SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 240.14a-12
Landmark Funds II - Landmark Equity Fund and Landmark Small Cap Equity Fund
(Name of Registrant as Specified In Its Charter)
Lea Anne Copenhefer
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
_______________________________________________________________________
2. Form, Schedule or Registration Statement No.:
_______________________________________________________________________
3. Filing Party:
_______________________________________________________________________
4. Date Filed:
_______________________________________________________________________
<PAGE>
BD&G Draft
8/13/97
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
LANDMARK EQUITY FUND
LANDMARK SMALL CAP EQUITY FUND
6 St. James Avenue
Boston, Massachusetts 02116
August __, 1997
Dear Shareholder:
The accompanying materials relate to a Special Meeting of Shareholders of
Landmark Equity Fund and Landmark Small Cap Equity Fund. The Meeting will be
held on Friday, October 17, 1997 at [ ] [a.m./p.m.] Eastern time.
YOUR PARTICIPATION AT THIS MEETING IS VERY IMPORTANT IN ORDER TO
ACCOMPLISH PROPOSALS WHICH YOUR BOARD OF TRUSTEES HAS DETERMINED ARE FAIR AND
REASONABLE AND IN YOUR BEST INTERESTS.
If you cannot attend the Meeting, you may participate by proxy. As a
shareholder, you cast one vote for each share that you own. Please take a few
moments to read the enclosed materials and then cast your vote on the enclosed
proxy card. If the Funds do not receive your proxy card, our proxy solicitor,
Shareholder Communications Corporation ("SCC"), may contact you to help you
decide how to cast your vote.
VOTING TAKES ONLY A FEW MINUTES. EACH SHAREHOLDER'S VOTE IS IMPORTANT.
YOUR PROMPT RESPONSE WILL BE MUCH APPRECIATED.
At the meeting, you will be asked to vote on proposals that would give
the Funds increased flexibility to invest in other investment companies. This
would allow the Funds to take advantage in the future of recent changes in
federal law without the expense of an additional shareholder meeting. You also
will be asked to vote on several other matters which relate, in large part, to
conforming the service arrangements and investment policies for the Funds to
other open-end funds managed by Citibank, N.A. All of these proposals are
described in the accompanying Notice and Proxy Statement.
After you have voted on the proposals, please be sure to SIGN YOUR PROXY
CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. If you have any
questions regarding the items to be voted on, or need assistance in completing
your proxy, please contact SCC at 1-800-733-8481 ext. 492.
We appreciate your participation in this important meeting. Thank you.
Sincerely,
Philip W. Coolidge
President
<PAGE>
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
LANDMARK EQUITY FUND
LANDMARK SMALL CAP EQUITY FUND
6 St. James Avenue
Boston, Massachusetts 02116
Telephone: (800) __________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held October 17, 1997
A Special Meeting of Shareholders of Landmark Equity Fund and Landmark
Small Cap Equity Fund will be held at Citicorp Center, 153 East 53rd Street, [
] Floor, New York, New York, on Friday, October 17, 1997 at [ ] [a.m./p.m.],
Eastern Time, for the following purposes:
ITEM 1. To vote on an amendment to the Funds' Declaration of Trust to
allow the assets of each Fund to be invested in one or more
investment companies to the extent not prohibited by the
Investment Company Act of 1940, the rules and regulations
thereunder, and exemptive orders granted under such Act (the
"1940 Act").
ITEM 2. To vote on an amendment to the fundamental investment
policies of each Fund to allow the assets of that Fund to be
invested in one or more investment companies to the extent not
prohibited by the 1940 Act.
ITEM 3. To vote on an amendment to the Declaration of Trust of the
Funds' corresponding Portfolios broadening the definition of
who may invest in those Portfolios and limiting the liability
of investors therein.
ITEM 4. To vote on an amendment to the fundamental investment
policies of each Fund concerning that Fund's ability to make
loans to other persons and to buy or sell futures contracts and
options on futures.
ITEM 5. (a) For Landmark Equity Fund, to vote on a proposal to adopt
fundamental investment policies concerning the underwriting of
securities, purchases and sales of real estate and commodities
and issuance of senior securities.
(b) For Landmark Small Cap Equity Fund, to vote on an amendment
to the Fund's fundamental investment policy concerning the
issuance of senior securities.
<PAGE>
ITEM 6. To vote on a Management Agreement for each Fund with Citibank,
N.A.
ITEM 7. To vote on a Management Agreement for each Fund's corresponding
Portfolio with Citibank, N.A.
ITEM 8. To vote on a Service Plan for each Fund pursuant to Rule
12b-1 under the 1940 Act.
ITEM 9. To vote on the selection of Price Waterhouse LLP as the
independent certified public accountants for each Fund.
ITEM 10. To transact such other business as may properly come before
the Special Meeting of Shareholders and any adjournments
thereof.
THE BOARD OF TRUSTEES OF THE FUNDS RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF
ITEMS 1 THROUGH 9.
Only shareholders of record on August 18, 1997 will be entitled to vote
at the Special Meeting of Shareholders and at any adjournments thereof.
Linda T. Gibson, Secretary
August __, 1997
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING
AND RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE
OF A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE
AND IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
LANDMARK EQUITY FUND
LANDMARK SMALL CAP EQUITY FUND
6 St. James Avenue
Boston, Massachusetts 02116
Telephone: (800) __________
PROXY STATEMENT
This Proxy Statement and Notice of Special Meeting with accompanying form
of proxy are being furnished in connection with the solicitation of proxies by
the Board of Trustees of Landmark Equity Fund and Landmark Small Cap Equity
Fund for use at a Special Meeting of Shareholders of these Funds, or any
adjournment thereof, to be held at Citicorp Center, 153 East 53rd Street, [ ]
Floor, New York, New York, on Friday, October 17, 1997 at [ ] [a.m./p.m.],
Eastern Time. The Meeting is being held to vote on matters which will give the
Funds increased flexibility to invest in other investment companies and certain
other matters, as described below and in the accompanying President's Letter
and Notice of Special Meeting.
The close of business on August 18, 1997 has been fixed as the Record
Date for the determination of shareholders entitled to notice of and to vote at
the Meeting. [ ] shares of Landmark Equity Fund and [ ] shares of Landmark
Small Cap Equity Fund, without par value, were outstanding as of the close of
business on the Record Date. Shareholders of record at the close of business on
the Record Date will be entitled to one vote for each share held.
The Funds' Annual Report for the fiscal year ended December 31, 1996,
including audited financial statements, has previously been sent to
shareholders and is available without charge upon request by calling the Funds
toll free at (800) 625-4554.
This Proxy Statement and Notice of Special Meeting with accompanying form
of proxy are being mailed by the Board of Trustees on or about August __, 1997.
The Funds currently are organized in a two-tier, master/feeder structure
whereby each Fund invests all of its investable assets in a single investment
company. As described below, the Funds are seeking the flexibility to invest in
more than one investment company, consistent with their investment objectives.
This change has been made possible by a recent amendment of federal law.
Although the Funds currently have no plans to change their investment
structure, the Board believes this flexibility will permit the Funds to take
advantage in the future of these and any further changes in federal law on
investment in other investment companies without the expense of an additional
shareholder meeting. Shareholders are being asked to vote on certain changes to
the Funds' investment restrictions and governing documents, as well as certain
other matters, to permit this change.
Shareholders are also being asked to approve a Service Plan pursuant to
Rule 12b-1 under the federal Investment Company Act of 1940 (the "1940 Act"),
to authorize certain other technical amendments to the Funds' investment
restrictions and to approve the selection of the Funds' accountants.
<PAGE>
MANNER OF VOTING PROXIES AND VOTE REQUIRED
If the accompanying form of proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. Shareholders of each Fund will vote separately with
respect to each Item other than Item 9, where all shareholders will vote
together as a single class. IF NO INSTRUCTIONS ARE SPECIFIED, ALL SHARES OF
EACH FUND WILL BE VOTED FOR EACH OF PROPOSED ITEMS 1 THROUGH 9. If the enclosed
form of proxy is executed and returned, it may nevertheless be revoked prior to
its exercise by a signed writing delivered at the Meeting or filed with the
Secretary of the Funds.
If sufficient votes to approve the proposed Items 1 through 9 are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares voted at the
Meeting. When voting on a proposed adjournment, the persons named as proxies
will vote all shares that they are entitled to vote with respect to Items 1
through 9 for the proposed adjournment, unless directed to disapprove the Item,
in which case such shares will be voted against the proposed adjournment.
With respect to each Fund, the presence in person or by proxy of the
holders of a majority of the outstanding shares of that Fund entitled to vote
is required to constitute a quorum at the Meeting for purposes of voting on
Items 1 through 9. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" (that
is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or
nominees do not have discretionary power) will be treated as shares that are
present but which have not been voted. For this reason, abstentions and broker
"non-votes" will have the effect of a "no" vote for purposes of obtaining the
requisite approval of Items 1 through 9.
GENERAL BACKGROUND
The Funds are open-end management investment companies, or mutual funds.
Landmark Equity Fund invests in a broadly diversified portfolio of equity
securities consisting mainly of common stocks of U.S. issuers with medium to
large market capitalizations, i.e., $750 million or more at the time of the
Fund's investment. The Fund emphasizes securities of issuers believed to have
above-average prospects for growth. Landmark Small Cap Equity Fund invests in a
diversified portfolio consisting primarily of equity securities of U.S.
companies that have market capitalizations of $750 million or less at the time
of the Fund's investment. In addition, the Fund may invest in companies that
are believed to be emerging companies relative to their potential markets.
The Funds currently are organized in a two-tier, master/feeder structure.
Each Fund invests all of its investable assets in a single investment company
(a "Portfolio") with the same investment objective and policies as that Fund.
Each Portfolio buys, holds and sells securities in accordance with its
objective and policies. Each Fund may withdraw its investment in its Portfolio
<PAGE>
at any time, and will do so when the Fund's Trustees believe that withdrawal
would be in the best interests of the Fund's shareholders.
Until recently, mutual funds could not invest their assets in more than
one other registered investment company without obtaining exemptive relief from
the Securities and Exchange Commission (the "SEC"). Recent amendments to the
1940 Act now permit funds to invest their assets in multiple registered
investment companies so long as the investment companies hold themselves out to
investors as related companies for purposes of investment and investor
services. It is possible that there could be additional amendments to the 1940
Act in the future which affect mutual funds' ability to invest in other funds.
In order to take advantage of this change in law and any future changes
in law on this topic, the Funds are proposing that their Declaration of Trust
and their fundamental investment policies be amended to give them the
flexibility to invest in multiple investment companies to the extent permitted
by applicable law. Although the Funds have no current plan to change their
investment structure, the proposed changes will permit the Funds to change that
structure in the future without the expense of an additional shareholder
meeting.
In addition, the Funds are proposing certain technical amendments to
their fundamental investment policies. These amendments are intended for
clarification and for conforming the policies to those of other Landmark Funds
and other mutual funds advised by Citibank.
The Funds currently do not have investment advisory agreements because
they invest all of their investable assets in their corresponding Portfolios.
The Funds currently receive administrative services under administrative
services agreements with their distributor. The distributor, in turn,
subcontracts with Citibank so that Citibank actually provides administrative
services to the Funds. The Portfolios have similar arrangements for
administrative services, but in addition each Portfolio has an investment
advisory agreement with Citibank. The Funds are proposing to simplify these
contractual arrangements. Each Fund will enter into a management agreement with
Citibank. These agreements will permit them to obtain both investment advisory
and administrative services directly from Citibank. By providing for investment
advisory services at the Fund level, these agreements will enable the Funds to
invest in multiple investment companies, if they choose to do so. The
Portfolios also will enter into similar management agreements with Citibank.
The Funds' and Portfolios' existing administrative services agreements, and the
Portfolios' existing investment advisory agreements, will then be unnecessary,
and will be terminated. THE AGGREGATE MANAGEMENT FEES PAYABLE BY FUND
SHAREHOLDERS UNDER THE PROPOSED MANAGEMENT AGREEMENTS WILL BE HIGHER THAN THE
AGGREGATE INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES FEES CURRENTLY
PAYABLE BY FUND SHAREHOLDERS, BUT, AS NOTED BELOW, IF NEW SERVICE PLANS ARE
ADOPTED, THE FUNDS' CONTRACTUAL TOTAL EXPENSE RATIOS ARE NOT EXPECTED TO
increase.
The Funds also are proposing to replace their existing Rule 12b-1
Distribution Plans with Service Plans entered into pursuant to Rule 12b-1 under
the 1940 Act. The Service Plans will permit payment of distribution and service
fees which are lower than the maximum fees currently permissible under the
existing Distribution Plans. The Funds are proposing the Service Plans in order
to simplify their existing distribution and service arrangements, and to
conform them to those of other open-end funds managed by Citibank.
<PAGE>
IMPORTANTLY, THE FUNDS' CONTRACTUAL TOTAL EXPENSE RATIOS WILL NOT
INCREASE AS A RESULT OF THE CHANGES DESCRIBED ABOVE. IN FACT, THE FUNDS' TOTAL
EXPENSE RATIOS, COMPUTED BASED ON CONTRACTUAL FEE LEVELS WITHOUT VOLUNTARY
WAIVERS, WILL DECREASE. IT IS EXPECTED THAT THE SAME PERSONNEL AT CITIBANK WHO
CURRENTLY PROVIDE SERVICES TO THE FUNDS AND PORTFOLIOS WILL CONTINUE TO DO SO
AFTER GIVING EFFECT TO THESE CHANGES, AND THE NATURE, LEVEL AND QUALITY OF
SERVICES TO THE FUNDS WILL NOT BE ADVERSELY AFFECTED.
The following table summarizes current estimated annual operating
expenses for each of the Funds and its Portfolio, without any fee waivers or
reimbursements. The following table also summarizes pro forma estimated annual
operating expenses for the Funds after giving effect to the proposals set forth
in Items 6, 7 and 8. The pro forma expenses also do not reflect any fee waivers
or reimbursements.
<TABLE>
<CAPTION>
National Fund New York Fund
Current(5) Pro Forma Current(5) Pro Forma
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES:
Management Fee..................... .50% .90%(1) .75%(1) 1.10%(1)
12b-1 Fees (2)..................... .20%(3) .25% .20%(3) .25%
Other Expenses
Administrative Services Fees...... .30% See(1) .30% See (1)
Shareholder Servicing Agent Fees.. .25% None .25% None
Other Operating Expenses.......... .10%(4) [____] .38% [___]
Total Operating Expenses........... 1.35%(3) [_____%] 1.88%(3) [____%]
</TABLE>
(1) A combined fee for investment advisory and administrative services.
(2) 12b-1 distribution fees are asset-based sales charges.
(3) 12b-1 fees assume a .05% charge for print or electronic media expenses, but
do not reflect the .25% service fee currently permissible under the
existing Distribution Plans. If this service fee were included, 12b-1 fees
would be .45% for each Fund, and total operating expenses would be 1.60%
for the Equity Fund and 2.13% for the Small Cap Equity Fund.
(4) The Equity Fund's distributor has agreed to pay the Fund's ordinary
expenses, subject to certain exceptions. The distributor receives a fee
from the Fund.
(5) After giving effect to fee waivers and reimbursements currently in effect,
administrative services fees, 12b-1 fees and total fund operating expenses
would be .15%, .05%, and 1.05% for the Equity Fund, and .15%, .05% and
1.35% for the Small Cap Equity Fund, respectively.
EXAMPLE: Based on the table above and without any fee waivers or
reimbursements, a shareholder would pay the following expenses on a $1,000
investment in each Fund, assuming a 5% annual return, that all dividends are
reinvested, and redemption at the end of each period indicated below:
One Year Three Five Ten Years
Years Years
EQUITY FUND (1)
Current (2)...... $61 $88 $118 $202
Pro Forma........ $__ $__ $___ $___
<PAGE>
SMALL CAP EQUITY
FUND(1)
Current (2)...... $66 $104 $144 $257
Pro Forma........ $__ $__ $___ $___
(1)Assumes deduction at the time of purchase of the maximum 4.75% sales load.
Expenses are based on each Fund's fiscal year ended December 31, 1996.
(2)After giving effect to certain voluntary fee waivers, the amounts in the
example would be $58, $79, $103 and $170 for the Equity Fund and $61, $88,
$118 and $202 for the Small Cap Equity Fund.
The assumption of a 5% annual return in the Example is required by the
Securities and Exchange Commission for all mutual funds, and is not a
prediction of either Fund's future performance. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF EITHER FUND. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The Funds' Trustees believe that the matters described in this section
are in the best interests of Fund shareholders. In the event that the proposals
in Items 1 through 9 below do not receive the requisite shareholder approval
for the Funds, the Trustees will consider possible alternatives, which might
include resubmission of the proposals for approval by shareholders of the
Funds.
ITEM 1. TO VOTE ON AN AMENDMENT TO THE FUNDS' DECLARATION OF TRUST
TO ALLOW THE ASSETS OF EACH FUND TO BE INVESTED IN ONE OR MORE
INVESTMENT COMPANIES TO THE EXTENT NOT PROHIBITED BY THE 1940
ACT.
It is proposed that the Funds' Declaration of Trust be amended to permit
the Funds to invest in other investment companies to the extent not prohibited
by the 1940 Act.
The Funds' Declaration of Trust presently permits each Fund to invest all
of its investable assets in a single investment company that is registered
under the 1940 Act. This permission appears in Section 3.2(c) of the
Declaration of Trust for Landmark Equity Fund, and in a later amendment to the
Declaration which established and designated Landmark Small Cap Equity Fund as
a separate Fund for Landmark Small Cap Equity Fund. Pursuant to this authority,
each Fund invests all of its investable assets in a Portfolio with the same
investment objectives and policies as the Fund. As described above, recent
amendments to the 1940 Act permit mutual funds to invest their investable
assets in multiple registered investment companies so long as certain
conditions are met. It is possible that there could be additional amendments to
the 1940 Act in the future which affect mutual funds' ability to invest in
other funds.
The proposed amendment to the Funds' Declaration of Trust which appears
below will allow the Funds to take advantage of the recent changes in law, as
well as future changes in law or regulation on this topic. The Funds' Board of
Trustees believes that this amendment will be to the Funds' advantage and is in
the best interests of the shareholders of each Fund. It is proposed that
Section 3.2(c) of the Declaration of Trust be amended by deleting the words
below that have been bracketed and adding the double bracketed words:
<PAGE>
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without
any requirement of approval by Shareholders to either invest all or a
portion of the Trust Property of Landmark Equity Fund [[and of each other
Series of the Trust,]] or sell all or a portion of such Trust Property and
invest the proceeds of such sales, in [another investment company that is
registered under the 1940 Act] [[one or more investment companies to the
extent not prohibited by the 1940 Act and exemptive orders granted under
such Act.]]
Under the Declaration of Trust, the 1940 Act is defined to include both
that Act itself and the rules and regulations under that Act; the amendment
would be based on that definition.
The Portfolios' Declaration of Trust currently does not contemplate the
investment by any Portfolio in one or more investment companies. The Portfolios
wish to include this capability in their Declaration of Trust even though, like
the Funds, they have no current plans to invest in other investment companies.
See "General Background." The Portfolios will call a meeting of their investors
to approve an amendment to their Declaration of Trust similar to the amendment
described above for the Funds' Declaration of Trust. By voting in favor of this
Item, Fund shareholders will be authorizing the Funds' Trustees to vote in
favor of this amendment.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
shares of a Fund is required for approval of the amendment to the Declaration
of Trust with respect to that Fund. This requires approval by the holders of
67% or more of the outstanding shares of the Fund which are present at the
Meeting if the holders of more than 50% of such shares are present in person or
by proxy, or more than 50% of the outstanding shares of the Fund, whichever is
less (a "Majority Shareholder Vote").
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
DECLARATION OF
TRUST.
ITEM 2. TO VOTE ON AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT
POLICIES OF EACH FUND TO ALLOW THE ASSETS OF THAT FUND TO BE
INVESTED IN ONE OR MORE INVESTMENT COMPANIES TO THE EXTENT NOT
PROHIBITED BY THE 1940 ACT.
Each Fund has adopted certain fundamental investment restrictions which,
as a matter of law, cannot be changed without shareholder approval. Certain of
these fundamental investment restrictions currently permit each Fund to invest
its investable assets in a single investment company having the same investment
objectives and policies and substantially the same investment restrictions as
that Fund. As noted above, recent amendments to the 1940 Act permit mutual
funds to invest their investable assets in multiple investment companies so
long as certain conditions are met. There also may be future amendments to the
1940 Act affecting mutual funds' ability to invest in other funds.
<PAGE>
In order to take advantage of the flexibility of current and future
applicable law and regulation, it is proposed that each of the fundamental
investment restrictions listed in Exhibit A be amended as indicated in that
Exhibit. Shareholders also should review Item 4 for additional proposed changes
to these investment restrictions.
The Trustees believe that these proposed amendments to the fundamental
investment policies are in the best interests of the shareholders of each Fund.
The Portfolios have adopted fundamental restrictions which are
substantially similar to those listed in Exhibit A. Each of these restrictions
for the Portfolios will be amended in the same way that the Funds' restrictions
will be amended. The Portfolios will call a meeting of their investors to
approve these amendments. By voting in favor of this Item, Fund shareholders
will be authorizing the Funds' Trustees to vote in favor of these amendments to
the Portfolios' fundamental investment restrictions.
VOTE REQUIRED
Because the investment restrictions in Exhibit B are fundamental policies
of each Fund, approval of this proposal with respect to a Fund will require a
Majority Shareholder Vote of the shareholders of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
FUNDS' FUNDAMENTAL INVESTMENT POLICIES TO ALLOW THE ASSETS OF EACH FUND TO BE
INVESTED IN ONE OR MORE INVESTMENT COMPANIES TO THE EXTENT
NOT PROHIBITED BY THE 1940 ACT.
ITEM 3. TO VOTE ON AN AMENDMENT TO THE DECLARATION OF TRUST OF THE
FUNDS' CORRESPONDING PORTFOLIOS BROADENING THE DEFINITION OF
WHO MAY INVEST IN THOSE PORTFOLIOS AND LIMITING THE LIABILITY
OF INVESTORS THEREIN.
Each Fund currently invests all of its investable assets in a single
Portfolio with the same investment objective and policies as the Fund. It is
proposed that the Portfolios' Declaration of Trust be amended to broaden the
class of investors which may invest in the Portfolios. It also is proposed that
the Portfolios' Declaration of Trust be amended to provide that investors in
the Portfolios have no liability for the liabilities and obligations of the
Portfolios.
The Portfolios' Declaration of Trust presently provides that interests in
the Portfolios may be issued only to Institutional Investors. Institutional
Investors exclude partnerships and grantor trusts beneficially owned by
partnerships. Because some investment companies elect to be treated as
partnerships for tax purposes, this exclusion could be construed to prevent
those investment companies from investing in the Portfolios.
The Portfolios' Declaration of Trust also presently provides that each
holder of an interest in a Portfolio is jointly and severally liable with each
other holder of an interest in that Portfolio (with rights of contribution
among those holders in proportion to their respective interests in the
Portfolio) for the liabilities and obligations of that Portfolio in the event
<PAGE>
that the Portfolio falls to satisfy its liabilities and obligations from its
assets. This provision was included in the Declaration of Trust in order to
enable the Portfolios to be treated as partnerships for tax purposes, and thus
to be subject to no entity-level income taxes. As a result of recent changes in
the federal tax regulations, this liability provision is no longer necessary.
The proposed amendment to the Portfolios' Declaration of Trust which
appears in Exhibit B will permit the Portfolios to issue their interests to
partnerships whose partnership interests are held by entities which otherwise
meet the definition of Institutional Investor. The proposed amendment also will
allow the Portfolios and their investors, including the Funds, to take
advantage of the recent changes in federal tax regulations described above. The
Funds' Board of Trustees believes that this amendment will make the Portfolios
more attractive to potential investors and could result in more assets being
invested in the Portfolios. The Funds also could benefit from the limitation on
liability. As a result, the Board believes that this amendment will be to the
Funds' advantage and is in the best interests of the shareholders of each Fund.
The Portfolios will call a meeting of their investors to approve the amendment.
By voting in favor of this Item, Fund shareholders will be authorizing the
Funds' Trustees to vote in favor of the amendment.
VOTE REQUIRED
If a quorum is present at a meeting of a Portfolio's investors, the
affirmative vote of the holders of a majority of the interests in the Portfolio
present, in person or by proxy, at such meeting is required for approval of the
amendment to the Portfolios' Declaration of Trust with respect to that
Portfolio. Holders of at least one-third of the interests in a Portfolio,
present in person or by proxy, constitute a quorum for a meeting of investors
of that Portfolio.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
PORTFOLIOS' DECLARATION OF TRUST.
ITEM 4. TO VOTE ON AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT
POLICIES OF EACH FUND CONCERNING THAT FUND'S ABILITY TO MAKE
LOANS TO OTHER PERSONS AND TO BUY OR SELL FUTURES CONTRACTS AND
OPTIONS ON FUTURES.
As noted above in Item 2, each Fund has adopted certain fundamental
investment restrictions which, as a matter of law, cannot be changed without
shareholder approval. One of these fundamental investment restrictions concerns
each Fund's ability to make loans to other persons. The Funds are proposing a
technical amendment to this restriction to clarify that the purchase of fixed
time deposits would not be a violation of this restriction.
The Funds are proposing technical amendments to certain other of the
Funds' fundamental investment restrictions to clarify that these restrictions
do not limit the Funds' ability to buy or sell futures contracts and options on
futures. The proposed amendments clarify that the Funds' ability to buy or sell
futures contracts and options on futures is consistent with that described in
the Funds' prospectus.
To give effect to these technical amendments, it is proposed that each of
the fundamental investment restrictions listed in Exhibit C be amended as
<PAGE>
indicated in that Exhibit. Shareholders should note that Exhibit C assumes that
Item 3 has been approved.
The Trustees believe that these proposed amendments to the fundamental
investment policies are in the best interests of the shareholders of each Fund.
VOTE REQUIRED
Because the investment restrictions in Exhibit C are fundamental policies
of each Fund, approval of this proposal with respect to a Fund will require a
Majority Shareholder Vote of the shareholders of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
FUNDS' FUNDAMENTAL INVESTMENT POLICIES CONCERNING THE FUNDS' ABILITY TO MAKE
LOANS TO OTHER PERSONS AND TO BUY OR SELL FUTURES CONTRACTS
AND OPTIONS ON FUTURES.
ITEM 5. (A) FOR LANDMARK EQUITY FUND, TO VOTE ON A PROPOSAL TO ADOPT
FUNDAMENTAL INVESTMENT POLICIES CONCERNING THE UNDERWRITING
OF SECURITIES, PURCHASES AND SALES OF REAL ESTATE AND
COMMODITIES AND ISSUANCE OF SENIOR SECURITIES.
As noted above in Items 2 and 4, Landmark Equity Fund has adopted certain
fundamental investment restrictions which, as a matter of law, cannot be
changed without shareholder approval. The Fund has taken the position that
additional fundamental investment restrictions also cannot be adopted without
shareholder approval. In its review of the Fund's registration statement
amendments, the Staff of the SEC has noted that the Fund has not adopted
fundamental restrictions concerning the underwriting of securities, purchases
and sales of real estate and commodities and issuance of senior securities. The
Staff of the SEC has asked that the Fund adopt fundamental restrictions on
these topics, and the Fund has undertaken to seek shareholder approval to do
so.
As a result, the Fund is proposing to adopt the fundamental investment
restrictions listed for the Fund in Exhibit D. It should be noted that the
adoption of these restrictions will not change the manner in which the Fund
conducts its investment activities. The Trustees believe that the proposed
adoption of these fundamental investment restrictions is in the best interests
of shareholders of the Fund.
The Fund's Portfolio has adopted fundamental restrictions which are
substantially similar to those of the Fund. The Portfolio will adopt
fundamental restrictions which are the same as those for the Fund in Exhibit D.
The Portfolio will call a meeting of its investors to approve this adoption. By
voting in favor of this Item, Fund shareholders will be authorizing the Fund's
Trustees to vote in favor of this adoption.
The Trustees believe that adoption of these fundamental investment
policies is in the best interests of shareholders of the Fund.
<PAGE>
VOTE REQUIRED
Because the investment restrictions in Exhibit D will be fundamental
policies of Landmark Equity Fund, approval of this proposal will require a
Majority Shareholder Vote of the shareholders of Landmark Equity Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF
LANDMARK EQUITY FUND VOTE FOR THE ADOPTION OF FUNDAMENTAL INVESTMENT POLICIES
CONCERNING THE UNDERWRITING OF SECURITIES, PURCHASES AND SALES OF REAL ESTATE
AND COMMODITIES AND ISSUANCE OF SENIOR SECURITIES.
(B) FOR LANDMARK SMALL CAP EQUITY FUND, TO VOTE ON AN
AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICY CONCERNING THE ISSUANCE OF SENIOR SECURITIES.
As noted above in Items 2 and 4, Landmark Small Cap Equity Fund has
adopted certain fundamental investment restrictions which, as a matter of law,
cannot be changed without shareholder approval. One of these restrictions
concerns the Fund's ability to issue senior securities. The Fund is proposing a
technical amendment to this restriction to clarify that if the Fund borrows
money, any such borrowing that results in a senior security will be
accomplished in accordance with the 1940 Act and the rules and regulations
thereunder.
To give effect to this amendment, it is proposed that the fundamental
investment restriction listed for the Fund in Exhibit D be amended as indicated
in that Exhibit.
The Fund's Portfolio has adopted a fundamental restriction on the
issuance of senior securities which is identical to that of the Fund. The
Portfolio will amend this fundamental restriction in the same way the Fund will
do so, and will call a meeting of its investors to approve this amendment. By
voting in favor of this Item, Fund shareholders will be authorizing the Fund's
Trustees to vote in favor of this amendment.
The Trustees believe that this proposed amendment to the Fund's
fundamental investment policy is in the best interests of shareholders of the
Fund.
VOTE REQUIRED
Because the investment restriction in Exhibit D is a fundamental policy
of Landmark Small Cap Equity Fund, approval of this proposal will require a
Majority Shareholder Vote of the shareholders of Landmark Small Cap Equity
Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF
LANDMARK SMALL CAP EQUITY FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO
THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING THE ISSUANCE OF SENIOR
SECURITIES.
ITEM 6. TO VOTE ON A MANAGEMENT AGREEMENT FOR EACH
FUND WITH CITIBANK, N.A.
The Funds currently do not have investment advisory agreements because
they invest all of their investable assets in their corresponding Portfolios.
The Funds currently receive administrative services under an administrative
<PAGE>
services agreement with their distributor. The distributor, in turn,
subcontracts with Citibank so that Citibank actually provides administrative
services to the Funds.
The Funds are proposing to enter into management agreements with Citibank
(the "Proposed Fund Management Agreements"). Under the Proposed Fund Management
Agreements, Citibank will be responsible for the overall management of each
Fund's business affairs, and will provide investment advisory as well as
administrative services to the Funds, including the provision of general office
facilities and supervising the overall administration of each Fund. By
providing for investment advisory services at the Fund level, the Proposed Fund
Management Agreements will enable the Funds to invest in the future in multiple
investment companies, if they choose to do so. See "General Background."
The Proposed Fund Management Agreements will render the Funds' existing
administrative services agreements unnecessary, and they will be terminated.
The same personnel at Citibank who currently provide administrative and
investment advisory services to the Funds and the Portfolios are expected to
continue to do so after the Proposed Fund Management Agreements and the
Proposed Portfolio Management Agreements described in Item 7 are entered into,
and the nature, level and quality of services to the Funds will not be
adversely effected.
The aggregate management fees payable by Fund shareholders under the
Proposed Fund Management Agreements will be higher than the aggregate
administrative services fees currently payable by Fund shareholders. However,
assuming that Fund shareholders approve Item 8 and adopt new Service Plans
under Rule 12b-1, the Funds' total expense ratios are not expected to increase.
In fact, the Funds' total contractual expense ratios, computed based on
contractual fee levels without voluntary waivers, will decrease.
A copy of the Proposed Fund Management Agreement for each Fund is
attached hereto as Exhibit E. Shareholders should refer to Exhibit E for the
complete terms of the Proposed Fund Management Agreement of each Fund, and the
description of the Proposed Fund Management Agreement set forth herein is
qualified in its entirety by the provisions of the Proposed Fund Management
Agreement as set forth in Exhibit E.
THE PROPOSED FUND MANAGEMENT AGREEMENTS
If the Proposed Fund Management Agreement is approved by a Fund's
shareholders, Citibank will be authorized to provide investment advisory
services directly to that Fund. The terms and conditions of each Proposed Fund
Management Agreement are identical. A description of the management fees
payable under the Proposed Fund Management Agreements is set forth below. See
"Management Fees."
Under each Proposed Fund Management Agreement, Citibank as investment
manager will furnish continuously an investment program for the Funds (which
may consist of the Funds continuing to invest all of their investable assets in
the Portfolios) and will determine from time to time what securities are
purchased, sold or exchanged, and what portion of the assets of the Funds are
held uninvested, subject always to the restrictions of the Funds' Declaration
of Trust and By-laws, as each may be amended from time to time, the provisions
of the 1940 Act and the Funds' prospectus. Citibank will also make
recommendations as to the manner in which proxies, voting rights, rights to
consent to corporate action and any other rights pertaining to portfolio
<PAGE>
securities will be exercised; and will take all actions which Citibank deems
necessary to implement Fund investment policies.
Under each Proposed Fund Management Agreement, Citibank also will perform
such administrative and management services as may from time to time be
reasonably requested, including: (i) providing office space, equipment and
clerical personnel necessary for maintaining the organization of the Fund and
for performing administrative and management functions; (ii) supervising the
overall administration of the Fund, including negotiation of contracts and fees
with and the monitoring of performance and billings of the Fund's transfer
agent, shareholder servicing agents, custodian and other independent
contractors or agents; (iii) preparing and, if applicable, filing all documents
required for compliance by the Fund 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; (iv) preparing agendas and supporting documents for and
minutes of meetings of Trustees, committees of Trustees and shareholders; and
(v) arranging for maintenance of the books and records of the Fund.
The Proposed Fund Management Agreement, if approved by a Majority
Shareholder Vote of a Fund, will continue in effect for a two-year period, and
thereafter from year to year, subject to approval annually in accordance with
the 1940 Act. The Proposed Fund Management Agreement of a Fund may be
terminated at any time without the payment of any penalty by the Fund's Board
of Trustees or by Majority Shareholder Vote of that Fund, or by Citibank, in
each case on not more than 60 days' nor less than 30 days' written notice to
the other party. The Proposed Fund Management Agreement of a Fund will also
terminate automatically in the event of its "assignment" (as defined in the
1940 Act).
Under each Proposed Fund Management Agreement, Citibank will not be
liable for any error of judgment or mistake of law or for any loss suffered by
a Fund in connection with the matters to which the Proposed Fund Management
Agreement relates, except a loss resulting from Citibank's willful misfeasance,
or its bad faith or gross negligence in the performance of its obligations and
duties, or by reason of Citibank's reckless disregard of its obligations and
duties under such agreement.
MANAGEMENT FEES
Under the Proposed Fund Management Agreements, Landmark Equity Fund will
pay Citibank management fees equal on an annual basis to 0.30% of the Fund's
average daily net assets for the Fund's then-current fiscal year, and Landmark
Small Cap Equity Fund will pay Citibank management fees equal on an annual
basis to 0.35% of the Fund's average daily net assets for the Fund's
then-current fiscal year. Fees will be accrued daily and payable monthly. The
administrative services fees currently payable by the Funds are 0.25% of each
Fund's average daily net assets for its then-current fiscal year. The Funds
currently pay no investment advisory fees. Under the Proposed Fund Management
Agreements, Citibank will be authorized to provide investment advisory services
directly to the Funds.
Administrative fees accrued under the existing administrative services
agreement for the last two fiscal years of each Fund were as follows: for
Landmark Equity Fund, [$_________] and [$_________] for the fiscal years ended
December 31, 1996 and 1995, respectively (of which $561,584 and $249,337,
respectively, accrued to Citibank); and for Landmark Small Cap Equity Fund,
<PAGE>
[$________] and [$_________] for the fiscal year ended December 31, 1996 and
the period from June 21, 1995 (commencement of operations) to December 31,
1995, respectively (of which $39,957 and $2,063, respectively, accrued to
Citibank). No investment advisory fees were payable by the Funds directly to
Citibank during those periods. Had the proposed management fees for the Funds
been in effect for those periods, the following fees would have been payable:
for Landmark Equity Fund, $673,901 and $588,674 for the fiscal years ended
December 31, 1996 and 1995, respectively, which is a ___% and ___% increase
from the administrative fees accrued under the existing administrative services
agreement for such periods; and for Landmark Small Cap Equity Fund, $55,940 and
$____ for the fiscal year ended December 31, 1996 and the period from June 21,
1995 (commencement of operations) to December 31, 1995, respectively, which is
a ___% and ___% increase from the administrative fees accrued under the
existing administrative services agreement for such periods.
The management fees payable to Citibank by Equity Portfolio under its
Proposed Portfolio Management Agreement will be higher than the aggregate
investment advisory and administrative services fees currently payable by that
Portfolio. The management fees payable to Citibank by Small Cap Equity
Portfolio under its Proposed Portfolio Management Agreement will be lower than
the aggregate investment advisory and administrative fees currently payable by
that Portfolio. The aggregate management fees payable by Fund shareholders
(including their share of the Portfolios' management fees) will increase by
virtue of the Proposed Fund and Proposed Portfolio Management Agreements.
However, if Fund shareholders approve Item 8 and adopt new Service Plans under
Rule 12b-1, the Funds' total expense ratios (including their shares of the
Portfolios' expenses) are not expected to increase. See "General Background"
for a table showing the effect of these transactions on the Funds' estimated
annual operating expenses.
Investment advisory and administrative services fees accrued to Citibank
for services provided to each Portfolio for the last two fiscal years of each
Portfolio were as follows: for Equity Portfolio, $1,525,950 and $1,153,909 for
the fiscal years ended December 31, 1996 and 1995, respectively; and for Small
Cap Equity Portfolio, $157,076 and $10,904 for the fiscal year ended December
31, 1996 and the period from June 21, 1995 (commencement of operations) to
December 31, 1995, respectively.
Except as set forth above with respect to administrative services and
investment advisory fees and under the caption "Other Services Provided by
Citibank" below, neither Citibank nor any affiliated person of Citibank, nor
any affiliated person of such person, received any other fees from the Funds or
the Portfolios for services provided to any of the Funds or the Portfolios
during their last two fiscal years. There were no other material payments by
the Funds or the Portfolios to Citibank, any affiliated person of Citibank, or
any affiliated person of such person, during such period.
As of June 30, 1997, Landmark Equity Fund had net assets of $251,043,862;
and Landmark Small Cap Equity Fund had net assets of $25,658,384.
For the last two fiscal years of each Fund, no brokerage commissions were
paid by the Funds or the Portfolios to any broker during the same period that
(i) is an affiliated person of the Portfolios, or (ii) is affiliated with any
person described in clause (i) of this paragraph, or (iii) an affiliated person
of which is an affiliated person of the Portfolios, Citibank or the distributor
of the Portfolios.
<PAGE>
DESCRIPTION OF THE MANAGER
Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
in money market, equity and fixed income securities. Citibank and its
affiliates manage more than $81 billion in assets worldwide. Citibank is a
wholly-owned subsidiary of Citicorp. Citibank's address is 153 East 53rd
Street, New York, New York 10043.
Grant D. Hobson and Richard Goldman have managed the Equity Portfolio
since January 1996. Mr. Hobson is responsible for managing U.S. equity
portfolios for mutual funds, trust and pension accounts of Citibank Global
Asset Management and currently manages, or co-manages, more than $1 billion of
total assets at Citibank. Prior to joining Citibank in 1993, Mr. Hobson was a
securities analyst and sector manager for pension accounts and mutual funds for
Axe Houghton, formerly a division of USF&G. Mr. Goldman is responsible for
managing U.S. equity portfolios for mutual funds and institutional accounts,
and for quantitative equity research for the U.S. institutional business of
Citibank Global Asset Management. He currently manages, or co-manages,
approximately $500 million of total assets at Citibank. He joined Citicorp's
Investment Management Division in 1985 and from 1988 to 1994 was responsible
for running Citicorp's Institutional Investor Relations Department.
Linda J. Intini has managed the Small Cap Equity Portfolio since February
1997. Ms. Intini has over nine years of experience specializing in the
management of small cap equities, including over $300 million of Citibank's
small cap portfolios for trusts and individuals. Prior to joining Citibank in
1992, she was a Portfolio Manager and Research Analyst with Manufacturers
Hanover in the Special Equity area. She also specialized in equity research at
Eberstadt Fleming.
John S. Reed is the Chairman of the Board and a Director of Citibank. The
following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins, William R. Rhodes and H. Onno Ruding. Other Directors of Citibank are
Alain J.P. Belda, President and Chief Operating Officer, Alcoa Corporation; D.
Wayne Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.,
Purchase, New York; Kenneth T. Derr, Chairman and Chief Executive Officer,
Chevron Corporation; John M. Deutch, Director, CMS Energy; Reuben Marks,
Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard D.
Parsons, Member, Board of Representatives; Rozanne L. Ridgway, President, The
Atlantic Council of the United States; Robert B. Shapiro, President and Chief
Operating Officer, Monsanto Company; Frank A. Shrontz, Chairman and Chief
Executive Officer, The Boeing Company, Seattle, Washington; Roger B. Smith,
Former Chairman and Chief Executive Officer, General Motors Corporation;
Franklin A. Thomas, President, The Ford Foundation, New York, New York; and
Edgar S. Woolard, Jr., Chairman and Chief Executive Officer, E.I. DuPont De
Nemours & Company.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
<PAGE>
Kenneth T. Derr Director, American Telephone and Telegraph, Co.
Director, Chevron Corporation
Director, Potlatch Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical Technologies, Inc.
Reuben Mark Director, Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage Association
Director, Philip Morris Companies Incorporated
Member, Board of Representatives,
Time Warner Entertainment Company, L.P.
Director and President, Time Warner, Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, The Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
H. Onno Ruding Member, Board of Supervisory Directors,
Amsterdam Trustee's Kantoor
Board Member, Corning Incorporated
Advisor, Intercena (C&A) (Netherlands)
Director, Pechiney S.A.
Member, Board of Advisers, Robeco N.V.
Advisory Director, Unilever N.V.
Advisory Director, Unilever PLC
Robert B. Shapiro Director, G.D. Searle & Co.
Director, Silicon Graphics
Director, Monsanto Company
Director, The Nutrasweet Company
<PAGE>
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director, The 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.
Edgar S. Woolard, Jr. Director, E.I. DuPont De Nemours & Company
Director, Apple Computer, Inc.
Director, Zurich Holding Company of America, Inc.
Advisory Director, Zurich Insurance Corporation
Banking Relationships. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Funds, including outstanding loans to such issuers which may be repaid in
whole or in part with the proceeds of securities so purchased. Citibank has
informed the Funds that, in making its investment decisions, it does not obtain
or use material inside information in the possession of any division or
department of Citibank or in the possession of any affiliate of Citibank.
Bank Regulatory Matters. The Glass-Steagall Act prohibits certain
financial institutions, such as Citibank, from underwriting securities of
open-end investment companies, such as the Funds. Citibank believes that its
services under the Proposed Fund and Proposed Portfolio Management Agreements
and the activities performed by it or its affiliates as Shareholder Servicing
Agents (see "Other Services Provided by Citibank" below) are not underwriting
and are consistent with the Glass-Steagall Act and other relevant federal and
state laws. However, there is no controlling precedent regarding the
performance of the combination of investment advisory, shareholder servicing
and administrative activities by banks. State laws on this issue may differ
from applicable federal law, and banks and financial institutions may be
required to register as dealers pursuant to state securities laws. Changes in
either federal or state statutes or regulations, or in their interpretations,
could prevent Citibank or its affiliates from continuing to perform these
services. If Citibank or its affiliates were to be prevented from acting as the
investment manager or a Shareholder Servicing Agent, the Funds would seek
alternative means for obtaining these services. The Funds do not expect that
shareholders would suffer any adverse financial consequences as a result of any
such occurrence.
Citibank furnishes at its own expense all services, facilities and
personnel necessary in connection with managing the Funds' investments and
effecting securities transactions for the Funds. Citibank also provides other
services to each of the Funds. See "Other Services Provided by Citibank" below.
Citibank also serves as adviser or subadviser to other registered
investment companies with similar investment objectives. Those companies are
identified in Exhibit F hereto, along with their asset size and the rates of
compensation paid by those companies to Citibank for advisory or subadvisory
services.
<PAGE>
OTHER SERVICES PROVIDED BY CITIBANK
Citibank and Its Affiliates as Shareholder Servicing Agents. The Funds
have entered into separate shareholder servicing agreements with each
Shareholder Servicing Agent pursuant to which that Shareholder Servicing Agent
provides shareholder services, including answering customer inquiries,
assisting in processing purchase, exchange and redemption transactions and
furnishing Fund communications to shareholders. For these services, each
Shareholder Servicing Agent receives a fee from each Fund at an annual rate of
0.25% of the average daily net assets of the Fund represented by shares owned
by investors for whom such Shareholder Servicing Agent maintains a servicing
relationship.
Net fees accrued to Citibank and its affiliates for services provided as
Shareholder Servicing Agent of each Fund for the last two fiscal years of each
Fund were as follows: for Landmark Equity Fund, $561,584 and $490,561 for the
fiscal years ended December 31, 1996 and 1995, respectively; and for Landmark
Small Cap Equity Fund, $39,957 and $5,497 for the fiscal year ended December
31, 1996 and the period from June 21, 1995 (commencement of operations) to
December 31, 1995, respectively.
THE EVALUATION BY THE BOARD OF TRUSTEES
The Funds' Board of Trustees has determined that approving the Proposed
Fund Management Agreements is in the best interests of the Funds and their
shareholders.
At a meeting on August 8, 1997, the Trustees considered information
concerning the Proposed Fund Management Agreements. The Trustees considered,
among other factors, representations by Citibank that the proposed agreements
would not materially affect the nature, level and quality of services now
provided to the Funds and Portfolios and proposed to be provided to the Funds.
The Trustees also considered that, subject to the required approval of
shareholders of the Funds, the same personnel at Citibank who provide
administrative services to the Funds and administrative and investment advisory
services to the Portfolios were expected to continue to do so under the
Proposed Fund and Proposed Portfolio Management Agreements. The Trustees noted
that the Funds could receive investment advisory services under the Proposed
Fund Management Agreements, and that the Funds' current agreements do not
contemplate such services. The Trustees believed that this justified the
increased management fees. The Trustees also considered the nature and quality
of services expected to be provided by Citibank to the Funds, and information
regarding fees, expense ratios and performance. In evaluating Citibank's
ability to provide services to the Funds, the Trustees considered information
as to Citibank's business organization, financial resources and personnel.
Based upon its review, the Trustees concluded that the Proposed Fund
Management Agreements are reasonable, fair and in the best interests of each
Fund and its shareholders, and that the fees provided in the Proposed Fund
Management Agreements are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and quality.
Accordingly, after consideration of the above factors, and such other factors
and information as were deemed relevant, the Trustees, including all of the
Independent Trustees, unanimously approved the Proposed Fund Management
Agreements for the Funds and voted to recommend their approval by Fund
shareholders.
<PAGE>
VOTE REQUIRED
Approval of the Proposed Fund Management Agreement with respect to a Fund
will require a Majority Shareholder Vote of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE MANAGEMENT AGREEMENT OF THE
FUND.
ITEM 7. TO VOTE ON A MANAGEMENT AGREEMENT FOR EACH FUND'S
CORRESPONDING PORTFOLIO WITH CITIBANK, N.A.
As described above in "General Background" and under Item 6, the
Portfolios currently receive investment advisory services under investment
advisory agreements with Citibank. The Portfolios currently receive
administrative services under administrative services agreements with an
affiliate of their placement agent. This entity, in turn, subcontracts with
Citibank so that Citibank actually provides administrative services to the
Portfolios.
The Portfolios are proposing to enter into management agreements with
Citibank (the "Proposed Portfolio Management Agreements"). Under the Proposed
Portfolio Management Agreements, Citibank will be responsible for the overall
management of each Portfolio's business affairs, and will provide investment
advisory as well as administrative services to the Portfolios, including the
provision of general office facilities and supervising the overall
administration of each Portfolio.
The Proposed Portfolio Management Agreements will render the Portfolios'
existing investment advisory and administrative services agreements
unnecessary, and they will be terminated. The same personnel at Citibank who
currently provide administrative and investment advisory services to the
Portfolios are expected to continue to do so after the Proposed Portfolio
Management Agreements are entered into, and the nature, level and quality of
services to the Portfolios will not be adversely effected.
The aggregate investment advisory and administrative services fees
payable by Equity Portfolio will increase by 0.05% per annum of the Portfolio's
average daily net assets. The aggregate investment advisory and administrative
services fees payable by Small Cap Equity Portfolio will decrease by 0.05% per
annum of the Portfolio's average daily net assets. The Portfolios will no
longer pay a separate administrative services fee.
A copy of the Proposed Portfolio Management Agreement for each Portfolio
is attached hereto as Exhibit G. Shareholders should refer to Exhibit G for the
complete terms of the Proposed Portfolio Management Agreement of each
Portfolio, and the description of the Proposed Portfolio Management Agreement
set forth herein is qualified in its entirety by the provisions of the Proposed
Portfolio Management Agreement as set forth in Exhibit G.
THE PROPOSED PORTFOLIO MANAGEMENT AGREEMENTS
If the Proposed Portfolio Management Agreement is approved by a
Portfolio's investors, Citibank will provide investment management and
administrative services directly to that Portfolio. The terms and conditions of
<PAGE>
each Proposed Portfolio Management Agreement are identical; the terms and
conditions of each Proposed Portfolio Management Agreement also are
substantially the same as the terms and conditions of the Proposed Fund
Management Agreements. See Item 6 for a description of these agreements. A
description of the management fees payable under the Proposed Portfolio
Management Agreements is set forth below. See "Management Fees."
MANAGEMENT FEES
Under the Proposed Portfolio Management Agreements, Equity Portfolio will
pay Citibank management fees equal on an annual basis to 0.60% of the
Portfolio's average daily net assets for the Portfolio's then-current fiscal
year, and Small Cap Equity Portfolio will pay Citibank management fees equal on
an annual basis to 0.75% of the Portfolio's average daily net assets for the
Portfolio's then-current fiscal year. Fees will be accrued daily and payable
monthly. The aggregate investment advisory and administrative services fees
currently payable by the Portfolios are 0.55% of Equity Portfolio's average
daily net assets and 0.80% of Small Cap Equity Portfolio's average daily net
assets, in each case for the Portfolio's then-current fiscal year.
Fund shareholders should note that the aggregate management fees payable
by Fund shareholders (including their share of the Portfolios' management fees)
will increase by virtue of the Proposed Fund and Proposed Portfolio Management
Agreements. However, if Fund shareholders approve Item 8 and adopt new Service
Plans under Rule 12b-1, the Funds' total expense ratios (including their shares
of the Portfolio's expenses) are not expected to increase. See "General
Background" for a table showing the effect of these transactions on the Funds'
estimated annual operating expenses.
Investment advisory and administrative services fees accrued under the
existing investment advisory and administrative services agreements for
services provided to each Portfolio for the last two fiscal years of each
Portfolio were as follows: for Equity Portfolio, [$__________] and
[$__________] for the fiscal years ended December 31, 1996 and 1995,
respectively (of which $1,525,950 and $1,153,909, respectively, accrued to
Citibank); and for Small Cap Equity Portfolio, $157,076 and $10,904 for the
fiscal year ended December 31, 1996 and the period from June 21, 1995
(commencement of operations) to December 31, 1995, respectively (of which
$157,076 and $10,904, respectively, accrued to Citibank). Had the proposed
management fees for the Portfolios been in effect for those periods, the
following fees would have been payable: for Equity Portfolio, $___ and $___ for
the fiscal years ended December 31, 1996 and 1995, respectively, which is a
___% and ___% increase from the net investment advisory and administrative
service fees accrued under the existing investment advisory and administrative
services agreements for such period; and for Small Cap Equity Portfolio, $___
and $____ for the fiscal year ended December 31, 1996 and the period from June
21, 1995 (commencement of operations) to December 31, 1995, respectively, which
is a ___% and ___% increase from the net investment advisory and administrative
service fees accrued under the existing investment advisory and administrative
services agreements for such period.
Except as set forth above with respect to administrative services and
investment advisory fees, neither Citibank nor any affiliated person of
Citibank, nor any affiliated person of such person, received any other fees
from the Portfolios for services provided to the Portfolios during their last
two fiscal years. There were no other material payments by the Portfolios to
Citibank, any affiliated person of Citibank, or any affiliated person of such
person, during such period.
<PAGE>
As of June 30, 1997, Equity Portfolio had net assets of $__________ ; and
Small Cap Equity Portfolio had net assets of $__________.
For the last two fiscal years of each Portfolio, no brokerage commissions
were paid by the Portfolios to any broker during the same period that (i) is an
affiliated person of the Portfolios, or (ii) is affiliated with any person
described in clause (i) of this paragraph, or (iii) an affiliated person of
which is an affiliated person of the Portfolios, Citibank or the distributor of
the Portfolios.
DESCRIPTION OF THE MANAGER
See Item 6 for a description of Citibank and the Portfolios' managers,
including fee information for other registered investment companies with
investment objectives similar to the Portfolios for which Citibank serves as
investment adviser.
THE EVALUATION BY THE BOARD OF TRUSTEES
The Portfolios' Board of Trustees has determined that approving the
Proposed Portfolio Management Agreements is in the best interests of the
Portfolios and their investors.
At a meeting on August 8, 1997, the Trustees considered information
concerning the Proposed Portfolio Management Agreements. The Trustees
considered, among other factors, representations by Citibank that the proposed
agreements would not materially affect the nature, level and quality of
services now provided to the Portfolios. The Trustees also considered that,
subject to the required approval of investors in the Portfolios, the same
personnel at Citibank who provide administrative and investment advisory
services to the Portfolios were expected to continue to do so under the
Proposed Portfolio Management Agreements. The Trustees noted that Equity
Portfolio's management fee would increase and that Small Cap Equity Portfolio's
management fee would decrease. They reviewed comparative fee data for
comparable funds and found the fees, as revised, to be in line with industry
standards and with the fees of comparable funds. The Trustees also considered
the nature and quality of services expected to be provided by Citibank to the
Portfolios, and information regarding fees, expense ratios and performance. In
evaluating Citibank's ability to provide services to the Portfolios, the
Trustees considered information as to Citibank's business organization,
financial resources and personnel.
Based upon its review, the Trustees concluded that the Proposed Portfolio
Management Agreements are reasonable, fair and in the best interests of each
Portfolio and its investors, and that the fees provided in the Proposed
Portfolio Management Agreements are fair and reasonable in light of the usual
and customary charges made by others for services of the same nature and
quality. Accordingly, after consideration of the above factors, and such other
factors and information as were deemed relevant, the Trustees, including all of
the Independent Trustees, unanimously approved the Proposed Portfolio
Management Agreements for the Portfolios and voted to recommend their approval
by Portfolio investors.
Each Portfolio will call a meeting of its investors to vote on the
Proposed Portfolio Management Agreement for that Portfolio. By voting in favor
of this Item, Fund shareholders will be authorizing the Funds' Trustees to vote
in favor of these agreements.
<PAGE>
VOTE REQUIRED
If a quorum is present at a meeting of a Portfolio's investors, the
affirmative vote of the holders of a majority of the interests in the Portfolio
present, in person or by proxy, at such meeting is required for approval of the
amendment to the Portfolios' Declaration of Trust with respect to that
Portfolio. Holders of at least one-third of the interests in a Portfolio,
present in person or by proxy, constitute a quorum for a meeting of investors
of that Portfolio.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF THE MANAGEMENT AGREEMENT OF THE
FUND'S CORRESPONDING PORTFOLIO.
ITEM 8. TO VOTE ON A SERVICE PLAN FOR EACH FUND PURSUANT TO RULE
12B-1 UNDER THE 1940 ACT.
Each Fund currently has a Distribution Plan which has been adopted in
accordance with Rule 12b-1 under the 1940 Act. The Funds are proposing to
replace these existing Distribution Plans with Service Plans, which also will
be adopted in accordance with Rule 12b-1. The Service Plans will permit payment
of distribution and service fees which are lower than the maximum fees
currently permissible under the existing Distribution Plans.
A copy of the proposed Service Plan for each Fund is attached hereto as
Exhibit H. Shareholders should refer to Exhibit H for the complete terms of the
proposed Service Plan for each Fund, and the description of the Service Plans
set forth herein is qualified in its entirety by the provisions of the Service
Plan as set forth in Exhibit H.
Each Fund's existing Distribution Plan was most recently approved by that
Fund's Board of Trustees in accordance with the 1940 Act on May 9, 1997.
COMPARISON OF EXISTING DISTRIBUTION PLANS AND PROPOSED SERVICE PLANS
The Funds' existing Distribution Plans provide that the Funds may pay
their distributor a monthly distribution fee and a monthly service fee at
annual rates not to exceed, respectively, 0.15% and 0.25% of the Funds' average
daily net assets. However, none of the Funds has entered into any agreement to
pay this service fee to the distributor. The existing Distribution Plans also
permit the Funds to pay the distributor an additional fee (not to exceed 0.05%
of average daily net assets) in anticipation of or as reimbursement for print
or electronic media advertising expenses incurred in connection with the sale
of Fund shares. The Funds did not pay anything under this provision during
1996, and do not anticipate doing so during the current fiscal year. Under the
Distribution Plans, the distributor uses the distribution fees to offset each
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 proposed Service Plans provide that the Funds may pay monthly fees in
an amount not to exceed 0.25% per annum of the Funds' average daily net assets.
<PAGE>
Each proposed Service Plan contemplates one aggregate fee which may be used for
distribution and service matters. These fees may be used to make payments to
the distributor for distribution services, and to service agents and others as
compensation for the sale of shares of the Funds, and to make payments for
advertising, marketing or other promotional activity, and payments for
preparation, printing, and distribution of prospectuses, statements of
additional information and reports for recipients other than regulators and
existing shareholders. The Funds also may make payments to the distributor,
service agents and others for providing personal service or the maintenance of
shareholder accounts. See "General Background" for a table showing the effect
of this transaction on the Funds' estimated annual operating expenses.
Under the proposed Service Plans, as under the existing Distribution
Plans, for so long as the Service Plans are in effect the Funds are obligated
to pay fees to the distributor, service agents and others as compensation for
their services, not as reimbursement for specific expenses incurred. Thus, even
if their expenses exceed the fees provided for under the Service Plan for any
Fund, the Fund will not be obligated to pay more than those fees and, if their
expenses are less than the fees paid to them, they will realize a profit. Each
Fund will pay the fees to the distributor, service agents and others until the
Service Plan or related distribution agreement is terminated or not renewed. In
that event, the distributor's or service agent's expenses in excess of fees
received or accrued through the termination date will be the distributor's or
service agent's sole responsibility and not obligations of the Fund.
Like the existing Distribution Plans, the proposed Service Plans provide
that their continuance must be specifically approved at least annually by a
vote of both a majority of the Trustees who are not "interested persons" of the
Funds and who have no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan ("Qualified Trustees"). The
Service Plans and the Distribution Plans further provide 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 proposed Service Plans, like the existing Distribution Plans, may be
terminated with respect to a Fund at any time by a vote of a majority of the
Qualified Trustees or by a vote of a majority of the outstanding shares of the
Fund and may not be materially amended in any case without a vote of the
majority of both the Trustees and the Qualified Trustees. Under the proposed
Service Plans, as under the existing Distribution Plans, shareholders of a Fund
must approve any amendments to the Plan which increase materially the amount of
the Fund's permitted expenses thereunder.
Under both the proposed Service Plans and the existing Distribution Plans
the distributor is required to preserve copies of any plan, agreement or report
made pursuant to the 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.
For the fiscal year ended December 31, 1996 the fees paid to the
distributor by Landmark Equity Fund under the Distribution Plans were $112,317,
which constituted ___% of the average net assets of the Fund. For the fiscal
year ended December 31, 1996 all fees payable to the distributor by Landmark
Small Cap Equity Fund were waived.
The maximum allowable expense under the Distribution Plans is 0.45% of
each Fund's average daily net assets. Under the Service Plans, the maximum
allowable expense would be 0.25% of each Fund's average daily net assets.
<PAGE>
THE EVALUATION BY THE BOARD OF TRUSTEES
The Funds' Board of Trustees has determined that approval of the Service
Plans is in the best interests of the Funds and their shareholders. At a
meeting on August 8, 1997, the Trustees considered, among other factors, the
flexibility provided by the Service Plans, in that they contemplate one
aggregate fee which may be used for distribution and services matters, as
opposed to two separate fees for these matters. The Trustees believe that this
structure will give the Funds greater flexibility in promoting sales of their
shares. The Trustees also noted that the aggregate distribution and service
fees payable by Fund shareholders would decrease as a result of the adoption of
the Service Plans. As a result of these and other factors, the Trustees believe
that the Service Plans are reasonably likely to benefit the Funds and their
shareholders, and recommend that they be approved by Fund shareholders.
VOTE REQUIRED
Approval of this proposal with respect to a Fund will require a Majority
Shareholder Vote of the shareholders of that Fund.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF A SERVICE PLAN FOR EACH FUND
PURSUANT TO RULE 12B-1 UNDER THE 1940 ACT.
ITEM 9. TO VOTE ON THE SELECTION OF PRICE WATERHOUSE LLP AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR EACH FUND.
It is intended that proxies cast by each Fund's shareholders not limited
to the contrary will be voted in favor of ratifying the selection, by a
majority of the Trustees of the Funds who are not "interested persons" (as that
term is defined in the 1940 Act) of the Funds, of Price Waterhouse LLP under
Section 32(a) of the 1940 Act as independent public accountants, to certify
every financial statement of each Fund required by any law or regulation to be
certified by independent public accountants and filed with the SEC in respect
of all or any part of the fiscal year of the Fund ending December 31, 1997.
Price Waterhouse LLP has no direct or material indirect interest in any Fund.
Price Waterhouse LLP has served as the independent certified public
accountants of Landmark Equity Fund since [_____, 1994] and of Landmark Small
Cap Equity Fund since its commencement of operations, providing audit services
and consultation with respect to the preparation of filings with the SEC.
Price Waterhouse, an affiliate of Price Waterhouse LLP, has served as the
Old Portfolios' independent certified public accountants since their
commencement of operations. At the meeting of the Portfolios' investors to vote
on the matters described under Items 1 through 5 and Item 7, investors in the
Portfolios also will be asked to approve Price Waterhouse as the Portfolios'
independent certified public accountants. By voting in favor of this Item, Fund
shareholders will be authorizing the Funds' Trustees to vote in favor of Price
Waterhouse as the Portfolios' independent certified public accountants.
Representatives of Price Waterhouse LLP are expected to be present at the
Meeting and are expected to be available to respond to appropriate questions.
<PAGE>
Representatives of Price Waterhouse LLP are expected to have the opportunity to
make a statement if they desire to do so.
VOTE REQUIRED
Approval of this proposal with respect to a Fund will require approval by
the holders of a majority of the outstanding shares of the Funds, taken
together as a single class, which are present at the Meeting in person or by
proxy.
THE BOARD OF TRUSTEES OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF EACH FUND VOTE FOR APPROVAL OF PRICE WATERHOUSE LLP AS
INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR EACH FUND.
ITEM 10. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE SPECIAL MEETING OF SHAREHOLDERS AND ANY ADJOURNMENTS
THEREOF.
The management of the Funds knows of no other business to be presented at
the Meeting. If any additional matters should be properly presented, it is
intended that the enclosed proxy (if not limited to the contrary) will be voted
in accordance with the judgment of the persons named in the enclosed form of
proxy.
INTERESTS OF CERTAIN PERSONS
As of August 1, 1997, the Trustees and officers of the Funds,
individually and as a group, owned beneficially or had the right to vote the
following outstanding shares of the Funds.
Amount of
Name and Address Beneficial Percent
of Beneficial Owner Ownership of Shares
Trustees of the Funds
[names]........................... ------- -----%
Officers of the Funds
[names]........................... ------- -----%
All Trustees and officers of
the Funds as a group........ ------- -----%
<PAGE>
As of August 1, 1997, to the best knowledge of the Funds, the following
persons beneficially owned 5% or more of the outstanding shares of the Funds:
Amount of
Name and Address Beneficial Percent
of Beneficial Owner Ownership of Shares
Landmark Equity Fund
[LIST SHAREHOLDERS]...................... ------- -----%
Landmark Small Cap Equity Fund
[LIST SHAREHOLDERS]...................... ------- -----%
ADDITIONAL INFORMATION
Each Fund is a series of Landmark Funds II (the "Trust"), a diversified,
open-end registered investment company organized as a Massachusetts business
trust under a Declaration of Trust dated as of April 13, 1984, as amended and
restated on August 9, 1996. Landmark Equity Fund and Landmark Small Cap Equity
Fund were designated as separate series of the Trust on April 17, 1990 and
August 19, 1994, respectively. The mailing address of the Trust is 6 St. James
Avenue, Boston, Massachusetts 02116.
Fund shareholders may have purchased their shares through banks or other
financial institutions, securities dealers or others (called Shareholder
Servicing Agents) that have entered into shareholder servicing agreements
concerning the Funds. In these cases, the Shareholder Servicing Agents are the
shareholders of record of the Funds. At any meeting of Fund shareholders, 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.
The cost of soliciting proxies in the accompanying form, which is
expected to be about $[ ], including the fees of a proxy soliciting agent, will
be borne by Citibank. In addition to solicitation by mail, proxies may be
solicited by the Board of Trustees, officers, and regular employees and agents
of the Funds without compensation therefor. Citibank may reimburse brokerage
firms and others for their expenses in forwarding proxy materials to the
beneficial owners and soliciting them to execute the proxies.
The Funds' distributor is The Landmark Funds Broker-Dealer Services,
Inc., 6 St. James Avenue, Boston, MA 02116. State Street Bank and Trust Company
acts as transfer agent, dividend disbursing agent and custodian for each Fund.
The principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110.
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a Massachusetts business trust and as such is not required
to hold annual meetings of shareholders, although special meetings may be
called for the Funds, or for the Trust as a whole, for purposes such as
electing Trustees or removing Trustees, changing fundamental policies, or
approving an advisory contract. Shareholder proposals to be presented at any
<PAGE>
subsequent meeting of shareholders must be received by the Trust at the Trust's
office within a reasonable time before the proxy solicitation is made.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Linda T. Gibson, Secretary
August __, 1997
<PAGE>
EXHIBIT A
Deleted text is bracketed and added text appears in double brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE AMENDED UNDER ITEM 2.
(3) Purchase securities of any issuer if such purchase at the time
thereof would cause with respect to 75% of the total assets of the Fund
more than 10% of the voting securities of such issuer to be held by the
Fund, except that[, with respect to each Fund, the applicable Trust may
invest all or substantially all of the Fund's assets in another
registered investment company having the same investment objectives and
policies and substantially the same investment restrictions as those with
respect to the Fund (a "Qualifying Portfolio").] [[the Fund may invest
all or any portion of its assets in one or more investment companies, to
the extent not prohibited by the 1940 Act, the rules and regulations
thereunder, and exemptive orders granted under such Act.]]
(4) Purchase securities of any issuer if such purchase at the time
thereof would cause as to 75% of the Fund's total assets more than 5% of
the Fund's assets (taken at market value) to be invested in the
securities of such issuer (other than securities or obligations issued or
guaranteed by the United States, any state or political subdivision
thereof, or any political subdivision of any such state, or any agency or
instrumentality of the United States or of any state or of any political
subdivision of any state), except that[, with respect to each Fund, the
applicable Trust may invest all or substantially all of the Fund's assets
in a Qualifying Portfolio.] [[the Fund may invest all or any portion of
its assets in one or more investment companies, to the extent not
prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act.]]
For Landmark Small Cap Equity Fund Only:
(6) Underwrite securities issued by other persons, except that all [[or
any portion of]] the assets of the Fund may be invested in [a Qualifying
Portfolio] [[one or more investment companies, to the extent not
prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act,]] and except insofar as the Fund
may technically be deemed an underwriter under the [1933] [[Securities]]
Act in selling a security.
<PAGE>
EXHIBIT B
Deleted text is bracketed and added text appears in double brackets.
THE DEFINITION OF INSTITUTIONAL INVESTOR FROM SECTION 1.2 AND SECTION 5.1,
IN ITS ENTIRETY, OF THE PORTFOLIOS' DECLARATION OF TRUST
PROPOSED TO BE AMENDED UNDER ITEM 3.
"Institutional Investor(s)" shall mean,[[ when used with respect
to each Series of the Trust other than the Series designated as Balanced
Portfolio, Government Income Portfolio, International Equity Portfolio
and Emerging Asian Markets Equity Portfolio,]] any regulated investment
company, segregated asset account, foreign investment company, common
trust fund, group trust or other investment arrangement, whether
organized within or without the United States of America, other than an
individual, S corporation[,] or partnership or a grantor trust
beneficially owned by any individual, [or] S corporation or partnership,
[[unless, in the case of a partnership or a grantor trust beneficially
owned by a partnership, the interests in the partnership are held by
entities that otherwise meet the definition of Institutional Investor.
When used with respect to those Series of the Trust designated as
Balanced Portfolio, Government Income Portfolio, International Equity
Portfolio and Emerging Asian Markets Equity Portfolio, Institutional
Investor(s) shall mean any regulated investment company, segregated asset
account, foreign investment company, common trust fund, group trust or
other investment arrangement, whether organized within or without the
United States of America, other than an individual, S corporation,
partnership or grantor trust beneficially owned by any individual, S
corporation or partnership.]]
5.1. Liability of Holders; Indemnification. [Each][[(a) As to
the Series of the Trust designated as Balanced Portfolio and Government
Income Portfolio, each]] Holder of an Interest in [a] [[such]] Series
shall be jointly and severally liable with every other Holder of an
Interest in that Series (with rights of contribution inter se in
proportion to their respective Interests in the Series) for the
liabilities and obligations of that Series (and of no other Series) in
the event that the Trust fails to satisfy such liabilities and obligations
from the assets of that Series[; provided, however, that, to]. [[To]]
the extent assets of [that Series] [[a Series named in the preceding
sentence]] are available in the Trust, the Trust shall indemnify and hold
each Holder [[of an Interest in that Series]] harmless from and against
any claim or liability to which such Holder may become subject by reason
of being or having been a Holder of [any] [[an]] Interest in that Series
to the extent that such claim or liability imposes on the Holder an
obligation or liability which, when compared to the obligations and
liabilities imposed on other Holders of Interests in that Series, is
greater than such Holder's [Interest (proportionate share)]
[[proportionate share of such claim or liability,]] and shall reimburse
such Holder for all legal and other expenses reasonably incurred by such
Holder in connection with any such claim or liability.
[[(b) Notwithstanding any other provision of this Declaration, each
Holder of an Interest in a Series of the Trust other than Balanced
Portfolio and Government Income Portfolio shall not be subject to any
personal liability whatsoever to any Person in connection with the Trust
Property or the acts, obligations or affairs of the Trust with respect to
<PAGE>
that Series; and if any such Holder is made a party to any suit or
proceeding to enforce any such liability, such Holder shall not, on
account thereof, be held to any personal liability. To the extent assets
of a Series enumerated in the preceding sentence are available in the
Trust, the Trust shall indemnify and hold each Holder of an Interest in
that Series harmless from and against any claim or liability to which
such Holder may become subject by reason of being or having been a Holder
of an Interest in that Series, and shall reimburse such Holder for all
legal and other expenses reasonably incurred by such Holder in connection
with any such claim or liability.]]
[[(c)]] The rights accruing to a Holder under this Section 5.1 shall
not exclude any other right to which such Holder may be lawfully
entitled, nor shall anything contained herein restrict the right of the
Trust to indemnify or reimburse a Holder in any appropriate situation
even though not specifically provided herein. [Notwithstanding the
indemnification procedure described above, it is intended that each
Holder of an Interest in a Series shall remain jointly and severally
liable to the creditors of that Series as a legal matter.] The
liabilities of a particular Series and the right to indemnification
granted hereunder to Holders of Interests in such Series shall not be
enforceable against any other Series or Holders of Interests in any other
Series.
<PAGE>
EXHIBIT C
Deleted text is bracketed and added text appears in double brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE AMENDED UNDER ITEM 4.
(1) Borrow money, except that as a temporary measure for extraordinary or
emergency purposes it may borrow in an amount not to exceed 1/3 of the
current value of its net assets, including the amount borrowed [(nor]
[[; or]] purchase any securities at any time at which borrowings exceed
5% of the total assets of the Fund, taken at market value[)]. It is
intended that [a] [[the]] Fund would borrow money only from banks and
only to accommodate requests for the repurchase of shares of the Fund
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 total assets (taken at market value), (b) through the use of
repurchase agreements [[or fixed time deposits]] or the purchase of
short-term obligations or (c) by purchasing all or a portion of an issue
of debt securities of types commonly distributed privately to financial
institutions. The purchase of short-term commercial paper or a portion of
an issue of debt securities which is part of an issue to the public shall
not be considered the making of a loan.
(3) Purchase securities of any issuer if such purchase at the time
thereof would cause with respect to 75% of the total assets of the Fund
more than 10% of the voting securities of such issuer to be held by the
Fund; [except][[provided that, for purposes of this restriction, the
issuer of an option or futures contract shall not be deemed to be the
issuer of the security or securities underlying such contract; and
provided further]] that the Fund may invest all or any portion of its
assets in one or more investment companies, to the extent not prohibited
by the 1940 Act, the rules and regulations thereunder, and exemptive
orders granted under such Act.
(4) Purchase securities of any issuer if such purchase at the time
thereof would cause as to 75% of the Fund's total assets more than 5% of
the Fund'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][[; provided that, for purposes of
this restriction, the issuer of an option or futures contract shall not
be deemed to be the issuer of the security or securities underlying such
contract; and provided further]] that the Fund may invest all or any
portion of its assets in one or more investment companies, to the extent
not prohibited by the 1940 Act, the rules and regulations thereunder, and
exemptive orders granted under such Act.
(5) Concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of the Fund's investment
[objectives] [[objective]], up to 25% of its assets, at market value at
<PAGE>
the time of each investment, may be invested in any one industry,
[[except that positions in futures contracts shall not be subject to this
restriction]].
For Landmark Small Cap Equity Fund Only:
(7) Purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity
contracts in the ordinary course of business ([[the foregoing shall not
be deemed to preclude the Fund from purchasing or selling futures
contracts or options thereon, and]] the Fund reserves the freedom of
action to hold and to sell real estate acquired as a result of the
ownership of securities by the Fund).
<PAGE>
EXHIBIT D
Deleted text is bracketed and added text appears in double brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE ADOPTED OR AMENDED
UNDER ITEM 5.
For Landmark Equity Fund Only:
[[(6) Underwrite securities issued by other persons, except that all or
any portion of the assets of the Fund may be invested in one or more
investment companies, to the extent not prohibited by the 1940 Act, the
rules and regulations thereunder, and exemptive orders granted under such
Act, and except insofar as the Fund may technically be deemed an
underwriter under the Securities Act in selling a security.]]
[[(7) Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business (the foregoing
shall not be deemed to preclude the Fund from purchasing or selling
futures contracts or options thereon, and the Fund reserves the freedom
of action to hold and to sell real estate acquired as a result of the
ownership of securities by the Fund).]]
[[(8) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder.]]
For Landmark Small Cap Equity Fund Only:
(8) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder[, except as appropriate to
evidence a debt incurred without violating Investment Restriction (1)
above].
<PAGE>
EXHIBIT E
MANAGEMENT AGREEMENT
LANDMARK FUNDS II
Landmark Equity Fund
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
Landmark Funds II, a Massachusetts business trust (the "Trust"), and Citibank,
N.A., a national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain
investment advisory and administrative services for the series of the Trust
designated as Landmark Equity Fund (the "Fund"), and Citibank is willing to
provide such investment advisory and administrative services for the Fund on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the Fund
and as such shall furnish continuously an investment program and shall
determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held uninvested,
subject always to the restrictions of the Trust's Declaration of Trust, dated
as of April 13, 1984, and By-laws, as each may be amended from time to time
(respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940
Act, and the then-current Registration Statement of the Trust with respect to
the Fund. The Manager shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities shall be exercised. Should the
Board of Trustees of the Trust at any time, however, make any definite
determination as to investment policy applicable to the Fund and notify the
Manager thereof in writing, the Manager shall be bound by such determination
for the period, if any, specified in such notice or until similarly notified
that such determination has been revoked. The Manager shall take, on behalf of
the Fund, all actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place all orders
for the purchase or sale of securities for the Fund's account with the brokers
or dealers selected by it, and to that end the Manager is authorized as the
agent of the Trust to give instructions to the custodian or any subcustodian of
<PAGE>
the Fund as to deliveries of securities and payments of cash for the account of
the Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which the Manager or its affiliates exercise investment discretion. The Manager
is authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Manager determines in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Manager and its affiliates have with
respect to accounts over which they exercise investment discretion. In making
purchases or sales of securities or other property for the account of the Fund,
the Manager may deal with itself or with the Trustees of the Trust or the
Trust's underwriter or distributor, to the extent such actions are permitted by
the 1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Fund's expense, one or more subadvisers; provided that in
each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Fund and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, shareholder servicing agents, custodian and other
independent contractors or agents; (iii) preparing and, if applicable, filing
all documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements of
additional information, semi-annual and annual reports to shareholders, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
shareholders; and (v) arranging for maintenance of books and records of the
Trust. Notwithstanding the foregoing, Citibank shall not be deemed to have
assumed any duties with respect to, and shall not be responsible for, the
distribution of shares of beneficial interest in the Fund, nor shall Citibank
be deemed to have assumed or have any responsibility with respect to functions
specifically assumed by any transfer agent, fund accounting agent, custodian or
shareholder servicing agent of the Trust or the Fund. In providing
administrative and management services as set forth herein, Citibank may, at
its own expense, employ one or more subadministrators; provided that Citibank
shall remain fully responsible for the performance of all administrative and
management duties set forth herein and shall supervise the activities of each
subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the Fund
all of its own expenses allocable to the Fund including, without limitation,
<PAGE>
organization costs of the Fund; compensation of Trustees who are not
"affiliated persons" of Citibank; governmental fees; interest charges; loan
commitment fees; taxes; membership dues in industry associations allocable to
the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of issuing and redeeming shares of
beneficial interest and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to existing shareholders of the Fund;
expenses connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Fund (including but not limited to the fees of independent pricing
services); expenses of meetings of the Fund's shareholders; expenses relating
to the registration and qualification of shares of the Fund; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Fund may
be a party and the legal obligation which the Trust may have to indemnify its
Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Fund a management fee computed daily and paid
monthly at an annual rate equal to 0.30% of the Fund's average daily net assets
for the Fund's then-current fiscal year. If Citibank provides services
hereunder for less than the whole of any period specified in this Section 3,
the compensation to Citibank shall be accordingly adjusted and prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the 1940
Act, will not take a long or short position in shares of beneficial interest in
the Fund except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current Registration
Statement applicable to the Fund relative to Citibank and its directors and
officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Section 5, the term
"Citibank" shall include directors, officers and employees of Citibank as well
as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Fund are not
to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as a shareholder or otherwise.
<PAGE>
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of Citibank at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by "vote of a majority of the outstanding voting securities" of the
Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Fund, or by Citibank, in each case on not more than 60 days'
nor less than 30 days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Fund (except
for any such amendment as may be effected in the absence of such approval
without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Fund; and that no other series of the Trust shall be liable with respect to
this Agreement or in connection with the transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust individually.
8. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
9. Use of Name. The Trust hereby acknowledges that any and all rights in
or to the name "Citi" 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 Citibank; that Citibank may assign any or all of such
rights to another party or parties without the consent of the Trust; and that
Citibank may permit other parties, including other investment companies, to use
the word "Citi" in their names. If Citibank, or its assignee as the case may
be, ceases to serve as the adviser to and administrator of the Trust, the Trust
hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name so as to delete the word "Citi."
<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 first above written.
LANDMARK FUNDS II CITIBANK, N.A.
By:______________________ By:_________________________
Title:___________________ Title:______________________
<PAGE>
MANAGEMENT AGREEMENT
LANDMARK FUNDS II
Landmark Small Cap Equity Fund
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
Landmark Funds II, a Massachusetts business trust (the "Trust"), and Citibank,
N.A., a national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain
investment advisory and administrative services for the series of the Trust
designated as Landmark Small Cap Equity Fund (the "Fund"), and Citibank is
willing to provide such investment advisory and administrative services for the
Fund on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the Fund
and as such shall furnish continuously an investment program and shall
determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held uninvested,
subject always to the restrictions of the Trust's Declaration of Trust, dated
as of April 13, 1984, and By-laws, as each may be amended from time to time
(respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940
Act, and the then-current Registration Statement of the Trust with respect to
the Fund. The Manager shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities shall be exercised. Should the
Board of Trustees of the Trust at any time, however, make any definite
determination as to investment policy applicable to the Fund and notify the
Manager thereof in writing, the Manager shall be bound by such determination
for the period, if any, specified in such notice or until similarly notified
that such determination has been revoked. The Manager shall take, on behalf of
the Fund, all actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place all orders
for the purchase or sale of securities for the Fund's account with the brokers
or dealers selected by it, and to that end the Manager is authorized as the
agent of the Trust to give instructions to the custodian or any subcustodian of
the Fund as to deliveries of securities and payments of cash for the account of
the Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which the Manager or its affiliates exercise investment discretion. The Manager
is authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
<PAGE>
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Manager determines in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Manager and its affiliates have with
respect to accounts over which they exercise investment discretion. In making
purchases or sales of securities or other property for the account of the Fund,
the Manager may deal with itself or with the Trustees of the Trust or the
Trust's underwriter or distributor, to the extent such actions are permitted by
the 1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Fund's expense, one or more subadvisers; provided that in
each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Fund and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, shareholder servicing agents, custodian and other
independent contractors or agents; (iii) preparing and, if applicable, filing
all documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements of
additional information, semi-annual and annual reports to shareholders, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
shareholders; and (v) arranging for maintenance of books and records of the
Trust. Notwithstanding the foregoing, Citibank shall not be deemed to have
assumed any duties with respect to, and shall not be responsible for, the
distribution of shares of beneficial interest in the Fund, nor shall Citibank
be deemed to have assumed or have any responsibility with respect to functions
specifically assumed by any transfer agent, fund accounting agent, custodian or
shareholder servicing agent of the Trust or the Fund. In providing
administrative and management services as set forth herein, Citibank may, at
its own expense, employ one or more subadministrators; provided that Citibank
shall remain fully responsible for the performance of all administrative and
management duties set forth herein and shall supervise the activities of each
subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the Fund
all of its own expenses allocable to the Fund including, without limitation,
organization costs of the Fund; compensation of Trustees who are not
"affiliated persons" of Citibank; governmental fees; interest charges; loan
commitment fees; taxes; membership dues in industry associations allocable to
the Trust; fees and expenses of independent auditors, legal counsel and any
<PAGE>
transfer agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of issuing and redeeming shares of
beneficial interest and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to existing shareholders of the Fund;
expenses connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Fund (including but not limited to the fees of independent pricing
services); expenses of meetings of the Fund's shareholders; expenses relating
to the registration and qualification of shares of the Fund; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Fund may
be a party and the legal obligation which the Trust may have to indemnify its
Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Fund a management fee computed daily and paid
monthly at an annual rate equal to 0.35% of the Fund's average daily net assets
for the Fund's then-current fiscal year. If Citibank provides services
hereunder for less than the whole of any period specified in this Section 3,
the compensation to Citibank shall be accordingly adjusted and prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the 1940
Act, will not take a long or short position in shares of beneficial interest in
the Fund except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current Registration
Statement applicable to the Fund relative to Citibank and its directors and
officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Section 5, the term
"Citibank" shall include directors, officers and employees of Citibank as well
as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Fund are not
to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as a shareholder or otherwise.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
<PAGE>
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of Citibank at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by "vote of a majority of the outstanding voting securities" of the
Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Fund, or by Citibank, in each case on not more than 60 days'
nor less than 30 days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Fund (except
for any such amendment as may be effected in the absence of such approval
without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Fund; and that no other series of the Trust shall be liable with respect to
this Agreement or in connection with the transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust individually.
8. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
9. Use of Name. The Trust hereby acknowledges that any and all rights in
or to the name "Citi" 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 Citibank; that Citibank may assign any or all of such
rights to another party or parties without the consent of the Trust; and that
Citibank may permit other parties, including other investment companies, to use
the word "Citi" in their names. If Citibank, or its assignee as the case may
be, ceases to serve as the adviser to and administrator of the Trust, the Trust
hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name so as to delete the word "Citi."
<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 first above written.
LANDMARK FUNDS II CITIBANK, N.A.
By:______________________ By:________________________
Title:___________________ Title:_____________________
<PAGE>
EXHIBIT F
OTHER INVESTMENT COMPANIES WITH SIMILAR INVESTMENT OBJECTIVES TO THE FUNDS FOR
WHICH CITIBANK IS AN INVESTMENT ADVISER OR SUBADVISER
Annual Fee (as a Percentage of Assets as of
Name of Fund Average Net Assets) [**____________**]
<PAGE>
EXHIBIT G
PROPOSED PORTFOLIO MANAGEMENT AGREEMENT
THE PREMIUM PORTFOLIOS
Equity Portfolio
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
The Premium Portfolios, a New York trust (the "Trust"), and Citibank, N.A., a
national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain
investment advisory and administrative services for the series of the Trust
designated as Equity Portfolio (the "Portfolio"), and Citibank is willing to
provide such investment advisory and administrative services for the Portfolio
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the
Portfolio and as such shall furnish continuously an investment program and
shall determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Portfolio shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated as of September 13, 1993, and By-laws, as each may be amended from
time to time (respectively, the "Declaration" and the "By-Laws"), the
provisions of the 1940 Act, and the then-current Registration Statement of the
Trust with respect to the Portfolio. The Manager shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's securities
shall be exercised. Should the Board of Trustees of the Trust at any time,
however, make any definite determination as to investment policy applicable to
the Portfolio and notify the Manager thereof in writing, the Manager shall be
bound by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The Manager
shall take, on behalf of the Portfolio, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of securities for the
Portfolio's account with the brokers or dealers selected by it, and to that end
the Manager is authorized as the agent of the Trust to give instructions to the
custodian or any subcustodian of the Portfolio as to deliveries of securities
<PAGE>
and payments of cash for the account of the Portfolio. In connection with the
selection of such brokers or dealers and the placing of such orders, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Portfolio and/or the other accounts over which the Manager or its
affiliates exercise investment discretion. The Manager is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. In making purchases or
sales of securities or other property for the account of the Portfolio, the
Manager may deal with itself or with the Trustees of the Trust or the Trust's
underwriter or distributor, to the extent such actions are permitted by the
1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Portfolio's expense, one or more subadvisers; provided that
in each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Portfolio and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, custodian and other independent contractors or agents;
(iii) preparing and, if applicable, filing all documents required for
compliance by the Trust with applicable laws and regulations, including
registration statements, semi-annual and annual reports to investors, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
investors; and (v) arranging for maintenance of books and records of the Trust.
Notwithstanding the foregoing, Citibank shall not be deemed to have assumed any
duties with respect to, and shall not be responsible for, the distribution of
beneficial interests in the Portfolio, nor shall Citibank be deemed to have
assumed or have any responsibility with respect to functions specifically
assumed by any transfer agent, fund accounting agent or custodian of the Trust
or the Portfolio. In providing administrative and management services as set
forth herein, Citibank may, at its own expense, employ one or more
subadministrators; provided that Citibank shall remain fully responsible for
the performance of all administrative and management duties set forth herein
and shall supervise the activities of each subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "affiliated persons" of Citibank; governmental fees; interest charges;
<PAGE>
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental
officers and commissions and to investors in the Portfolio; expenses connected
with the execution, recording and settlement of security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Portfolio, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of the
Portfolio (including but not limited to the fees of independent pricing
services); expenses of meetings of the Portfolio's investors; expenses relating
to the issuance of beneficial interests in the Portfolio; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Portfolio
may be a party and the legal obligation which the Trust may have to indemnify
its Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Portfolio a management fee computed daily and
paid monthly at an annual rate equal to 0.60% of the Portfolio's average daily
net assets for the Portfolio's then-current fiscal year. If Citibank provides
services hereunder for less than the whole of any period specified in this
Section 3, the compensation to Citibank shall be accordingly adjusted and
prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, if any, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests in the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to
Citibank and its directors and officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 5,
the term "Citibank" shall include directors, officers and employees of Citibank
as well as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Portfolio are
not to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as an investor or otherwise.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
<PAGE>
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of Citibank at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by "vote of a majority of the outstanding voting securities" of the
Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, or by Citibank, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or holders of
beneficial interests in the Trust individually.
8. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE PREMIUM PORTFOLIOS CITIBANK, N.A.
By:______________________ By:_______________________
Title:___________________ Title:____________________
<PAGE>
PROPOSED PORTFOLIO MANAGEMENT AGREEMENT
THE PREMIUM PORTFOLIOS
Small Cap Equity Portfolio
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
The Premium Portfolios, a New York trust (the "Trust"), and Citibank, N.A., a
national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain
investment advisory and administrative services for the series of the Trust
designated as Small Cap Equity Portfolio (the "Portfolio"), and Citibank is
willing to provide such investment advisory and administrative services for the
Portfolio on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the
Portfolio and as such shall furnish continuously an investment program and
shall determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Portfolio shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated as of September 13, 1993, and By-laws, as each may be amended from
time to time (respectively, the "Declaration" and the "By-Laws"), the
provisions of the 1940 Act, and the then-current Registration Statement of the
Trust with respect to the Portfolio. The Manager shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's securities
shall be exercised. Should the Board of Trustees of the Trust at any time,
however, make any definite determination as to investment policy applicable to
the Portfolio and notify the Manager thereof in writing, the Manager shall be
bound by such determination for the period, if any, specified in such notice or
until similarly notified that such determination has been revoked. The Manager
shall take, on behalf of the Portfolio, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of securities for the
Portfolio's account with the brokers or dealers selected by it, and to that end
the Manager is authorized as the agent of the Trust to give instructions to the
custodian or any subcustodian of the Portfolio as to deliveries of securities
and payments of cash for the account of the Portfolio. In connection with the
selection of such brokers or dealers and the placing of such orders, brokers or
dealers may be selected who also provide brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Portfolio and/or the other accounts over which the Manager or its
affiliates exercise investment discretion. The Manager is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in excess of
<PAGE>
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. In making purchases or
sales of securities or other property for the account of the Portfolio, the
Manager may deal with itself or with the Trustees of the Trust or the Trust's
underwriter or distributor, to the extent such actions are permitted by the
1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Portfolio's expense, one or more subadvisers; provided that
in each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Portfolio and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, custodian and other independent contractors or agents;
(iii) preparing and, if applicable, filing all documents required for
compliance by the Trust with applicable laws and regulations, including
registration statements, semi-annual and annual reports to investors, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
investors; and (v) arranging for maintenance of books and records of the Trust.
Notwithstanding the foregoing, Citibank shall not be deemed to have assumed any
duties with respect to, and shall not be responsible for, the distribution of
beneficial interests in the Portfolio, nor shall Citibank be deemed to have
assumed or have any responsibility with respect to functions specifically
assumed by any transfer agent, fund accounting agent or custodian of the Trust
or the Portfolio. In providing administrative and management services as set
forth herein, Citibank may, at its own expense, employ one or more
subadministrators; provided that Citibank shall remain fully responsible for
the performance of all administrative and management duties set forth herein
and shall supervise the activities of each subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "affiliated persons" of Citibank; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
<PAGE>
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental
officers and commissions and to investors in the Portfolio; expenses connected
with the execution, recording and settlement of security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Portfolio, including safekeeping of funds and securities and maintaining
required books and accounts; expenses of calculating the net asset value of the
Portfolio (including but not limited to the fees of independent pricing
services); expenses of meetings of the Portfolio's investors; expenses relating
to the issuance of beneficial interests in the Portfolio; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Portfolio
may be a party and the legal obligation which the Trust may have to indemnify
its Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Portfolio a management fee computed daily and
paid monthly at an annual rate equal to 0.75% of the Portfolio's average daily
net assets for the Portfolio's then-current fiscal year. If Citibank provides
services hereunder for less than the whole of any period specified in this
Section 3, the compensation to Citibank shall be accordingly adjusted and
prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, if any, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests in the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to
Citibank and its directors and officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 5,
the term "Citibank" shall include directors, officers and employees of Citibank
as well as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Portfolio are
not to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as an investor or otherwise.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of Citibank at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
<PAGE>
Trust or by "vote of a majority of the outstanding voting securities" of the
Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, or by Citibank, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or holders of
beneficial interests in the Trust individually.
8. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE PREMIUM PORTFOLIOS CITIBANK, N.A.
By:______________________ By:_______________________
Title:___________________ Title:____________________
<PAGE>
EXHIBIT H
SERVICE PLAN
SERVICE PLAN of Landmark Funds II, a Massachusetts business trust (the
"Trust"), with respect to shares of beneficial interest ("Shares") of its
series Landmark Equity Fund, Landmark Small Cap Equity Fund, and any other
series of the Trust adopting this plan (the "Series").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and
other assets;
WHEREAS, the Trust intends to distribute Shares in accordance with Rule
12b-1 under the 1940 Act, and wishes to adopt this Plan as a plan of
distribution pursuant to Rule 12b-1;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of this Plan or in
any agreement relating hereto (the "Non-Interested Trustees"), having
determined, in the exercise of reasonable business judgment and in light of
their fiduciary duties under state law and under Section 36(a) and (b) of the
1940 Act, that there is a reasonable likelihood that this Plan will benefit the
Trust and the shareholders of the Series, have approved this Plan by votes cast
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan as a plan of
distribution in accordance with Rule 12b-1 under the 1940 Act, with the terms
of the Plan being as follows:
1. Distribution and Servicing Activities. Subject to
the supervision of the Trustees of the Trust, the Trust may:
(a) engage, directly or indirectly, in any activities primarily
intended to result in the sale of Shares of the Series, which activities
may include, but are not limited to (i) payments to the Trust's
Distributor for distribution services, (ii) payments to securities
dealers, financial institutions (which may include banks) and others in
respect of the sale of Shares of the Series, (iii) payments for
advertising, marketing or other promotional activity, and (iv) payments
for preparation, printing, and distribution of prospectuses and
statements of additional information and reports of the Trust for
recipients other than regulators and existing shareholders of the Trust;
and
(b) make payments, directly or indirectly, to the Trust's
Distributor, securities dealers, financial institutions (which may
include banks) and others for providing personal service and/or the
maintenance of shareholder accounts.
The Trust is authorized to engage in the activities listed above either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
<PAGE>
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan shall be determined by the Trustees of the Trust, but in
no event may such expenditures exceed an amount calculated at the rate of 0.25%
per annum of the average daily net assets of each Series attributable to Shares
of that Series. Payments pursuant to this Plan may be made directly by the
Trust or to other persons with which the Trust has entered into agreements
related to this Plan. For purposes of determining the fees payable under this
Plan, the value of each Series' average daily net assets attributable to Shares
shall be computed in the manner specified in the applicable Series'
then-current prospectus and statement of additional information.
3. Trust's Expenses. The Trust shall pay all expenses of its operations,
including the following, and such expenses shall not constitute expenditures
under this Plan: organization costs of each series; compensation of Trustees
who are not "affiliated persons" of the Distributor; governmental fees;
interest charges; loan commitment fees; taxes; membership dues in industry
associations allocable to the Trust; fees and expenses of independent auditors,
legal counsel and any transfer agent, distributor, shareholder servicing agent,
registrar or dividend disbursing agent of the Trust; expenses of issuing and
redeeming shares of beneficial interest and servicing shareholder accounts;
expenses of preparing, typesetting, printing and mailing prospectuses,
statements of additional information, shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to existing
shareholders of the Series; expenses connected with the execution, recording
and settlement of security transactions; insurance premiums; fees and expenses
of the custodian for all services to the Series, including safekeeping of funds
and securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Series (including but not limited to the
fees of independent pricing services); expenses of meetings of shareholders;
expenses relating to the issuance, registration and qualification of shares;
and such non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Trust may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
4. Term and Termination. (a) This Plan shall become effective as to a
Series on _________ __, 199_, provided that the following have occurred: (i)
approval by a vote of at least a majority of the outstanding voting securities
(as defined in the 1940 Act) of Shares of the particular Series, and (ii)
approval by a majority of the Trustees of the Trust and a majority of the
Non-Interested Trustees cast in person at a meeting called for the purpose of
voting on this Plan. Unless terminated as herein provided, this Plan shall
continue until August 8, 1998, and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both the Trustees of the Trust
and the Non-Interested Trustees, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to any Series by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities, as defined in the 1940 Act, of Shares of
the applicable Series.
5. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities, as
defined in the 1940 Act, of Shares of the applicable Series, and no material
<PAGE>
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 4(a) hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Non-Interested Trustees of the Trust shall
be committed to the discretion of such Non-Interested Trustees.
7. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
9. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
provisions of the 1940 Act.
<PAGE>
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
PROXY CARD PROXY CARD
LANDMARK EQUITY FUND
LANDMARK SMALL CAP EQUITY FUND
A PROXY FOR A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD OCTOBER 17, 1997
The undersigned, revoking all Proxies heretofore given, hereby appoints
each of [ ] and [ ], or any of them, as Proxies of the undersigned with full
power of substitution, to vote on behalf of all of the undersigned all shares
in Landmark Equity Fund and Landmark Small Cap Equity Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Funds to be held at Citicorp Center, 153 East 53rd Street, [ ] Floor, New York,
New York, on Friday, October 17, 1997 at [ ] [a.m./p.m.], Eastern Time, and at
any adjournment thereof, as fully as the undersigned would be entitled to vote
if personally present, as follows:
PROXY SOLICITED ON BEHALF OF THE FUNDS' BOARD OF TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS.
1. An amendment to the Declaration of Trust of each Fund to allow the assets
of that Fund to be invested in one or more investment companies to the
extent not prohibited by the 1940 Act.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
2. An amendment to the fundamental investment policies of each Fund to allow
the assets of that Fund to be invested in one or more investment
companies to the extent not prohibited by the 1940 Act.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
<PAGE>
3. An amendment to the Declaration of Trust of each Fund's corresponding
Portfolio broadening the definition of who may invest in that Portfolio
and limiting the liability of investors therein.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
4. An amendment to the fundamental investment policies of each Fund
concerning that Fund's ability to make loans to other persons and to buy
or sell futures contracts and options on futures.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
5.a. For Landmark Equity Fund, to adopt fundamental investment policies
concerning the underwriting of securities, purchases and sales of real
estate and commodities and issuance of senior securities.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
5.b. For Landmark Small Cap Equity Fund, an amendment to the Fund's
fundamental investment policy concerning the issuance of senior
securities.
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
6. A Management Agreement for each Fund with Citibank, N.A.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
<PAGE>
7. A Management Agreement for each Fund's corresponding Portfolio with
Citibank, N.A.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
8. A Service Plan for each Fund pursuant to Rule 12b-1 under the 1940 Act.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
9. The selection of Price Waterhouse LLP as the independent certified public
accountants for each Fund.
I vote my shares in Landmark Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
I vote my shares in Landmark Small Cap Equity Fund, if any:
______FOR ______AGAINST ______ABSTAIN
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR ANY PROPOSALS
FOR WHICH NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
Date:_______________
-----------------------------------
Signature
-----------------------------------
Signature of joint owner, if any
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners
should each sign this proxy. Please sign, date and return in the enclosed
envelope.
