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SUPPLEMENT DATED JANUARY 2, 1996 TO PROSPECTUS DATED APRIL 3, 1995
FOR
LANDMARK NATIONAL TAX FREE INCOME FUND
LANDMARK NEW YORK TAX FREE INCOME FUND
Each of the Funds may use financial futures in order to protect the Fund from
fluctuations in interest rates (sometimes called "hedging") without actually
buying or selling debt securities, or to manage the effective maturity or
duration of fixed-income securities in the Fund's portfolio in an effort to
reduce potential losses or enhance potential gain. Futures contracts provide for
the future sale by one party and purchase by another party of a specified amount
of a security at a specified future time and price, or for making payment of a
cash settlement based on changes in the value of a security or an index of
securities. Because the value of a futures contract changes based on the price
of the underlying security, futures contracts are commonly referred to as
"derivatives". Futures contracts are a generally accepted part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. The futures contracts that may be purchased by the
Funds are standardized contracts traded on commodities exchanges or boards of
trade.
When a Fund purchases or sells a futures contract, it is required to make an
initial margin deposit. Although the amount may vary, initial margin can be as
low as 1% or less of the face amount of the contract. Additional margin may be
required as the contract fluctuates in value. Since the amount of margin is
relatively small compared to the value of the securities covered by a futures
contract, the potential for gain or loss on a futures contract is much greater
then the amount of a Fund's initial margin deposit. Neither Fund currently
intends to enter into a futures contract if, as a result, the initial margin
deposits on all of that Fund's futures contracts would exceed approximately 5%
of the Fund's net assets. Also, each Fund intends to limit its futures contracts
so that the value of the securities covered by its futures contracts would not
generally exceed 50% of the Fund's other assets and to segregate sufficient
assets to meet its obligations under outstanding futures contracts. In any
event, a Fund will not invest in futures contracts to the extent that such
investment would be inconsistent with such Fund's investment policies which
provide that, under normal circumstances, the National Tax Free Income Fund will
invest at least 80% of its assets in tax-exempt Municipal Obligations and the
New York Tax Free Income Fund will invest at least 80% of its assets in triple
tax-exempt Municipal Obligations.
The ability of a Fund to utilize futures contracts successfully will depend on
the Adviser's ability to predict interest rate movements, which cannot be
assured. In addition to general risks associated with any investment, the use of
futures contracts entails the risk that, to the extent the Adviser's view as to
interest rate movements is incorrect, the use of futures contracts, even for
hedging purposes, could result in losses greater than if they had not been used.
This could happen, for example, if there is a poor correlation between price
movements of futures contracts and price movements in a Fund's related portfolio
position. Also, although the Funds will purchase only standardized futures
traded on regulated exchanges, the futures markets may not be liquid in all
circumstances. As a result, in certain markets, a Fund might not be able to
close out a transaction without incurring substantial losses, if at all. When
futures contracts are used for hedging, even if they are successful in
minimizing the risk of loss due to a decline in the value of the hedged
position, at the same time they limit any potential gain which might result from
an increase in value of such position.
The use of futures contracts potentially exposes a Fund to the effects of
"leveraging", which occurs when futures are used so that the Fund's exposure to
the market is greater than it would have been if the Fund had invested directly
in the underlying securities. "Leveraging" increases a Fund's potential for both
gain and loss. As noted above, each of the Funds intends to adhere to certain
policies relating to the use of futures contracts, which should have the effect
of limiting the amount of leverage by the Fund. The use of futures contracts may
increase the amount of taxable income of a Fund and may affect in other ways the
amount, timing and character of a Fund's income for tax purposes, as more fully
discussed in the section entitled "Certain Additional Tax Matters" in the Funds'
Statement of Additional Information.
The use of futures by the Funds and some of their risks are described more fully
in the Funds' Statement of Additional Information.
This Supplement supersedes the section entitled "Futures Contracts And Options
On Futures Contracts" appearing in the Appendix to the Funds' Prospectus and
supplements the section entitled "Investment Objectives and Policies -- Risk
Factors" and the section entitled "Risk Considerations" in the Funds'
Prospectus.
