proxy statements, annual reports, updating
prospectuses, statements of additional information and other communications from
the Trust to shareholders of such Fund; and providing such other related
services as the Trust, a Third Party Firm or a shareholder may request. Each
Shareholder Servicing Agreement shall provide that the Shareholder Servicing
Agent shall provide all personnel and facilities necessary in order for it to
perform the functions described in the applicable Shareholder Servicing
Agreement with respect to its customers who purchase Shares or the services it
has agreed to provide to Third Party Firms, as applicable. As consideration for
services performed under the Shareholder Servicing Agreements, the Trust shall,
subject to paragraph 5 hereof, periodically pay to each Shareholder Servicing
Agent such fee from the assets of each such Fund as may from time to time be
agreed to by the Trust and such Shareholder Servicing Agent. Each Shareholder
Servicing Agent will be permitted to charge its customers direct fees for the
same or similar services as provided pursuant to a Shareholder Servicing
Agreement.
5. Notwithstanding paragraphs 3 and 4 hereof, the aggregate of the fee
payable from a Fund to the Administrator pursuant to the Administrative Services
Agreement, the fees payable from such Fund to the Shareholder Servicing Agents
pursuant to the Shareholder Servicing Agreements and the Basic Distribution Fees
(as defined in the Trust's Distribution Plan) payable from such Fund to the
Distributor pursuant to the Trust's Distribution Plan may not exceed an amount
equal to .65% of such Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year.
6. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of the
responsibility for and control of the conduct of the affairs of the Trust.
7. This Plan shall become effective upon (a) approval by a vote of at least
a "majority of the outstanding voting securities" of each Fund, and (b) approval
by a vote of the Board of Trustees of the Trust and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely, provided that such
continuance is subject to annual approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
date which is 15 months after the date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the amount to be
expended from the assets of any Fund for the services described herein shall be
effective only upon approval by a vote of a "majority of the outstanding voting
securities" of such Fund, and (b) any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of the Trust and
a majority of the Qualified Trustees, such votes to be cast in person at a
meeting called for the purpose of voting on such amendment. This Plan may be
terminated at any time with respect to any Fund by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of such Fund.
10. The Treasurer of the Trust shall provide the Board of Trustees of the
Trust, and the Board of Trustees of the Trust shall review, at least quarterly,
a written report of the amounts expended under the Plan and the purposes for
which such expenditures were made.
11. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are not
"interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the 1940
Act. In addition, for purposes of determining the fees payable to the
Administrator and each Shareholder Servicing Agent, the value of a Fund's net
assets shall be computed in the manner specified in the Trust's then-current
prospectus and statement of additional information applicable to that Fund for
the computation of the net asset value of Shares of that Fund.
13. The Fund shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 10 hereof (collectively the
"Records"), for a period of six years from the end of the fiscal year in which
such Record was made and each such Record shall be kept in an easily accessible
place for the first two years of said record-keeping.
14. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
15. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
Exhibit 9(b)
ADMINISTRATIVE SERVICES
AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of April 15, 1993, by and
between Landmark Funds I, a Massachusetts business trust (the "Trust"), and THE
LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a Massachusetts corporation
("LFBDS" or the "Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the shares of Beneficial Interest of the Trust (the "Shares") are
divided into one or more separate series (together with any series which may in
the future be established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted an Administrative
Services Plan, dated as of August 21, 1986 (as amended and in effect from time
to time, the "Plan"), which is incorporated herein by reference and pursuant to
which the Trust desires to enter into this Administrative Services Agreement;
and
WHEREAS, the Trust wishes to engage LFBDS to provide certain administrative
and management services, and LFBDS is willing to provide such administrative and
management services to the Trust, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Administrator. Subject to the direction and control of
the Board of Trustees of the Trust, the Administrator shall perform such
administrative and management services as may from time to time be
reasonably requested by the Trust, which shall include without limitation:
(a) providing office space, equipment and clerical personnel necessary for
maintaining the organization of the Trust and for performing the
administrative and management functions herein set forth; (b) arranging, if
desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual
consent and to any limitations imposed by law; (c) supervising the overall
administration of the Trust, including negotiation of contracts and fees
with and the monitoring of performance and billings of the Trust's transfer
agent, shareholder servicing agents, custodian and other independent
contractors or agents; (d) preparing and, if applicable, filing all
documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements
of additional information, semi-annual and annual reports to shareholders,
proxy statements and tax returns; (e) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees
and shareholders; and (f) arranging for maintenance of books and records of
the Trust. Notwithstanding the foregoing, the Administrator shall not be
deemed to have assumed any duties with respect to, and shall not be
responsible for, the management of the Trust's assets or the rendering of
investment advice and supervision with respect thereto or the distribution
of Shares of any Fund, nor shall the Administrator be deemed to have assumed
or have any responsibility with respect to functions specifically assumed by
any transfer agent, custodian or shareholder servicing agent of the Trust.
2. Allocation of Charges and Expenses. LFBDS shall pay the entire
salaries and wages of all of the Trust's Trustees, officers and agents who
devote part or all of their time to the affairs of LFBDS or its affiliates,
and the wages and salaries of such persons shall not be deemed to be
expenses incurred by the Trust for purposes of this Section 2. Except as
provided in the foregoing sentence, the Trust will pay all of its own
expenses including, without limitation, compensation of Trustees not
affiliated with the Administrator; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Trust; fees and expenses of each Fund's investment adviser or advisers; fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of distributing and redeeming Shares
and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses and statements of additional information, reports,
notices, proxy statements and reports to shareholders and governmental
officers and commissions; expenses connected with the execution, recording
and settlement of portfolio security transactions; insurance premiums; fees
and expenses of the Trust's custodian for all services to the Trust,
including safekeeping of funds and securities and maintaining required books
and accounts; expenses of calculating the net asset value of shares of each
Fund; expenses of shareholder meetings; and expenses relating to the
issuance, registration and qualification of shares of each Fund.
3. Compensation of Administrator. Subject to paragraph 5 of the Plan,
for the services to be rendered and the facilities to be provided by the
Administrator hereunder, the Trust shall pay to the Administrator an
administrative fee from the assets of each Fund as may be agreed to from
time to time by the Trust and the Administrator. If LFBDS serves as
Administrator for less than the whole of any period specified in this
Section 3, the compensation to LFBDS, as Administrator, shall be prorated.
For purposes of computing the fees payable to the Administrator hereunder,
the value of the net assets of any Fund shall be computed in the manner
specified in the Trust's then-current prospectus and statement of additional
information.
4. "Landmark Funds" Name. The Trust hereby acknowledges that any and all
rights in or to the names "Landmark" and "Landmark Funds" which exist on the
date of this Agreement or which may arise hereafter are, and under any and
all circumstances shall continue to be, the sole property of LFBDS; that
LFBDS may assign any or all of such rights to another party or parties
without the consent of the Trust; and that LFBDS may permit other parties,
including other investment companies, to use the word "Landmark" or the
words "Landmark Funds" in their names. If LFBDS, or its assignee as the case
may be, ceases to serve as the Administrator of the Trust, the Trust hereby
agrees to take promptly any and all actions which are necessary or desirable
to change its name and the name of each Fund so as to delete the word
"Landmark" or the words "Landmark Funds".
5. Limitation of Liability of the Administrator. The Administrator shall
not be liable for any error of judgment or mistake of law or for any act or
omission in the administration or management of the Trust or the performance
of its duties hereunder, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of the reckless
disregard of its obligations and duties hereunder. As used in this Section
5, the term "Administrator" shall include LFBDS and/or any of its affiliates
and the Directors, officers and employees of LFBDS and/or any of its
affiliates.
6. Activities of the Administrator. The services of the Administrator to
the Trust are not to be deemed to be exclusive, LFBDS being free to render
administrative and/or other services to other parties. It is understood that
Trustees, officers, and shareholders of the Trust are or may become
interested in the Administrator and/or any of its affiliates, as Directors,
officers, employees, or otherwise, and that Directors, officers and
employees of the Administrator and/or any of its affiliates are or may
become similarly interested in the Trust and that the Administrator and/or
any of its affiliates may be or become interested in the Trust as a
shareholder or otherwise.
7. Subcontracting by LFBDS. LFBDS may subcontract for the performance of
LFBDS' obligations hereunder with any one or more persons; provided,
however, that LFBDS shall not enter into any such subcontract unless the
Trustees of the Trust shall have found the subcontracting party to be
qualified to perform the obligations sought to be subcontracted; and
provided, further, that, unless the Trust otherwise expressly agrees in
writing, LFBDS shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it would be for its own acts or omissions.
8. Duration and Termination of this Agreement. This Agreement shall
become effective as of the day and year first above written and shall govern
the relations between the parties hereto thereafter, and shall remain in
force indefinitely, provided that its continuance is "specifically approved
at least annually" (a) by the vote of a majority of the Board of Trustees of
the Trust who are not "interested persons" of the Trust or of the
Administrator at a meeting specifically called for the purpose of voting on
such approval, and (b) by the Board of Trustees of the Trust or by the "vote
of a majority of the outstanding voting securities" of each Fund as to which
this Agreement is to continue, and provided, however, that the term
"assignment" shall include (without limitation) any sale, transfer or
conversion of a controlling interest of any class of voting stock of LFBDS
or of any entity which holds a controlling interest of any class of voting
stock of LFBDS or another such entity.
This Agreement may be terminated as to any Fund at any time, without the
payment of any penalty, by the Board of Trustees of the Trust or by the "vote of
a majority of the outstanding voting securities" of such Fund, or by the
Administrator, in each case on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its "assignment".
The terms "specifically approved at least annually", "vote of a majority of
the outstanding voting securities", "assignment", and "interested persons", when
used in this Agreement, shall have the respective meanings specified in, and
shall be construed in a manner consistent with, the 1940 Act, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned Trustee or officer of the Trust has executed this Agreement not
individually, but as Trustee or officer under the Trust's Declaration of Trust,
dated April 13,1984, as amended, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Trust
individually, but bind only the Trust estate.
LANDMARK FUNDS I THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: /s/ Philip Coolidge By: /s/ Philip Coolidge
--------------------------- -----------------------------
Title: President Title: Chief Executive Officer
--------------------------- -----------------------------
<PAGE>
Exhibit 9(c)
SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT, dated as of July 1,1989 and amended
and restated as of May 24,1990 by and between THE LANDMARK FUNDS BROKER-DEALER
SERVICES, INC., a Massachusetts corporation ("LFBDS" or the "Administrator"),
and CITIBANK, N.A., a national banking association ("Citibank" or the
"Sub-Administrator").
WITNESSETH:
WHEREAS, LFBDS has entered into an Administrative Services Agreement as
amended (the "Administrative Agreement") with Landmark Funds I (the "Trust") and
WHEREAS, as permitted by Section 7 of the Administrative Agreement, as
amended, Citibank desires to subcontract some or all of the performance of the
Administrator's obligations thereunder to Citibank, and Citibank desires to
accept such obligations; and
WHEREAS, LFBDS wishes to engage Citibank to provide certain administrative
services on the terms and conditions hereinafter set forth, so long as the
Trustees of the Trust shall have found Citibank to be qualified to perform the
obligations sought to be subcontracted.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Sub-Administrator. The Sub-Administrator shall perform
such administrative and management services as may from time to time
be agreed to between the Administrator and the Sub-Administrator so
long as the Trustees of the Trust shall have found the
Sub-Administrator to be Qualified to perform the obligations sought to
be subcontracted, which may include (a) providing office space,
equipment and clerical personnel necessary for maintaining the
organization of the Trust and for performing the administrative
functions herein set forth; (b) participation in the preparation of
documents required for compliance by the Trust with applicable laws
and regulations, including registration statements, prospectuses,
semi-annual and annual reports to shareholders, proxy statements and
tax returns; (c) preparation of agendas and supporting documents for
and minutes of meetings of the Trustees, Committees of Trustees and
shareholders; (d) arranging for maintenance of books and records of
the Trust; and (e) any other functions or obligations permitted to or
required by the Administrator. Notwithstanding the foregoing, the
Sub-Administrator under this Agreement shall not be deemed to have
assumed any duties with respect to, and shall not be responsible for,
the management of the Trust or the distribution of Shares of
Beneficial Interest of the Trust ("Shares"), nor shall the
Sub-Administrator under this Agreement be deemed to have assumed or
have any responsibility with respect to functions specifically assumed
by any transfer agent, custodian or shareholder servicing agent of the
Trust.
2. Compensation of Administrator. For the services to be rendered and the
facilities to be provided by the Sub-Administrator hereunder, the
Sub-Administrator shall be paid an administrative fee as may from time
to time be agreed to between the Administrator and the
Sub-Administrator.
3. Additional Terms and Conditions. The parties may amend this agreement
and include such other terms and conditions as may from time to time
be agreed to between the Administrator and the Sub-Administrator, so
long as the Trustees of the Trust shall have found the subcontracting
party to be qualified to perform the obligations sought to be
subcontracted.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By: /s/ Philip Coolidge
------------------------------------
Title: Chief Executive Officer
------------------------------------
CITIBANK, N.A.
By: /s/ Robert P. Wallace
------------------------------------
Title: Vice President
------------------------------------
SASA/LFI
<PAGE>
EXHIBIT NO. 9(D)(I)
FORM OF
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, by and between: (i) each of the trusts listed on the
signature page hereof or which may be added to this Agreement by execution of a
counterpart signature page hereto at a subsequent date pursuant to a vote of
such trust's Trustees (individually, the "Trust") and (ii) each national banking
association or subsidiary thereof or state chartered banking association
(individually, the "Financial Institution") listed on the signature page hereof
or which may be added to this Agreement by execution of a counterpart signature
page hereto at a subsequent date pursuant to appropriate authorization by such
Financial Institution's officers and directors, as a shareholder servicing agent
hereunder (the "Agent");
WITNESSETH:
WHEREAS, all transactions in Shares of Beneficial Interest of the Trust
or of any series now existing or later created of the Trust ("Shares") may be
made only by investors who are customers of, and using the services of, a
financial institution as defined in the then-current prospectus of the Trust,
which has entered into a shareholder servicing agreement with the Trust; and
WHEREAS, the Financial Institution wishes to make it possible for its
customers (the "Customers") to purchase Shares and wishes to act as the
Customers' agent in performing certain administrative functions in connection
with purchases, exchanges and redemptions of Shares from time to time upon the
order and for the account of Customers and to provide related services to its
Customers in connection with their investments in the Trust; and
WHEREAS, it is in the interest of the Trust to make the services of the
Agent available to Customers who are or may become shareholders of the Trust;
NOW, THEREFORE, the Trust and the Financial Institution hereby agree as
follows:
1. APPOINTMENT. The Financial Institution, as Agent, hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Agent's appointment hereunder is non-exclusive, and the parties
recognize and agree that, from time to time, the Trust may enter into
other shareholder servicing agreements, in writing, with other
financial institutions.
2. SERVICE TO BE PERFORMED.
2.1 Type of Service. The Agent shall be responsible for
performing shareholder account administrative and servicing functions,
which shall include without limitation: (a) answering Customer
inquiries regarding account status and history, the manner in which
purchases, exchanges and redemptions of the Shares may be effected, and
certain other matters pertaining to the Trust; (b) assisting Customers
in designating and changing dividend options, account designations and
addresses; (c) providing necessary personnel and facilities to
establish and maintain certain shareholder accounts and records, as may
reasonably be requested from time to time by the Trust; (d) assisting
in processing purchases, exchange and redemption transactions; (e)
arranging for the wiring of funds; (f) transmitting and receiving funds
in connection with Customer orders to purchase, exchange or redeem
Shares; (g) verifying and guaranteeing Customer signatures in
connection with redemption orders, transfers among and changes in
Customer-designated accounts; (h) providing periodic statements showing
a Customer's account balances and, to the extent practicable,
integration of such information with information concerning other
client transactions otherwise effected with or through the Financial
Institution; (i) furnishing on behalf of the Trust's distributor
(either separately or on an integrated basis with other reports sent to
a Customer by the Agent) periodic statements and confirmations of all
purchases, exchanges and redemptions of Shares in a Customer's account
required by applicable federal or state law, all such confirmations and
statements to conform to Rule 10b-10 under the Securities Exchange Act
of 1934 and other applicable federal or state law; (j) transmitting
proxy statements, annual reports, updating prospectuses and other
communications from the Trust to Customers; (k) receiving, tabulating
and transmitting to the Trust proxies executed by Customers with
respect to annual and special meetings of shareholders of the Trust;
(l) providing reports (at least monthly, but more frequently if so
requested by the Trust's distributor) containing state-by-state
listings of the principal residences of the beneficial owners of the
Shares; and (m) providing such other related services as the Trust or a
Customer may reasonably request. The Agent shall provide all personnel
and facilities to perform the functions described in this paragraph
with respect to its Customers.
2.2 Standard of Services. All services to be rendered by the Agent
hereunder shall be performed in a professional, competent and timely
manner. The details of the operating standards and procedures to be
followed by the Agent in performance of the services described above
shall be determined from time to time by agreement between the Agent
and the Trust. The Trust acknowledges that the Agent's ability to
perform on a timely basis certain of its obligations under this
Agreement depends upon the Trust's timely delivery of certain materials
and/or information to the Agent. The Trust agrees to use its best
efforts to provide such materials to the Agent in a timely manner.
3. FEES.
3.1 Fees from the Trust. In consideration for the services
described in Section 2 hereof and the incurring of expenses in
connection therewith, the Agent shall receive fees to be paid in
arrears periodically (but in no event less frequently than
semi-annually) determined by agreement between the Trust and the Agent.
For purposes of determining the fees payable to the Agent hereunder,
the value of the Trust's net assets shall be computed in the manner
specified in the Trust's then-current prospectus for computation of the
net asset value of the Trust's Shares. The above fees constitute all
fees to be paid to the Agent by the Trust with respect to the
transactions contemplated hereby.
3.2 Fees from Customers. It is agreed that the Financial
Institution may impose certain conditions on Customers, in addition to
or different from those imposed by the Trust, such as requiring a
minimum initial investment or charging Customers direct fees for the
same or similar services as are provided hereunder by the Financial
Institution as Agent (which fees may either relate specifically to the
Financial Institution's services with respect to the Trust or generally
cover services not limited to those with respect to the Trust). The
Financial Institution shall bill Customers directly for such fees. In
the event the Financial Institution charges Customers such fees, it
shall notify the Trust in advance and make appropriate prior written
disclosure (such disclosure to be in accordance with all applicable
laws) to Customers of any such fees charged to the Customer. To the
extent required by applicable rules and regulations of the Securities
and Exchange Commission, the Trust shall make written disclosure of the
fees paid or to be paid to the Agent pursuant to Section 3.1 of this
Agreement. It is understood, however, that in no event shall the
Financial Institution have recourse or access as Agent or otherwise to
the account of any shareholder of the Trust except to the extent
expressly authorized by law or by such shareholder, or to any assets of
the Trust, for payment of any direct fees referred to in this Section
3.2.
4. INFORMATION PERTAINING TO THE SHARES. The Agent and its
officers, employees and agents are not authorized to make any
representations concerning the Trust or the Shares to Customers or
prospective Customers, excepting only accurate communication of any
information provided by or on behalf of any administrator of the Trust
or any distributor of the Shares or any factual information contained
in the then-current prospectus relating to the Trust or to any series
of the Trust. In furnishing such information regarding the Trust or the
Shares, the Agent shall act as agent for the Customer only and shall
have no authority to act as agent for the Trust. Advance copies or
proofs of all materials which are generally circulated or disseminated
by the Agent to Customers or prospective Customers which identify or
describe the Trust shall be provided to the Trust at least 10 days
prior to such circulation or dissemination (unless the Trust consents
in writing to a shorter period), and such materials shall not be
circulated or disseminated or further circulated or disseminated at any
time after the Trust shall have given written notice within such 10 day
period to the Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the
Trust liable for the use (as opposed to the accuracy) of any
information about the Trust which is disseminated by the Agent.
5. USE OF THE AGENT'S NAME. The Trust shall not use the name of
the Agent, (the Financial Institution or any of its affiliates or
subsidiaries) in any prospectus, sales literature or other material
relating to the Trust in a manner not approved by the Agent prior
thereto in writing; provided, however, that the approval of the Agent
shall not be required for any use of its name which merely refers in
accurate and factual terms to its appointment hereunder or which is
required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such
approval be unreasonably withheld or delayed.
6. USE OF THE TRUST'S NAME. The Agent shall not use the name of
the Trust on any checks, bank drafts, bank statements or forms for
other than internal use in a manner not approved by the Trust prior
thereto in writing; provided, however, that the approval of the Trust
shall not be required for the use of the Trust's name in connection
with communications permitted by Section 4 hereof or (subject to
Section 4, to the extent the same may be applicable) for any use of the
Trust's name which merely refers in accurate and factual terms to the
Trust in connection with the Agent's role hereunder or which is
required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such
approval be unreasonably withheld or delayed.
7. SECURITY. The Agent represents and warrants that to the best
of its knowledge, the various procedures and systems which it has
implemented (including provision for twenty-four hours a day restricted
access) with regard to safeguarding from loss or damage attributable to
fire, theft or any other cause the Trust's records and other data and
the Agent's records, data, equipment, facilities and other property
used in the performance of its obligations hereunder are adequate and
that it will make such changes therein from time to time as in its
judgment are required for the secure performance of its obligations
hereunder. The parties shall review such systems and procedures on a
periodic basis, and the Trust shall from time to time specify the types
of records and other data of the Trust to be safeguarded in accordance
with this Section 7.
8. COMPLIANCE WITH LAWS. The Agent shall comply with all
applicable federal and state laws and regulations, including securities
laws. The Agent represents and warrants to the Trust that the
performance of all its obligations hereunder will comply with all
applicable laws and regulations, the provisions of its charter
documents and by-laws and all material contractual obligations binding
upon the Agent. The Agent furthermore undertakes that it will promptly,
after the Agent becomes so aware, inform the Trust of any change in
applicable laws or regulations (or interpretations thereof) or in its
charter or by-laws or material contracts which would prevent or impair
full performance of any of its obligations hereunder.
9. REPORTS. To the extent requested by the Trust from time to
time, the Agent agrees that it will provide the Treasurer of the Trust
with a written report of the amounts expended by the Agent pursuant to
this Agreement and the purposes for which such expenditures were made.
Such written reports shall be in a form satisfactory to the Trust and
shall supply all information necessary for the Trust to discharge its
responsibilities under applicable laws and regulations.
10. RECORD KEEPING.
10.1 Section 31(a). The Agent shall maintain records in a form
reasonably acceptable to the Trust and in compliance with applicable
laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping
requirements of Section 31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act") and the rules thereunder. Such records shall
be deemed to be the property of the Trust and will be made available,
at the Trust's request, for inspection and use by the Trust,
representatives of the Trust and governmental authorities. The Agent
agrees that, for so long as it retains any records of the Trust, it
will meet all reporting requirements pursuant to the 1940 Act and
applicable to the Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Agent shall maintain accurate
and complete records with respect to services performed by the Agent in
connection with the purchase and redemption of Shares. Such records
shall be maintained in form reasonably acceptable to the Trust and in
compliance with the requirements of Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, as amended, pursuant to which any
dealer of the Shares must maintain certain records. All such records
maintained by the Agent shall be the property of such dealer and will
be made available for inspection and use by the Trust or such dealer
upon the request of either. The Agent shall file with the Securities
and Exchange Commission and other appropriate governmental authorities,
and furnish to the Trust and any such dealer copies of, all reports and
undertakings as may be reasonably requested by the Trust or such dealer
in order to comply with the said rules. If so requested by any such
dealer, the Agent shall confirm to such dealer its obligations under
this Section 10.2 by a writing reasonably satisfactory to such dealer.
10.3 Identification, Etc. of Records. The Trust shall from
time to time instruct the Agent in writing as to, and the Trust and the
Agent shall periodically review, the records to be maintained and the
procedures to be followed by the Agent in complying with the foregoing
Sections 10.1 and 10.2 and Section 8 to the extent it relates to
record-keeping required under federal securities laws and regulations.
Notwithstanding the provisions of Section 8, the Agent shall be
entitled to rely on such instructions.
10.4 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Agent is appointed, the Agent shall,
at the expense of the Trust, transfer to such designee as the Trust may
direct a certified list of the shareholders of the Trust serviced by
the Agent (with name, address and tax identification or Social Security
number, if any), a complete record of the account of each such
shareholder and the status thereof, and all other relevant books,
records, correspondence, and other data established or maintained by
the Agent under this Agreement. In the event this Agreement is
terminated, the Agent will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including
assistance in the establishment of books, records and other data by the
successor.
10.5 Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 10 shall survive the
termination of this Agreement for a period of three years.
10.6 Obligations Pursuant to Agreement Only. Nothing in this
Section 10 shall be construed to mean that the Agent would, by virtue
of its role hereunder, be required under applicable law to maintain the
records required to be maintained by it under this Section 10, but it
is understood that the Agent has agreed to do so in order to enable the
Trust and its dealer or dealers to comply with laws and regulations
applicable to them.
10.7 Agent's Rights to Copy Records. Anything in this Section
10 to the contrary notwithstanding, except to the extent otherwise
prohibited by law, the Agent shall have the right to copy, maintain and
use any records maintained by the Agent pursuant to this Section 10,
except as otherwise prohibited by Sections 4 and 6 hereof.
11. FORCE MAJEURE. The Agent shall not be liable or
responsible for delays or errors by reason of circumstances beyond its
reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, Acts of God, insurrection,
war, riots or failure of communication or power supply.
12. INDEMNIFICATION.
12.1 Indemnification of the Agent. The Trust will indemnify
and hold the Agent harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses) from any claim, demand, action or suit (collectively,
"Claims") (a) arising in connection with misstatements or omissions in
the Trust's Prospectus, actions or inactions by the Trust or any of its
agents or contractors or the performance of the Agent's obligations
hereunder and (b) not resulting from (i) the bad faith or negligence of
the Agent, its officers, employees or agents, (ii) any breach of
applicable law by the Agent, its officers, employees or agents, (iii)
any action of the Agent, its officers, employees or agents which
exceeds the legal authority of the Agent or its authority hereunder, or
(iv) any error or omission of the Agent, its officers, employees or
agents with respect to the purchase, redemption and transfer of
Customers' Shares or the Agent's verification or guarantee of any
Customer signature. Notwithstanding anything herein to the contrary,
the Trust will indemnify and hold the Agent harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any Claim as a result of its
acting in accordance with any written instructions reasonably believed
by the Agent to have been executed by any person duly authorized by the
Trust, or as a result of acting in reliance upon any instrument or
stock certificate reasonably believed by the Agent to have been genuine
and signed, countersigned or executed by a person duly authorized by
the Trust, excepting only the gross negligence or bad faith of the
Agent.
In any case in which the Trust may be asked to indemnify or
hold the Agent harmless, the Trust shall be advised of all pertinent
facts concerning the situation in question and the Agent shall use
reasonable care to identify and notify the Trust promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Trust. The Trust shall have the option to
defend the Agent against any Claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend
against such Claim, the defense shall be conducted by counsel chosen by
the Trust and satisfactory to the Agent. The Agent may retain
additional counsel at its expense. Except with the prior written
consent of the Trust, the Agent shall not confess any Claim or make any
compromise in any case in which the Trust will be asked to indemnify
the Agent.
12.2 Indemnification of the Trust. Without limiting the rights
of the Trust under applicable law, the Agent will indemnify and hold
the Trust harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any
Claim (a) resulting from (i) the bad faith or negligence of the Agent,
its officers, employees or agents, (ii) any breach of applicable law by
the Agent, its officers, employees or agents, (iii) any action of the
Agent, its officers, employees or agents which exceeds the legal
authority of the Agent or its authority hereunder, or (iv) any error or
omission of the Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Shares or the
Agent's verification or guarantee of any Customer signature, and (b)
not resulting from the Agent's actions in accordance with written
instructions reasonably believed by the Agent to have been executed by
any person duly authorized by the Trust, or in reliance upon any
instrument or stock certificate reasonably believed by the Agent to
have been genuine and signed, countersigned or executed by a person
duly authorized by the Trust.
In any case in which the Agent may be asked to indemnify or hold
the Trust harmless, the Agent shall be advised of all pertinent facts
concerning the situation in question and the Trust shall use reasonable
care to identify and notify the Agent promptly concerning any situation
which presents or appears likely to present a claim for indemnification
against the Agent. The Agent shall have the option to defend the Trust
against any Claim which may be the subject of indemnification
hereunder. In the event that the Agent elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Agent
and satisfactory to the Trust. The Trust may retain additional counsel
at its expense. Except with the prior written consent of the Agent, the
Trust shall not confess any Claim or make any compromise in any case in
which the Agent will be asked to indemnify the Trust.
12.3 Survival of Indemnities. The indemnities granted by the
parties in this Section 12 shall survive the termination of this
Agreement.
13. NOTICES. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if
mailed to such party at the address of such party set forth in the
preamble of this Agreement or at such other address as such party may
have designated by written notice to the other.
14. FURTHER ASSURANCES. Each party agrees to perform such
further acts and execute such further documents as are necessary to
effectuate the purposes hereof.
15. TERMINATION. This Agreement may be terminated by the
Trust, without the payment of any penalty, at any time upon not more
than 60 days' nor less than 30 days' notice, by a vote of a majority of
the Board of Trustees of the Trust who are not "interested persons" of
the Trust (as defined in the 1940 Act) and have no direct or indirect
financial interest in the operation of the Administrative Services Plan
(the "Plan"), to which this Agreement is related, this Agreement or any
other agreement related to such Plan, or by "a vote of a majority of
the outstanding voting securities" (as defined in the 1940 Act) of the
Trust. The Agent may terminate this Agreement upon not more than 60
days' nor less than 30 days' notice to the Trust. The period of prior
notice of termination shall be reduced to the extent necessary to
comply with the effective date of any change in applicable laws or
regulations (or interpretations thereof) which prevents or impairs full
performance of the obligations set forth herein. Provided, however, in
the event such period of prior notice is reduced, the terminating party
shall give prompt notice of termination. Notwithstanding anything
herein to the contrary, but except as provided in Section 19 of this
Agreement, this Agreement may not be assigned and shall terminate
automatically without notice to either party upon any assignment. Upon
termination hereof, the Trust shall pay such compensation as may be due
the Agent as of the date of such termination.
16. CHANGES; AMENDMENTS. This Agreement may be changed or
amended only by written instrument signed by both parties.
17. LIMITATION OF SHAREHOLDER LIABILITY. The Agent hereby
agrees that obligations assumed by the Trust pursuant to this Agreement
shall be limited in all cases to the Trust and its assets and that the
Agent shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Trust. It is further agreed that
the Agent shall not seek satisfaction of any such obligations from the
Board of Trustees or any individual Trustee of the Trust.
18. DIVIDEND PAYMENT DATES. The Trust hereby agrees, with
respect to any Trust that is a money market fund, that dividends
otherwise payable to any Customer on the last business day of each
month shall, to the extent required by the Agent, be distributed on
such other date in each month as the Agent may designate as the
dividend distribution date with respect to such Customer.
19. SUBCONTRACTING BY AGENT. The Agent may, with the written
approval of the Trust (such approval not to be unreasonably withheld or
delayed), subcontract for the performance of the Agent's obligations
hereunder with any one or more persons, including but not limited to
any one or more persons which is an affiliate of the Agent; provided,
however, that the Agent shall be as fully responsible to the Trust for
the acts and omissions of any subcontractor as it would be for its own
acts or omissions.
20. AUTHORITY TO VOTE. The Trust hereby confirms that,
pursuant to the Declaration of Trust of the Trust, at any meeting of
shareholders of the Trust or of any series of the Trust, the Agent is
authorized to vote any Shares held in accounts serviced by the Agent
and which are otherwise not represented in person or by proxy at the
meeting, proportionately in accordance with the votes cast by holders
of all Shares otherwise represented at the meeting in person or by
proxy and held in accounts serviced by the Agent.
21. COMPLIANCE WITH LAWS AND POLICIES; COOPERATION. The Trust
hereby agrees that it will comply with all laws and regulations
applicable to its operations and the Agent agrees that it will comply
with all laws and regulations applicable to its operations hereunder
and each party agrees from time to time to provide such certificates,
information and access to its books, records and personnel as the other
may reasonably request to confirm the foregoing. Each party understands
that the other may from time to time adopt or modify policies relating
to the subject matter of this Agreement, in which case the party
adopting or modifying such a policy shall notify the other thereof and
the parties shall consider the applicability thereof and endeavor to
comply therewith to the extent not impracticable or unreasonably
burdensome. Each of the parties agrees to cooperate with the other in
connection with the performance of this Agreement and the resolution of
any problems, questions or disagreements in connection herewith.
21.1 Audit. The Trust shall maintain or arrange to be
maintained complete and accurate accounting records, in accordance with
generally accepted accounting principles. The Trust shall retain or
arrange to be retained such records for a period of three years from
the termination of this Agreement. The Agent and its designated
certified public accountants shall have access to such records based on
reasonable cause and professional judgment during normal business hours
upon reasonable notice to the Trust.
21.2 Annual Financial Reports. At least once a year, the Trust
shall send to the owners of its shares and to the Agent the Trust's
audited financial statements.
21.3 Shareholder Updates. The Trust shall give the Agent
advance written notice of any change in the Trust's place of
incorporation, mailing address, management, investment objectives, fees
or redemption rights. The Trust shall give such advance notice to the
owners of its shares to the extent required by federal securities laws
or the rules and regulations of the Securities and Exchange Commission.
21.4. Annual Certification. At least once a year, the parties
shall certify to each other in writing that the certifying party is
conducting its business in accordance with the terms and conditions of
the Agreement and in the case of the Trust, in accordance with the
representations set forth in its then current prospectus.
22. MISCELLANEOUS. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one and the same
instrument. Although this Agreement has been executed by multiple
parties, it shall be construed and enforced as a separate agreement
between each Trust and each Financial Institution acting as Agent for
such Trust. The terms of this Agreement shall become effective with
respect to each Trust and each Financial Institution listed on a
signature page hereof as of the date set forth thereon.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered in their names and on their
behalf by the undersigned, thereunto duly authorized, all as of the day
and year set forth below. The undersigned Trustee of the Trust has
executed this Agreement not individually, but as Trustee under the
Trust's Declaration of Trust, as from time to time amended, and the
obligations of this Agreement are not binding upon any of the Trustees
or shareholders of the Trust individually, but bind only the Trust
estate.
Dated as of:
---------------------------
[NAME OF TRUST] CITIBANK, N.A.
[NAME OF SERIES, IF ANY]
By: By:
------------------------------ ---------------------------
Name: Philip W. Coolidge Name:
---------------------------
Title: President Title:
---------------------------
Principal Place of Business: Principal Place of Business:
6 St. James Avenue ---------------------------
Boston, Massachusetts 02116 ---------------------------
---------------------------
SSA/NA
<PAGE>
EXHIBIT NO. 9(D)(II)
FORM OF
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, by and between: (i) each of the trusts listed on the
signature page hereof or which may be added to this Agreement by execution of a
counterpart signature page hereto at a subsequent date pursuant to a vote of
such trust's Trustees (individually, the "Trust") and (ii) each federal savings
bank (individually, the "Financial Institution") listed on the signature page
hereof or which may be added to this Agreement by execution of a counterpart
signature page hereto at a subsequent date pursuant to appropriate authorization
by such Financial Institution's officers and directors, as a shareholder
servicing agent hereunder (the "Agent");
WITNESSETH:
WHEREAS, all transactions in Shares of Beneficial Interest of the Trust
or of any series now existing or later created of the Trust ("Shares") may be
made only by investors who are customers of, and using the services of, a
financial institution as defined in the then-current prospectus of the Trust,
which has entered into a shareholder servicing agreement with the Trust; and
WHEREAS, the Financial Institution wishes to make it possible for its
customers (the "Customers") to purchase Shares and wishes to act as the
Customers' agent in performing certain administrative functions in connection
with purchases, exchanges and redemptions of Shares from time to time upon the
order and for the account of Customers and to provide related services to its
Customers in connection with their investments in the Trust; and
WHEREAS, it is in the interest of the Trust to make the services of the
Agent available to Customers who are or may become shareholders of the Trust;
NOW, THEREFORE, the Trust and the Financial Institution hereby agree as
follows:
1. APPOINTMENT. The Financial Institution, as Agent, hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Agent's appointment hereunder is non-exclusive, and the parties
recognize and agree that, from time to time, the Trust may enter into
other shareholder servicing agreements, in writing, with other
financial institutions.
2. SERVICE TO BE PERFORMED.
2.1 Type of Service. The Agent shall be responsible for performing
shareholder account administrative and servicing functions, which shall
include without limitation: (a) answering Customer inquiries regarding
account status and history, the manner in which purchases, exchanges
and redemptions of the Shares may be effected, and certain other
matters pertaining to the Trust; (b) assisting Customers in designating
and changing dividend options, account designations and addresses; (c)
providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records, as may reasonably be
requested from time to time by the Trust; (d) assisting in processing
purchases, exchange and redemption transactions; (e) arranging for the
wiring of funds; (f) verifying and guaranteeing Customer signatures in
connection with redemption orders, transfers among and changes in
Customer-designated accounts; (g) providing periodic statements showing
a Customer's account balances and, to the extent practicable,
integration of such information with information concerning other
client transactions otherwise effected with or through the Financial
Institution; (h) furnishing on behalf of the Trust's distributor
(either separately or on an integrated basis with other reports sent to
a Customer by the Agent) periodic statements and confirmations of all
purchases, exchanges and redemptions of Shares in a Customer's account
required by applicable federal or state law, all such confirmations and
statements to conform to Rule 10b-10 under the Securities Exchange Act
of 1934 and other applicable federal or state law; (i) transmitting
proxy statements, annual reports, updating prospectuses and other
communications from the Trust to Customers; (j) receiving, tabulating
and transmitting to the Trust proxies executed by Customers with
respect to annual and special meetings of shareholders of the Trust;
(k) providing reports (at least monthly, but more frequently if so
requested by the Trust's distributor) containing state-by-state
listings of the principal residences of the beneficial owners of the
Shares; and (l) providing such other related services as the Trust or a
Customer may reasonably request. The Agent shall provide all personnel
and facilities to perform the functions described in this paragraph
with respect to its Customers.
2.2 Standard of Services. All services to be rendered by the Agent
hereunder shall be performed in a professional, competent and timely
manner. The details of the operating standards and procedures to be
followed by the Agent in performance of the services described above
shall be determined from time to time by agreement between the Agent
and the Trust. The Trust acknowledges that the Agent's ability to
perform on a timely basis certain of its obligations under this
Agreement depends upon the Trust's timely delivery of certain materials
and/or information to the Agent. The Trust agrees to use its best
efforts to provide such materials to the Agent in a timely manner.
3. FEES.
3.1 Fees from the Trust. In consideration for the services
described in Section 2 hereof and the incurring of expenses in
connection therewith, the Agent shall receive fees to be paid in
arrears periodically (but in no event less frequently than
semi-annually) determined by agreement between the Trust and the Agent.
For purposes of determining the fees payable to the Agent hereunder,
the value of the Trust's net assets shall be computed in the manner
specified in the Trust's then-current prospectus for computation of the
net asset value of the Trust's Shares. The above fees constitute all
fees to be paid to the Agent by the Trust with respect to the
transactions contemplated hereby.
3.2 Fees from Customers. It is agreed that the Financial
Institution may impose certain conditions on Customers, in addition to
or different from those imposed by the Trust, such as requiring a
minimum initial investment or charging Customers direct fees for the
same or similar services as are provided hereunder by the Financial
Institution as Agent (which fees may either relate specifically to the
Financial Institution's services with respect to the Trust or generally
cover services not limited to those with respect to the Trust). The
Financial Institution shall bill Customers directly for such fees. In
the event the Financial Institution charges Customers such fees, it
shall notify the Trust in advance and make appropriate prior written
disclosure (such disclosure to be in accordance with all applicable
laws) to Customers of any such fees charged to the Customer. To the
extent required by applicable rules and regulations of the Securities
and Exchange Commission, the Trust shall make written disclosure of the
fees paid or to be paid to the Agent pursuant to Section 3.1 of this
Agreement. It is understood, however, that in no event shall the
Financial Institution have recourse or access as Agent or otherwise to
the account of any shareholder of the Trust except to the extent
expressly authorized by law or by such shareholder, or to any assets of
the Trust, for payment of any direct fees referred to in this Section
3.2.
4. INFORMATION PERTAINING TO THE SHARES. The Agent and its
officers, employees and agents are not authorized to make any
representations concerning the Trust or the Shares to Customers or
prospective Customers, excepting only accurate communication of any
information provided by or on behalf of any administrator of the Trust
or any distributor of the Shares or any factual information contained
in the then-current prospectus relating to the Trust or to any series
of the Trust. In furnishing such information regarding the Trust or the
Shares, the Agent shall act as agent for the Customer only and shall
have no authority to act as agent for the Trust. Advance copies or
proofs of all materials which are generally circulated or disseminated
by the Agent to Customers or prospective Customers which identify or
describe the Trust shall be provided to the Trust at least 10 days
prior to such circulation or dissemination (unless the Trust consents
in writing to a shorter period), and such materials shall not be
circulated or disseminated or further circulated or disseminated at any
time after the Trust shall have given written notice within such 10 day
period to the Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the
Trust liable for the use (as opposed to the accuracy) of any
information about the Trust which is disseminated by the Agent.
5. USE OF THE AGENT'S NAME. The Trust shall not use the name of
the Agent, (the Financial Institution or any of its affiliates or
subsidiaries) in any prospectus, sales literature or other material
relating to the Trust in a manner not approved by the Agent prior
thereto in writing; provided, however, that the approval of the Agent
shall not be required for any use of its name which merely refers in
accurate and factual terms to its appointment hereunder or which is
required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such
approval be unreasonably withheld or delayed.
6. USE OF THE TRUST'S NAME. The Agent shall not use the name of
the Trust on any checks, bank drafts, bank statements or forms for
other than internal use in a manner not approved by the Trust prior
thereto in writing; provided, however, that the approval of the Trust
shall not be required for the use of the Trust's name in connection
with communications permitted by Section 4 hereof or (subject to
Section 4, to the extent the same may be applicable) for any use of the
Trust's name which merely refers in accurate and factual terms to the
Trust in connection with the Agent's role hereunder or which is
required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such
approval be unreasonably withheld or delayed.
7. SECURITY. The Agent represents and warrants that to the best
of its knowledge, the various procedures and systems which it has
implemented (including provision for twenty-four hours a day restricted
access) with regard to safeguarding from loss or damage attributable to
fire, theft or any other cause the Trust's records and other data and
the Agent's records, data, equipment, facilities and other property
used in the performance of its obligations hereunder are adequate and
that it will make such changes therein from time to time as in its
judgment are required for the secure performance of its obligations
hereunder. The parties shall review such systems and procedures on a
periodic basis, and the Trust shall from time to time specify the types
of records and other data of the Trust to be safeguarded in accordance
with this Section 7.
8. COMPLIANCE WITH LAWS. The Agent shall comply with all
applicable federal and state laws and regulations, including securities
laws. The Agent represents and warrants to the Trust that the
performance of all its obligations hereunder will comply with all
applicable laws and regulations, the provisions of its charter
documents and by-laws and all material contractual obligations binding
upon the Agent. The Agent furthermore undertakes that it will promptly,
after the Agent becomes so aware, inform the Trust of any change in
applicable laws or regulations (or interpretations thereof) or in its
charter or by-laws or material contracts which would prevent or impair
full performance of any of its obligations hereunder.
9. REPORTS. To the extent requested by the Trust from time to
time, the Agent agrees that it will provide the Treasurer of the Trust
with a written report of the amounts expended by the Agent pursuant to
this Agreement and the purposes for which such expenditures were made.
Such written reports shall be in a form satisfactory to the Trust and
shall supply all information necessary for the Trust to discharge its
responsibilities under applicable laws and regulations.
10. RECORD KEEPING.
10.1 Section 31(a). The Agent shall maintain records in a form
reasonably acceptable to the Trust and in compliance with applicable
laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping
requirements of Section 31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act") and the rules thereunder. Such records shall
be deemed to be the property of the Trust and will be made available,
at the Trust's request, for inspection and use by the Trust,
representatives of the Trust and governmental authorities. The Agent
agrees that, for so long as it retains any records of the Trust, it
will meet all reporting requirements pursuant to the 1940 Act and
applicable to the Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Agent shall maintain accurate
and complete records with respect to services performed by the Agent in
connection with the purchase and redemption of Shares. Such records
shall be maintained in form reasonably acceptable to the Trust and in
compliance with the requirements of Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, as amended, pursuant to which any
dealer of the Shares must maintain certain records. All such records
maintained by the Agent shall be the property of such dealer and will
be made available for inspection and use by the Trust or such dealer
upon the request of either. The Agent shall file with the Securities
and Exchange Commission and other appropriate governmental authorities,
and furnish to the Trust and any such dealer copies of, all reports and
undertakings as may be reasonably requested by the Trust or such dealer
in order to comply with the said rules. If so requested by any such
dealer, the Agent shall confirm to such dealer its obligations under
this Section 10.2 by a writing reasonably satisfactory to such dealer.
10.3 Identification, Etc. of Records. The Trust shall from
time to time instruct the Agent in writing as to, and the Trust and the
Agent shall periodically review, the records to be maintained and the
procedures to be followed by the Agent in complying with the foregoing
Sections 10.1 and 10.2 and Section 8 to the extent it relates to
record-keeping required under federal securities laws and regulations.
Notwithstanding the provisions of Section 8, the Agent shall be
entitled to rely on such instructions.
10.4 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Agent is appointed, the Agent shall,
at the expense of the Trust, transfer to such designee as the Trust may
direct a certified list of the shareholders of the Trust serviced by
the Agent (with name, address and tax identification or Social Security
number, if any), a complete record of the account of each such
shareholder and the status thereof, and all other relevant books,
records, correspondence, and other data established or maintained by
the Agent under this Agreement. In the event this Agreement is
terminated, the Agent will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including
assistance in the establishment of books, records and other data by the
successor.
10.5 Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 10 shall survive the
termination of this Agreement for a period of three years.
10.6 Obligations Pursuant to Agreement Only. Nothing in this
Section 10 shall be construed to mean that the Agent would, by virtue
of its role hereunder, be required under applicable law to maintain the
records required to be maintained by it under this Section 10, but it
is understood that the Agent has agreed to do so in order to enable the
Trust and its dealer or dealers to comply with laws and regulations
applicable to them.
10.7 Agent's Rights to Copy Records. Anything in this Section 10
to the contrary notwithstanding, except to the extent otherwise
prohibited by law, the Agent shall have the right to copy, maintain and
use any records maintained by the Agent pursuant to this Section 10,
except as otherwise prohibited by Sections 4 and 6 hereof.
11. FORCE MAJEURE. The Agent shall not be liable or
responsible for delays or errors by reason of circumstances beyond its
reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, Acts of God, insurrection,
war, riots or failure of communication or power supply.
12. INDEMNIFICATION.
12.1 Indemnification of the Agent. The Trust will indemnify and
hold the Agent harmless from all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) from any
claim, demand, action or suit (collectively, "Claims") (a) arising in
connection with misstatements or omissions in the Trust's Prospectus,
actions or inactions by the Trust or any of its agents or contractors
or the performance of the Agent's obligations hereunder and (b) not
resulting from (i) the bad faith or negligence of the Agent, its
officers, employees or agents, (ii) any breach of applicable law by the
Agent, its officers, employees or agents, (iii) any action of the
Agent, its officers, employees or agents which exceeds the legal
authority of the Agent or its authority hereunder, or (iv) any error or
omission of the Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Shares or the
Agent's verification or guarantee of any Customer signature.
Notwithstanding anything herein to the contrary, the Trust will
indemnify and hold the Agent harmless from any and all losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any Claim as a result of its acting in
accordance with any written instructions reasonably believed by the
Agent to have been executed by any person duly authorized by the Trust,
or as a result of acting in reliance upon any instrument or stock
certificate reasonably believed by the Agent to have been genuine and
signed, countersigned or executed by a person duly authorized by the
Trust, excepting only the gross negligence or bad faith of the Agent.
In any case in which the Trust may be asked to indemnify or
hold the Agent harmless, the Trust shall be advised of all pertinent
facts concerning the situation in question and the Agent shall use
reasonable care to identify and notify the Trust promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Trust. The Trust shall have the option to
defend the Agent against any Claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend
against such Claim, the defense shall be conducted by counsel chosen by
the Trust and satisfactory to the Agent. The Agent may retain
additional counsel at its expense. Except with the prior written
consent of the Trust, the Agent shall not confess any Claim or make any
compromise in any case in which the Trust will be asked to indemnify
the Agent.
12.2 Indemnification of the Trust. Without limiting the rights of
the Trust under applicable law, the Agent will indemnify and hold the
Trust harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any
Claim (a) resulting from (i) the bad faith or negligence of the Agent,
its officers, employees or agents, (ii) any breach of applicable law by
the Agent, its officers, employees or agents, (iii) any action of the
Agent, its officers, employees or agents which exceeds the legal
authority of the Agent or its authority hereunder, or (iv) any error or
omission of the Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Shares or the
Agent's verification or guarantee of any Customer signature, and (b)
not resulting from the Agent's actions in accordance with written
instructions reasonably believed by the Agent to have been executed by
any person duly authorized by the Trust, or in reliance upon any
instrument or stock certificate reasonably believed by the Agent to
have been genuine and signed, countersigned or executed by a person
duly authorized by the Trust.
In any case in which the Agent may be asked to indemnify or
hold the Trust harmless, the Agent shall be advised of all pertinent
facts concerning the situation in question and the Trust shall use
reasonable care to identify and notify the Agent promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Agent. The Agent shall have the option to
defend the Trust against any Claim which may be the subject of
indemnification hereunder. In the event that the Agent elects to defend
against such Claim, the defense shall be conducted by counsel chosen by
the Agent and satisfactory to the Trust. The Trust may retain
additional counsel at its expense. Except with the prior written
consent of the Agent, the Trust shall not confess any Claim or make any
compromise in any case in which the Agent will be asked to indemnify
the Trust.
12.3 Survival of Indemnities. The indemnities granted by the
parties in this Section 12 shall survive the termination of this
Agreement.
13. NOTICES. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if
mailed to such party at the address of such party set forth in the
preamble of this Agreement or at such other address as such party may
have designated by written notice to the other.
14. FURTHER ASSURANCES. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate
the purposes hereof.
15. TERMINATION. This Agreement may be terminated by the Trust,
without the payment of any penalty, at any time upon not more than 60
days' nor less than 30 days' notice, by a vote of a majority of the
Board of Trustees of the Trust who are not "interested persons" of the
Trust (as defined in the 1940 Act) and have no direct or indirect
financial interest in the operation of the Administrative Services Plan
(the "Plan"), to which this Agreement is related, this Agreement or any
other agreement related to such Plan, or by "a vote of a majority of
the outstanding voting securities" (as defined in the 1940 Act) of the
Trust. The Agent may terminate this Agreement upon not more than 60
days' nor less than 30 days' notice to the Trust. The period of prior
notice of termination shall be reduced to the extent necessary to
comply with the effective date of any change in applicable laws or
regulations (or interpretations thereof) which prevents or impairs full
performance of the obligations set forth herein. Provided, however, in
the event such period of prior notice is reduced, the terminating party
shall give prompt notice of termination. Notwithstanding anything
herein to the contrary, but except as provided in Section 19 of this
Agreement, this Agreement may not be assigned and shall terminate
automatically without notice to either party upon any assignment. Upon
termination hereof, the Trust shall pay such compensation as may be due
the Agent as of the date of such termination.
16. CHANGES; AMENDMENTS. This Agreement may be changed or
amended only by written instrument signed by both parties.
17. LIMITATION OF SHAREHOLDER LIABILITY. The Agent hereby agrees
that obligations assumed by the Trust pursuant to this Agreement shall
be limited in all cases to the Trust and its assets and that the Agent
shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Trust. It is further agreed that
the Agent shall not seek satisfaction of any such obligations from the
Board of Trustees or any individual Trustee of the Trust.
18. DIVIDEND PAYMENT DATES. The Trust hereby agrees, with respect
to any Trust that is a money market fund, that dividends otherwise
payable to any Customer on the last business day of each month shall,
to the extent required by the Agent, be distributed on such other date
in each month as the Agent may designate as the dividend distribution
date with respect to such Customer.
19. SUBCONTRACTING BY AGENT. The Agent may, with the written
approval of the Trust (such approval not to be unreasonably withheld or
delayed), subcontract for the performance of the Agent's obligations
hereunder with any one or more persons, including but not limited to
any one or more persons which is an affiliate of the Agent; provided,
however, that the Agent shall be as fully responsible to the Trust for
the acts and omissions of any subcontractor as it would be for its own
acts or omissions.
20. AUTHORITY TO VOTE. The Trust hereby confirms that, pursuant to
the Declaration of Trust of the Trust, at any meeting of shareholders
of the Trust or of any series of the Trust, the Agent is authorized to
vote any Shares held in accounts serviced by the Agent and which are
otherwise not represented in person or by proxy at the meeting,
proportionately in accordance with the votes cast by holders of all
Shares otherwise represented at the meeting in person or by proxy and
held in accounts serviced by the Agent.
21. COMPLIANCE WITH LAWS AND POLICIES; COOPERATION. The Trust
hereby agrees that it will comply with all laws and regulations
applicable to its operations and the Agent agrees that it will comply
with all laws and regulations applicable to its operations hereunder
and each party agrees from time to time to provide such certificates,
information and access to its books, records and personnel as the other
may reasonably request to confirm the foregoing. Each party understands
that the other may from time to time adopt or modify policies relating
to the subject matter of this Agreement, in which case the party
adopting or modifying such a policy shall notify the other thereof and
the parties shall consider the applicability thereof and endeavor to
comply therewith to the extent not impracticable or unreasonably
burdensome. Each of the parties agrees to cooperate with the other in
connection with the performance of this Agreement and the resolution of
any problems, questions or disagreements in connection herewith.
21.1 Audit. The Trust shall maintain or arrange to be maintained
complete and accurate accounting records, in accordance with generally
accepted accounting principles. The Trust shall retain or arrange to be
retained such records for a period of three years from the termination
of this Agreement. The Agent and its designated certified public
accountants shall have access to such records based on reasonable cause
and professional judgment during normal business hours upon reasonable
notice to the Trust.
21.2 Annual Financial Reports. At least once a year, the Trust
shall send to the owners of its shares and to the Agent the Trust's
audited financial statements.
21.3 Shareholder Updates. The Trust shall give the Agent advance
written notice of any change in the Trust's place of incorporation,
mailing address, management, investment objectives, fees or redemption
rights. The Trust shall give such advance notice to the owners of its
shares to the extent required by federal securities laws or the rules
and regulations of the Securities and Exchange Commission.
21.4. Annual Certification. At least once a year, the parties
shall certify to each other in writing that the certifying party is
conducting its business in accordance with the terms and conditions of
the Agreement and in the case of the Trust, in accordance with the
representations set forth in its then current prospectus.
22. MISCELLANEOUS. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the Commonwealth of
Massachusetts. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
Although this Agreement has been executed by multiple parties, it shall
be construed and enforced as a separate agreement between each Trust
and each Financial Institution acting as Agent for such Trust. The
terms of this Agreement shall become effective with respect to each
Trust and each Financial Institution listed on a signature page hereof
as of the date set forth thereon.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered in their names and on their behalf by the
undersigned, thereunto duly authorized, all as of the day and year set
forth below. The undersigned Trustee of the Trust has executed this
Agreement not individually, but as Trustee under the Trust's
Declaration of Trust, as from time to time amended, and the obligations
of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust individually, but bind only the Trust estate.
Dated as of:
---------------------------
[NAME OF TRUST] CITIBANK, N.A.
[NAME OF SERIES, IF ANY]
By: By:
------------------------------ ---------------------------
Name: Philip W. Coolidge Name:
---------------------------
Title: President Title:
---------------------------
Principal Place of Business: Principal Place of Business:
6 St. James Avenue ---------------------------
Boston, Massachusetts 02116 ---------------------------
---------------------------
SSA/FSB
<PAGE>
EXHIBIT NO. 9(D)(III)
FORM OF
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, by and between: (i) each of the trusts listed on the
signature page hereof or which may be added to this Agreement by execution of a
counterpart signature page hereto at a subsequent date pursuant to a vote of
such trust's Trustees (individually, the "Trust") and (ii) The Landmark Funds
Broker-Dealer Services, Inc. (the "Financial Institution"), a Massachusetts
corporation, with its principal place of business at 6 St. James Avenue, Boston,
Massachusetts 02116, as a shareholder servicing agent hereunder (the "Agent");
WITNESSETH:
WHEREAS, all transactions in Shares of Beneficial Interest of the Trust
or of any series now existing or later created of the Trust ("Shares") may be
made only by investors who are customers of, and using the services of, a
financial institution as defined in the then-current prospectus of the Trust,
which has entered into a shareholder servicing agreement with the Trust; and
WHEREAS, the Financial Institution wishes to make it possible for its
customers (the "Customers") to purchase Shares and wishes to act as the
Customers' agent in performing certain administrative functions in connection
with purchases, exchanges and redemptions of Shares from time to time upon the
order and for the account of Customers and to provide related services to its
Customers in connection with their investments in the Trust; and
WHEREAS, it is in the interest of the Trust to make the services of the
Agent available to Customers who are or may become shareholders of the Trust;
NOW, THEREFORE, the Trust and the Financial Institution hereby agree as
follows:
1. APPOINTMENT. The Financial Institution, as Agent, hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Agent's appointment hereunder is non-exclusive, and the parties
recognize and agree that, from time to time, the Trust may enter into
other shareholder servicing agreements, in writing, with other
financial institutions.
2. SERVICE TO BE PERFORMED.
2.1 Type of Service. The Agent shall be responsible for performing
shareholder account administrative and servicing functions, which shall
include without limitation: (a) answering Customer inquiries regarding
account status and history, the manner in which purchases, exchanges
and redemptions of the Shares may be effected, and certain other
matters pertaining to the Trust; (b) assisting Customers in designating
and changing dividend options, account designations and addresses; (c)
providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records, as may reasonably be
requested from time to time by the Trust; (d) assisting in processing
purchases, exchange and redemption transactions; (e) arranging for the
wiring of funds; (f) transmitting and receiving funds in connection
with Customer orders to purchase, exchange or redeem Shares; (g)
verifying and guaranteeing Customer signatures in connection with
redemption orders, transfers among and changes in Customer-designated
accounts; (h) providing periodic statements showing a Customer's
account balances and, to the extent practicable, integration of such
information with information concerning other client transactions
otherwise effected with or through the Financial Institution; (i)
furnishing on behalf of the Trust's distributor (either separately or
on an integrated basis with other reports sent to a Customer by the
Agent) periodic statements and confirmations of all purchases,
exchanges and redemptions of Shares in a Customer's account required by
applicable federal or state law, all such confirmations and statements
to conform to Rule 10b-10 under the Securities Exchange Act of 1934 and
other applicable federal or state law; (j) transmitting proxy
statements, annual reports, updating prospectuses and other
communications from the Trust to Customers; (k) receiving, tabulating
and transmitting to the Trust proxies executed by Customers with
respect to annual and special meetings of shareholders of the Trust;
(l) providing reports (at least monthly, but more frequently if so
requested by the Trust's distributor) containing state-by-state
listings of the principal residences of the beneficial owners of the
Shares; and (m) providing such other related services as the Trust or a
Customer may reasonably request. The Agent shall provide all personnel
and facilities to perform the functions described in this paragraph
with respect to its Customers.
2.2 Standard of Services. All services to be rendered by the Agent
hereunder shall be performed in a professional, competent and timely
manner. The details of the operating standards and procedures to be
followed by the Agent in performance of the services described above
shall be determined from time to time by agreement between the Agent
and the Trust. The Trust acknowledges that the Agent's ability to
perform on a timely basis certain of its obligations under this
Agreement depends upon the Trust's timely delivery of certain materials
and/or information to the Agent. The Trust agrees to use its best
efforts to provide such materials to the Agent in a timely manner.
3. FEES.
3.1 Fees from the Trust. In consideration for the services
described in Section 2 hereof and the incurring of expenses in
connection therewith, the Agent shall receive fees to be paid in
arrears periodically (but in no event less frequently than
semi-annually) determined by agreement between the Trust and the Agent.
For purposes of determining the fees payable to the Agent hereunder,
the value of the Trust's net assets shall be computed in the manner
specified in the Trust's then-current prospectus for computation of the
net asset value of the Trust's Shares. The above fees constitute all
fees to be paid to the Agent by the Trust with respect to the
transactions contemplated hereby.
3.2 Fees from Customers. It is agreed that the Financial
Institution may impose certain conditions on Customers, in addition to
or different from those imposed by the Trust, such as requiring a
minimum initial investment or charging Customers direct fees for the
same or similar services as are provided hereunder by the Financial
Institution as Agent (which fees may either relate specifically to the
Financial Institution's services with respect to the Trust or generally
cover services not limited to those with respect to the Trust). The
Financial Institution shall bill Customers directly for such fees. In
the event the Financial Institution charges Customers such fees, it
shall notify the Trust in advance and make appropriate prior written
disclosure (such disclosure to be in accordance with all applicable
laws) to Customers of any such fees charged to the Customer. To the
extent required by applicable rules and regulations of the Securities
and Exchange Commission, the Trust shall make written disclosure of the
fees paid or to be paid to the Agent pursuant to Section 3.1 of this
Agreement. It is understood, however, that in no event shall the
Financial Institution have recourse or access as Agent or otherwise to
the account of any shareholder of the Trust except to the extent
expressly authorized by law or by such shareholder, or to any assets of
the Trust, for payment of any direct fees referred to in this Section
3.2.
4. INFORMATION PERTAINING TO THE SHARES. The Agent and its
officers, employees and agents are not authorized to make any
representations concerning the Trust or the Shares to Customers or
prospective Customers, excepting only accurate communication of any
information provided by or on behalf of any administrator of the Trust
or any distributor of the Shares or any factual information contained
in the then-current prospectus relating to the Trust or to any series
of the Trust. In furnishing such information regarding the Trust or the
Shares, the Agent shall act as agent for the Customer only and shall
have no authority to act as agent for the Trust. Advance copies or
proofs of all materials which are generally circulated or disseminated
by the Agent to Customers or prospective Customers which identify or
describe the Trust shall be provided to the Trust at least 10 days
prior to such circulation or dissemination (unless the Trust consents
in writing to a shorter period), and such materials shall not be
circulated or disseminated or further circulated or disseminated at any
time after the Trust shall have given written notice within such 10 day
period to the Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Trust
liable for the use (as opposed to the accuracy) of any information
about the Trust which is disseminated by the Agent.
5. USE OF THE AGENT'S NAME. The Trust shall not use the name of
the Agent, (the Financial Institution or any of its affiliates or
subsidiaries) in any prospectus, sales literature or other material
relating to the Trust in a manner not approved by the Agent prior
thereto in writing; provided, however, that the approval of the Agent
shall not be required for any use of its name which merely refers in
accurate and factual terms to its appointment hereunder or which is
required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such
approval be unreasonably withheld or delayed.
6. USE OF THE TRUST'S NAME. The Agent shall not use the name of
the Trust on any checks, bank drafts, bank statements or forms for
other than internal use in a manner not approved by the Trust prior
thereto in writing; provided, however, that the approval of the Trust
shall not be required for the use of the Trust's name in connection
with communications permitted by Section 4 hereof or (subject to
Section 4, to the extent the same may be applicable) for any use of the
Trust's name which merely refers in accurate and factual terms to the
Trust in connection with the Agent's role hereunder or which is
required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such
approval be unreasonably withheld or delayed.
7. SECURITY. The Agent represents and warrants that to the best
of its knowledge, the various procedures and systems which it has
implemented (including provision for twenty-four hours a day restricted
access) with regard to safeguarding from loss or damage attributable to
fire, theft or any other cause the Trust's records and other data and
the Agent's records, data, equipment, facilities and other property
used in the performance of its obligations hereunder are adequate and
that it will make such changes therein from time to time as in its
judgment are required for the secure performance of its obligations
hereunder. The parties shall review such systems and procedures on a
periodic basis, and the Trust shall from time to time specify the types
of records and other data of the Trust to be safeguarded in accordance
with this Section 7.
8. COMPLIANCE WITH LAWS. The Agent shall comply with all
applicable federal and state laws and regulations, including securities
laws. The Agent represents and warrants to the Trust that the
performance of all its obligations hereunder will comply with all
applicable laws and regulations, the provisions of its charter
documents and by-laws and all material contractual obligations binding
upon the Agent. The Agent furthermore undertakes that it will promptly,
after the Agent becomes so aware, inform the Trust of any change in
applicable laws or regulations (or interpretations thereof) or in its
charter or by-laws or material contracts which would prevent or impair
full performance of any of its obligations hereunder.
9. REPORTS. To the extent requested by the Trust from time to
time, the Agent agrees that it will provide the Treasurer of the Trust
with a written report of the amounts expended by the Agent pursuant to
this Agreement and the purposes for which such expenditures were made.
Such written reports shall be in a form satisfactory to the Trust and
shall supply all information necessary for the Trust to discharge its
responsibilities under applicable laws and regulations.
10. RECORD KEEPING.
10.1 Section 31(a). The Agent shall maintain records in a form
reasonably acceptable to the Trust and in compliance with applicable
laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping
requirements of Section 31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act") and the rules thereunder. Such records shall
be deemed to be the property of the Trust and will be made available,
at the Trust's request, for inspection and use by the Trust,
representatives of the Trust and governmental authorities. The Agent
agrees that, for so long as it retains any records of the Trust, it
will meet all reporting requirements pursuant to the 1940 Act and
applicable to the Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Agent shall maintain accurate
and complete records with respect to services performed by the Agent in
connection with the purchase and redemption of Shares. Such records
shall be maintained in form reasonably acceptable to the Trust and in
compliance with the requirements of Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, as amended, pursuant to which any
dealer of the Shares must maintain certain records. All such records
maintained by the Agent shall be the property of such dealer and will
be made available for inspection and use by the Trust or such dealer
upon the request of either. The Agent shall file with the Securities
and Exchange Commission and other appropriate governmental authorities,
and furnish to the Trust and any such dealer copies of, all reports and
undertakings as may be reasonably requested by the Trust or such dealer
in order to comply with the said rules. If so requested by any such
dealer, the Agent shall confirm to such dealer its obligations under
this Section 10.2 by a writing reasonably satisfactory to such dealer.
10.3 Identification, Etc. of Records. The Trust shall from
time to time instruct the Agent in writing as to, and the Trust and the
Agent shall periodically review, the records to be maintained and the
procedures to be followed by the Agent in complying with the foregoing
Sections 10.1 and 10.2 and Section 8 to the extent it relates to
record-keeping required under federal securities laws and regulations.
Notwithstanding the provisions of Section 8, the Agent shall be
entitled to rely on such instructions.
10.4 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Agent is appointed, the Agent shall,
at the expense of the Trust, transfer to such designee as the Trust may
direct a certified list of the shareholders of the Trust serviced by
the Agent (with name, address and tax identification or Social Security
number, if any), a complete record of the account of each such
shareholder and the status thereof, and all other relevant books,
records, correspondence, and other data established or maintained by
the Agent under this Agreement. In the event this Agreement is
terminated, the Agent will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including
assistance in the establishment of books, records and other data by the
successor.
10.5 Survival of Record-Keeping Obligations. The record-keeping
obligations imposed in this Section 10 shall survive the termination of
this Agreement for a period of three years.
10.6 Obligations Pursuant to Agreement Only. Nothing in this
Section 10 shall be construed to mean that the Agent would, by virtue
of its role hereunder, be required under applicable law to maintain the
records required to be maintained by it under this Section 10, but it
is understood that the Agent has agreed to do so in order to enable the
Trust and its dealer or dealers to comply with laws and regulations
applicable to them.
10.7 Agent's Rights to Copy Records. Anything in this Section 10
to the contrary notwithstanding, except to the extent otherwise
prohibited by law, the Agent shall have the right to copy, maintain and
use any records maintained by the Agent pursuant to this Section 10,
except as otherwise prohibited by Sections 4 and 6 hereof.
11. FORCE MAJEURE. The Agent shall not be liable or
responsible for delays or errors by reason of circumstances beyond its
reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, Acts of God, insurrection,
war, riots or failure of communication or power supply.
12. INDEMNIFICATION.
12.1 Indemnification of the Agent. The Trust will indemnify
and hold the Agent harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses) from any claim, demand, action or suit (collectively,
"Claims") (a) arising in connection with misstatements or omissions in
the Trust's Prospectus, actions or inactions by the Trust or any of its
agents or contractors or the performance of the Agent's obligations
hereunder and (b) not resulting from (i) the bad faith or negligence of
the Agent, its officers, employees or agents, (ii) any breach of
applicable law by the Agent, its officers, employees or agents, (iii)
any action of the Agent, its officers, employees or agents which
exceeds the legal authority of the Agent or its authority hereunder, or
(iv) any error or omission of the Agent, its officers, employees or
agents with respect to the purchase, redemption and transfer of
Customers' Shares or the Agent's verification or guarantee of any
Customer signature. Notwithstanding anything herein to the contrary,
the Trust will indemnify and hold the Agent harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any Claim as a result of its
acting in accordance with any written instructions reasonably believed
by the Agent to have been executed by any person duly authorized by the
Trust, or as a result of acting in reliance upon any instrument or
stock certificate reasonably believed by the Agent to have been genuine
and signed, countersigned or executed by a person duly authorized by
the Trust, excepting only the gross negligence or bad faith of the
Agent.
In any case in which the Trust may be asked to indemnify or hold
the Agent harmless, the Trust shall be advised of all pertinent facts
concerning the situation in question and the Agent shall use reasonable
care to identify and notify the Trust promptly concerning any situation
which presents or appears likely to present a claim for indemnification
against the Trust. The Trust shall have the option to defend the Agent
against any Claim which may be the subject of indemnification
hereunder. In the event that the Trust elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Trust
and satisfactory to the Agent. The Agent may retain additional counsel
at its expense. Except with the prior written consent of the Trust, the
Agent shall not confess any Claim or make any compromise in any case in
which the Trust will be asked to indemnify the Agent.
12.2 Indemnification of the Trust. Without limiting the rights
of the Trust under applicable law, the Agent will indemnify and hold
the Trust harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any
Claim (a) resulting from (i) the bad faith or negligence of the Agent,
its officers, employees or agents, (ii) any breach of applicable law by
the Agent, its officers, employees or agents, (iii) any action of the
Agent, its officers, employees or agents which exceeds the legal
authority of the Agent or its authority hereunder, or (iv) any error or
omission of the Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Shares or the
Agent's verification or guarantee of any Customer signature, and (b)
not resulting from the Agent's actions in accordance with written
instructions reasonably believed by the Agent to have been executed by
any person duly authorized by the Trust, or in reliance upon any
instrument or stock certificate reasonably believed by the Agent to
have been genuine and signed, countersigned or executed by a person
duly authorized by the Trust.
In any case in which the Agent may be asked to indemnify or hold
the Trust harmless, the Agent shall be advised of all pertinent facts
concerning the situation in question and the Trust shall use reasonable
care to identify and notify the Agent promptly concerning any situation
which presents or appears likely to present a claim for indemnification
against the Agent. The Agent shall have the option to defend the Trust
against any Claim which may be the subject of indemnification
hereunder. In the event that the Agent elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Agent
and satisfactory to the Trust. The Trust may retain additional counsel
at its expense. Except with the prior written consent of the Agent, the
Trust shall not confess any Claim or make any compromise in any case in
which the Agent will be asked to indemnify the Trust.
12.3 Survival of Indemnities. The indemnities granted by the
parties in this Section 12 shall survive the termination of this
Agreement.
13. NOTICES. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if
mailed to such party at the address of such party set forth in the
preamble of this Agreement or at such other address as such party may
have designated by written notice to the other.
14. FURTHER ASSURANCES. Each party agrees to perform such
further acts and execute such further documents as are necessary to
effectuate the purposes hereof.
15. TERMINATION. This Agreement may be terminated by the
Trust, without the payment of any penalty, at any time upon not more
than 60 days' nor less than 30 days' notice, by a vote of a majority of
the Board of Trustees of the Trust who are not "interested persons" of
the Trust (as defined in the 1940 Act) and have no direct or indirect
financial interest in the operation of the Administrative Services Plan
(the "Plan"), to which this Agreement is related, this Agreement or any
other agreement related to such Plan, or by "a vote of a majority of
the outstanding voting securities" (as defined in the 1940 Act) of the
Trust. The Agent may terminate this Agreement upon not more than 60
days' nor less than 30 days' notice to the Trust. The period of prior
notice of termination shall be reduced to the extent necessary to
comply with the effective date of any change in applicable laws or
regulations (or interpretations thereof) which prevents or impairs full
performance of the obligations set forth herein. Provided, however, in
the event such period of prior notice is reduced, the terminating party
shall give prompt notice of termination. Notwithstanding anything
herein to the contrary, but except as provided in Section 19 of this
Agreement, this Agreement may not be assigned and shall terminate
automatically without notice to either party upon any assignment. Upon
termination hereof, the Trust shall pay such compensation as may be due
the Agent as of the date of such termination.
16. CHANGES; AMENDMENTS. This Agreement may be changed or
amended only by written instrument signed by both parties.
17. LIMITATION OF SHAREHOLDER LIABILITY. The Agent hereby
agrees that obligations assumed by the Trust pursuant to this Agreement
shall be limited in all cases to the Trust and its assets and that the
Agent shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Trust. It is further agreed that
the Agent shall not seek satisfaction of any such obligations from the
Board of Trustees or any individual Trustee of the Trust.
18. DIVIDEND PAYMENT DATES. The Trust hereby agrees, with
respect to any Trust that is a money market fund, that dividends
otherwise payable to any Customer on the last business day of each
month shall, to the extent required by the Agent, be distributed on
such other date in each month as the Agent may designate as the
dividend distribution date with respect to such Customer.
19. SUBCONTRACTING BY AGENT. The Agent may, with the written
approval of the Trust (such approval not to be unreasonably withheld or
delayed), subcontract for the performance of the Agent's obligations
hereunder with any one or more persons, including but not limited to
any one or more persons which is an affiliate of the Agent; provided,
however, that the Agent shall be as fully responsible to the Trust for
the acts and omissions of any subcontractor as it would be for its own
acts or omissions. The Trust hereby approves the use of Boston Data
Financial Services, Inc. as a subcontractor of the Agent hereunder.
20. AUTHORITY TO VOTE. The Trust hereby confirms that,
pursuant to the Declaration of Trust of the Trust, at any meeting of
shareholders of the Trust or of any series of the Trust, the Agent is
authorized to vote any Shares held in accounts serviced by the Agent
and which are otherwise not represented in person or by proxy at the
meeting, proportionately in accordance with the votes cast by holders
of all Shares otherwise represented at the meeting in person or by
proxy and held in accounts serviced by the Agent.
21. COMPLIANCE WITH LAWS AND POLICIES; COOPERATION. The Trust
hereby agrees that it will comply with all laws and regulations
applicable to its operations and the Agent agrees that it will comply
with all laws and regulations applicable to its operations hereunder
and each party agrees from time to time to provide such certificates,
information and access to its books, records and personnel as the other
may reasonably request to confirm the foregoing. Each party understands
that the other may from time to time adopt or modify policies relating
to the subject matter of this Agreement, in which case the party
adopting or modifying such a policy shall notify the other thereof and
the parties shall consider the applicability thereof and endeavor to
comply therewith to the extent not impracticable or unreasonably
burdensome. Each of the parties agrees to cooperate with the other in
connection with the performance of this Agreement and the resolution of
any problems, questions or disagreements in connection herewith.
21.1 Audit. The Trust shall maintain or arrange to be
maintained complete and accurate accounting records, in accordance with
generally accepted accounting principles. The Trust shall retain or
arrange to be retained such records for a period of three years from
the termination of this Agreement. The Agent and its designated
certified public accountants shall have access to such records based on
reasonable cause and professional judgment during normal business hours
upon reasonable notice to the Trust.
21.2 Annual Financial Reports. At least once a year, the Trust
shall send to the owners of its shares and to the Agent the Trust's
audited financial statements.
21.3 Shareholder Updates. The Trust shall give the Agent
advance written notice of any change in the Trust's place of
incorporation, mailing address, management, investment objectives, fees
or redemption rights. The Trust shall give such advance notice to the
owners of its shares to the extent required by federal securities laws
or the rules and regulations of the Securities and Exchange Commission.
21.4. Annual Certification. At least once a year, the parties
shall certify to each other in writing that the certifying party is
conducting its business in accordance with the terms and conditions of
the Agreement and in the case of the Trust, in accordance with the
representations set forth in its then current prospectus.
22. MISCELLANEOUS. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one and the same
instrument. Although this Agreement has been executed by multiple
parties, it shall be construed and enforced as a separate agreement
between each Trust and the Financial Institution acting as Agent for
such Trust. The terms of this Agreement shall become effective with
respect to each Trust and the Financial Institution listed on a
signature page hereof as of the date set forth thereon.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered in their names and on their behalf by the
undersigned, thereunto duly authorized, all as of the day and year set
forth below. The undersigned officer of the Trust has executed this
Agreement not individually, but as an officer of the Trust pursuant to
the Trust's Declaration of Trust, as from time to time amended, and the
obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but bind only the
Trust estate.
Dated as of:
---------------------------
[NAME OF TRUST] THE LANDMARK FUNDS BROKER-
[NAME OF SERIES, IF ANY] DEALER SERVICES, INC.
By: By:
------------------------------- -------------------------------
Name: Name:
------------------------------- -------------------------------
Title: Title:
------------------------------- -------------------------------
Principal Place of Business: Principal Place of Business:
6 St. James Avenue 6 St. James Avenue
Boston, Massachusetts 02116 Boston, Massachusetts 02116
SSA/LFBDS
<PAGE>
Exhibit 10
BINGHAM, DANA & GOULD
15O FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
TELEPHONE: (617) 951-8000
TELEX: 275147 BDGBSN UR
CABLE ADDRESS: BLODGHAM BSN
TELECOPY: (617) 951-8736
WASHINGTON OFFICE ROUTE 128 OFFICE CAPE COD OFFICE LONDON OFFICE
(202) 822-8320 (617) 890-0922 (508) 420-0283 011-44-1-792-2846
April 30, 1990
Landmark Funds I
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
We have acted as counsel to Landmark Funds I (formerly, Landmark Growth
and Income Fund), a Massachusetts business trust (the "Trust"), in connection
with Post-Effective Amendment No. 6 to the Trust's Registration Statement on
Form N-1A filed with the Securities and Exchange Commission on April 27, 1990
(as amended by such Post-Effective Amendment No. 6, the "Registration
Statement"), with respect to Shares of Beneficial Interest (without par value)
(the "Shares") of its series designated as Landmark Total Return Fund (the
"Fund"). It is proposed that the name of the Fund be changed to Landmark
Balanced Fund.
We have made such investigations and have examined and relied upon the
originals or copies, certified or otherwise identified to our satisfaction, of
such records, instruments, certificates, memoranda and other documents as we
have deemed necessary or advisable for the purposes of this opinion. In that
examination, we have assumed the genuineness of all signatures, the authenticity
and completeness of all documents purporting to be originals (whether reviewed
by us in original or copy form) and the conformity to the originals of all
documents purporting to be copies.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts as applied by courts in Massachusetts.
Based upon and subject to the foregoing, please be advised that it is
our opinion that the Shares, when issued and sold in accordance with the Trust's
Declaration of Trust, its By-Laws, the Declaration of Series establishing the
Fund and the Registration Statement, will be legally issued, fully paid and
non-assessable, except that, as set forth in the Registration Statement,
shareholders of the Trust may under certain circumstances be held personally
liable for its obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Bingham, Dana & Gould
BINGHAM, DANA & GOULD
0023E
<PAGE>
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 27 to the registration statement on Form N-1A (the "Registration
Statement") of Landmark Funds I of our report dated February 2, 1998, relating
to the financial statements and financial highlights of Landmark Balanced Fund
appearing in the December 31, 1997 Annual Report of Landmark Balanced Fund,
which are also incorporated by reference into the Registration Statement. We
also consent to the references to us under the headings "Condensed Financial
Information" and "Counsel and Independent Auditors" in the Prospectus and under
the headings "Auditors" and "Independent Accountants and Financial Statements"
in the Statement of Additional Information.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 18, 1998
<PAGE>
Exhibit 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 27
to the registration statement on Form N-1A (the "Registration Statement") of
Landmark Funds I of our report dated February 2, 1998, relating to the financial
statements and financial highlights of the Balanced Portfolio appearing in the
December 31, 1997 Annual Report of Landmark Balanced Fund, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Auditors" and "Independent Accountants
and Financial Statements" in the Statement of Additional Information.
/s/ PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 18, 1998
<PAGE>
Exhibit 15
AMENDED AND RESTATED
DISTRIBUTION PLAN-CLASS A
DISTRIBUTION PLAN, dated as of August 21, 1986 and amended and restated as
of May 5, 1995 of Landmark Funds I, a Massachusetts business trust (the "Trust")
with respect to Shares of Beneficial Interest to be designated "Class A".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds"); and
WHEREAS, the Trust intends to distribute the shares of each Fund designated
Class A Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act
("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a
plan of distribution pursuant to such Rule; and
WHEREAS, the Trust desires to engage The Landmark Funds Broker-Dealer
Services, Inc., a Massachusetts corporation ("LFBDS"), to provide certain
distribution services for the Trust (the "Distributor"); and
WHEREAS, the Trust desires to enter into an amended and restated
distribution agreement (in such form as may from time to time be approved by the
Board of Trustees of the Trust in the manner specified in Rule 12b-1) with the
Distributor, whereby the Distributor will provide facilities and personnel and
render services to the Trust in connection with the offering and distribution of
the Shares of each Fund (the "Distribution Agreement"); and
WHEREAS, the Trust recognizes and agrees that the Distributor may retain
the services of any one or more broker-dealers registered as such under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), banks and
other financial intermediaries, to act as dealer or agent in connection with the
offering of Shares of a Fund, and the Distributor may make periodic payments,
out of the fee paid to the Distributor, its profits or any other source
available to it, to such broker-dealer, bank or other financial intermediary for
such services; and
WHEREAS, the Distribution Agreement provides that a sales charge may be
paid by investors who purchase Shares and that the Distributor and
broker-dealers, banks and other financial intermediaries, may receive such sales
charge as partial compensation for their services in connection with the sale of
Shares; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as
it deemed necessary to an informed determination as to whether this Plan should
be adopted and implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use assets of each Fund for
such purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan
for the Trust as a plan for distribution in accordance with Rule 12b-1, on the
following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the
offering and sale of Shares of each Fund to customers of financial
institutions which have entered into shareholder servicing agreements
with the Trust applicable to such Fund. Among other things, the
Distributor shall be responsible for all expenses of printing
(excluding typesetting) and distributing prospectuses, and, upon
request, statements of additional information, to prospective
shareholders of each Fund and providing such other related services as
are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses described
in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel,
office expenses (including rent and overhead), equipment, printing,
delivery and mailing costs.
3. It is understood that, under certain circumstances, the Distributor may
impose certain deferred sales charges in connection with the repurchase
of Shares of each Fund and the Distributor may retain (or receive from
each Fund, as the case may be) all such deferred sales charges. As
additional consideration for services performed and expenses incurred
in the performance of its obligations under the Distribution Agreement,
except in connection with print or electronic media advertising, the
Trust shall pay the Distributor from the assets of each Fund a
distribution fee periodically at an annual rate not to exceed 0.10% of
the average daily net assets of such Fund for its then-current fiscal
year attributable to the Shares of that Fund (the "Basic Distribution
Fee"). The Trust shall pay the Distributor an additional fee from the
assets of each Fund at an annual rate not to exceed 0.05% of the
average daily net assets of such Fund for its then-current fiscal year
attributable to the Shares of that Fund in anticipation of, or as
reimbursement for, expenses incurred by the Distributor in connection
with print or electronic media advertising in connection with the sale
of Shares of such Fund.
4. As partial consideration for the personal services and/or account
maintenance services performed by the Distributor and/or each
broker-dealer, bank or other financial intermediary in the performance
of its obligations under its dealer or agency agreement with the
Distributor, each Fund may pay the Distributor and/or each
broker-dealer, bank or other financial intermediary a service fee
periodically at a rate not to exceed in the aggregate 0.25% per annum
of the average daily net assets of such Fund (and provided that any
service fee paid to a broker-dealer, bank or other financial
intermediary will not exceed 0.25% per annum of the portion of the
average daily net assets of such Fund that is represented by Shares
that are owned by investors for whom such broker-dealer, bank or other
financial intermediary is the holder or intermediary of record). That
portion of each such Fund's average daily net assets on which the fees
payable to a broker-dealer, bank or other financial intermediary under
this paragraph 4 hereof are calculated may be subject to certain
minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established from
time to time, by the Distributor. The service fee payable to a
broker-dealer, bank or other financial intermediary pursuant to this
paragraph 4 may from time to time be paid by each Fund to the
Distributor and the Distributor will then pay these fees on behalf of
such Fund.
5. The Trust understands that an agreement between the Distributor and any
broker-dealer registered as such under the Exchange Act, bank or other
financial intermediary may provide for a portion (which may be
substantially all) of the fees payable to the Distributor under the
Distribution Agreement to be paid by the Distributor to such
broker-dealer, bank or other financial intermediary in consideration of
services in connection with the sale of the Shares of any Fund. Nothing
in this Plan shall be construed as requiring the Trust to make any
payment to any such broker-dealer, bank or other financial intermediary
or to have any obligation to such broker-dealer, bank or other
financial intermediary in connection with its services. The Distributor
agrees and hereby undertakes that any agreement entered into between
the Distributor and any such broker-dealer, bank or other financial
intermediary shall provide that such broker-dealer, bank or other
financial intermediary shall look solely to the Distributor for
compensation for its services thereunder and that in no event shall
such broker-dealer, bank or other financial intermediary seek any
payment from the Trust or its shareholders.
6. The Trust shall pay all fees and expenses of any independent auditor,
legal counsel, administrator, transfer agent, custodian, shareholder
servicing agent, registrar or dividend disbursing agent of the Trust;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses and
statements of additional information, shareholder reports, notices,
proxy statements and reports to government officers and commissions and
to shareholders of the Trust except that the Distributor shall be
responsible for the expenses of printing (excluding typesetting) and
distributing prospectuses and statements of additional information to
prospective shareholders as provided in paragraphs 1 and 2 hereof;
expenses connected with the execution, recording and settlement of
portfolio security transactions; insurance premiums; expenses of
calculating the net asset value of Shares; expenses of shareholder
meetings; and expenses relating to the issuance, registration and
qualification of Shares.
7. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of Trustees
of the responsibility for and control of the conduct of the affairs of
the Trust.
8. This Plan shall become effective as to any Fund upon (a) approval by a
vote of at least a "majority of the outstanding voting securities" of
the Shares of that Fund, and (b) approval by a vote of the Board of
Trustees and vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at
a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the
Board of Trustees of the Trust and a majority of the Qualified
Trustees, such votes to be cast in person at a meeting called for the
purpose of voting on continuance of this Plan. If such annual approval
is not obtained, this Plan shall expire on the date which is 15 months
after the date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the
amount to be expended from the assets of any Fund attributable to the
Shares for the services described herein shall be effective only upon
approval by a vote of a "majority of the outstanding voting securities"
of the Shares of such Fund, and (b) any material amendment of this Plan
shall be effective only upon approval by a vote of the Board of
Trustees of the Trust and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of
voting on such amendment. This Plan may be terminated at any time with
respect to any Fund by vote of a majority of the Qualified Trustees or
by a vote of a "majority of the outstanding voting securities" of the
Shares of such Fund.
11. The Trust and the Distributor each shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at
least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
12. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons" and
"majority of the outstanding voting securities" are used as defined in
the 1940 Act. In addition, for purposes of determining the fees payable
to the Distributor, the value of the net assets of any Fund shall be
computed in the manner specified in the Trust's then-current prospectus
and statement of additional information applicable to that Fund for
computation of the net asset value applicable to Shares of that Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof
(collectively, the "Records") for a period of six years from the end of
the fiscal year in which such Record was made and each such Record
shall be kept in an easily accessible place for the first two years of
said record-keeping.
15. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
Exhibit 25(a)
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Molly S. Mugler and Linda T. Gibson, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by Landmark Funds I (on behalf
of each of its series now or hereinafter created) (the "Registrant") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and under the Investment Company Act of 1940, as amended, and any and all other
instruments which such attorneys and agents, or any of them, deem necessary or
advisable to enable the Registrant to comply with the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Philip W. Coolidge
- ------------------------------
Philip W. Coolidge
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Funds I (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Riley C. Gilley
- ---------------------------
Riley C. Gilley
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Landmark Funds I (on
behalf of each of its series now or hereinafter created) (the "Registrant") with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, and under the Investment Company Act of 1940, as amended, and any and
all other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Registrant to comply with the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the
rules, regulations and requirements of the Securities and Exchange Commission,
and the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
John R. Elder
- --------------------------
John R. Elder
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Funds I (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
C. Oscar Morong, Jr.
- -------------------------------
C. Oscar Morong, Jr.
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Funds I (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
E. Kirby Warren
- --------------------------
E. Kirby Warren
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Funds I (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
William S. Woods, Jr.
- ----------------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as her true and lawful attorneys and agents to
execute in her name and on her behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Funds I (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as her own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day of
February, 1998.
Diana R. Harrington
- ----------------------------
Diana R. Harrington
<PAGE>
LANDMARK FUNDS I
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as her true and lawful attorneys and agents to
execute in her name and on her behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Funds I (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as her own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day of
February, 1998.
Susan B. Kerley
- --------------------------
Susan B. Kerley
<PAGE>
Exhibit 25(b)
THE PREMIUM PORTFOLIOS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
C. Oscar Morong, Jr.
- -------------------------------
C. Oscar Morong, Jr.
At Southampton, Bermuda
<PAGE>
THE PREMIUM PORTFOLIOS
The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by The Premium
Portfolios (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, the Registration Statements on Form N-1A, and
any and all amendments thereto, to be executed by the Registrant and filed by
another registrant with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, or under the Securities Act of 1933,
as amended, and any and all other instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable the Registrant to comply
with the Investment Company Act of 1940, as amended, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction; and the undersigned hereby
ratifies and confirms as his own act and deed any and all that such attorneys
and agents, or any of them, shall do or cause to be done by virtue hereof. Any
one of such attorneys and agents shall have, and may exercise, all of the powers
hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
John R. Elder
- -----------------------------
John R. Elder
At Southampton, Bermuda
<PAGE>
THE PREMIUM PORTFOLIOS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Elliott J. Berv
- -----------------------------
Elliott J. Berv
At Southampton, Bermuda
<PAGE>
THE PREMIUM PORTFOLIOS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Mark T. Finn
- ---------------------------
Mark T. Finn
At Southampton, Bermuda
<PAGE>
THE PREMIUM PORTFOLIOS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by The
Premium Portfolios (on behalf of each of its series now or hereinafter created)
(the "Registrant") with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, the Registration Statements on Form
N-1A, and any and all amendments thereto, to be executed by the Registrant and
filed by another registrant with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, or under the Securities Act of
1933, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Walter E. Robb, III
- ---------------------------------
Walter E. Robb, III
At Southampton, Bermuda
<PAGE>
THE PREMIUM PORTFOLIOS
The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Molly S. Mugler and Linda T. Gibson, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by The Premium Portfolios (on
behalf of each of its series now or hereinafter created) (the "Registrant") with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, the Registration Statements on Form N-1A, and any and all amendments
thereto, to be executed by the Registrant and filed by another registrant with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, or under the Securities Act of 1933, as amended, and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Registrant to comply with the Investment
Company Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Philip W. Coolidge
- ---------------------------------
Philip W. Coolidge
At Southampton, Bermuda
<TABLE> <S> <C>
<PAGE>
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