<PAGE>
As filed with the Securities and Exchange Commission on February 20, 1998
File Nos. 33-5819
811-5034
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE
AMENDMENT NO. 19
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
AMENDMENT NO. 20
LANDMARK TAX FREE INCOME FUNDS*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 617-423-1679
PHILIP W. COOLIDGE, 6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM DANA LLP, 150 FEDERAL STREET,
BOSTON, MASSACHUSETTS 02110
It is proposed that this filing will become effective on March 2, 1998
pursuant to paragraph (b) of Rule 485.
================================================================================
*Formerly, Landmark New York Tax Free Income Fund.
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
(LANDMARK NATIONAL TAX FREE INCOME FUND AND
LANDMARK NEW YORK TAX FREE INCOME FUND)
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
N-1A
ITEM NO. N-1A ITEM LOCATION
- -------- --------- --------
PART A PROSPECTUS
- ------ ----------
Item 1. Cover Page............................ Cover Page
Item 2. Synopsis.............................. Expense Summary
Item 3. Condensed Financial Information....... Condensed Financial
Information
Item 4. General Description of Registrant..... Investment Information;
General Information;
Appendix
Item 5. Management of the Fund................ Management; Expenses
Item 5A. Management's Discussion of Fund Not Applicable
Performance...........................
Item 6. Capital Stock and Other Securities.... General Information; Voting
and Other Rights; Purchases;
Exchanges; Redemptions;
Dividends and Distributions;
Tax Matters
Item 7. Purchase of Securities Being Offered.. Purchases; Exchanges;
Redemptions
Item 8. Redemption or Repurchase.............. Purchases; Exchanges;
Redemptions
Item 9. Pending Legal Proceedings............. Not Applicable
STATEMENT OF
ADDITIONAL
PART B INFORMATION
- ------ -----------
Item 10. Cover Page............................ Cover Page
Item 11. Table of Contents..................... Cover Page
Item 12. General Information and History....... The Funds
Item 13. Investment Objectives and Policies.... Investment Objectives,
Policies and Restrictions
Item 14. Management of the Fund................ Management
Item 15. Control Persons and Principal Holders of Management
Securities............................
Item 16. Investment Advisory and Other Services Management
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities.... Description of Shares,
Voting Rights and
Liabilities
Item 19. Purchase, Redemption and Pricing of
Securities Description of Shares,
Being Offered......................... Voting Rights and
Liabilities; Determination
of Net Asset Value;
Valuation of Securities;
Additional Purchase and
Redemption Information
Item 20. Tax Status............................ Certain Additional Tax
Matters
Item 21. Underwriters.......................... Management
Item 22. Calculation of Performance Data....... Performance Information
Item 23. Financial Statements.................. Independent Accountants and
Financial Statements
PART C Information required to be included in Part C is set forth under the
- ---- appropriate Item, so numbered, in Part C to this Registration
Statement.
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
MARCH 2, 1998
CITIFUNDS(SM) NATIONAL TAX FREE INCOME PORTFOLIO
CITIFUNDS(SM) NEW YORK TAX FREE INCOME PORTFOLIO
This Prospectus describes two mutual funds in the CitiFunds(SM) Family of
Funds: CitiFunds(SM) National Tax Free Income Portfolio and CitiFunds(SM) New
York Tax Free Income Portfolio. Each Fund has its own investment objectives
and policies. Citibank, N.A. is the investment adviser.
- --------------------------------------------------------------------------------
REMEMBER THAT SHARES OF THE FUNDS:
o ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY
o ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, CITIBANK
OR ANY OF ITS AFFILIATES
o ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED
- --------------------------------------------------------------------------------
This Prospectus concisely sets forth information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information dated March 2, 1998 (and incorporated by reference in this
Prospectus) has been filed with the Securities and Exchange Commission. Copies
of the Statement of Additional Information may be obtained without charge, and
further inquiries about the Funds may be made, by contacting the investor's
Servicing Agent (see inside back cover for address and phone number). The
Statement of Additional Information and other related materials are available on
the SEC's Internet web site (http://www.sec.gov).
This Prospectus shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sales of these securities in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
TABLE OF CONTENTS
2 Prospectus Summary
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4 Expense Summary
- --------------------------------------------------------------------------------
5 Condensed Financial Information
- --------------------------------------------------------------------------------
7 Investment Information
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8 Risk Considerations
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9 Valuation of Shares
Purchases
- --------------------------------------------------------------------------------
10 Exchanges
Redemptions
- --------------------------------------------------------------------------------
11 Dividends and Distributions
Management
- --------------------------------------------------------------------------------
14 Tax Matters
Performance Information
- --------------------------------------------------------------------------------
15 General Information
- --------------------------------------------------------------------------------
17 Appendix -- Permitted Investments
and Investment Practices
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
See the body of the Prospectus for more information on the topics discussed
in this summary.
THE FUNDS: This Prospectus describes two mutual funds: CitiFunds(SM) National
Tax Free Income Portfolio and CitiFunds(SM) New York Tax Free Income
Portfolio. Each Fund has its own investment objectives and policies. There can
be no assurance that either Fund will achieve its objectives.
INVESTMENT OBJECTIVES AND POLICIES:
CITIFUNDS(SM) NATIONAL TAX FREE INCOME PORTFOLIO. The Fund's objectives are
to generate high levels of current income exempt from federal income taxes and
to preserve the value of its shareholders' investment. The Fund invests
primarily in municipal obligations that pay interest that is exempt from federal
income taxes.
CITIFUNDS(SM) NEW YORK TAX FREE INCOME PORTFOLIO. The Fund's objectives are
to generate high levels of current income exempt from federal, New York State
and New York City personal income taxes and to preserve the value of its
shareholders' investment. The Fund invests primarily in municipal obligations
that pay interest that is exempt from federal, New York State and New York City
personal income taxes.
INVESTMENT ADVISER AND DISTRIBUTOR: Citibank, N.A. ("Citibank" or the
"Adviser"), a wholly-owned subsidiary of Citicorp, is the investment adviser.
Citibank and its affiliates manage more than $88 billion in assets worldwide.
CFBDS, Inc. ("CFBDS" or the "Distributor") is the distributor of shares of
each Fund. See "Management."
PURCHASES AND REDEMPTIONS: Customers of Shareholder Servicing Agents may
purchase and redeem shares of the Funds on any Business Day. See "Purchases"
and "Redemptions."
PRICING: Shares of the Funds are purchased and redeemed at net asset value
without a sales load or redemption fees. Shares are subject to a distribution
fee at the annual rate of 0.05% of the average daily net assets of the
National Tax Free Income Portfolio and 0.15% of the average daily net assets
of the New York Tax Free Income Portfolio. See "Purchases" and "Management --
Distribution Arrangements."
EXCHANGES: Shares may be exchanged for shares of the CitiSelect(R) Portfolios
and certain other CitiFunds. See "Exchanges."
DIVIDENDS: Dividends are declared and paid monthly for each Fund. Net capital
gains are distributed annually. See "Dividends and Distributions."
REINVESTMENT: All dividend and capital gain distributions may be received
either in cash or in Fund shares at net asset value, subject to the policies
of a shareholder's Shareholder Servicing Agent. See "Dividends and
Distributions."
WHO SHOULD INVEST: Each Fund has its own suitability considerations and risk
factors, as summarized below and described in more detail in "Investment
Information" and "Risk Considerations." No single Fund is intended to provide a
complete investment program.
NATIONAL TAX FREE INCOME PORTFOLIO. The Fund is designed for investors seeking
current income that is exempt from federal income taxes. Investors should be
willing to accept fluctuation in the price of shares of the Fund.
NEW YORK TAX FREE INCOME PORTFOLIO. The Fund is designed for investors seeking
current income that is exempt from federal, New York State and New York City
personal income taxes. Investors should be willing to accept fluctuation in the
price of shares of the Fund and to bear the increased risk of an investment
portfolio that is concentrated in obligations of New York and its political
subdivisions.
RISK FACTORS: There can be no assurance that either Fund will achieve its
investment objectives. Each Fund's net asset value will fluctuate based on
changes in the values of the underlying portfolio securities. As a result, an
investor's shares may be worth more or less at redemption than at the time of
purchase.
The value of fixed income securities, including municipal obligations,
generally goes down when interest rates go up, and vice versa. Changes in
interest rates will generally cause bigger changes in the prices of longer-term
securities than in the prices of shorter-term securities.
Prices of fixed income securities also fluctuate based on changes in the
actual and perceived creditworthiness of issuers. The prices of lower rated
securities often fluctuate more than those of higher rated securities. Also, it
is possible that some issuers will be unable to make required payments on fixed
income securities held by each Fund.
Each Fund is a non-diversified mutual fund, which means that it may invest a
relatively high percentage of its assets in the obligations of a limited number
of issuers. The New York Tax Free Income Portfolio's investments are, under
normal circumstances, concentrated in municipal obligations of New York issuers.
As a result, each Fund is more susceptible than more diversified funds to any
single economic, political or regulatory occurrence, and the New York Tax Free
Income Portfolio is particularly susceptible to occurrences affecting New York
issuers. New York State, New York City and other New York governmental
authorities have experienced financial difficulties, and as a result the credit
ratings of some of their municipal obligations have been downgraded.
Certain investment practices may also entail special risks. Investors should
read "Risk Considerations" for more information about risk factors.
<PAGE>
EXPENSE SUMMARY
- ------------------------------------------------------------------------------
The following table summarizes estimated shareholder transaction and annual
operating expenses for shares of each Fund. For more information on costs and
expenses, see "Management" -- page 11 and "General Information -- Expenses" --
page 16.*
<TABLE>
<CAPTION>
------------------------------------
NATIONAL TAX FREE NEW YORK TAX FREE
INCOME PORTFOLIO INCOME PORTFOLIO
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES .......................... None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS):
Investment Management Fees (after fee waivers and
reimbursements)(2) ........................................ 0.25% 0.23%
12b-1 Fees (including service fees) (after fee waivers and
reimbursements)(1)(2) ................................... 0.05% 0.01%
Administrative Services Fees (after fee waivers and
reimbursements)(2) ........................................ 0.10% 0.08%
Shareholder Servicing Fees ................................ 0.25% 0.25%
Other Expenses (after fee waivers and reimbursements(2) ... 0.15% 0.23%
Total Fund Operating Expenses(2) .......................... 0.80% 0.80%
* This table is intended to assist investors in understanding the various costs
and expenses that a shareholder of a Fund will bear, either directly or
indirectly.
</TABLE>
The table shows the fees paid to various service providers after giving effect
to expected voluntary partial fee waivers and reimbursements. There can be no
assurance that the fee waivers and reimbursements reflected in the table will
continue at these levels.
(1) 12b-1 distribution fees are asset-based sales charges. Long-term
shareholders in a Fund could pay more in sales charges than the economic
equivalent of the maximum front-end sales charges permitted by the National
Association of Securities Dealers, Inc.
(2) Absent fee waivers and reimbursements, investment management fees, 12b-1
fees, administrative services fees, other expenses and total fund operating
expenses would be 0.40%, 0.10%, 0.40%, 6.56% and 7.71% for CitiFunds
National Tax Free Income Portfolio. Absent fee waivers and reimbursements,
investment management fees, 12b-1 fees, administrative services fees and
total fund operating expenses would be 0.40%, 0.20%, 0.25% and 1.33% for
CitiFunds New York Tax Free Income Portfolio.
EXAMPLE: A shareholder would pay the following expenses on a $1,000
investment, assuming, except as otherwise noted, redemption at the end of each
period indicated below:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
NATIONAL TAX FREE INCOME PORTFOLIO .. $8 $26 $44 $99
NEW YORK TAX FREE INCOME PORTFOLIO . $8 $26 $44 $99
The Example assumes a 5% annual return and that all dividends are reinvested and
reflects certain voluntary fee waivers. If waivers were not in place, the
amounts in the example would be $76, $222, $360 and $674 for National Tax Free
Income Portfolio; and $14, $42, $73 and $160 for New York Tax Free Income
Portfolio. The assumption of a 5% annual return is required by the Securities
and Exchange Commission for all mutual funds, and is not a prediction of any
Fund's future performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OF ANY FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
The following tables provide condensed financial information about the Funds for
the periods indicated. The information below should be read in conjunction with
the financial statements appearing in the Funds' Annual Reports to Shareholders,
which are incorporated by reference in the Statement of Additional Information.
The financial statements and notes, as well as the tables below, have been
audited by Deloitte & Touche LLP, independent accountants, whose reports are
included in the Funds' Annual Reports. Copies of the Annual Reports may be
obtained without charge from an investor's Shareholder Servicing Agent (see
inside of back cover for address and phone number).
----------------------------------------------
<TABLE>
<CAPTION>
NEW YORK TAX FREE INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOUR
YEAR ENDED DEC. 31, MONTHS YEAR ENDED AUGUST 31,
ENDED
DEC. 31,
1997 1996 1995 1994 1993(A) 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning- of period $10.98 $11.25 $10.09 $11.54 $11.44 $10.82 $10.27 $ 9.77 $ 9.89 $ 9.34 $ 9.49
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
Operations:
Net investment income 0.594 0.585 0.607 0.566 0.210 0.567 0.589 0.583 0.565 0.577 0.586
Net realized and
unrealized gain
(loss)
on investments ..... 0.431 (0.267) 1.153 (1.415) 0.076 0.610 0.541 0.510 (0.117) 0.550 (0.156)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
operations ..... 1.025 0.318 1.760 (0.849) 0.286 1.177 1.130 1.093 0.448 1.127 0.430
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Dividends From:
Net investment
income ......... (0.585) (0.588) (0.600) (0.601) (0.186) (0.557) (0.580) (0.593) (0.568) (0.577) (0.580)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, end
of period .......... $11.42 $10.98 $11.25 $10.09 $11.54 $11.44 $10.82 $10.27 $ 9.77 $ 9.89 $9.340
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's
omitted)............ $75,978 $82,182 $90,264 $86,399 $120,824 $111,583 $81,185 $73,884 $76,442 $73,790 $70,050
Ratio of expenses to
average net assets 0.80% 0.80% 0.80% 0.80% 0.80%+ 0.80% 0.80% 0.81% 1.37% 1.42% 1.25%
Ratio of net
investment income to
average net assets . 5.31% 5.34% 5.62% 5.52% 4.84%+ 5.11% 5.58% 5.82% 5.73% 5.95% 6.34%
Portfolio turnover ... 16% 47% 98% 150% 46% 149% 143% 337% 170% 204% 107%
Total return ......... 9.62% 3.01% 17.89% (7.47%) 2.52%** 11.19% 11.31% 11.52% 4.66% 12.49% 4.67%
Note: If certain agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the periods indicated
and expenses were not reduced for fees paid indirectly for the years ended after December 31, 1994, the net investment income per
share and the ratios would have been as follows:
Net investment income
per share .......... $0.540 $0.534 $0.555 $0.508 $0.191 $0.515 $0.537 $0.540 $0.561 * $0.586
RATIOS:
Expenses to average
net assets ......... 1.28% 1.27% 1.27% 1.27% 1.23%+ 1.27% 1.30% 1.24% 1.40% * 1.26%
Net investment income
to average net assets 4.83% 4.87% 5.15% 5.05% 4.40%+ 4.64% 5.09% 5.39% 5.69% * 6.33%
* No waiver or assumption of expenses during the period.
** Not annualized.
+ Annualized.
(A) Effective September 1, 1993, the Fund changed its fiscal year end from August 31 to December 31.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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NATIONAL TAX FREE INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
AUGUST 17, 1995
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
1997 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, beginning- of period .............. $ 10.34 $ 10.55 $ 10.00
-------- -------- --------
Income from Operations:
Net investment income .............................. 0.564 0.562 0.187
Net realized and unrealized gain (loss) on
investments ...................................... 0.586 (0.232) 0.551
-------- -------- --------
Total from operations .......................... 1.150 0.330 0.738
-------- -------- --------
Less Dividends From:
Net investment income ............................ (0.570) (0.540) (0.188)
-------- -------- --------
Net Asset Value, end of period ..................... $ 10.92 $ 10.34 $ 10.55
======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) .......... $1,917 $2,060 $1,306
Ratio of expenses to average net assets (A) ........ 0.14% 0% 0%
Ratio of expenses to average net assets after fees
paid indirectly (A) .............................. 0% 0% 0%
Ratio of net investment income to average net assets 5.45% 5.42% 5.20%+
Portfolio turnover ................................. 55% 52% 0%
Total return ....................................... 11.45% 3.31% 7.43%**
Note: If certain agents of the Fund had not voluntarily agreed to waive all or aportion of their fees for the period,
expenses were not reduced for fees paid indirectly and had expenses been limited to that required by state securities
laws in 1995, the net investment income per share and the ratios would have been as follows:
Net investment income (loss) per share ............. $(0.229) $(0.291) $0.098
RATIOS:
Expenses to average net assets ..................... 7.66% 8.23% 2.50%+
Net investment income to average net assets ........ (2.21)% (2.81)% 2.70%+
+ Annualized.
** Not annualized.
(A) The expense ratios for the year ended December 31, 1995 and the periods thereafter have been adjusted to reflect
a change in reporting requirements. The new reporting guidelines require the Fund to increase its expense ratio of
any expense offset arrangements with its service providers.
</TABLE>
<PAGE>
INVESTMENT INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES: The investment objectives of the NATIONAL TAX FREE
INCOME PORTFOLIO are to generate high levels of current income exempt from
federal income taxes and to preserve the value of its shareholders' investment.
The investment objectives of the NEW YORK TAX FREE INCOME PORTFOLIO are to
generate high levels of current income exempt from federal, New York State and
New York City personal income taxes and to preserve the value of its
shareholders' investment.
The investment objectives of each Fund may be changed by its Trustees
without approval by that Fund's shareholders, but shareholders will be given
written notice at least 30 days before any change is implemented. Of course,
there can be no assurance that either Fund will achieve its investment
objectives.
INVESTMENT POLICIES: The NATIONAL TAX FREE INCOME PORTFOLIO seeks its objectives
by investing in debt securities consisting primarily of obligations issued by
state and municipal governments and by other qualifying issuers ("Municipal
Obligations") that pay interest that is exempt from federal income taxes
including the federal alternative minimum tax ("tax-exempt Municipal
Obligations"). Under normal circumstances at least 80% of the Fund's assets will
be invested in tax-exempt Municipal Obligations.
The National Tax Free Income Portfolio may invest in short-term debt
securities that pay interest that is subject to federal income taxes, including
those issued by companies, the U.S. Government or agencies of the U.S.
Government. Except for temporary defensive purposes no more than 20% of the
Fund's net assets will be invested in debt securities that pay interest subject
to federal income tax.
The NEW YORK TAX FREE INCOME PORTFOLIO seeks its objectives by investing in
Municipal Obligations that pay interest that is exempt from federal, New York
State and New York City personal income taxes including the federal alternative
minimum tax ("triple tax-exempt Municipal Obligations"). Under normal
circumstances at least 80% of the Fund's assets will be invested in triple
tax-exempt Municipal Obligations.
The New York Tax Free Income Portfolio may invest in Municipal Obligations
paying interest that is exempt from federal income taxes but subject to New York
State and New York City personal income taxes. The Fund may also invest in
short-term debt securities that pay interest that is subject to federal, New
York State and New York City personal income taxes, including those issued by
companies, the U.S. Government or agencies of the U.S. Government. Except for
temporary defensive purposes no more than 20% of the Fund's net assets will be
invested in debt securities that pay interest subject to federal income tax or
New York State or New York City personal income taxes.
Municipal Obligations include municipal bonds, notes and commercial paper
issued by the states, territories and possessions of the United States
(including the District of Columbia) and their political subdivisions, agencies
and instrumentalities, and obligations of other qualifying issuers. The Funds
may invest both in "general obligation" bonds, which are backed by the full
faith, credit and taxing power of the issuer, and in "revenue" bonds, which are
payable only from the revenues generated by a specific project or from another
specific revenue source.
Each Fund will invest only in cash and in debt securities that either (i)
carry at least a Baa rating from Moody's Investor's Service, Inc., or a BBB
rating from Standard & Poor's Ratings Group, or are considered by the Adviser to
be of equivalent quality, (ii) are issued or guaranteed by the U.S. Government
or one of its agencies or instrumentalities, or (iii) are obligations (including
certificates of deposit, bankers' acceptances and repurchase agreements) of
banks with at least $1 billion of assets.
Securities rated Baa or BBB, while considered "investment grade," have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments on bonds rated Baa or BBB than is the case for higher
grade securities. Investors should review Appendix B to the Statement of
Additional Information for a description of credit ratings.
Under normal market conditions, the weighted average maturity of securities
held by each Fund is in a long-term range (between 10 and 30 years). While
long-term debt securities tend to generate a higher rate of current income than
short-term debt securities, the prices of long-term debt securities generally
fluctuate more in response to interest rate changes and other factors than the
prices of short-term debt securities. Therefore, investors in each Fund should
be willing to accept fluctuation in the price of shares of the Fund.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
TEMPORARY INVESTMENTS. During periods of unusual economic or market
conditions or for temporary defensive purposes or liquidity, each Fund may
invest without limit in cash and in U.S. dollar-denominated high quality money
market and short-term instruments. These investments may result in a lower yield
than would be available from investments with a lower quality or longer term and
the interest on these investments may be subject to tax.
OTHER PERMITTED INVESTMENTS. For more information regarding the Funds'
permitted investments and investment practices, see the Appendix -- Permitted
Investments and Investment Practices on page 17. The Funds will not necessarily
invest or engage in each of the investments and investment practices in the
Appendix but reserve the right to do so.
INVESTMENT RESTRICTIONS. The Statement of Additional Information contains a
list of specific investment restrictions which govern the investment policies of
the Funds, including a limitation that each Fund may borrow money from banks in
an amount not to exceed 33 1/3% of the Fund's net assets for extraordinary or
emergency purposes (e.g., to meet redemption requests). Except as otherwise
indicated, the Funds' investment objectives and policies may be changed without
shareholder approval. If a percentage or rating restriction (other than a
restriction as to borrowing) is adhered to at the time an investment is made, a
later change in percentage or rating resulting from changes in a Fund's
securities will not be a violation of policy.
PORTFOLIO TURNOVER. Securities of each Fund will be sold whenever the
Adviser believes it is appropriate to do so in light of the Fund's investment
objectives, without regard to the length of time a particular security may have
been held. Each Fund's portfolio turnover rate appears in the Financial
Highlights for the Fund. See "Condensed Financial Information." The amount of
transaction costs and realization of taxable capital gains will tend to increase
as the level of portfolio activity increases.
BROKERAGE TRANSACTIONS. The primary consideration in placing each Fund's
security transactions with broker-dealers for execution is to obtain and
maintain the availability of execution at the most favorable prices and in the
most effective manner possible.
RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The risks of investing in each Fund vary depending upon the nature of the
securities held, and the investment practices employed, on its behalf. Certain
of these risks are described below.
CHANGES IN NET ASSET VALUE. Each Fund's net asset value will fluctuate based
on changes in the values of the underlying portfolio securities. This means that
an investor's shares may be worth more or less at redemption than at the time of
purchase.
INTEREST RATE RISK. The value of fixed income securities, including
Municipal Obligations, generally goes down when interest rates go up, and vice
versa. Furthermore, the value of fixed income securities may vary based on
anticipated or potential changes in interest rates. Changes in interest rates
will generally cause bigger changes in the prices of longer-term securities than
in the prices of shorter-term securities.
CREDIT RISK. Prices of fixed income securities fluctuate based on changes in
the actual and perceived creditworthiness of issuers. The prices of lower rated
securities often fluctuate more than those of higher rated securities. It is
possible that some issuers will be unable to make required payments on fixed
income securities held by a Fund.
"REVENUE" OBLIGATIONS. Each Fund may invest in Municipal Obligations that
are payable only from the revenues generated from a specific project or from
another specific revenue source. Each Fund may invest more than 25% of its
assets in (i) industrial revenue bonds issued to finance industrial projects,
and (ii) Municipal Obligations issued to finance housing, electrical utilities
and hospitals (although each Fund may not invest more than 25% of its assets at
any time in debt securities financing any one of housing, electrical utilities,
or hospitals, considered as three separate categories). Projects may suffer
construction delays, increased costs or reduced revenues as a result of
political, regulatory, economic and other factors. As a result projects may not
generate sufficient revenues to pay principal and interest on Municipal
Obligations held by a Fund.
NON-DIVERSIFIED FUNDS. Each Fund is a non-diversified mutual fund. This
means that it is not subject to any statutory restrictions under the Investment
Company Act of 1940 limiting the investment of its assets in one or relatively
few issuers (although certain diversification requirements are imposed by the
Internal Revenue Code). Since each Fund may invest a relatively high percentage
of its assets in the obligations of a limited number of issuers, the value of
shares of each Fund may be more susceptible to any single economic, political or
regulatory occurrence. The New York Tax Free Income Portfolio is particularly
susceptible to occurrences affecting New York issuers. Each Fund also may invest
25% or more of its assets in securities the issuers of which are located in the
same state or the interest on which is paid from revenues of similar type
projects or that are otherwise related in such a way that a single economic,
business or political development or change affecting one of the securities
would also affect other securities. Investors should consider the greater risk
inherent in these policies when compared with more diversified mutual funds.
NEW YORK SECURITIES. The New York Tax Free Income Portfolio's investments
are, under normal circumstances, concentrated in Municipal Obligations of New
York issuers. Payment of interest and principal of these securities is dependent
on the continuing ability of issuers in New York to meet their obligations.
Investors in the New York Tax Free Income Portfolio should consider
carefully the special risks inherent in investing in New York Municipal
Obligations. These risks result from the financial condition of New York State,
certain of its public bodies and municipalities, and New York City. Beginning in
early 1975, New York State, New York City and other State entities faced serious
financial difficulties which jeopardized the credit standing and impaired the
borrowing abilities of such entities and contributed to high interest rates on,
and lower market prices for, debt obligations issued by them. These financial
difficulties caused the credit ratings of certain New York Municipal Obligations
to be downgraded by ratings agencies. A recurrence of such financial
difficulties or a failure of certain financial recovery programs could result in
defaults or declines in the market values of various New York Municipal
Obligations in which the New York Tax Free Income Portfolio may invest. Although
the steady growth that has characterized the New York economy recently continued
during the first half of 1997, there can be no assurance that credit ratings on
obligations of New York State, New York City and other New York governmental
authorities will not be downgraded further. Investors in this Fund should
consider the greater risks inherent in the Fund's concentration in these
securities when compared with the safety that comes with a less geographically
concentrated investment portfolio. Further information is set forth in the
Statement of Additional Information.
INVESTMENT PRACTICES. Certain of the investment practices employed for the
Funds may entail certain risks. These risks are in addition to risks described
above and are described in the Appendix. See the Appendix -- Permitted
Investments and Investment Practices on page 17.
VALUATION OF SHARES
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Net asset value per share of each Fund is determined each day the New York
Stock Exchange is open for trading (a "Business Day"). This determination is
made once each day as of the close of regular trading on the Exchange (normally
4:00 p.m. Eastern time) by adding the market value of all securities and other
assets of a Fund, then subtracting the Fund's liabilities, and then dividing the
result by the number of the Fund's outstanding shares. The net asset value per
share is effective for orders received and accepted by the Distributor prior to
its calculation.
Portfolio securities and other assets are valued primarily on the basis of
market quotations, or if quotations are not available, by a method believed to
accurately reflect fair value.
PURCHASES
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Shares of the Funds are offered continuously and may be purchased on any
Business Day at the public offering price either through a securities broker
which has a sales agreement with the Distributor or through a bank or other
financial institution which has an agency agreement with the Distributor. Such a
bank or financial institution will receive transaction fees that are equal to
the commissions paid to securities brokers. Shares of the Funds are being
offered exclusively to customers of a Shareholder Servicing Agent (i.e., a
financial institution, such as a federal or state-chartered bank, trust company,
savings and loan association or savings bank, or a securities broker, that has
entered into a shareholder servicing agreement concerning a Fund). A securities
broker may receive both commissions and shareholder servicing fees. Each Fund
and the Distributor reserve the right to reject any purchase order and to
suspend the offering of Fund shares for a period of time.
Each shareholder's account is established and maintained by his or her
Shareholder Servicing Agent, which will be the shareholder of record of the
Fund. Each Shareholder Servicing Agent may establish its own terms, conditions
and charges with respect to services it offers to its customers. Charges for
these services may include fixed annual fees and account maintenance fees. The
effect of any such fees will be to reduce the net return on the investment of
customers of that Shareholder Servicing Agent.
Shareholder Servicing Agents will not transmit purchase orders to the
Distributor unless they are in proper form.
EXCHANGES
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Shares of each Fund may be exchanged for shares of the CitiSelect Portfolios
and certain other CitiFunds that are made available by a shareholder's
Shareholder Servicing Agent, or may be acquired through an exchange of shares of
those funds.
Shareholders must place exchange orders through their Shareholder Servicing
Agents, and may do so by telephone if their account applications so permit. For
more information on telephone transactions see "Redemptions." All exchanges will
be effected based on the relative net asset values per share next determined
after the exchange order is received and accepted by the Distributor. See
"Valuation of Shares."
This exchange privilege may be modified or terminated at any time, upon at
least 60 days' notice when such notice is required by SEC rules, and is
available only in those jurisdictions where such exchanges legally may be made.
See the Statement of Additional Information for further details.
An exchange is treated as a sale of the shares exchanged and could result in
taxable gain or loss to the shareholder making the exchange.
REDEMPTIONS
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Fund shares may be redeemed at their net asset value next determined after a
redemption request in proper form is received by a shareholder's Shareholder
Servicing Agent. Shareholders may redeem shares of a Fund only by authorizing
their Shareholder Servicing Agents to redeem such shares on their behalf through
the Distributor.
A redemption is treated as a sale of the shares redeemed and could result in
taxable gain or loss to the shareholder making the redemption.
REDEMPTIONS BY MAIL. Shareholders may redeem Fund shares by sending written
instructions in proper form (as determined by a shareholder's Shareholder
Servicing Agent) to their Shareholder Servicing Agents. Shareholders are
responsible for ensuring that a request for redemption is in proper form.
REDEMPTIONS BY TELEPHONE. Shareholders may redeem or exchange Fund shares by
telephone, if their account applications so permit, by calling their Shareholder
Servicing Agents. During periods of drastic economic or market changes or severe
weather or other emergencies, shareholders may experience difficulties
implementing a telephone exchange or redemption. In such an event, another
method of instruction, such as a written request sent via an overnight delivery
service, should be considered. The Funds and each Shareholder Servicing Agent
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. These procedures may include recording of the telephone
instructions and verification of a caller's identity by asking for his or her
name, address, telephone number, Social Security number, and account number. If
these or other reasonable procedures are not followed, the Fund or the
Shareholder Servicing Agent may be liable for any losses to a shareholder due to
unauthorized or fraudulent instructions. Otherwise, the shareholder will bear
all risk of loss relating to a redemption or exchange by telephone.
PAYMENT OF REDEMPTIONS. The proceeds of a redemption are paid in federal
funds normally on the next Business Day, but in any event within seven days. If
a shareholder requests redemption of shares which were purchased recently, a
Fund may delay payment until it is assured that good payment has been received.
In the case of purchases by check, this can take up to ten days. See
"Determination of Net Asset Value; Valuation of Securities; Additional Purchase
and Redemption Information" in the Statement of Additional Information regarding
the Funds' right to pay the redemption price in kind with securities (instead of
cash).
Questions about redemption requirements should be referred to the
shareholder's Shareholder Servicing Agent. The right of any shareholder to
receive payment with respect to any redemption may be suspended or the payment
of the redemption price postponed during any period in which the Exchange is
closed (other than weekends or holidays) or trading on the Exchange is
restricted or if an emergency exists.
DIVIDENDS AND DISTRIBUTIONS
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Substantially all of each Fund's net income from dividends and interest is
paid to its shareholders of record as a dividend monthly, on or about the last
day of each month.
Each Fund's net realized short-term and long-term capital gains, if any,
will be distributed to the Fund's shareholders at least annually, in December.
Each Fund may also make additional distributions to its shareholders to the
extent necessary to avoid the application of the 4% non-deductible excise tax on
certain undistributed income and net capital gains of mutual funds.
Subject to the policies of the shareholder's Shareholder Servicing Agent, a
shareholder may elect to receive dividends and capital gains distributions in
either cash or additional shares of the same class issued at net asset value
without a sales charge.
MANAGEMENT
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TRUSTEES AND OFFICERS: Each Fund is supervised by a Board of Trustees. A
majority of the Trustees are not affiliated with the Adviser. More information
on the Trustees and officers of the Funds appears under "Management" in the
Statement of Additional Information.
INVESTMENT ADVISER: CITIBANK. Each Fund draws on the strength and experience of
Citibank. Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
in money market, equity and fixed income securities. Citibank and its affiliates
manage more than $88 billion in assets worldwide. Citibank is a wholly-owned
subsidiary of Citicorp. Citibank's address is 153 East 53rd Street, New York
10043.
Citibank manages each Fund's assets pursuant to separate Investment Advisory
Agreements. Subject to policies set by the Trustees, Citibank makes investment
decisions for each Fund.
John C. Mooney, a Vice President of Citibank, has managed the Funds since
June 1997. Mr. Mooney is a Senior Portfolio Manager responsible for managing
tax-exempt fixed income funds. He is also part of the team responsible for
fixed-income strategy, research and trading. Prior to joining Citibank in 1997,
Mr. Mooney served as a tax-exempt portfolio manager at SunAmerica for over three
years and also served as a tax-exempt portfolio manager at First Investors for
three years. His prior experience also includes positions at Alliance Capital
Management L.P. and The Boston Company.
Management's discussion of each Fund's performance is included in the Fund's
Annual Report to Shareholders, which investors may obtain without charge by
contacting their Shareholder Servicing Agents.
ADVISORY FEES. For its services under the Investment Advisory Agreements,
the Adviser receives advisory fees from each Fund, which are accrued daily and
paid monthly, at an annual rate of 0.40% of the Fund's average daily net assets
on an annualized basis for the Fund's then-current fiscal year. The Adviser may
voluntarily agree to waive a portion of its investment advisory fees.
For the fiscal year ended December 31, 1997, the fee paid to Citibank under
the Investment Advisory Agreement for the New York Tax Free Income Portfolio
was, after waivers, 0.23% of the Fund's average daily net assets for that fiscal
year. For the fiscal year ended December 31, 1997, Citibank voluntarily waived
its entire fee under the Investment Advisory Agreement for the National Tax Free
Income Portfolio.
BANKING RELATIONSHIPS. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
the Funds, including outstanding loans to such issuers which may be repaid in
whole or in part with the proceeds of securities so purchased. Citibank has
informed the Funds that, in making its investment decisions, it does not obtain
or use material inside information in the possession of any division or
department of Citibank or in the possession of any affiliate of Citibank.
BANK REGULATORY MATTERS. The Glass-Steagall Act prohibits certain financial
institutions, such as Citibank, from underwriting securities of open-end
investment companies, such as the Funds. Citibank believes that its services
under the Investment Advisory Agreements and the activities performed by it or
its affiliates as Shareholder Servicing Agents and sub-administrator are not
underwriting and are consistent with the Glass-Steagall Act and other relevant
federal and state laws. However, there is no controlling precedent regarding the
performance of the combination of investment advisory, shareholder servicing and
sub-administrative activities by banks. State laws on this issue may differ from
applicable federal law, and banks and financial institutions may be required to
register as dealers pursuant to state securities laws. Changes in either federal
or state statutes or regulations, or in their interpretations, could prevent
Citibank or its affiliates from continuing to perform these services. If
Citibank or its affiliates were to be prevented from acting as the Adviser,
sub-administrator or a Shareholder Servicing Agent, the Funds would seek
alternative means for obtaining these services. The Funds do not expect that
shareholders would suffer any adverse financial consequences as a result of any
such occurrence.
ADMINISTRATIVE SERVICES PLAN: The Funds have an Administrative Services Plan
which provides that the Funds may obtain the services of an administrator, a
transfer agent, a custodian, and one or more Shareholder Servicing Agents, and
may enter into agreements providing for the payment of fees for such services.
Under the Administrative Services Plan, the total of the fees paid to each
Fund's Administrator and Shareholder Servicing Agents may not exceed 0.65% of
the Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year. Any distribution fees (other than any fee concerning
electronic or other media advertising) payable under the Distribution Plan for
shares of the New York Tax Free Income Portfolio are included in this percentage
limitation for those shares. This limitation does not include any amounts
payable under the Distribution Plan for shares of the National Tax Free Income
Portfolio. Within this overall limitation, individual fees may vary. See
"Administrator," "Shareholder Servicing Agents" and "Transfer Agent and
Custodian."
ADMINISTRATOR: CFBDS, Inc. provides certain administrative services to the Funds
under an administrative services agreement. These administrative services
include providing general office facilities, supervising the overall
administration of the Funds, and providing persons satisfactory to the Board of
Trustees to serve as Trustees and officers of the Funds. These Trustees and
officers may be directors, officers or employees of CFBDS or its affiliates.
For these services, the Administrator receives fees accrued daily and paid
monthly not to exceed 0.25% of the average daily net assets of the New York Tax
Free Income Portfolio and 0.40% of the average daily net assets of the National
Tax Free Income Portfolio on an annualized basis for the Fund's then-current
fiscal year. However, the Administrator has voluntarily agreed to waive a
portion of the fees payable to it.
CFBDS is a wholly-owned subsidiary of Signature Financial Group, Inc.
SUB-ADMINISTRATOR: Pursuant to a sub-administrative services agreement, Citibank
performs such sub-administrative duties for the Funds as from time to time are
agreed upon by Citibank and CFBDS. Citibank's compensation as sub- administrator
is paid by CFBDS.
SHAREHOLDER SERVICING AGENTS: The Funds have entered into separate shareholder
servicing agreements with each Shareholder Servicing Agent pursuant to which
that Shareholder Servicing Agent provides shareholder services, including
answering customer inquiries, assisting in processing purchase, exchange and
redemption transactions and furnishing Fund communications to shareholders. For
these services, each Shareholder Servicing Agent receives a fee from each Fund
at an annual rate of 0.25% of the average daily net assets of the Fund
represented by shares owned by investors for whom such Shareholder Servicing
Agent maintains a servicing relationship.
Some Shareholder Servicing Agents may impose certain conditions on their
customers in addition to or different from those imposed by the Funds, such as
requiring a minimum initial investment or charging their customers a direct fee
for their services. Each Shareholder Servicing Agent has agreed to transmit to
its customers who are shareholders of a Fund appropriate prior written
disclosure of any fees that it may charge them directly and to provide written
notice at least 30 days prior to imposition of any transaction fees.
TRANSFER AGENT AND CUSTODIAN: State Street Bank and Trust Company acts as
transfer agent, dividend disbursing agent and custodian for each Fund.
Securities may be held by a sub-custodian bank approved by the Trustees. The
principal business address of State Street Bank and Trust Company is 225
Franklin Street, Boston, Massachusetts 02110.
DISTRIBUTION ARRANGEMENTS: CFBDS, 6 St. James Avenue, Boston, Massachusetts
02116, (617) 423-1679, is the distributor of shares of each Fund and also serves
as distributor for each of the other CitiFunds and as a Shareholder Servicing
Agent for certain investors. CFBDS receives distribution fees from the Funds
pursuant to Distribution Plans adopted in accordance with Rule 12b-1 under the
1940 Act. In those states where CFBDS is not a registered broker-dealer, shares
of the Funds are sold through Signature Broker-Dealer Services, Inc., as dealer.
The Funds' Distribution Plans provide that the Funds may pay the Distributor
a monthly distribution fee at an annual rate not to exceed 0.05% of the average
daily net assets of the National Tax Free Income Portfolio and 0.15% of the
average daily net assets of the New York Tax Free Income Portfolio. The
Distribution Plan also permits the Funds to pay the Distributor an additional
fee (not to exceed 0.05% of the average daily net assets of the Fund) in
anticipation of or as reimbursement for print or electronic media advertising
expenses incurred in connection with the sale of shares. The Funds did not pay
any fees under this provision during 1997 and do not anticipate doing so during
the current fiscal year.
The Distributor uses the distribution fees under the Plans to offset each
Fund's marketing costs attributable to the Fund, 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 Funds and
the Distributor provide to the Trustees quarterly a written report of amounts
expended pursuant to the Plans and the purposes for which the expenditures were
made.
During the period they are in effect, the Plans and related Distribution
Agreements obligate the Funds to pay distribution fees to CFBDS as compensation
for its distribution activities, not as reimbursement for specific expenses
incurred. Thus, even if CFBDS's expenses exceed its distribution fees for a
Fund, the Fund will not be obligated to pay more than those fees and, if CFBDS's
expenses are less than such fees, it will retain its full fees and realize a
profit. Each Fund will pay the distribution fees to CFBDS until either the
applicable Plan or Distribution Agreement is terminated or not renewed. In that
event, CFBDS's expenses in excess of distribution fees received or accrued
through the termination date will be CFBDS's sole responsibility and not
obligations of the Fund. In their annual consideration of the continuation of
the Plans for each Fund, the Trustees will review each Plan separately.
TAX MATTERS
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This discussion of taxes is for general information only. Investors should
consult their own tax advisers about their particular situations.
FEDERAL INCOME TAXES: Each Fund intends to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies so that it will not be
liable for any federal income or excise taxes.
Each Fund expects that most of its net income will be attributable to
tax-exempt Municipal Obligations, and, as a result, most of the Fund's dividends
to shareholders will be excludable from shareholders' gross income. However,
each Fund may invest from time to time in taxable securities, and certain Fund
dividends may be subject to the federal alternative minimum tax. Distributions
of capital gains on the sale or other disposition of Fund investments are also
taxable to Fund shareholders. Generally, distributions of short-term net capital
gains will be taxed as ordinary income, and distributions of long-term net
capital gains will be taxed as such regardless of how long the shares of the
Fund have been held. Such capital gains may be taxable to shareholders that are
individuals, estates, or trusts at maximum rates of 20%, 25%, or 28%, depending
upon the source of the gains. Dividends and distributions are treated in the
same manner for federal tax purposes whether they are paid in cash or as
additional shares.
Any gains realized by a shareholder on the sale or redemption of Fund shares
are subject to tax. If Fund shares are redeemed after tax-exempt income has
accrued but not yet been declared as a dividend, the portion of redemption
proceeds representing that income may be taxed as a capital gain even though it
would have been tax-exempt if it had been declared as a dividend prior to
redemption. In addition, any short-term capital loss realized upon the
redemption of Fund shares within six months of their purchase is disallowed to
the extent of any dividends of tax-exempt income received during that period.
Fund dividends of tax-exempt income are taken into account in determining
the amount of a shareholder's social security and railroad retirement benefits
that may be subject to federal income tax. No deduction may be claimed for
interest on indebtedness incurred or carried for the purpose of purchasing or
holding Fund shares. Investors who are, or are related to, "substantial users"
of facilities financed by private activity bonds should consult their tax
advisers before buying Fund shares.
By January 31 of each year, each Fund will notify its shareholders of the
amount and tax status of distributions paid to shareholders for the preceding
year.
STATE AND LOCAL TAXES: NEW YORK TAXES. To the extent that dividends received
from the New York Tax Free Income Portfolio are derived from interest on triple
tax-exempt obligations, the dividends will be excluded from the gross income of
individual shareholders who are New York residents for New York State and New
York City personal income tax purposes. DIVIDENDS FROM THE NEW YORK TAX FREE
INCOME PORTFOLIO ARE NOT EXCLUDED IN DETERMINING NEW YORK STATE OR NEW YORK CITY
FRANCHISE TAXES ON CORPORATIONS AND FINANCIAL INSTITUTIONS. Dividends received
from the National Tax Free Income Portfolio are generally not expected to be
excluded from gross income for New York State and New York City personal income
tax purposes.
GENERALLY. Except as described under "New York Taxes," Fund dividends which
are excludable from shareholders' gross income for federal income tax purposes
will not necessarily be exempt from the income or other tax laws of any state or
local taxing authority. Investors should consult their own tax advisers in this
regard.
PERFORMANCE INFORMATION
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Fund performance may be quoted in advertising, shareholder reports and other
communications in terms of yield, effective yield, tax equivalent yield, total
rate of return or tax equivalent total rate of return. All performance
information is historical and is not intended to indicate future performance.
Yields and total rates of return fluctuate in response to market conditions and
other factors, and the value of a Fund's shares when redeemed may be more or
less than their original cost.
Each Fund may provide its period and average annualized "total rates of
return" and "tax equivalent total rates of return." The "total rate of return"
refers to the change in the value of an investment in the Fund over a stated
period which was made at the maximum public offering price and reflects any
change in net asset value per share, and is compounded to include the value of
any shares purchased with any dividends or capital gains declared during such
period. Period total rates of return may be "annualized." An "annualized" total
rate of return assumes that the period total rate of return is generated over a
one-year period. The "tax equivalent total rate of return" refers to the total
rate of return that a fully taxable mutual fund would have to generate in order
to produce an after-tax total rate of return equivalent to that of a Fund. The
use of a tax equivalent total rate of return allows investors to compare the
total rates of return of the Funds, the dividends from which are expected to be
mostly exempt from federal income taxes and, in the case of the New York Tax
Free Income Portfolio, from New York State and New York City personal income
taxes, with the total rates of return of funds the dividends from which are not
so tax-exempt.
Each Fund may provide annualized "yield," "effective yield" and "tax
equivalent yield" quotations. The "yield" of a Fund refers to the income
generated by an investment in the Fund over a 30-day or one month period (which
period is stated in any such advertisement or communication). This income is
then annualized; that is, the amount of income generated by the investment over
that period is assumed to be generated each month over a one-year period and is
shown as a percentage of the public offering price on the last day of that
period. The "effective yield" is calculated similarly, but when annualized the
income earned by the investment during that 30-day or one month period is
assumed to be reinvested. The effective yield is slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The "tax
equivalent yield" refers to the yield that a fully taxable fund would have to
generate in order to produce an after-tax yield equivalent to that of a Fund.
The use of a tax equivalent yield allows investors to compare the yield of the
Funds, the dividends from which are expected to be mostly exempt from federal
income taxes and, in the case of the New York Tax Free Income Portfolio, from
New York State and New York City personal income taxes, with yields of funds the
dividends from which are not so tax exempt. A "yield" quotation, unlike a total
rate of return quotation, does not reflect changes in net asset value.
Each Fund will include performance data for Fund shares in any
advertisements, reports or communications including Fund performance data. Of
course, any fees charged by a shareholder's Shareholder Servicing Agent will
reduce that shareholder's net return on his or her investment. See the Statement
of Additional Information for more information concerning the calculation of
yield and total rate of return quotations for the Funds.
GENERAL INFORMATION
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ORGANIZATION: Each Fund is a series of CitiFunds Tax Free Income Trust (the
"Trust"), which is a Massachusetts business trust that was organized on May 27,
1986. Prior to March 2, 1998, the Trust was known as "Landmark Tax Free Income
Funds." The Trust was known as "Landmark New York Tax Free Income Fund" until
its name was changed effective October 21, 1993. The Trust is an open-end
management investment company registered under the 1940 Act. Prior to March 2,
1998, the National Tax Free Income Portfolio was called Landmark National Tax
Free Income Fund and the New York Tax Free Income Portfolio was called Landmark
New York Tax Free Income Fund.
Each Fund is a non-diversified mutual fund, which means that it is not
limited by the 1940 Act in the proportion of its assets that may be invested in
the obligations of a single issuer. Each Fund intends, however, to comply with
diversification requirements imposed on mutual funds by the Internal Revenue
Code.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the trust's
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the trust itself was unable to meet its
obligations.
PROPOSED CHANGES: Currently, the Funds operate on a stand-alone basis; that is,
each Fund invests directly in investment securities. CitiFunds National Tax Free
Income Portfolio has the ability to convert to a two-tier, master/ feeder
structure whereby the Fund would invest all of its investable assets in a single
investment company. CitiFunds New York Tax Free Income Portfolio has not had the
ability to use the master/feeder structure. At a meeting held on October 24,
1997, shareholders of these Funds approved an amendment to the Funds'
Declaration of Trust and fundamental investment restrictions to allow these
Funds to invest in one or more investment companies. Shareholders also approved
new Management Agreements with Citibank and new Rule 12b-1 Service Plans for the
Funds. The new Management Agreements and Service Plans are not yet effective,
and the proposed restructuring has not yet taken place.
Under the new 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. If the restructuring
takes place and the new Management Agreements become effective, the Fund's
existing advisory and administrative services agreements will be terminated.
Under the new Management Agreements, each of the Funds will pay Citibank
management fees equal on an annual basis to 0.75% of the Fund's average daily
net assets, compared to advisory and administrative services fees currently
payable by the National Tax Free Income Portfolio equal on an annual basis to
0.80% of the Fund's average daily net assets and by the New York Tax Free Income
Portfolio equal on an annual basis to 0.65% of the Fund's average daily net
assets.
Under the Funds' existing Rule 12b-1 Distribution Plans, the National Tax
Free Income Portfolio may pay its distributor a monthly distribution fee at an
annual rate not to exceed 0.05% and a monthly service fee at an annual rate not
to exceed 0.25%, of the Fund's average daily net assets, and the New York Tax
Free Income Portfolio may pay its distributor a monthly distribution fee at an
annual rate not to exceed 0.15% of the Fund's average daily net assets. The
existing Distribution Plans also permit the Funds to pay the distributor an
additional fee (not to exceed on an annual basis 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. Under
the new Service Plans, the Funds may pay monthly fees in an amount not to exceed
0.25% per annum of the Funds' average daily net assets, for both distribution
and service matters. If the restructuring takes place and the new Service Plans
become effective, the existing Distribution Plans will be terminated.
If the restructuring takes place, it is not expected that the Funds' total
expense ratios will increase.
VOTING AND OTHER RIGHTS: The Trust may issue an unlimited number of shares, may
create new series of shares and may divide shares in each series into classes.
Each share of each Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each series of
the Trust have equal voting rights except that, in matters affecting only a
particular Fund or class, only shares of that particular Fund or class are
entitled to vote.
At any meeting of shareholders of any Fund, a Shareholder Servicing Agent
may vote any shares of which it is the holder of record and for which it does
not receive voting instructions proportionately in accordance with the
instructions it receives for all other shares of which that Shareholder
Servicing Agent is the holder of record.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will usually be sought only for
changes in a Fund's fundamental investment restrictions and for the election of
Trustees under certain circumstances. Trustees may be removed by shareholders
under certain circumstances. Each share of each Fund or any other series of the
Trust is entitled to participate equally in dividends and other distributions
and the proceeds of any liquidation of that Fund.
CERTIFICATES: The Funds' Transfer Agent maintains a share register for
shareholders of record, i.e., Shareholder Servicing Agents. Share certificates
are not issued.
EXPENSES: In addition to amounts payable as described above under the Investment
Advisory Agreements, the Administrative Services Plan and the Distribution
Plans, each Fund is responsible for its own expenses, including, among other
things, the costs of securities transactions, the compensation of Trustees that
are not affiliated with the Adviser, government fees, taxes, accounting and
legal fees, expenses of communicating with shareholders, interest expense, and
insurance premiums. All fee waivers are voluntary and may be reduced or
terminated at any time.
For the fiscal year ended December 31, 1997, the total expenses for the New
York Tax Free Income Portfolio were 0.80% of the average daily net assets of the
Fund for the fiscal year. For the fiscal year ended December 31, 1997, the
unwaived expenses for the National Tax Free Income Portfolio were absorbed by
the Administrator.
COUNSEL AND INDEPENDENT AUDITORS: Bingham Dana LLP, 150 Federal Street, Boston,
MA 02110, is counsel for each Fund. Deloitte & Touche LLP, located at 125 Summer
Street, Boston, MA 02110, are the independent auditors for each Fund.
----------------
The Statement of Additional Information dated the date hereof contains more
detailed information about the Funds, including information related to (i)
investment policies and restrictions, (ii) the Trustees, officers, Adviser and
Administrator, (iii) securities transactions, (iv) the Funds' shares, including
rights and liabilities of shareholders, (v) the method used to calculate
performance information, and (vi) the determination of net asset value.
No person has been authorized to give any information or make any
representations not contained in this Prospectus or the Statement of Additional
Information in connection with the offering made by this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Funds or their distributor. This Prospectus does
not constitute an offering by the Funds or their distributor in any jurisdiction
in which such offering may not lawfully be made.
APPENDIX
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PERMITTED INVESTMENTS AND
INVESTMENT PRACTICES
MUNICIPAL BONDS. Municipal bonds are debt obligations of states, cities,
municipalities, municipal agencies and authorities and other qualifying issuers
which generally have a maturity at the time of issue of one year or more and
which are issued to raise funds for various public purposes, such as
construction of a wide range of public facilities, refunding outstanding
obligations or obtaining funds for institutions and facilities. The two
principal classifications of municipal bonds are "general obligation" and
"revenue" bonds. General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. The principal of and interest on revenue bonds are payable from the
income of specific projects or authorities and generally are not supported by
the issuer's general power to levy taxes. In some cases, revenues derived from
specific taxes are pledged to support payments on a revenue bond.
In addition, certain kinds of private activity bonds ("PABs") are issued by
or on behalf of public authorities to provide funding for various privately
operated industrial facilities, such as warehouse, office, plant and store
facilities and environmental and pollution control facilities. PABs are, in most
cases, revenue bonds. The payment of the principal and interest on PABs usually
depends solely on the ability of the user of the facilities financed by the
bonds or other guarantor to meet its financial obligations and, in certain
instances, the pledge of real and personal property as security for payment.
Many PABs may not be readily marketable; however, the PABs or the participation
certificates in PABs purchased by the Funds may have liquidity because they
generally will be supported by demand features to "high quality" banks,
insurance companies or other financial institutions.
MUNICIPAL NOTES. There are four major varieties of state and municipal
notes: Tax and Revenue Anticipation Notes ("TRANs"); Tax Anticipation Notes
("TANs"); Revenue Anticipation Notes ("RANs"); and Bond Anticipation Notes
("BANs"). TRANs, TANs and RANs are issued by states, municipalities and other
tax-exempt issuers to finance short-term cash needs or, occasionally, to finance
construction. Most TRANs, TANs and RANs are general obligations of the issuing
entity payable from taxes or designated revenues, respectively, expected to be
received within the related fiscal period. BANs are issued with the expectation
that principal and interest of the maturing notes will be paid out of proceeds
from notes or bonds to be issued concurrently or at a later date. BANs are
issued most frequently by both general obligation and revenue bond issuers
usually to finance such items as land acquisition, facility acquisition and/or
construction and capital improvement projects.
VARIABLE RATE INSTRUMENTS AND PARTICIPATION INTERESTS. Variable rate
instruments provide for a periodic adjustment in the interest rate paid on the
instrument and usually permit the holder to receive payment of principal and
accrued interest upon a specified number of day's notice. The Funds may invest
in participation interests in Municipal Obligations owned by a bank, insurance
company or other financial institution or affiliated organization
("Participation Interests"). A variable rate instrument or a Participation
Interest may be backed by an irrevocable letter of credit or guarantee of, or a
right to put to, a bank, or an insurance policy of an insurance company. See
"Stand-by Commitments." Purchase of a Participation Interest may involve the
risk that a Fund will not be deemed to be the owner of the underlying Municipal
Obligation for purposes of the ability to claim tax exemption of interest paid
on that Municipal Obligation. If interest rates rise or fall, the rates payable
on variable rate instruments will generally be readjusted. As a result variable
rate instruments do not offer the same opportunity for capital appreciation or
loss as fixed rate instruments.
STAND-BY COMMITMENTS. When a Fund purchases Municipal Obligations it may
also acquire stand-by commitments from banks or broker-dealers with respect to
the Municipal Obligations. Under a stand-by commitment, a bank or broker-dealer
agrees to purchase at the Fund's option a specified Municipal Obligation at a
specified price. A stand-by commitment is the equivalent of a "put" option with
respect to a particular Municipal Obligation. Each Fund intends to acquire
stand-by commitments solely to facilitate liquidity. Standby commitments are
subject to certain risks, which include the ability of the issuer of the
commitment to pay for the Municipal Obligations at the time the commitment is
exercised, the fact that the commitment is not marketable, and the fact that the
maturity of the underlying security will generally be different from that of the
commitment. In some cases it may not be possible to exercise rights under a
stand-by commitment when the underlying Municipal Obligation is in default.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements in
order to earn a return on temporarily available cash. Repurchase agreements are
transactions in which an institution sells a Fund a security at one price,
subject to the Fund's obligation to resell and the selling institution's
obligation to repurchase that security at a higher price normally within a seven
day period. There may be delays and risks of loss if the seller is unable to
meet its obligation to repurchase. Repurchase agreements may involve Municipal
Obligations and other securities.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements. Reverse repurchase agreements involve the sale of securities held by
a Fund and the agreement by the Fund to repurchase the securities at an
agreed-upon price, date and interest payment. When a Fund enters into reverse
repurchase transactions, securities of a dollar amount equal in value to the
securities subject to the agreement will be maintained in a segregated account
with the Fund's custodian. The segregation of assets could impair the Fund's
ability to meet its current obligations or impede investment management if a
large portion of the Fund's assets are involved. Reverse repurchase agreements
are considered to be a form of borrowing.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, each Fund may lend its
portfolio securities to broker-dealers and other institutional borrowers. Such
loans must be callable at any time and continuously secured by collateral (cash
or U.S. Government securities) in an amount not less than the market value,
determined daily, of the securities loaned. It is intended that the value of
securities loaned by a Fund would not exceed 30% of the Fund's total assets.
In the event of the bankruptcy of the other party to a securities loan, a
repurchase agreement or a reverse repurchase agreement, a Fund could experience
delays in recovering either the securities or cash. To the extent that, in the
meantime, the value of the securities loaned or sold has increased or the value
of the securities purchased has decreased, the Fund could experience a loss.
RULE 144A SECURITIES. Each Fund may purchase restricted securities that are
not registered for sale to the general public. If the Adviser determines that
there is a dealer or institutional market in the securities, the securities will
not be treated as illiquid for purposes of the Fund's investment limitations.
The Trustees will review these determinations. These securities are known as
"Rule 144A securities," because they are traded under SEC Rule 144A among
qualified institutional buyers. Institutional trading in Rule 144A securities is
relatively new, and the liquidity of these investments could be impaired if
trading in Rule 144A securities does not develop or to the extent qualified
institutional buyers become, for a time, uninterested in purchasing Rule 144A
securities.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. The National Tax Free Income
Portfolio and the New York Tax Free Income Portfolio may invest up to 15% and
10%, respectively, of their net assets in securities for which there is no
readily available market. These illiquid securities may include privately placed
restricted securities for which no institutional market exists. The absence of a
trading market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for a Fund
to sell them promptly at an acceptable price.
"WHEN-ISSUED" SECURITIES. In order to ensure the availability of suitable
securities, each Fund may purchase securities on a "when-issued" or on a
"forward delivery" basis, which means that the securities would be delivered to
the Fund at a future date beyond customary settlement time. Under normal
circumstances, the Fund takes delivery of the securities. In general, the Fund
does not pay for the securities until received and does not start earning
interest until the contractual settlement date. While awaiting delivery of the
securities, the Fund establishes a segregated account consisting of cash, cash
equivalents or high quality debt securities equal to the amount of the Fund's
commitments to purchase "when-issued" securities. An increase in the percentage
of a Fund's assets committed to the purchase of securities on a "when-issued"
basis may increase the volatility of its net asset value.
FUTURES CONTRACTS. 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
considered to be "derivatives." Futures contracts are a generally accepted part
of modern portfolio management and are regularly utilized by many mutual funds
and other institutional investors. 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
than 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 the
investment would be inconsistent with such Fund's investment policies which
provide that, under normal circumstances, the National Tax Free Income Portfolio
will invest at least 80% of its assets in tax-exempt Municipal Obligations and
the New York Tax Free Income Portfolio 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 the Fund's potential for
both gain and loss. As noted above, each of the Funds intends to adhere to
certain policies relating to the use of futures contracts, which should have the
effect of limiting the amount of leverage by the Fund. The use of futures
contracts may increase the amount of taxable income of a Fund and may affect in
other ways the amount, timing and character of a Fund's income for tax purposes,
as more fully discussed in the section entitled "Certain Additional Tax Matters"
in the Statement of Additional Information.
The use of futures by the Funds and some of their risks are described more
fully in the Statement of Additional Information.
SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. Each Fund may engage in short sales only if at the time of
the short sale it owns or has the right to obtain, at no additional cost, an
equal amount of the security being sold short. This investment technique is
known as a short sale "against the box." A Fund may make a short sale as a
hedge, when it believes that the value of a security owned by the Fund (or a
security convertible or exchangeable for such security) may decline. Not more
than 40% of a Fund's total assets would be involved in short sales "against the
box."
<PAGE>
SHAREHOLDER
SERVICING AGENTS
- -------------------------------------------------------------------------------
FOR CITIBANK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CLIENTS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
(212) 820-2383 or (800) 846-5300
FOR CITIGOLD CLIENTS:
Citigold
P.O. Box 5130, New York, NY 10126-5130
Call Your Citigold Executive or, in NY or CT, (800) 285-1701,
or for all other states, (800) 285-1707
FOR CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Investment Specialist or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT
CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR CITIBANK NORTH AMERICAN INVESTOR
SERVICES CLIENTS:
Citibank, N.A.
Master Trust Accounts
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9659
FOR CITICORP INVESTMENT SERVICES CLIENTS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200,
(212) 820-2380 in New York City
CITIFUNDS(SM)
MONEY MARKET FUNDS:
Cash Reserves
Premium Liquid Reserves
Institutional Liquid Reserves
Institutional Cash Reserves
U.S. Treasury Reserves
Premium U.S. Treasury Reserves
Institutional U.S. Treasury Reserves
Tax Free Reserves
Institutional Tax Free Reserves
California Tax Free Reserves
Connecticut Tax Free Reserves
New York Tax Free Reserves
STOCK & BOND FUNDS:
Short-Term U.S. Government
Income Portfolio
Intermediate Income Portfolio
National Tax Free Income Portfolio
New York Tax Free Income Portfolio
Balanced Portfolio
Large Cap Growth Portfolio
International Equity Portfolio
Small Cap Growth Portfolio
Emerging Asian Markets Equity Portfolio
<PAGE>
CITIFUNDS(SM)
CITIFUNDS(SM)
NATIONAL
TAX FREE
INCOME PORTFOLIO
CITIFUNDS(SM)
NEW YORK
TAX FREE
INCOME PORTFOLIO
- --------------
PROSPECTUS
March 2, 1998
- --------------
TFI/P.1/97/PB Printed on Recycled Paper [recycle symbol]
<PAGE>
Statement of
Additional Information
March 2, 1998
CITIFUNDS(SM) NATIONAL TAX FREE INCOME PORTFOLIO
CITIFUNDS(SM) NEW YORK TAX FREE INCOME PORTFOLIO
Each of CITIFUNDS(SM) NATIONAL TAX FREE INCOME PORTFOLIO (the "National
Fund") and CITIFUNDS(SM) NEW YORK TAX FREE INCOME PORTFOLIO (the "New York Fund"
and together with the National Fund, the "Funds") is a series of CITIFUNDS(SM)
TAX FREE INCOME TRUST (the "Trust"). The address and telephone number of the
Trust are 6 St. James Avenue, Boston, Massachusetts 02116, (617) 423-1679.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, CITIBANK,
N.A. OR ANY OF ITS AFFILIATES, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS PAGE
1. The Funds ............................................................. 2
2. Investment Objectives, Policies and Restrictions ...................... 2
3. Performance Information ............................................... 9
4. Determination of Net Asset Value; Valuation of Securities;
Additional Purchase and Redemption Information ........................ 10
5. Management ............................................................ 11
6. Portfolio Transactions ................................................ 17
7. Description of Shares, Voting Rights and Liabilities .................. 18
8. Certain Additional Tax Matters ........................................ 19
9. Independent Accountants and Financial Statements ...................... 20
Appendix A -- Description of Municipal Obligations ....................... 21
Appendix B -- Description of Securities Ratings .......................... 23
Appendix C -- Additional Information Concerning New York Municipal
Obligations................................................. 26
This Statement of Additional Information sets forth information which may be
of interest to investors but which is not necessarily included in the Funds'
Prospectus, dated March 2, 1998, by which shares of the Funds are offered. This
Statement of Additional Information should be read in conjunction with the
Prospectus, a copy of which may be obtained by an investor without charge by
contacting the Funds' distributor, CFBDS, Inc., at 6 St. James Avenue, Boston,
MA 02116, (617) 423-1679.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. THE FUNDS
CitiFundsSM Tax Free Income Trust (the "Trust") is an open-end management
investment company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on May 27, 1986. Prior to March 2, 1998, the Trust
was known as "Landmark Tax Free Income Funds." The Trust was known as "Landmark
New York Tax Free Income Fund" until its name was changed effective October 21,
1993. This Statement of Additional Information describes CitiFunds National Tax
Free Income Portfolio and CitiFunds New York Tax Free Income Portfolio, each of
which is a separate series of the Trust. Prior to March 2, 1998, the National
Fund was called "Landmark National Tax Free Income Fund," and the New York Fund
was called "Landmark New York Tax Free Income Fund." References in this
Statement of Additional Information to the "Prospectus" are to the Prospectus,
dated March 2, 1998, of the Trust by which shares of the Funds are offered.
Citibank, N.A. ("Citibank" or the "Adviser") is investment adviser to each
of the Funds. The Adviser manages the investments of the Funds from day to day
in accordance with each Fund's investment objectives and policies. The selection
of investments for the Funds and the way they are managed depend on the
conditions and trends in the economy and the financial marketplaces.
CFBDS, Inc. ("CFBDS" or the "Administrator"), the administrator of each
Fund, supervises the overall administration of each Fund. The Board of Trustees
of the Trust provides broad supervision over the affairs of the Funds. Shares of
the Funds are continuously sold by CFBDS, the Funds' distributor (the
"Distributor"), only to investors who are customers of a financial institution,
such as a federal or state-chartered bank, trust company, savings and loan
association or savings bank, or a securities broker, that has entered into a
shareholder servicing agreement with the Trust (collectively, "Shareholder
Servicing Agents"). Shares of each Fund are sold at net asset value. CFBDS
receives a distribution fee from each Fund pursuant to a Distribution Plan
adopted with respect to shares of the Funds in accordance with Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act").
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
The investment objectives of the CitiFunds National Tax Free Income
Portfolio are to generate high levels of current income exempt from federal
income taxes and to preserve the value of its shareholders' investment.
The investment objectives of the CitiFunds New York Tax Free Income
Portfolio are to generate high levels of current income exempt from federal, New
York State and New York City personal income taxes and to preserve the value of
its shareholders' investment.
The investment objectives of each Fund may be changed without approval by
that Fund's shareholders, but shareholders will be given written notice at least
30 days before any change is implemented. Of course, there can be no assurance
that either Fund will achieve its investment objectives.
INVESTMENT POLICIES
As a fundamental policy, the Trust seeks to achieve the investment objective
of the National Fund by investing in debt obligations consisting primarily
(i.e., at least 80% of its assets under normal circumstances) of municipal bonds
and notes and other debt instruments the interest on which is exempt from
federal personal income taxes ("Municipal Obligations" or "tax-exempt
securities"). As used in this Statement of Additional Information, the terms
"Municipal Obligations" and "tax-exempt securities" are used interchangeably to
refer to debt instruments issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies or instrumentalities, or other qualifying
issuers, the interest on which is exempt from federal income taxes (without
regard to whether the interest thereon is subject to the federal alternative
minimum tax).
As a fundamental policy, the Trust seeks to achieve the investment objective
of the New York Fund by investing in debt obligations consisting primarily
(i.e., at least 80% of its assets under normal conditions) of municipal bonds
and notes and other debt instruments the interest on which is exempt from
federal, New York State and New York City personal income taxes. These
obligations are issued primarily by the State of New York, its political
subdivisions, municipalities, agencies, instrumentalities or public authorities.
Each Fund's investment policies are described in "Investment Information
Investment Policies" in the Prospectus. The following supplements the
information contained in the Prospectus concerning the investment objectives,
policies and techniques of the Funds. For a general discussion of Municipal
Obligations and the risks associated with investment therein, see Appendix A to
this Statement of Additional Information. In determining the tax status of
interest on Municipal Obligations, the Adviser relies on opinions of bond
counsel who may be counsel to the issuer.
Except as otherwise stated, the following investment policies are not
fundamental and may be changed by the Board of Trustees without approval by the
Funds' shareholders.
FUTURES CONTRACTS
A futures contract is an agreement between two parties for the purchase or
sale for future delivery of securities or for the payment or acceptance of a
cash settlement based upon changes in the value of the securities or of an index
of securities. A "sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by the contract at a
specified price, or to make or accept the cash settlement called for by the
contract, on a specified date. A "purchase" of a futures contract means the
acquisition of a contractual obligation to acquire the securities called for by
the contract at a specified price, or to make or accept the cash settlement
called for by the contract, on a specified date. Futures contracts have been
designed by exchanges which have been designated "contract markets" by the
Commodity Futures Trading Commission ("CFTC") and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on these markets, and the
exchanges, through their clearing organizations, guarantee that the contracts
will be performed as between the clearing members of the exchange.
While futures contracts based on debt securities do provide for the delivery
and acceptance of securities, such deliveries and acceptances are very seldom
made. Generally, a futures contract is terminated by entering into an offsetting
transaction. Brokerage fees will be incurred when a Fund purchases or sells a
futures contracts. At the same time such a purchase or sale is made, the Fund
must provide cash or securities as a deposit ("initial deposit") known as
"margin." The initial deposit required will vary, but may be as low as 1% or
less of a contract's face value. Daily thereafter, the futures contract is
valued through a process known as "marking to market," and the Fund may receive
or be required to pay additional "variation margin" as the futures contract
becomes more or less valuable. At the time of delivery of securities pursuant to
such a contract, adjustments are made to recognize differences in value arising
from the delivery of securities with a different interest rate than the specific
security that provides the standard for the contract. In some (but not many)
cases, securities called for by a futures contract may not have been issued when
the contract was entered into.
A Fund may purchase or sell futures contracts to attempt to protect the Fund
from fluctuations in interest rates, or to manage the effective maturity or
duration of the Fund's portfolio in an effort to reduce potential losses or
enhance potential gain, without actually buying or selling debt securities. For
example, if interest rates were expected to increase, the Fund might enter into
futures contracts for the sale of debt securities. Such a sale would have much
the same effect as if the Fund sold bonds that it owned, or as if the Fund sold
longer-term bonds and purchased shorter-term bonds. If interest rates did
increase, the value of the Fund's debt securities would decline, but the value
of the futures contracts would increase, thereby keeping the net asset value of
the Fund from declining as much as it otherwise would have. Similar results
could be accomplished by selling bonds, or by selling bonds with longer
maturities and investing in bonds with shorter maturities. However, by using
futures contracts, the Fund avoids having to sell its securities.
Similarly, when it is expected that interest rates may decline, a Fund might
enter into futures contracts for the purchase of debt securities. Such a
transaction would be intended to have much the same effect as if the Fund
purchased bonds, or as if the Fund sold shorter-term bonds and purchased
longer-term bonds. If interest rates did decline, the value of the futures
contracts would increase.
Although the use of futures for hedging should tend to minimize the risk of
loss due to a decline in the value of the hedged position (e.g., if a Fund sells
a futures contract to protect against losses in the debt securities held by the
Fund), at the same time the futures contracts limit any potential gain which
might result from an increase in value of a hedged position.
In addition, the ability effectively to hedge all or a portion of a Fund's
investments through transactions in futures contracts depends on the degree to
which movements in the value of the debt securities underlying such contracts
correlate with movements in the value of the Fund's securities. If the security
underlying a futures contract is different than the security being hedged, they
may not move to the same extent or in the same direction. In that event, the
Fund's hedging strategy might not be successful and the Fund could sustain
losses on these hedging transactions which would not be offset by gains on the
Fund's other investments or, alternatively, the gains on the hedging transaction
might not be sufficient to offset losses on the Fund's other investments. It is
also possible that there may be a negative correlation between the security
underlying a futures contract and the securities being hedged, which could
result in losses both on the hedging transaction and the securities. In these
and other instances, the Fund's overall return could be less than if the hedging
transactions had not been undertaken. Similarly, even where a Fund enters into
futures transactions other than for hedging purposes, the effectiveness of its
strategy may be affected by lack of correlation between changes in the value of
the futures contracts and changes in value of the securities which the Fund
would otherwise buy and sell.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, there is the potential that the liquidity of the
futures market may be lacking. Prior to expiration, a futures contract may be
terminated only by entering into a closing purchase or sale transaction, which
requires a secondary market on the contract market on which the futures
contracts was originally entered into. While a Fund will establish a futures
position only if there appears to be a liquid secondary market therefor, there
can be no assurance that such a market will exist for any particular futures
contract at any specific time. In that event, it may not be possible to close
out a position held by the Fund, which could require the Fund to purchase or
sell the instrument underlying the futures contract or to meet ongoing variation
margin requirements. The inability to close out futures positions also could
have an adverse impact on the ability effectively to use futures transactions
for hedging or other purposes.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by the exchanges, which
limit the amount of fluctuation in the price of a futures contract during a
single trading day and prohibit trading beyond such limits once they have been
reached. The trading of futures contracts also is subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Investments in futures contracts also entail the risk that if the Adviser's
investment judgment about the general direction of interest rates is incorrect,
the Fund's overall performance may be poorer than if any such contract had not
been entered into. For example, if a Fund hedged against the possibility of an
increase in interest rates which would adversely affect the price of the Fund's
bonds and interest rates decrease instead, part or all of the benefit of the
increased value of the Fund's bonds which were hedged will be lost because the
Fund will have offsetting losses in its futures positions. Similarly, if a Fund
purchases futures contracts expecting a decrease in interest rates and interest
rates instead increased, the Fund will have losses in its futures positions
which will increase the amount of the losses on the securities in its portfolio
which will also decline in value because of the increase in interest rates. In
addition, in such situations, if the Fund has insufficient cash, the Fund may
have to sell bonds from its investments to meet daily variation margin
requirements, possibly at a time when it may be disadvantageous to do so.
Each contract market on which futures contracts are traded has established a
number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Adviser
does not believe that these trading and position limits would have an adverse
impact on a Fund's strategies involving futures.
CFTC regulations require compliance with certain limitations in order to
assure that the Fund is not deemed to be a "commodity pool" under such
regulations. In particular, CFTC regulations prohibit the Fund from purchasing
or selling futures contracts (other than for bona fide hedging transactions) if,
immediately thereafter, the sum of the amount of initial margin required to
establish the Fund's non-hedging futures positions would exceed 5% of the Fund's
net assets.
Each Fund will comply with this CFTC requirement, and each Fund currently
intends to adhere to the additional policies described below. First, an amount
of cash or cash equivalents will be maintained by each Fund in a segregated
account with the Fund's custodian so that the amount so segregated, plus the
initial margin held on deposit, will be approximately equal to the amount
necessary to satisfy the Fund's obligations under the futures contract. The
second is that a Fund will not enter into a futures contract if immediately
thereafter the amount of initial margin deposits on all the futures contracts
held by the Fund would exceed approximately 5% of the net assets of the Fund.
The third is that the aggregate market value of the futures contracts held by a
Fund not generally exceed 50% of the market value of the Fund's total assets
other than its futures contracts. For purposes of this third policy, "market
value" of a futures contract is deemed to be the amount obtained by multiplying
the number of units covered by the futures contract times the per unit price of
the securities covered by that contract. Finally, 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
(that is, obligations that pay interest that is exempt from federal, New York
State and New York City personal income taxes including the federal alternative
minimum tax).
The use of futures contracts may increase the amount of taxable income of a
Fund and may affect the amount, timing and character of a Fund's income for tax
purposes, as more fully discussed herein in the section entitled "Certain
Additional Tax Matters."
WHEN-ISSUED SECURITIES
Each of the Funds may purchase securities on a "when-issued" or on a
"forward delivery" basis. It is expected that, under normal circumstances, the
applicable Fund would take delivery of such securities. When a Fund commits to
purchase a security on a "when-issued" or on a "forward delivery" basis, it sets
up procedures consistent with Securities and Exchange Commission ("SEC")
policies. Since those policies currently require that an amount of a Fund's
assets equal to the amount of the purchase be held aside or segregated to be
used to pay for the commitment, the Fund expects always to have cash, cash
equivalents, or high quality debt securities sufficient to cover any commitments
or to limit any potential risk. However, even though the Funds do not intend to
make such purchases for speculative purposes and intend to adhere to the
provisions of SEC policies, purchases of securities on such bases may involve
more risk than other types of purchases. For example, a Fund may have to sell
assets which have been set aside in order to meet redemptions. Also, if the
Adviser determines it is advisable as a matter of investment strategy to sell
the "when-issued" or "forward delivery" securities, the Fund would be required
to meet its obligations from the then available cash flow or the sale of
securities, or, although it would not normally expect to do so, from the sale of
the "when-issued" or "forward delivery" securities themselves (which may have a
value greater or less than the Fund's payment obligation).
VARIABLE AND FLOATING RATE OBLIGATIONS
Investments in floating or variable rate securities normally involve
industrial development or revenue bonds which provide that the rate of interest
is set as a specific percentage of a designated base rate, such as rates on
Treasury Bonds or Bills or the prime rate at a major commercial bank, and that a
bondholder can demand payment of the obligations on short notice at par plus
accrued interest. While there is usually no established secondary market for
issues of this type of security, the dealer that sells an issue of such
securities frequently also offers to repurchase such securities at any time, at
a repurchase price which varies and may be more or less than the amount the
bondholder paid for them.
The maturity of floating or variable rate obligations (including
participation interests therein) is deemed to be the longer of (i) the notice
period required before a Fund is entitled to receive payment of the obligation
upon demand or (ii) the period remaining until the obligation's next interest
rate adjustment. If not redeemed by a Fund through the demand feature, the
obligations mature on a specified date which may range up to 30 years from the
date of issuance.
PARTICIPATION INTERESTS
The Trust may purchase from banks on behalf of each Fund participation
interests in all or part of specific holdings of Municipal Obligations. The
Trust has the right to sell the participation interest back to the bank and draw
on the letter of credit or guarantee for all or any part of the full principal
amount of the participation interest in the security, plus accrued interest. In
some cases, these rights may not be exercisable in the event of a default on the
underlying Municipal Obligations; in these cases, the underlying Municipal
Obligations must meet the Funds' credit standards at the time of purchase of the
participation interests. Each participation interest is backed by an irrevocable
letter of credit or guarantee of the selling bank. Participation interests will
only be purchased if in the opinion of counsel interest income on such interests
will be tax-exempt when distributed as dividends to shareholders of the Funds.
The Trust will not invest more than 5% of either Fund's total assets (taken at
the greater of cost or market value) in participation interests. Participation
interests include municipal lease obligations which are deemed to be illiquid
unless otherwise determined by the Board of Trustees.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to generate
income, each of the Funds may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks of
the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. Either party has the right to terminate a
loan at any time on customary industry settlement notice (which will not usually
exceed three business days). During the existence of a loan, a Fund would
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and with respect to cash collateral would also
receive compensation based on investment of the collateral (subject to a rebate
payable to the borrower). When the borrower provides a Fund with collateral
consisting of U.S. Treasury obligations, the borrower is also obligated to pay
the Fund a fee for use of the borrowed securities. A Fund would not, however,
have the right to vote any securities having voting rights during the existence
of the loan, but would call the loan in anticipation of an important vote to be
taken among holders of the securities or of the giving or withholding of their
consent on a material matter affecting the investment. As with other extensions
of credit, there are risks of delay in recovery or even loss of rights in the
collateral should the borrower fail financially. However, the loans would be
made only to entities deemed by the Adviser to be of good standing, and when, in
the judgment of the Adviser, the consideration which can be earned currently
from loans of this type justifies the attendant risk. In addition, a Fund could
suffer loss if the borrower terminates the loan and the Fund is forced to
liquidate the investments in order to return the cash collateral to the buyer.
If the Adviser determines to make loans, it is not intended that the value of
the securities loaned by either Fund would exceed 30% of the value of its total
assets.
RULE 144A SECURITIES
Each of the Funds may purchase securities that are not registered ("Rule
144A securities") under the Securities Act of 1933 (the "Securities Act"), but
can be offered and sold to "qualified institutional buyers" under Rule 144A
under the Securities Act. However, the National Fund and New York Fund will not
invest more than 15% and 10%, respectively, of their net assets in illiquid
investments, which include securities for which there is no readily available
market, securities subject to contractual restrictions on resale and Rule 144A
securities, unless the Trustees of the Trust determine, based on the trading
markets for a specific Rule 144A security, that it is liquid. The Trustees may
adopt guidelines and delegate to the Adviser the daily function of determining
and monitoring liquidity of Rule 144A securities. The Trustees, however, retain
oversight and are ultimately responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market
for Rule 144A securities will develop, the Trustees will carefully monitor each
Fund's investments in Rule 144A securities, focusing on such factors, among
others, as valuation, liquidity and availability of information. The liquidity
of investments in Rule 144A securities could be impaired if trading in Rule 144A
securities does not develop or if qualified institutional buyers become for a
time uninterested in purchasing Rule 144A securities.
SPECIAL FACTORS AFFECTING NEW YORK
The Trust intends to invest a high proportion of the New York Fund's assets
in Municipal Obligations of the State of New York and its political
subdivisions, municipalities, agencies, instrumentalities and public
authorities. Payment of interest and preservation of principal is dependent upon
the continuing ability of New York issuers and/or obligors of state, municipal
and public authority debt obligations to meet their obligations thereunder.
The fiscal stability of New York State is related, at least in part, to the
fiscal stability of its localities and authorities. Various State agencies,
authorities and localities have issued large amounts of bonds and notes either
guaranteed or supported by the State through lease-purchase arrangements, other
contractual arrangements or moral obligation provisions. While debt service is
normally paid out of revenues generated by projects of such State agencies,
authorities and localities, the State has had to provide special assistance in
recent years, in some cases of a recurring nature, to enable such agencies,
authorities and localities to meet their financial obligations and, in some
cases, to prevent or cure defaults. To the extent State agencies and local
governments require State assistance to meet their financial obligations, the
ability of the State to meet its own obligations as they become due or to obtain
additional financing could be adversely affected.
For further information concerning New York Municipal Obligations, see
Appendix C to this Statement of Additional Information. The summary set forth
above and in Appendix C is included for purposes of providing a general
description of New York State and New York City credit and financial conditions.
This summary is based on information from statements of issuers of New York
Municipal Obligations and does not purport to be complete. The Trust is not
responsible for the accuracy or timeliness of this information.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The Trust, on behalf of each Fund, has adopted the following policies which
cannot be changed without the approval of the holders of a majority of the
applicable Fund's outstanding voting securities (which, as used in this
Statement of Additional Information, means the lesser of (i) more than 50% of
the outstanding voting securities of the Fund, or (ii) 67% or more of the
outstanding voting securities of the Fund present at a meeting at which holders
of more than 50% of the Fund's outstanding voting securities are represented in
person or by proxy). The term "voting securities" as used in this paragraph has
the same meaning as in the 1940 Act.
The Trust, on behalf of either of the Funds, may not:
(1) Borrow money or pledge, mortgage or hypothecate assets of the Fund,
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 the
Fund's net assets, including the amount borrowed, and may pledge, mortgage
or hypothecate not more than 1/3 of such assets to secure such borrowings
(it is intended that money would be borrowed only from banks and only to
accommodate requests for the repurchase of shares of the Fund while
effecting an orderly liquidation of portfolio securities), provided that
collateral arrangements with respect to futures contracts, including
deposits of initial and variation margin, are not considered a pledge of
assets for purposes of this restriction; for additional related
restrictions, see clause (i) under the caption "Non-Fundamental
Restrictions" hereafter;
(2) Purchase any security or evidence of interest therein on margin,
except that the Trust may obtain such short-term credit for the Fund as may
be necessary for the clearance of purchases and sales of securities and
except that deposits of initial and variation margin may be made for the
Fund in connection with the purchase, ownership, holding or sale of futures
contracts;
(3) Write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) the writing, purchasing or
selling of puts, calls or combinations thereof with respect to U.S.
Government securities or with respect to futures contracts, or (ii) the
writing, purchase, ownership, holding or sale of futures contracts;
(4) Underwrite securities issued by other persons except insofar as the
Trust may technically be deemed an underwriter under the Securities Act of
1933 in selling a portfolio security for a Fund (provided, however, that the
National Fund may invest all of its assets in an open-end management
investment company with the same investment objective and policies and
substantially the same investment restrictions as the Fund (a "Qualifying
Portfolio"));
(5) Make loans to other persons except (a) through the lending of the
Fund's 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 the purchase of short-term obligations and provided
that not more than 10% of the New York Fund's total assets, and 15% of the
National Fund's total assets, will be invested in repurchase agreements
maturing in more than seven days, or (c) by purchasing a portion of an issue
of debt securities of types commonly distributed privately to financial
institutions, for which purposes the purchase of short-term commercial paper
or a portion of an issue of debt securities which are part of an issue to
the public shall not be considered the making of a loan;
(6) With respect to the New York Fund only, knowingly invest in
securities which are subject to legal or contractual restrictions on resale
(other than repurchase agreements maturing in not more than seven days) if,
as a result thereof, more than 10% of the New York Fund's total assets
(taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days);
(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 (except futures contracts) in the ordinary course of business (the
Trust reserves the freedom of action to hold for the Fund's portfolio and to
sell real estate acquired as a result of ownership of securities);
(8) With respect to the New York Fund only, purchase securities of any
issuer if such purchase at the time thereof would cause more than 10% of the
voting securities of such issuer to be held by the New York Fund;
(9) Make short sales of securities or maintain a short position, unless
at all times when a short position is open the Trust, on behalf of the Fund,
owns an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities
of the same issue as, and equal in amount to, the securities sold short, and
unless not more than 10% of the Fund's net assets (taken at market value) is
held as collateral for such sales at any one time (it is the present
intention of management to make such sales only for the purpose of deferring
realization of gain or loss for federal income tax purposes; such sales
would not be made of securities subject to outstanding options);
(10) Concentrate the Fund's investments in any particular industry, but
if it is deemed appropriate for the achievement of the Fund's investment
objective, up to 25% of the Fund's assets, at market value at 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 and except
that all of the assets of the National Fund may be invested in a Qualifying
Portfolio; or
(11) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, provided that collateral arrangements
with respect to futures contracts, including deposits of initial and
variation margin, are not considered to be the issuance of a senior security
for purposes of this restriction.
For purposes of the investment restrictions described above and the non-
fundamental restrictions described below, the issuer of a tax-exempt security is
deemed to be the entity (public or private) ultimately responsible for the
payment of the principal of and interest on the security. Investment Restriction
(9) above applies only to short sales of or short positions in securities, and
does not prevent the writing, purchase, ownership, holding or sale of futures
contracts.
NON-FUNDAMENTAL RESTRICTIONS
The Trust on behalf of either Fund does not, as a matter of operating
policy:
(i) borrow money for any purpose in excess of 10% of the Fund's total
assets (taken at cost) (moreover, the Trust will not purchase any securities
for the Fund at any time at which borrowings exceed 5% of the Fund's total
assets (taken at market value)),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the Fund's net assets (taken at market value), provided that collateral
arrangements with respect to futures contracts, including deposits of
initial and variation margin, are not considered a pledge of assets for
purposes of this restriction,
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind and
amount to the securities sold and provided that if such right is conditional
the sale is made upon the same conditions (this restriction does not apply
to the writing, purchase, ownership, holding or sale of futures contracts),
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the National Fund may be invested in a Qualifying
Portfolio,
(v) purchase securities issued by any registered investment company,
except that all of the assets of the National Fund may be invested in a
Qualifying Portfolio and except by purchase in the open market where no
commission or profit to a sponsor or dealer results from such purchase other
than the customary broker's commission, or except when such purchase, though
not made in the open market, is part of a plan of merger or consolidation,
provided, however, that the Trust will not purchase the securities of any
registered investment company for the Fund if such purchase at the time
thereof would cause more than 10% of the Fund's total assets (taken at the
greater of cost or market value) to be invested in the securities of such
issuers or would cause more than 3% of the outstanding voting securities of
any such issuer to be held for the Fund; and provided, further, that the
Trust, on behalf of the New York Fund, shall not purchase securities issued
by any open-end investment company,
(vi) invest more than 15% of the National Fund's net assets and 10% of
the New York Fund's net assets (taken at the greater of cost or market
value) in securities that are not readily marketable, except that all of the
assets of the National Fund may be invested in a Qualifying Portfolio,
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause the Fund to hold more than 10% of any class of
securities of such issuer, for which purposes all indebtedness of an issuer
shall be deemed a single class and all preferred stock of an issuer shall be
deemed a single class, except that all of the assets of the National Fund
may be invested in a Qualifying Portfolio and except that futures contracts
shall not be subject to this restriction,
(viii) invest more than 5% of the Fund's assets in companies which,
including predecessors, have a record of less than three years' continuous
operation, except that all of the assets of the National Fund may be
invested in a Qualifying Portfolio, or
(ix) purchase or retain in the Fund's portfolio any securities issued by
an issuer any of whose officers, directors, trustees or security holders is
an officer or Trustee of the Trust, or is an officer or director of the
Adviser, if after the purchase of the securities of such issuer for the Fund
one or more of such persons owns beneficially more than 1/2 of 1% of the
shares or securities, or both, all taken at market value, of such issuer,
and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities, or
both, all taken at market value.
These policies are not fundamental and may be changed by the Trust on behalf
of the Fund without shareholder approval.
PERCENTAGE AND RATING RESTRICTIONS
If a percentage restriction on investment or utilization of assets set forth
above or referred to in the Prospectus is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held for a Fund is not considered a
violation of policy.
3. PERFORMANCE INFORMATION
A total rate of return quotation for a Fund is calculated for any period by
(a) dividing (i) the sum of the net asset value per share on the last day of the
period and the net asset value per share on the last day of the period of shares
purchasable with dividends and capital gains distributions declared during such
period with respect to a share held at the beginning of such period and with
respect to shares purchased with such dividends and capital gains distributions,
by (ii) the public offering price per share on the first day of such period, and
(b) subtracting 1 from the result. Any annualized total rate of return quotation
is calculated by (x) adding 1 to the period total rate of return quotation
calculated above, (y) raising such sum to a power which is equal to 365 divided
by the number of days in such period, and (z) subtracting 1 from the result.
Any current yield quotation of a Fund consists of an annualized historical
yield, carried at least to the nearest hundredth of one percent, based on a 30
calendar day or one month period and is calculated by (a) raising to the sixth
power the sum of 1 plus the quotient obtained by dividing the Fund's net
investment income earned during the period by the product of the average daily
number of shares outstanding during the period that were entitled to receive
dividends and the maximum public offering price per share on the last day of the
period, (b) subtracting 1 from the result, and (c) multiplying the result by 2.
Any tax equivalent yield quotation of a Fund is calculated as follows: If
the entire current yield quotation for such period is tax-exempt, the tax
equivalent yield would be the current yield quotation divided by 1 minus a
stated income tax rate or rates. If a portion of the current yield quotation is
not tax-exempt, the tax equivalent yield would be the sum of (a) that portion of
the yield which is tax-exempt divided by 1 minus a stated income tax rate or
rates, and (b) the portion of the yield which is not tax-exempt.
Set forth below is total rate of return information for shares of each Fund
for the periods indicated, assuming that dividends and capital gains
distributions, if any, were reinvested.
<TABLE>
<CAPTION>
REDEEMABLE VALUE
ANNUALIZED OF A HYPOTHETICAL
TOTAL $1,000 INVESTMENT
RATE OF RETURN AT THE END OF THE PERIOD
CITIFUNDS NEW YORK TAX FREE INCOME PORTFOLIO
<S> <C> <C>
Ten years ended December 31, 1997 7.57% $2,074
Five years ended December 31, 1997 5.78% $1,325
One year ended December 31, 1997 8.23% $1,052
CITIFUNDS NATIONAL TAX FREE INCOME PORTFOLIO
August 17, 1995 (commencement of operations) to December 31, 1997 7.50% $1,165
One year ended December 31, 1997 6.99% $1,070
</TABLE>
The yields with respect to shares for the 30-day period ended December 31,
1997 were 4.66% for the New York Fund and 5.00% for the National Fund.
The New York Fund's tax equivalent yield for the 30-day period ended
December 31, 1997 was 8.77% (assuming (i) a combined New York State, New York
City and federal tax bracket of 46.88% and (ii) that 100% of the New York Fund's
assets were invested in New York Municipal Obligations).
The National Fund's tax equivalent yield for the 30-day period ended
December 31, 1997 was 8.28% (assuming a federal tax bracket of 39.60%).
Comparative performance information may be used from time to time in
advertising shares of the Funds, including data from Lipper Analytical Services,
Inc. and other industry sources and publications. From time to time a Fund may
compare its performance against inflation with the performance of other
instruments against inflation, such as FDIC-insured bank money market accounts.
In addition, advertising for the Funds may indicate that investors should
consider diversifying their investment portfolios in order to seek protection of
the value of their assets against inflation. From time to time, advertising
materials for the Funds may refer to or discuss current or past economic or
financial conditions, developments and events.
From time to time, each Fund may use hypothetical tax equivalent yields or
charts in their advertising. These hypothetical yields or charts will be used
for illustrative purposes only and are not indicative of either Fund's past or
future performance.
4. DETERMINATION OF NET ASSET VALUE; VALUATION OF SECURITIES;
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The net asset value of each share of each Fund is determined each day during
which the New York Stock Exchange (the "Exchange") is open for trading. As of
the date of this Statement of Additional Information, the Exchange is open for
trading every weekday except for the following holidays (or the days on which
they are observed): New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. This determination is made once each day as of the close of
regular trading on the Exchange (normally 4:00 p.m. Eastern time) by adding the
market value of all securities and other assets of a Fund, then subtracting the
liabilities of the Fund, and then dividing the result by the number of
outstanding shares of the Fund. The net asset value per share is effective for
orders received and accepted by the Distributor prior to its calculation.
Bonds and other fixed income securities (other than short-term obligations)
held for each Fund are valued on the basis of valuations furnished by a pricing
service, use of which has been approved by the Board of Trustees. In making such
valuations, the pricing service utilizes both dealer- supplied valuations and
electronic data processing techniques which take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data, without exclusive reliance upon quoted prices or exchange
or over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Short-term obligations (maturing
in 60 days or less) are valued at amortized cost, which constitutes fair value
as determined by the Board of Trustees. Futures contracts are normally valued at
the settlement price on the exchange on which they are traded. Securities for
which there are no such valuations are valued at fair value as determined in
good faith by or at the direction of the Board of Trustees.
Interest income on long-term obligations held for the Funds is determined on
the basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued less amortization of premium.
Subject to compliance with applicable regulations, the Trust has reserved
the right to pay the redemption or repurchase price of shares of the Funds,
either totally or partially, by a distribution in kind of readily marketable
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares or beneficial interests being sold. If a holder of shares or
beneficial interests received a distribution in kind, such holder could incur
brokerage or other charges in converting the securities to cash.
The Trust may suspend the right of redemption or postpone the date of
payment for shares of a Fund more than seven days during any period when (a)
trading in the markets the Fund normally utilizes is restricted, or an
emergency, as defined by the rules and regulations of the SEC, exists making
disposal of a Fund's investments or determination of its net asset value not
reasonably practicable; (b) the Exchange is closed (other than customary weekend
and holiday closings); or (c) the SEC has by order permitted such suspension.
5. MANAGEMENT
The Trustees and officers of the Trust, their ages and their principal
occupations during the past five years are set forth below. Their titles may
have varied during that period. Asterisks indicate that those Trustees and
officers are "interested persons" (as defined in the 1940 Act) of the Trust.
Unless otherwise indicated below, the address of each Trustee and officer is 6
St. James Avenue, Boston, Massachusetts.
TRUSTEES
ELLIOTT J. BERV; 54 -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June 1991 to
June 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE*; 46 -- President of the Trust; Chief Executive Officer and
President, Signature Financial Group, Inc. and CFBDS.
MARK T. FINN; 54 -- President and Director, Delta Financial, Inc. (since June
1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April 1990); Director, Vantage
Consulting Group, Inc. (since October 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
RILEY C. GILLEY; 71 -- Vice President and General Counsel, Corporate Property
Investors (November 1988 to December 1991); Partner, Breed, Abbott & Morgan
(Attorneys) (retired, December 1987). His address is 4041 Gulf Shore Boulevard
North, Naples, Florida.
DIANA R. HARRINGTON; 57 -- Professor, Babson College (since September 1993);
Visiting Professor, Kellogg Graduate School of Management, Northwestern
University (September 1992 to September 1993); Professor, Darden Graduate School
of Business, University of Virginia (September 1978 to September 1993); Trustee,
The Highland Family of Funds (since March 1997). Her address is 120 Goulding
Street, Holliston, Massachusetts.
SUSAN B. KERLEY; 46 -- President, Global Research Associates, Inc. (Investment
Research) (since August 1990); Manager, Rockefeller & Co. (March 1988 to July
1990); Trustee, Mainstay Institutional Funds (since December 1990). Her
address is P.O. Box 9572, New Haven, Connecticut.
C. OSCAR MORONG, JR.; 62 -- Chairman of the Board of Trustees of the Trust;
Managing Director, Morong Capital Management (since February 1993); Senior Vice
President and Investment Manager, CREF Investments, Teachers Insurance & Annuity
Association (retired, January 1993); Director, Indonesia Fund; Director, MAS
Funds. His address is 1385 Outlook Drive West, Mountainside, New Jersey.
WALTER E. ROBB, III; 71 -- President, Benchmark Consulting Group, Inc. (since
1991); Principal, Robb Associates (corporate financial advisers) (since 1978);
President, Benchmark Advisors, Inc. (Corporate Financial Advisors)(since
1989); Trustee of certain registered investment companies in the MFS Family of
Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
E. KIRBY WARREN; 63 -- Professor of Management, Graduate School of Business,
Columbia University (since 1987); Samuel Bronfman Professor of Democratic
Business Enterprise (1978 to 1987). His address is Columbia University, Graduate
School of Business, 725 Uris Hall, New York, New York.
WILLIAM S. WOODS, JR.; 77 -- Vice President-Investments, Sun Company, Inc.
(retired, April 1984). His address is 35 Colwick Road, Cherry Hill, New Jersey.
OFFICERS OF THE TRUST
PHILIP W. COOLIDGE*; 46 -- President of the Trust; Chief Executive Officer and
President, Signature Financial Group, Inc. and CFBDS.
CHRISTINE A. DRAPEAU*; 27 -- Assistant Secretary and Assistant Treasurer of
Trust; Assistant Vice President, Signature Financial Group, Inc. (since January
1996); Paralegal and Compliance Officer, various financial companies (July 1992
to January 1996); Graduate Student, Bentley College (prior to December 1994).
TAMIE EBANKS-CUNNINGHAM*; 25 -- Assistant Secretary of the Trust; Office
Manager, Signature Financial Group (Cayman) Ltd. (Since April 1995);
Administrator, Cayman Islands Primary School (prior to April 1995). Her address
is P.O. Box 2494, Elizabethan Square, George Town, Grand Cayman, Cayman Islands,
B.W.I.
JOHN R. ELDER*; 49 -- Treasurer of the Trust; Vice President, Signature
Financial Group, Inc. (since April 1995); Treasurer, CFBDS (since April 1995);
Treasurer of the Phoenix Family of Mutual Funds, Phoenix Home Life Mutual
Insurance Company (1983 to March 1995).
LINDA T. GIBSON*; 32 -- Secretary of the Trust; Vice President, Signature
Financial Group, Inc. (since May 1992); Assistant Secretary, CFBDS, Inc.
(since October 1992).
JOAN R. GULINELLO*; 42 -- Assistant Secretary and Assistant Treasurer of the
Trust; Vice President, Signature Financial Group, Inc. (since October 1993);
Secretary, CFBDS, Inc. (since October 1995); Vice President and Assistant
General Counsel, Massachusetts Financial Services Company (prior to October
1993).
JAMES E. HOOLAHAN*; 51 -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust; Senior Vice President, Signature Financial Group, Inc.
SUSAN JAKUBOSKI*; 33 -- Vice President, Assistant Treasurer and Assistant
Secretary of the Trust (since August 1994); Manager, Signature Financial Group
(Cayman) Ltd. (since August 1994); Fund Compliance Administrator, Concord
Financial Group (November 1990 to August 1994). Her address is Suite 193, 12
Church Street, Hamilton HM11, Bermuda.
MOLLY S. MUGLER*; 46 -- Assistant Secretary of the Trust; Vice President,
Signature Financial Group, Inc.; Assistant Secretary, CFBDS.
CLAIR TOMALIN*; 29 -- Assistant Secretary of the Trust; Office Manager,
Signature Financial Group (Europe) Limited (since 1993). Her address is 117
Charterhouse Street, London ECIM 6AA.
SHARON M. WHITSON*; 49 -- Assistant Secretary and Assistant Treasurer of the
Trust; Assistant Vice President, Signature Financial Group, Inc.
JULIE J. WYETZNER*; 38 -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust; Vice President, Signature Financial Group, Inc.
The Trustees and officers of the Trust also hold comparable positions with
certain other funds for which CFBDS or its affiliates serve as the distributor
or administrator.
The Trustees of the Trust received the following remuneration from the Trust
for the periods indicated:
TRUSTEE COMPENSATION TABLE
AGGREGATE AGGREGATE TOTAL
COMPENSATION COMPENSATION COMPENSATION
FROM THE NEW FROM THE NATIONAL FROM TRUST AND
TRUSTEE YORK FUND (1) FUND (1) COMPLEX (2)
H. B. Alvord(3) .......... $1,121 $558 $32,000
Elliott J. Berv .......... $1,916 $889 $57,000
Philip W. Coolidge ....... $ 0 $ 0 $ 0
Mark T. Finn ............. $1,858 $888 $54,000
Riley C. Gilley .......... $2,000 $891 $50,000
Diana R. Harrington ...... $2,196 $896 $57,000
Susan B. Kerley .......... $2,225 $897 $59,000
C. Oscar Morong, Jr. ..... $2,357 $900 $70,000
Walter E. Robb, III ...... $1,924 $889 $56,000
E. Kirby Warren .......... $2,038 $892 $50,000
William S. Woods, Jr. .... $2,200 $896 $58,000
- ----------
(1) For the fiscal year ended December 31, 1997.
(2) Information relates to the fiscal year ended December 31, 1997. Messrs.
Berv, Coolidge, Finn, Gilley, Morong, Robb, Warren and Woods, and Mses.
Harrington and Kerley are Trustees of 31, 55, 26, 31, 28, 24, 28, 30, 29 and
29 funds and portfolios, respectively, in the family of open-end registered
investment companies advised or managed by Citibank.
(3) Mr. Alvord retired as a Trustee on May 31, 1997.
As of February 1, 1998, all Trustees and officers as a group owned less than
1% of the outstanding shares of each Fund. As of the same date, more than 95% of
the outstanding shares of each Fund were held of record by Citibank, N.A., or
its affiliates, as Shareholder Servicing Agents for the accounts of their
respective clients.
The Declaration of Trust of the Trust provides that the Trust will indemnify
its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust unless, as to liability to the Trust or its investors, it
is finally adjudicated that they engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in their offices,
or unless with respect to any other matter it is finally adjudicated that they
did not act in good faith in the reasonable belief that their actions were in
the best interests of the Trust. In the case of settlement, such indemnification
will not be provided unless it has been determined by a court or other body
approving the settlement or other disposition, or by a reasonable determination,
based upon a review of readily available facts, by vote of a majority of
disinterested Trustees of the Trust, or in a written opinion of independent
counsel, that such officers or Trustees have not engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.
ADVISER
Citibank manages the assets of each Fund pursuant to separate investment
advisory agreements (the "Advisory Agreements"). Subject to such policies as the
Board of Trustees may determine, the Adviser manages the securities of each Fund
and makes investment decisions for each Fund. The Adviser furnishes at its own
expense all services, facilities and personnel necessary in connection with
managing each Fund's investments and effecting securities transactions for each
Fund. Each Advisory Agreement continues in effect as long as such continuance is
specifically approved at least annually by the Board of Trustees or by a vote of
a majority of the outstanding voting securities of the Fund, and, in either
case, by a majority of the Trustees who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.
Each of the Advisory Agreements provides that the Adviser may render
services to others. Each Advisory Agreement is terminable without penalty on not
more than 60 days' nor less than 30 days' written notice by the Trust when
authorized either by a vote of a majority of the outstanding voting securities
of the applicable Fund or by a vote of a majority of the Board of Trustees, or
by the Adviser on not more than 60 days' nor less than 30 days' written notice,
and will automatically terminate in the event of its assignment. Each Advisory
Agreement provides that neither the Adviser nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution and management of the
applicable Fund, except for willful misfeasance, bad faith or gross negligence
or reckless disregard of its or their obligations and duties under the Advisory
Agreement.
The Prospectus contains a description of the fees payable to the Adviser for
services under the Advisory Agreements. The Adviser has agreed to waive a
portion of the fees payable to it under the Advisory Agreements on a
month-to-month basis. For the fiscal years ended December 31, 1995, 1996 and
1997, the fees payable to the Adviser by the New York Fund were $354,135 (of
which $191,039 was voluntarily waived), $342,600 (of which $254,015 was
voluntarily waived) and $311,371 (of which $130,101 was voluntarily waived),
respectively. For the period August 17, 1995 (commencement of operations) to
December 31, 1995 and for the fiscal years ended December 31, 1996 and 1997, the
fees payable to the Adviser by the National Fund were $1,723, $7,598 and $7,777
(all of which were voluntarily waived), respectively.
ADMINISTRATOR
Pursuant to an administrative services agreement (the "Administrative
Services Agreement"), CFBDS provides the Trust with general office facilities
and CFBDS supervises the overall administration of the Trust, including, among
other responsibilities, the negotiation of contracts and fees with, and the
monitoring of performance and billings of, the Trust's independent contractors
and agents; the preparation and filing of all documents required for compliance
by the Trust with applicable laws and regulations; and arranging for the
maintenance of books and records of the Trust. The Administrator provides
persons satisfactory to the Board of Trustees of the Trust to serve as Trustees
and officers of the Trust. Such Trustees and officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
CFBDS or its affiliates.
The Prospectus contains a description of the fees payable to the
Administrator under the Administrative Services Agreement. The Administrator has
voluntarily agreed to waive a portion of the fees payable to it under the
Administrative Services Agreement on a month-to-month basis. For the fiscal
years ended December 31, 1995, 1996 and 1997, the fees payable to CFBDS from the
New York Fund under the Administrative Services Agreement were $177,067 (of
which $48,777 was voluntarily waived), $214,125 (of which $18,284 was
voluntarily waived) and $194,607 (of which $124,928 was voluntarily waived),
respectively. For the period August 17, 1995 (commencement of operations) to
December 31, 1995 and for the fiscal years ended December 31, 1996 and 1997, the
fees payable to CFBDS from the National Fund under the Administrative Services
Agreement were $862, $7,598 and $7,777, respectively, (all of which were
voluntarily waived).
By agreement, the Trust acknowledges that the name "CitiFunds" is the
property of the Adviser and provides that if Citibank ceases to serve as the
Adviser of the Trust, the Trust would change its name and the name of the Funds
so as to delete the word "CitiFunds." The agreement with the Trust also provides
that Citibank may render investment advisory services to others and may permit
other investment companies to use the word "CitiFunds" in their names.
The Administrative Services Agreement with the Trust continues in effect
with respect to each Fund if such continuance is specifically approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Trust and, in either case, by a majority of
the Trustees who are not parties to the Administrative Services Agreement or
interested persons of any such party. The Administrative Services Agreement with
the Trust terminates automatically if it is assigned and may be terminated
without penalty by vote of a majority of the outstanding voting securities of
the Trust or by either party on not more than 60 days' nor less than 30 days'
written notice. The Administrative Services Agreement with the Trust also
provides that neither CFBDS, as the Administrator, nor its personnel shall be
liable for any error of judgment or mistake of law or for any act or omission in
the administration or management of the Trust, except for willful misfeasance,
bad faith or gross negligence in the performance of its or their duties or by
reason of reckless disregard of its or their obligations and duties under the
Administrative Services Agreement.
CFBDS is wholly-owned subsidiary of Signature Financial Group, Inc.
Pursuant to a sub-administrative services agreement, Citibank performs such
sub-administrative duties for the Trust as from time to time are agreed upon by
Citibank and CFBDS. Citibank's sub-administrative duties may include providing
equipment and clerical personnel necessary for maintaining the Trust's
organization, participation in the preparation of documents required for
compliance by the Trust with applicable laws and regulations, the preparation of
certain documents in connection with meetings of Trustees and shareholders, and
other functions which would otherwise be performed by the Administrator. For
performing such sub-administrative services, Citibank receives compensation as
from time to time is agreed upon by Citibank and CFBDS not in excess of the
amount paid to CFBDS for its services under the Administrative Services
Agreement with the Trust. All such compensation is paid by CFBDS.
DISTRIBUTOR
CFBDS serves as the Distributor of each Fund's shares pursuant to
Distribution Agreements with the Trust with respect to each class of shares of
each Fund. Unless otherwise terminated, the Distribution Agreements remain in
effect from year to year upon annual approval by the Trust's Board of Trustees
or by the vote of a majority of the outstanding voting securities of the Trust,
and by the vote of a majority of the Board of Trustees of the Trust who are not
parties to the Agreements or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. Each
Distribution Agreement will terminate in the event of its assignment, as defined
in the 1940 Act.
The Trust has adopted a Distribution Plan (each a "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act with respect to shares of the
Funds after concluding that there is a reasonable likelihood that the
Distribution Plans will benefit each Fund and its shareholders. The Distribution
Plan provides that each Fund shall pay a distribution fee to the Distributor at
an annual rate not to exceed 0.05% of the average daily net assets for the
National Fund and 0.15% of the average daily net assets for the New York Fund.
The Distributor receives the distribution fees for its services under the
Distribution Agreements in connection with the distribution of each Fund's
shares (exclusive of any advertising expenses incurred by the Distributor in
connection with the sale of shares of each Fund). The Distributor may use all or
any portion of such distribution fees to pay for expenses of printing
prospectuses and reports used for sales purposes, expenses of the preparation
and printing of sales literature, commissions to dealers who sell shares of the
applicable class of the Funds and other distribution-related expenses.
The National Fund is permitted to pay the Distributor a service fee at an
annual rate not to exceed 0.25% of the National Fund's average daily net assets.
The Distribution Plan also permits the Funds to pay the Distributor an
additional fee (not to exceed 0.05% of the average daily net assets of the Fund)
in anticipation of or as reimbursement for print or electronic media advertising
expenses incurred in connection with the sale of Fund shares.
The Distribution Plans continue in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trust's Trustees and a majority of the Trustees who are not "interested persons"
of the Trust and who have no direct or indirect financial interest in the
operation of the Distribution Plans or in any agreement related to the Plans
(for purposes of this paragraph "Qualified Trustees"). Each Distribution Plan
requires that the Trust and the Distributor provide to the Board of Trustees,
and the Board of Trustees review, at least quarterly, a written report of the
amounts expended (and the purposes therefor) under the Distribution Plan. Each
Distribution Plan further provides that the selection and nomination of the
Qualified Trustees is committed to the discretion of the disinterested Trustees
(as defined in the 1940 Act) then in office. The Distribution Plans may be
terminated with respect to any class of shares of either Fund at any time by a
vote of a majority of the Trust's Qualified Trustees or by a vote of a majority
of the outstanding voting securities of that class of shares of the Fund. The
Distribution Plan applicable to either Fund may not be amended to increase
materially the amount of a Fund's permitted expenses thereunder without the
approval of a majority of the outstanding securities of that Fund and may not be
materially amended in any case without a vote of a majority of both the Trustees
and Qualified Trustees. The Distributor will preserve copies of any plan,
agreement or report made pursuant to each Distribution Plan for a period of not
less than six years from the date of the Plan, and for the first two years the
Distributor will preserve such copies in an easily accessible place.
As contemplated by the Distribution Plans, CFBDS acts as the agent of the
Trust in connection with the offering of shares of the Funds pursuant to the
Distribution Agreements. After the prospectuses and periodic reports of the
Funds have been prepared, set in type and mailed to existing shareholders, the
Distributor pays for the printing and distribution of copies thereof which are
used in connection with the offering of shares of the Funds to prospective
investors. The Prospectus contains a description of fees payable to the
Distributor under the Distribution Agreements. For the fiscal years ended
December 31, 1995, 1996 and 1997, the fees payable to the Distributor from the
New York Fund under the Distribution Agreement were $44,267 (all of which was
voluntarily waived), $128,475 (all of which was voluntarily waived) and $116,763
(of which $114,903 was voluntarily waived), respectively, no portion of which
was applicable to reimbursement for expenses incurred in connection with print
or electronic media advertising. For the period August 17, 1995 (commencement of
operations) to December 31, 1995 and for the fiscal years ended December 31,
1996 and 1997, the fees payable to the Distributor from the National Fund under
the Distribution Agreement were $216, $949 and $972, respectively, (all of which
were voluntarily waived).
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
The Trust has adopted an administrative services plan (the "Administrative
Services Plan") after having concluded that there is a reasonable likelihood
that the Administrative Services Plan will benefit the Funds and their
shareholders. The Administrative Services Plan provides that the Trust may
obtain the services of an administrator, a transfer agent, a custodian and one
or more Shareholder Servicing Agents, and may enter into agreements providing
for the payment of fees for such services. Under the Administrative Services
Plan, the total of the fees paid from a Fund to the Trust's Administrator and
Shareholder Servicing Agents may not exceed 0.65% of the Fund's average daily
net assets on an annualized basis for the Fund's then-current fiscal year. Any
distribution fees (other than any fee concerning electronic or other media
advertising) payable under the Distribution Plan for shares of the New York Fund
are included in this percentage limitation for those shares. The Administrative
Services Plan continues in effect if such continuance is specifically approved
at least annually by a vote of both a majority of the Trustees and a majority of
the Trustees who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Administrative
Services Plan or in any agreement related to such Plan (for purposes of this
paragraph "Qualified Trustees"). The Administrative Services Plan requires that
the Trust provide to its Board of Trustees and the Board of Trustees review, at
least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Administrative Services Plan. The Administrative Services
Plan may be terminated at any time by a vote of a majority of the Qualified
Trustees of the Trust or as to each Fund by a vote of a majority of the
outstanding voting securities of the Fund. The Administrative Services Plan may
not be amended to increase materially the amount of the New York Fund's
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the New York Fund and may not be materially
amended in any case without a vote of the majority of both the Trustees and the
Qualified Trustees.
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent and a Transfer Agency and
Custodian Agreement with State Street Bank and Trust Company ("State Street")
pursuant to which State Street acts as transfer agent and custodian for each
Fund. See "Shareholder Servicing Agents" and "Transfer Agent and Custodian" in
the Prospectus for additional information, including a description of fees paid
to the Shareholder Servicing Agents under the Servicing Agreements. For the
fiscal years ended December 31, 1995, 1996 and 1997, aggregate fees payable from
the New York Fund to Shareholder Servicing Agents were $354,135 (of which
$132,801 was voluntarily waived), $214,125 and $194,607, respectively. For the
period August 17, 1995 (commencement of operations) to December 31, 1995 and for
the fiscal years ended December 31, 1996 and 1997, aggregate fees payable from
the National Fund to Shareholder Servicing Agents were $1,723, $4,748 and $4,861
(all of which were voluntarily waived), respectively.
The principal business address of State Street is 225 Franklin Street,
Boston, MA 02110.
AUDITORS
Deloitte & Touche LLP are the independent accountants for the Trust,
providing audit services and assistance and consultation with respect to the
preparation of filings with the SEC. The address of Deloitte & Touche LLP is 125
Summer Street, Boston, Massachusetts 02110.
COUNSEL
Bingham Dana LLP, 150 Federal Street, Boston, MA 02110, acts as counsel for
the Funds.
6. PORTFOLIO TRANSACTIONS
The Trust trades securities for a Fund if it believes that a transaction net
of costs (including custodian charges) will help achieve the Fund's investment
objectives. Changes in a Fund's investments are made without regard to the
length of time a security has been held, or whether a sale would result in the
recognition of a profit or loss. Therefore, the rate of turnover is not a
limiting factor when changes are appropriate. Specific decisions to purchase or
sell securities for the Funds are made by a portfolio manager who is an employee
of the Adviser and who is appointed and supervised by its senior officers. The
portfolio manager may serve other clients of the Adviser in a similar capacity.
The primary consideration in placing portfolio securities transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of each Fund and other clients
of the Adviser on the basis of their professional capability, the value and
quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Adviser normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the Adviser on the tender of a
Fund's securities in so-called tender or exchange offers. Such soliciting dealer
fees are in effect recaptured for the Fund by the Adviser. At present no other
recapture arrangements are in effect.
Under the Advisory Agreements, in connection with the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed to
seek for each Fund in its best judgment, prompt execution in an effective manner
at the most favorable price. Subject to this requirement of seeking the most
favorable price, securities may be bought from or sold to broker-dealers who
have furnished statistical, research and other information or services to the
Adviser or the Funds, subject to any applicable laws, rules and regulations.
The investment advisory fee that each Fund pays to the Adviser will not be
reduced as a consequence of the Adviser's receipt of brokerage and research
services. While such services are not expected to reduce the expenses of the
Adviser, the Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff or obtain such services
independently.
In certain instances there may be securities that are suitable as an
investment for a Fund as well as for one or more of the Adviser's other clients.
Investment decisions for each Fund and for the Adviser's other clients are made
with a view to achieving their respective investment objectives. It may develop
that a particular security is bought or sold for only one client even though it
might be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling the same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could adversely affect the price of or the size of the
position obtainable in a security for a Fund. When purchases or sales of the
same security for a Fund and for other portfolios managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large volume purchases or sales.
For the fiscal years ended December 31, 1995, 1996 and 1997, the New York
Fund paid no brokerage commissions. For the period August 17, 1995 (commencement
of operations) to December 31, 1995 and for the fiscal years ended December 31,
1996 and 1997, the National Fund paid no brokerage commissions.
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional Shares of Beneficial Interest (without par value)
of each series and to divide or combine the shares of any series into a greater
or lesser number of shares of that series without thereby changing the
proportionate beneficial interests in that series. The Trust has reserved the
right to create and issue additional series and classes of shares. Each share of
each class of each Fund represents an equal proportionate interest in the Fund
with each other share of that class. Shares of each series participate equally
in the earnings, dividends and distribution of net assets of the particular
series upon liquidation or dissolution (except for any differences among classes
of shares in a series). Shares of each series are entitled to vote separately to
approve advisory agreements or changes in investment policy, but shares of all
series may vote together in the election or selection of Trustees and
accountants for the Trust. In matters affecting only a particular Fund or class,
only shares of that particular Fund or class are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust would
not be able to elect any Trustee. The Trust is not required to hold, and has no
present intention of holding, annual meetings of shareholders but the Trust will
hold special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have, under certain circumstances (e.g., upon the application and submission of
certain specified documents to the Trustees by a specified number of
shareholders), the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have under certain circumstances the right to
remove one or more Trustees without a meeting by a declaration in writing by a
specified number of shareholders. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative vote of the holders of a
majority of the outstanding shares of each series affected by the amendment.
(See "Investment Objectives, Policies and Restrictions--Investment
Restrictions.") At any meeting of shareholders of a Fund, a Shareholder
Servicing Agent may vote any shares of which it is the holder of record and for
which it does not receive voting instructions proportionately in accordance with
the instructions it receives for all other shares of which that Shareholder
Servicing Agent is the holder of record. Shares have no preference, pre-emptive,
conversion or similar rights. Shares, when issued, are fully paid and
non-assessable, except as set forth below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by a vote of the holders of
two-thirds of the Trust's outstanding shares, voting as a single class, or of
the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's (or the
affected series) outstanding shares would be sufficient. The Trust or any series
of the Trust, as the case may be, may be terminated (i) by a vote of a majority
of the outstanding voting securities of the Trust or the affected series or (ii)
by the Trustees by written notice to the shareholders of the Trust or the
affected series. If not so terminated, the Trust will continue indefinitely.
Share certificates will not be issued.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust of the Trust
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Trust property for any shareholder held personally liable for the obligations
of the Trust. The Declaration of Trust of the Trust also provides that the Trust
may maintain appropriate insurance (e.g., fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust of each Trust protects a Trustee
against any liability to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
8. CERTAIN ADDITIONAL TAX MATTERS
Each Fund has elected to be treated, and intends to qualify each year, as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements as to the nature of the Fund's gross
income, the amount of Fund distributions (as a percentage of both the Fund's
income and its tax-exempt income), and the composition of the Fund's portfolio
assets. Provided all such requirements are met and all of a Fund's net
investment income and realized capital gains are distributed to shareholders in
accordance with the timing requirements imposed by the Code, no federal income
or excise taxes generally will be required to be paid by the Fund. If a Fund
should fail to qualify as a "regulated investment company" for any year, the
Fund would incur a regular corporate federal income tax upon its taxable income
and Fund distributions would generally be taxable as ordinary dividend income to
shareholders.
The portion of each Fund's distributions of net investment income that is
attributable to interest from tax-exempt securities will be designated by the
Fund as an "exempt-interest dividend" under the Code and will generally be
exempt from federal income tax in the hands of shareholders so long as at least
50% of the total value of the Fund's assets consists of tax-exempt securities at
the close of each quarter of the Fund's taxable year. Distributions of
tax-exempt interest earned from certain securities may, however, be treated as
an item of tax preference for shareholders under the federal alternative minimum
tax, and all exempt-interest dividends may increase a corporate shareholder's
alternative minimum tax. Unless a Fund provides shareholders with actual monthly
percentage breakdowns, the percentage of income designated as tax-exempt will be
applied uniformly to all distributions by the Fund of net investment income made
during each fiscal year of the Fund and may differ from the percentage of
distributions consisting of tax-exempt interest in any particular month.
Shareholders are required to report exempt-interest dividends received from each
Fund on their federal income tax returns.
Shareholders of a Fund will generally have to pay federal income taxes on
the balance of each Fund's distributions of net investment income and on any
distributions from net short-term capital gains, whether the distributions are
made in cash or in additional shares. Distributions of net capital gains (i.e.,
the excess of net long-term capital gains over net short-term capital losses),
whether made in cash or in additional shares, are taxable to shareholders as
long-term capital gains without regard to the length of time the shareholders
have held their shares. Such capital gains may be taxable to shareholders that
are individuals, estates, or trusts at maximum rates of 20%, 25% or 28%,
depending upon the source of the gains.
Any Fund dividend that is declared in October, November or December of any
calendar year, that is payable to shareholders of record in such a month, and
that is paid the following January will be treated as if received by the
shareholders on December 31 of the year in which the dividend is declared. Any
Fund distribution will have the effect of reducing the per share net asset value
of shares in the Fund by the amount of the distribution. Shareholders purchasing
shares shortly before the record date of any distribution other than an
exempt-interest dividend may thus pay the full price for the shares and then
effectively receive a portion of the purchase price back as a taxable
distribution.
In general, any gain or loss realized upon a taxable disposition of shares
of a Fund by a shareholder that holds such shares as a capital asset will be
treated as long-term capital gain or loss if the shares have been held for more
than twelve months and otherwise as a short-term capital gain or loss; a
long-term capital gain realized by an individual shareholder will be eligible
for reduced tax rates if the shares were held for more than 18 months. However,
any loss realized upon a redemption of shares in a Fund held for six months or
less will be disallowed to the extent of any exempt-interest dividends received
with respect to those shares. If not disallowed, any such loss will be treated
as a long-term capital loss to the extent of any distributions of net capital
gain made with respect to those shares. Any loss realized upon a disposition of
shares may also be disallowed under rules relating to wash sales.
Any investment in certain securities purchased at a market discount will
cause the applicable Fund to recognize income prior to the receipt of cash
payments with respect to those securities. In order to distribute this income
and avoid a tax, the Trust may be required to liquidate securities of a Fund
that it might otherwise have continued to hold and thereby potentially cause the
Fund to realize additional taxable gain or loss.
Each Fund's transactions in options, Futures Contracts and forward
contracts, if any, will be subject to special tax rules that may affect the
amount, timing, and character of Fund income and distributions to holders of
beneficial interests. For example, certain positions held by the Trust on behalf
of a Fund on the last business day of each taxable year will be marked to market
(i.e., treated as if closed out) on that day, and any gain or loss associated
with the positions will be treated as 60% long-term and 40% short-term capital
gain or loss. Certain positions held by the Trust on behalf of a Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute straddles, and may be subject to special tax rules that
would cause deferral of Fund losses, adjustments in the holding periods of
securities held by the Trust on behalf of the Fund and conversion of short-term
into long-term capital losses. Certain tax elections exist for straddles which
may alter the effects of these rules. The Trust will limit its investment
activities in options, Futures Contracts and forward contracts on behalf of the
Funds to the extent necessary to meet the requirements of Subchapter M of the
Code.
The Fund will withhold tax payments at the rate of 30% (or any lower rate
permitted under an applicable treaty) on taxable dividends and other payments
subject to withholding taxes that are made to persons who are not citizens or
residents of the United States.
The account application asks each new shareholder to certify that the
shareholder's Social Security or taxpayer identification number is correct and
that the shareholder is not subject to 31% backup withholding for failing to
report income to the IRS. If a shareholder fails to provide this information, or
otherwise violates IRS regulations, the Fund may be required to withhold tax at
the rate of 31% on certain distributions and redemption proceeds paid to that
shareholder.
9. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Deloitte & Touche LLP are the independent accountants for the Funds,
providing audit services and assistance and consultation with respect to the
preparation of filings with the SEC.
The audited financial statements of the New York Fund (Portfolio of
Investments at December 31, 1997, Statement of Assets and Liabilities at
December 31, 1997, Statement of Operations for the year ended December 31, 1997,
Statement of Changes in Net Assets for the years ended December 31, 1997 and
1996, the Financial Highlights for each of the years in the four-year period
ended December 31, 1997, the four months ended December 31, 1993, and for the
year ended August 31, 1993, Notes to Financial Statements and Independent
Auditors' Report), each of which is included in the Annual Report to
Shareholders of the New York Fund, are incorporated by reference into this
Statement of Additional Information and have been so incorporated in reliance
upon the report of Deloitte & Touche LLP, independent accountants, on behalf of
the New York Fund.
The audited financial statements of the National Fund (Portfolio of
Investments at December 31, 1997, Statement of Assets and Liabilities at
December 31, 1997, Statement of Operations for the year ended December 31, 1997,
Statement of Changes in Net Assets for the years ended December 31, 1997 and
1996, Financial Highlights for each of the years in the two-year period ended
December 31, 1997, and for the period August 17, 1995 (commencement of
operations) to December 31, 1995, Notes to Financial Statements and Independent
Auditors' Report), each of which is included in the Annual Report to
Shareholders of the National Fund, are incorporated by reference into this
Statement of Additional Information and have been so incorporated in reliance
upon the report of Deloitte & Touche LLP, independent accountants, on behalf of
the National Fund.
Copies of the Annual Reports for each Fund accompany this Statement of
Additional Information.
<PAGE>
APPENDIX A
DESCRIPTION OF MUNICIPAL OBLIGATIONS
Municipal Obligations include bonds, notes and commercial paper issued by or
on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from federal income taxes
(without regard to whether the interest thereon is also exempt from the personal
income taxes of any state). Municipal Obligation bonds are issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligation bonds may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses, and
obtaining funds to loan to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide privately-operated
housing facilities, industrial facilities, sports facilities, convention or
trade show facilities, airport, mass transit, port or parking facilities, air or
water pollution control facilities, hazardous waste treatment or disposal
facilities, and certain local facilities for water supply, gas, electricity or
sewage or solid waste disposal. Such obligations are included within the term
Municipal Obligations if the interest paid thereon qualifies as exempt from
federal income tax. Other types of industrial development bonds, the proceeds of
which are used for the construction, equipment, repair or improvement of
privately operated industrial or commercial facilities, may constitute Municipal
Obligations, although the current federal tax laws place substantial limitations
on the size of such issues.
The two principal classifications of Municipal Obligation bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its good faith, credit and taxing power for the payment of
principal and interest. The payment of the principal of and interest on such
bonds may be dependent upon an appropriation by the issuer's legislative body.
The characteristics and enforcement of general obligation bonds vary according
to the law applicable to the particular issuer. Revenue bonds are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other specific revenue
source. Industrial development bonds which are Municipal Obligations are in most
cases revenue bonds and do not generally constitute the pledge of the credit of
the issuer of such bonds. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications, depending on numerous factors.
Municipal Obligation notes generally are used to provide for short-term
capital needs and generally have maturities of one year or less. Municipal
Obligation notes include:
1. TAX ANTICIPATION NOTES. Tax Anticipation Notes are issued to finance
operational needs of municipalities. Generally, they are issued in anticipation
of the receipt of various tax revenues, such as property, income, sales, use and
business taxes.
2. REVENUE ANTICIPATION NOTES. Revenue Anticipation Notes are issued in
expectation of receipt of dedicated revenues, such as state aid or federal
revenues available under federal revenue sharing programs.
3. TAX AND REVENUE ANTICIPATION NOTES. Tax and Revenue Anticipation Notes are
issued by a state or municipality to fund its day-to-day operations and certain
local assistance payments to its municipalities and school districts. Such Notes
are issued in anticipation of the receipt of various taxes and revenues, such as
personal income taxes, business taxes and user taxes and fees.
4. BOND ANTICIPATION NOTES. Bond Anticipation Notes are issued to provide
interim financing until long-term bond financing can be arranged. Long-term
bonds or renewal Bond Anticipation Notes provide the money for the repayment of
the Notes.
Issues of commercial paper typically represent short-term, unsecured,
negotiable promissory notes. These obligations are issued by agencies of state
and local governments to finance seasonal working capital needs of
municipalities or to provide interim construction financing and are paid from
general revenues of municipalities or are refinanced with long-term debt. In
most cases, Municipal Obligation commercial paper is backed by letters of
credit, lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions.
The yields on Municipal Obligations are dependent on a variety of factors,
including general market conditions, supply and demand and general conditions of
the Municipal Obligation market, size of a particular offering, the maturity of
the obligation and rating (if any) of the issue. The ratings of Moody's
Investors Service, Inc., Standard & Poor's Ratings Group and FITCH IBCA, Inc.
represent their opinions as to the quality of various Municipal Obligations. It
should be emphasized, however, that ratings are not absolute standards of
quality. Consequently, Municipal Obligations with the same maturity, coupon and
rating may have different yields while Municipal Obligations of the same
maturity and coupon with different ratings may have the same yield.
<PAGE>
APPENDIX B
DESCRIPTION OF SECURITIES RATINGS
The ratings of Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Group ("S&P") and FITCH IBCA, Inc. ("Fitch") represent their
opinions as to the quality of various debt securities. It should be emphasized,
however, that ratings are not absolute standards of quality. Consequently, debt
securities with the same maturity, coupon and rating may have different yields
while debt securities of the same maturity and coupon with different ratings may
have the same yield. The ratings below are as described by the rating agencies.
Ratings are generally given to securities at the time of issuance. While the
rating agencies may from time to time revise such ratings, they undertake no
obligation to do so.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
FOUR HIGHEST BOND RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and generally are referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that general rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
FOUR HIGHEST BOND RATINGS
AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated AA differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Plus (+) or Minus (-): The ratings from AA to BBB may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
DESCRIPTION OF FITCH IBCA, INC.'S
FOUR HIGHEST INTERNATIONAL LONG-TERM CREDIT RATINGS
When assigning ratings, Fitch considers the historical and prospective
financial condition, quality of management, and the operating performance of the
issuer and of any guarantor, any special features of a specific issue or
guarantee, the issue's relationship to other obligations of the issuer, as well
as developments in the economic and political environment that might affect the
issuer's financial strength and credit quality.
Variable rate demand obligations and other securities which contain a demand
feature will have a dual rating, such as "AAA/F1+." The first rating denotes
long-term ability to make principal and interest payments. The second rating
denotes ability to meet a demand feature in full and on time.
AAA Highest credit quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.
AA Very high credit quality. "AA" ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.
A High credit quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB Good credit quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
"+" OR "-" may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the "AAA" long-term category.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES
Moody's ratings for state and municipal short-term obligations are
designated Moody's Investment Grade ("MIG"). Issues or the features associated
with MIG or VMIG ratings are identified by date of issue, date of maturity or
maturities or rating expiration date and description to distinguish each rating
from other ratings. Each rating designation is unique with no implication as to
any other similar issue of the same obligor. MIG ratings terminate at the
retirement of the obligation while VMIG rating expiration will be a function of
each issue's specific structural or credit features.
MIG 1/VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
TWO HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES
An S&P note rating reflects the liquidity factors and market-access risks
unique to notes. Notes maturing in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment:
- Amortization schedule -- the larger the final maturity relative to other
maturities, the more likely it will be treated as a note.
- Source of payment -- the more the issue depends on the market for its
refinancing, the more likely it will be treated as a note.
Note rating symbols are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined to possess
very strong characteristics are given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest with some vulnerability
to adverse financial and economic changes over the term of the notes.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
RATINGS OF TAX-EXEMPT DEMAND BONDS
S&P assigns "dual" ratings to all debt issues that have a put option or
demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for
example, "AAA/A-1+"). With short-term demand debt, note rating symbols are used
with the commercial paper rating symbols (for example, "SP-1+ /A-1+").
DESCRIPTION OF FITCH IBCA, INC.'S
TWO HIGHEST INTERNATIONAL SHORT-TERM CREDIT RATINGS
A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to meet financial commitments
in a timely manner.
F-1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.
F-2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations. These obligations are an original
maturity not exceeding one year, unless explicitly noted.
Issuers rated PRIME-1 (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: (1) leading
market positions in well-established industries; (2) high rates of return on
funds employed; (3) conservative capitalization structure with moderate reliance
on debt and ample asset protection; (4) broad margins in earnings coverage of
fixed financial charges and high internal cash generation; and (5)
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Issuers rated PRIME-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S
TWO HIGHEST COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
A-1 A short-term obligation rated A-1 is rated in the highest category by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
<PAGE>
APPENDIX C
ADDITIONAL INFORMATION CONCERNING
NEW YORK MUNICIPAL OBLIGATIONS
The following information is a summary of special factors affecting investments
in New York Municipal Obligations. The sources of payment for such obligations
and the marketability thereof may be affected by financial or other difficulties
experienced by New York State (the "State") and certain of its municipalities
and public authorities. This information does not purport to be a complete
description and is based on information from official statements, including
preliminary official statements, relating to securities offerings of New York
issuers. CitiFunds New York Tax Free Income Portfolio is not responsible for the
accuracy or timeliness of this information.
NEW YORK STATE
The factors affecting the State's financial condition are complex and the
following description constitutes only a summary.
CURRENT ECONOMIC OUTLOOK
At the national level, although the current projection is for a faster
annual growth rate for 1998 as a whole and slower annual growth for 1999 than
expected in the earlier forecast, growth in both years is still expected to be
substantially slower than it was during 1997. The revised forecast projects real
Gross Domestic Product ("GDP") growth of 2.6 percent in 1998, which is more than
a full percentage point lower than the estimated 1997 growth rate. In 1999, real
GDP growth is expected to fall even further to 2.0 percent. The growth of
nominal GDP is projected to decline from 5.8 percent in 1997 to 4.8 percent in
1998 and 4.3 percent in 1999. The inflation rate is expected to drop to 2.2
percent in 1998 before rising to 2.5 percent in 1999. The annual rate of job
growth is expected to be 2.3 percent in 1998, equaling the strong growth rate
experienced in 1997. In 1999, however, employment growth is forecast to slow
markedly to 1.3 percent. Growth in personal income and wages is expected to slow
in 1998 and again in 1999.
At the State level, moderate growth is projected to continue in 1998 and
1999 for employment, wages, and personal income, although the growth rates will
lessen gradually during the course of the two years. Personal income is
estimated to grow by 5.4 percent in 1997, fueled in part by a continued large
increase in financial sector bonus payments, and is projected to grow 4.7
percent in 1998 and 4.4 percent in 1999. Increases in bonus payments at year-end
1998 are projected to be modest, a substantial change from the rate of increase
of the last few years. Overall employment growth is expected to continue at a
modest rate, reflecting the slowing growth in the national economy, continued
spending restraint in government, and restructuring in the health care, social
service, and banking sectors.
1997-98 FISCAL YEAR
The adopted 1997-98 budget projects an increase in General Fund
disbursements of $1.7 billion or 5.2 percent over 1996-97 levels. The average
annual growth rate over the last three fiscal years is approximately 1.2
percent. State Funds disbursements (excluding federal grants) are projected to
increase by 5.4 percent from the 1996-97 fiscal year. All Governmental Funds
projected disbursements increase by 7.0 percent over the 1996-97 fiscal year.
The 1997-98 State Financial Plan is projected to be balanced on a cash
basis. The Financial Plan projections include a reserve for future needs of $530
million. As compared to the Governor's Executive Budget as amended in February
1997, the State's adopted budget for 1997-98 increases General Fund spending by
$1.7 billion, primarily from increases for local assistance ($1.3 billion).
Resources used to fund these additional expenditures include increased revenues
projected for the 1997-98 fiscal year, increased resources produced in the
1996-97 fiscal year that will be utilized in 1997-98, reestimates of social
service, fringe benefit and other spending, and certain non-recurring resources.
Total non-recurring resources included in the 1997-98 Financial Plan are
projected by the State Division of the Budget ("DOB") to be $270 million, or 0.7
percent of total General Fund receipts.
The 1997-98 adopted budget includes multi-year tax reductions, including a
State funded property and local income tax reduction program, estate tax relief,
utility gross receipts tax reductions, permanent reductions in the State sales
tax on clothing, and the elimination of assessments on medical providers. These
reductions are intended to reduce the overall level of State and local taxes in
New York and to improve the State's competitive position vis-a-vis other states.
The various elements in the State and local tax and assessment reductions have
little or no impact on the 1997-98 Financial Plan, and do not begin to
materially affect the outyear projections until the State's 1999-2000 fiscal
year. The adopted 1997-98 budget also makes significant investments in
education, and proposes a new $2.4 billion general obligation bond proposal for
school facilities to be submitted to the voters in November 1997.
The 1997-98 Financial Plan also includes: a projected balance of $332
million in the Tax Stabilization Reserve Fund ("TSRF"); and a projected $65
million balance in the Contingency Reserve Fund ("CRF").
1998-99 FISCAL YEAR (EXECUTIVE BUDGET FORECAST)
The Governor presented his 1998-99 Executive Budget to the Legislature on
January 20, 1998. The Executive Budget contains financial projections for the
State's 1997-98 through 2000-01 fiscal years, detailed estimates of receipts and
a proposed Capital Program and Financing Plan for the 1997-98 through 2002-03
fiscal years. It is expected that the Governor will prepare amendments to his
Executive Budget as permitted under law and that these amendments will be
reflected in a revised Financial Plan to be released on or before February 19,
1998. There can be no assurance that the Legislature will enact into law the
Executive Budget as proposed by the Governor, or that the State's adopted budget
projections will not differ materially and adversely from the projections set
forth herein.
The 1998-99 Financial Plan is projected to be balanced on a cash basis in
the General Fund. Total General Fund receipts, including transfers from other
funds, are projected to be $36.22 billion, an increase of $1.02 billion over
projected receipts in the current fiscal year. Total General Fund disbursements,
including transfers to other funds, are projected to be $36.18 billion, an
increase of $1.02 billion over the State Financial Plan, the Executive Budget
proposes year-to-year growth in General Fund spending of 2.89 percent. State
Funds spending (i.e., General Funds plus other dedicated funds, with the
exception of federal aid) is projected to grow by 8.5 percent. Spending from All
Governmental Funds (excluding transfers) is proposed to increase by 7.6 percent
from the prior fiscal year.
Current law and programmatic requirements are primarily responsible for the
year-to-year growth in General Fund spending. These include a current law
increase in school aid ($607 million), cost and enrollment growth in handicapped
education ($91 million) and Medicaid ($212 million), and employee contract
increases of $84 million for corrections programs to cover new capacity demands
and $152 million for mental health programs to finance current law increases and
the expansion of community beds. Other spending growth reflects a requested
increase of $108 million for the Judiciary and $117 million for long-term debt
service. New spending is partially offset by reductions of $453 million for
long-term debt service. New spending is partially offset by reductions of $453
million in capital projects transfers due to the financing of Community
Enhancement Facilities Assistance Program ("CEFAP") from resources available in
1997-98, $37 million in welfare assistance savings, $36 million from lower
spending in General State charges, and $68 million in welfare assistance
savings, $36 million from lower spending in General State charges, and $68
million in lower transfers primarily due to the elimination of the Lottery
transfer made in 1997-98.
The 1998-99 Financial Plan projects that the State will end 1998-99 with a
closing balance in the General Fund of $500 million, which reflects $400 million
in the TSRF and $100 million in the CRF, following an anticipated deposit of $35
million in the latter fund during the year.
1996-97 FISCAL YEAR
The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a
cash basis, with a General Fund cash surplus as reported by DOB of approximately
$1.4 billion. The cash surplus was derived primarily from higher-than-expected
revenues and lower-than-expected spending for social services programs. The
Governor in his Executive Budget applied $1.05 billion of the cash surplus
amount to finance the 1997-98 Financial Plan, and the additional $373 million is
available for use in financing the 1997-98 Financial Plan when enacted by the
State Legislature.
The General Fund closing fund balance was $433 million. Of that amount, $317
million was in the TSRF, after a required deposit of $15 million and an
additional deposit of $65 million in 1996-97. The TSRF can be used in the event
of any future General Fund deficit, as provided under the State Constitution and
State Finance Law. In addition, $41 million remains on deposit in the CRF. This
fund assists the State in financing any extraordinary litigation costs during
the fiscal year. The remaining $75 million reflects amounts on deposit in the
Community Projects Fund. This fund was created to fund certain legislative
initiatives. The General Fund closing fund balance does not include $1.86
billion in the tax refund reserve account, of which $521 million was made
available as a result of the Local Government Assistance Corporation ("LGAC")
financing program and was required to be on deposit as of March 31, 1997.
General Fund receipts and transfers from other funds for the 1996-97 fiscal
year totaled $33.04 billion, an increase of 0.7 percent from the previous fiscal
year (excluding deposits into the tax refund reserve account). General Fund
disbursements and transfers to other funds totaled $32.90 billion for the
1996-97 fiscal year, an increase of 0.7 percent from the 1995-96 fiscal year.
1995-96 FISCAL YEAR
The State ended its 1995-96 fiscal year on March 31, 1996 with a General
Fund cash surplus as reported by DOB, of $445 million. Of that amount, $65
million was deposited into the TSRF, and $380 million was used to reduce 1996-97
Financial Plan liabilities.
The General Fund closing fund balance was $287 million, an increase of $129
million from 1994-95 levels. The $129 million change in fund balance is
attributable to the $65 million voluntary deposit to the TSRF, a $15 million
required deposit to the TSRF, a $40 million deposit to the CRF, and a $9 million
deposit to the Revenue Accumulation Fund. The closing fund balance included $237
million on deposit in the TSRF. In addition, $41 million was on deposit in the
CRF. The remaining $9 million reflected amounts then on deposit in the Revenue
Accumulation Fund. The General Fund closing balance does not include $678
million in the tax refund reserve account of which $521 million was made
available as a result of the LGAC financing program and was required to be on
deposit as of March 31, 1996.
General Fund receipts and transfers from other funds totaled $32.81 billion,
a decrease of 1.1 percent from 1994-95 levels. General Fund disbursements and
transfers to other funds totaled $32.68 billion for the 1995-96 fiscal year, a
decrease of 2.2 percent from 1994-95 levels.
1994-95 FISCAL YEAR
The State ended its 1994-95 fiscal year with the General Fund in balance.
The $241 million decline in the fund balance reflects the planned use of $264
million from the CRF, partially offset by the required deposit of $23 million to
the TSRF. In addition, $278 million was on deposit in the tax refund reserve
account, $250 million of which was deposited to continue the process of
restructuring the State's cash flow as part of the LGAC program. The closing
fund balance of $158 million reflects $157 million in the TSRF and $1 million in
the CRF.
General Fund receipts and transfers from other funds totaled $33.16 billion,
an increase of 2.9 percent from 1993-94 levels. General Fund disbursements and
transfers to other funds totaled $33.40 billion for the 1994-95 fiscal year, an
increase of 4.7 percent from the previous fiscal year.
Rating Agencies Actions: On February 8, 1993, Fitch assigned its municipal
bond rating of A+ to the State's general obligation bonds. Moody's assigned its
municipal bond rating of A2 on February 10, 1997, and as of August 28, 1997, S&P
assigned its rating of A to the State's general obligation bonds. Each such
rating reflects only the views of the respective rating agency, and an
explanation of the significance of such rating may be obtained from such rating
agency. There is no assurance that such ratings will continue for any given
period of time or that they will not be revised or withdrawn entirely by such
rating agency if, in the judgment of such rating agency, circumstances so
warrant. A downward revision or withdrawal of any such rating may have an
adverse effect on the market price of the State's general obligation bonds.
PUBLIC AUTHORITIES
The fiscal stability of the State is related, in part, to the fiscal
stability of its public authorities, meaning public benefit corporations created
pursuant to State law, other than local authorities. Public authorities are not
subject to the constitutional restrictions on the incurrence of debt which apply
to the State itself and may issue bonds and notes within the amounts, and
restrictions set forth in legislative authorization. The State's access to the
public credit markets could be impaired, and the market price of its outstanding
debt may be materially and adversely affected, if any of its public authorities
were to default on their respective obligations, particularly those using the
financing techniques referred to as State-supported or State-related debt. As of
September 30, 1996, there were 17 public authorities that had outstanding debt
of $100 million or more, and the aggregate outstanding debt, including refunding
bonds, of all State public authorities was $73.4 billion, only a portion of
which constitutes State-supported or State related debt.
There are numerous public authorities with various responsibilities,
including those which finance, construct and/or operate revenue producing public
facilities. Public authority operating expenses and debt service costs are
generally paid by revenues generated by the projects financed or operated, such
as tolls charged for the use of highways, bridges or tunnels, rentals charged
for housing units, and charges for occupancy at medical care facilities.
In addition, State legislation authorizes several financing techniques for
public authorities. Also, there are statutory arrangements providing for State
local assistance payments, otherwise payable to localities, to be made under
certain circumstances to public authorities. Although the State has no
obligation to provide additional assistance to localities whose local assistance
payments have been paid to public authorities under these arrangements if local
assistance payments are so diverted, the affected localities could seek
additional State assistance.
Some authorities also receive moneys from State appropriations to pay for
the operating costs of certain of their programs. As described below, the
Metropolitan Transportation Authority ("MTA") receives the bulk of this money in
order to provide transit and commuter services.
METROPOLITAN TRANSPORTATION AUTHORITY
The MTA oversees the operation of subway and bus lines in New York City by
its affiliates, the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the "TA"). The MTA operates
certain commuter rail and bus services in the New York Metropolitan area through
MTA's subsidiaries, the Long Island Rail Road Company, the Metro- North Commuter
Railroad Company, and the Metropolitan Suburban Bus Authority. In addition, the
Staten Island Rapid Transit Operating Authority, an MTA subsidiary, operates a
rapid transit line on Staten Island. Through its affiliated agency, the
Triborough Bridge and Tunnel Authority (the "TBTA"), the MTA operates certain
intrastate toll bridges and tunnels. Because fare revenues are not sufficient to
finance the mass transit portion of these operations, the MTA has depended, and
will continue to depend on operating support from the State, local governments
and TBTA and, to the extent available, federal operating assistance, including
loans, grants and subsidies. If current revenue projections are not realized
and/or operating expenses exceed current projections, the TA or commuter
railroads may be required to seek additional State assistance, raise fares or
take other actions.
Since 1980, the State has enacted several taxes--including a surcharge on
the profits of banks, insurance corporations and general business corporations
doing business in the 12-county Metropolitan Transportation Region served by the
MTA and a special one-quarter of 1 percent regional sales and use tax-- that
provide revenues for mass transit purposes, including assistance to the MTA.
Since 1987 State law has required that the proceeds of a one-quarter of 1
percent mortgage recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for operating or
capital expenses. In 1993, the State dedicated a portion of certain additional
State petroleum business tax receipts to fund operating or capital assistance to
the MTA. For the 1997-98 State fiscal year, total State assistance to the MTA is
projected to total approximately $1.2 billion, an increase of $76 million over
the 1996-97 fiscal year.
State legislation accompanying the 1996-97 adopted State budget authorized
the MTA, TBTA and TA to issue an aggregate of $6.5 billion in bonds to finance a
portion of the $12.17 billion MTA capital plan for the 1995 through 1999
calendar years (the "1995-99 Capital Program"). In July 1997, the Capital
Program Review Board ("CPRB") approved the 1995-99 Capital Program, which
supercedes the overlapping portion of the MTA's 1992-96 Capital Program. The
1995-99 Capital Program is the fourth capital plan since the Legislature
authorized procedures for the adoption, approval and amendment of MTA capital
programs and is designed to upgrade the performance of the MTA's transportation
systems by investing in new rolling stock, maintaining replacement schedules for
existing assets and bringing the MTA system into a state of good repair. The
1995-99 Capital Program assumes the issuance of an estimated $5.1 billion in
bonds under this $6.5 billion aggregate bonding authority. The remainder of the
plan is projected to be financed through assistance from the State, the federal
government, and the City of New York, and from various other revenues generated
from actions taken by the MTA.
There can be no assurance that all the necessary governmental actions for
future capital programs will be taken, that funding sources currently identified
will not be decreased or eliminated, or that the 1995-99 Capital Program, or
parts thereof, will not be delayed or reduced. Should funding levels fall below
current projections, the MTA would have to revise its 1995-99 Capital Program
accordingly. If the 1995-99 Capital Program is delayed or reduced, ridership and
fare revenues may decline, which could, among other things, impair the MTA's
ability to meet its operating expenses without additional assistance.
LOCALITIES
THE CITY OF NEW YORK
The fiscal health of the State may also be affected by the fiscal health of
New York City ("the City"), which continues to require significant financial
assistance from the State. The City depends on State aid both to enable the City
to balance its budget and to meet its cash requirements. The State could also be
affected by the ability of the City and certain entities issuing debt for the
benefit of the City to market their securities successfully in the public credit
markets. The City has achieved balanced operating results for each of its fiscal
years since 1981 as reported in accordance with the then-applicable GAAP
standards.
FISCAL OVERSIGHT
In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the State
established the Municipal Assistance Corporation for the City of New York ("NYC
MAC") to provide financing assistance to the City; the New York State Financial
Control Board (the "Control Board") to oversee the City's financial affairs; and
the Office of the State Deputy Comptroller for the City of New York ("OSDC") to
assist the Control Board in exercising its powers and responsibilities. A
"Control Period" existed from 1975 to 1986 during which the City was subject to
certain statutorily-prescribed fiscal controls. Although the Control Board
terminated the Control Period in 1986 when certain statutory conditions were met
and suspended certain Control Board powers, upon the occurrence or "substantial
likelihood and imminence" of the occurrence of certain events, including (but
not limited to) a City operating budget deficit of more than $100 million or
impaired access to the public credit markets, the Control Board is required by
law to reimpose a Control Period.
Currently, the City and its Covered Organizations (i.e., those which receive
or may receive moneys from the City directly, indirectly or contingently)
operate under a four-year financial plan (the "Financial Plan") which the City
prepares annually and periodically updates. The City's Financial Plan includes
its capital, revenue and expense projections and outlines proposed gap-closing
programs for years with projected budget gaps. The City's projections set forth
in the Financial Plan are based on various assumptions and contingencies, some
of which are uncertain and may not materialize. Unforeseen developments and
changes in major assumptions could significantly affect the City's ability to
balance its budget as required by State law and to meet its annual cash flow and
financing requirements.
Implementation of the Financial Plan is also dependent upon the ability of
the City and certain entities issuing debt for the benefit of the City to market
their securities successfully. The City issues securities to finance, refinance
and rehabilitate infrastructure and other capital needs, as well as for seasonal
financing needs. In order to help the City to avoid exceeding its State
Constitutional general debt limit, the State created the New York City
Transitional Finance Authority to finance a portion of the City's capital
program. Despite this additional financing mechanism, the City currently
projects that if no action is taken, it will reach its debt limit in City fiscal
year 1999-2000. On June 2, 1997, an action was commenced seeking a declaratory
judgment declaring the legislation establishing the Transitional Finance
Authority to be unconstitutional. If such legislation were voided, projected
contracts for City capital projects would exceed the City's debt limit during
fiscal year 1997-98. Future developments concerning the City or entities issuing
debt for the benefit of the City, and public discussion of such developments, as
well as prevailing market conditions and securities credit ratings, may affect
the ability or cost to sell securities issued by the City or such entities and
may also affect the market for their outstanding securities.
MONITORING AGENCIES
The staffs of the Control Board, OSDC and the City Comptroller issue
periodic reports on the City's Financial Plans which analyze the City's
forecasts of revenues and expenditures, cash flow, and debt service requirements
for, and Financial Plan compliance by, the City and its Covered Organizations.
According to recent staff reports, while economic recovery in New York City has
been slower than in other regions of the country, a surge in Wall Street
profitability resulted in increased tax revenues and generated a substantial
surplus for the City in City fiscal year 1996-97. Although several sectors of
the City's economy have expanded recently, especially tourism and business and
professional services, City tax revenues remain heavily dependent on the
continued profitability of the securities industries and the course of the
national economy. These reports have also indicated that recent City budgets
have been balanced in part through the use of non-recurring resources; that the
City's Financial Plan tends to rely on actions outside its direct control; that
the City has not yet brought its long-term expenditure growth in line with
recurring revenue growth; and that the City is therefore likely to continue to
face substantial gaps between forecast revenues and expenditures in future years
that must be closed with reduced expenditures and/or increased revenues. Copies
of the most recent Control Board, OSDC and City Comptroller, and IBO staff
reports are available by contacting the Control Board at 270 Broadway, 21st
Floor, New York, NY, 10007, Attention: Executive Director; OSDC at 270 Broadway,
23nd Floor, New York, NY 10007, Attention: Deputy Comptroller; the City
Comptroller at Municipal Building, Room 517, One Centre Street, New York, NY
10007, Attention: Deputy Comptroller, Finance; and the IBO at 110 William
Street, 14th Floor, New York, NY 10038, Attention: Director.
OTHER LOCALITIES
Certain localities outside New York City have experienced financial problems
and have requested and received additional State assistance during the last
several State fiscal years The potential impact on the State of any future
requests by localities for additional assistance is not included in the
projections of the State's receipts and disbursements for the State's 1997-98
fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
reestablishment of the Financial Control Board for the City of Yonkers by the
State in 1984. That Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the State to assist Yonkers could result in
increased State expenditures for extraordinary local assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the City
of Troy in 1994. The Supervisory Board's powers were increased in 1995, when
Troy MAC was created to help Troy avoid default on certain obligations. The
legislation creating Troy MAC prohibits the City of Troy from seeking federal
bankruptcy protection while Troy MAC bonds are outstanding. Troy MAC has issued
bonds to effect a restructuring of the City of Troy's obligations.
Eighteen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities aid that was largely continued in 1997. Twenty-eight
municipalities are scheduled to share more than $32 million in targeted
unrestricted aid allocated in the 1997-98 budget. An additional $21 million will
be dispersed among all cities, towns and villages, a 3.97 percent increase in
General Purpose State Aid.
Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1995, the total indebtedness of all localities in
the State other than New York City was approximately $19.0 billion. A small
portion (approximately $102.3 million) of that indebtedness represented
borrowing to finance budgetary deficits and was issued pursuant to State
enabling legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than New York City authorized by State law to issue debt to finance deficits
during the period that such deficit financing is outstanding. Eighteen
localities had outstanding indebtedness for deficit financing at the close of
their fiscal year ending in 1995.
From time to time, federal expenditure reductions could reduce, or in some
cases eliminate, federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities. If
the State, the City or any of the public authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining urban
population, increasing expenditures and other economic trends could adversely
affect localities and require increasing State assistance in the future.
LITIGATION
GENERAL
The legal proceedings noted below involve State finances, and programs and
miscellaneous civil rights, real property, contract and other tort claims in
which the State is a defendant and the potential monetary claims against the
State are substantial, generally in excess of $100 million. These proceedings
could adversely affect the financial condition of the State in the 1997-98
fiscal year or thereafter.
Adverse developments in these proceedings, other proceedings for which there
are unanticipated, unfavorable and material judgments, or the initiation of new
proceedings could affect the ability of the State to maintain a balanced 1997-98
Financial Plan. The State believes that the 1997-98 Financial Plan includes
sufficient reserves to offset the costs associated with the payment of judgments
that may be required during the 1997-98 fiscal year. There can be no assurance,
however, that adverse decisions in legal proceedings against the State would not
exceed the amount of all potential 1997-98 Financial Plan resources available
for the payment of judgments and, therefore, could affect the ability of the
State to maintain a balanced 1997-98 Financial Plan. In its General Purpose
Financial Statements, the State reports its estimated liability for awarded and
anticipated unfavorable judgments. The General Purpose Financial Statements for
the 1996-97 fiscal year report estimated probable awarded and anticipated
unfavorable judgments of $364 million, of which $134 million is expected to be
paid during the 1997-98 fiscal year.
Adverse developments in the proceedings described below, other proceedings
for which there are unanticipated, unfavorable and material judgments, or the
initiation of new proceedings could affect the ability of the State to maintain
a balanced 1997-98 Financial Plan. The State believes that the proposed 1997-98
Financial Plan includes sufficient reserves to offset the costs associated with
the payment of judgments that may be required during the 1997-98 fiscal year.
These reserves include (but are not limited to) projected fund balances in the
General Fund. In addition, any amounts ultimately required to be paid by the
State may be subject to settlement or may be paid over a multi-year period.
There can be no assurance, however, that adverse decisions in legal proceedings
against the State would not exceed the amount of all potential 1997-98 Financial
Plan resources available for the payment of judgments, and could therefore
affect the ability of the State to maintain a balanced 1997-98 Financial Plan.
STATE FINANCE POLICIES
INSURANCE LAW
Proceedings have been brought by two groups of petitioners challenging
regulations promulgated by the Superintendent of Insurance that established
excess medical malpractice premium rates for the 1986-87 through 1995-96 and
1996-97 fiscal years, respectively (New York State Health Maintenance
Organization Conference, Inc., et al. v. Muhl et al. ["HMO"], and New York State
Conference of Blue Cross and Blue Shield Plans, et al. v. Muhl, et al. ["Blue
Cross 'I' and 'II' "], Supreme Court, Albany County). By Order filed January 22,
1997, the Court in Blue Cross I permitted the plaintiffs in HMO to intervene,
and dismissed the challenges to the rates for the period prior to 1995-96. By
decision dated July 24, 1997, the Court in Blue Cross I held that the
determination made by the Superintendent in establishing the 1995-96 rate was
arbitrary and capricious and directed that premiums paid pursuant to that
determination should be returned to the payors. The State has appealed this
decision.
OFFICE OF MENTAL/HEALTH PATIENT-CARE COSTS
Two actions, Balzi, et al. v. Surles, et al., commenced in November 1985 in
the United States District Court for the Southern District of New York, and
Brogan, et al. v. Sullivan, et al., commenced in May 1990 in the United States
District Court for the Western District of New York, now consolidated, challenge
the practice of using patients' Social Security benefits for the costs of care
of patients of State Office of Mental Health facilities. The cases have been
settled by a stipulation and order dated January 7, 1998.
STATE PROGRAMS
Several cases challenge provisions of Chapter 81 of the Laws of 1995 which
alter the nursing home Medicaid reimbursement methodology on and after April
1, 1995. Included are New York State Health Facilities Association, et al. v.
DeBuono, et al., St. Luke's Nursing Center, et al. v. DeBuono, et al., New
York Association of Homes and Services for the Aging v. DeBuono et al. (three
cases), Healthcare Association of New York State v. DeBuono and Bayberry
Nursing Home et al. v. Pataki, et al. Plaintiffs allege that the changes in
methodology have been adopted in violation of procedural and substantive
requirements of State and federal law.
In a consolidated action commenced in 1992, Medicaid recipients and home
health care providers and organizations challenge promulgation by the State
Department of Social Services ("DSS") in June 1992 of a home assessment resource
review instrument ("HARRI"), which is to be used by DSS to determine eligibility
for and the nature of home care services for Medicaid recipients, and challenge
the policy of DSS of limiting reimbursable hours of service until a patient is
assessed using the HARRI (Dowd, et al. v. Bane, Supreme Court, New York County).
In several cases, plaintiffs seek retroactive claims for reimbursement for
services provided to Medicaid recipients who were also eligible for Medicare
during the period January 1, 1987 to June 2, 1992. Included are Matter of New
York State Radiological Society v. Wing, Appel v. Wing, E.F.S. Medical
Supplies v. Dowling, Kellogg v. Wing, Lifshitz v. Wing, New York State
Podiatric Medical Association v. Wing and New York State Psychiatric
Association v. Wing. These cases were commenced after the State's
reimbursement methodology was held invalid in New York City Health and
Hospital Corp. v. Perales. The State contends that these claims are time-
barred.
Several cases, including Port Jefferson Health Care Facility, et al. v. Wing
(Supreme Court, Suffolk County), challenge the constitutionality of Public
Health Law (S)2807-d, which imposes a gross receipts tax on the gross receipts
hospitals and residential health care facilities receive from all patient care
services. Plaintiffs allege that the tax assessments were not uniformly applied,
in violation of federal regulations. In a decision dated June 30, 1997, the
Court held that the 1.2 percent and 3.8 percent assessments on gross receipts
imposed pursuant to Public Health Law (S)(S) 2807-d(2)(b) (ii) and
2807-d(2)(b)(iii), respectively, are unconstitutional. An order entered August
27, 1997 enforced the terms of the decision. The State has appealed that order.
SHELTER ALLOWANCE
In an action commenced in March 1987 against State and New York City
officials (Jiggetts, et al. v. Bane, et al., Supreme Court, New York County),
plaintiffs allege that the shelter allowance granted to recipients of public
assistance is not adequate for proper housing. In a decision dated April 16,
1997, the Court held that the shelter allowance promulgated by the Legislature
and enforced through Department of Social Services regulations is not reasonably
related to the cost of rental housing in New York City and results in
homelessness to families in New York City. A judgment was entered on July 25,
1997, directing, inter alia, that the State (i) submit a proposed schedule of
shelter allowances (for the Aid to Dependent Children program and any successor
program) that bears a reasonable relation to the cost of housing in New York
City; and (ii) compel the New York City Department of Social Services to pay
plaintiffs a monthly shelter allowance in the full amount of their contract
rents, provided they continue to meet the eligibility requirements for public
assistance, until such time as a lawful shelter allowance is implemented, and
provide interim relief to other eligible recipients of Aid to Dependent Children
under the interim relief system established in this case. The State has sought
relief from each and every provision of this judgment except that portion
directing continued provision of interim relief.
TAX LAW
In Matter of the Petition of Consolidated Rail Corporation v. Tax Appeals
Tribunal (Appellate Division, Third Department, commenced December 22, 1995),
petitioner rail freight corporation, that purchases diesel motor fuel out of
State and imports the fuel into the State for use, distribution, storage or sale
in the State, contends that the assessment of the petroleum business tax
pursuant to Tax Law (S)301-a to such fuel purchases violated the Commerce Clause
of the United States Constitution. Petitioner contended that the application of
Section 301-a to the interstate transaction, but not to purchasers who purchase
fuel within the State for use, distribution, storage or sale within the State
discriminates against interstate commerce. In a decision dated July 17, 1997,
the Appellate Division, Third Department, dismissed the petition. Petitioner
appealed to the Court of Appeals. On December 4, 1997, the Court of Appeals
dismissed the appeal, sua sponte, upon the ground that no substantial
Constitutional question was directly involved.
In New York Association of Convenience Stores et al. v. Urbach, et al.,
petitioners New York Association of Convenience Stores, National Association of
Convenience Stores, M.W.S. Enterprises, Inc. and Sugarcreek Stores, Inc. seek to
compel respondents, the Commissioner of Taxation and Finance and the Department
of Taxation and Finance, to enforce sales and excise taxes pursuant to Tax Law
Articles 12-A, 20 and 28 on tobacco products and motor fuel sold to non-Indian
consumers on Indian reservations. In orders dated August 13, 1996 and August 24,
1996, the Supreme Court, Albany County, ordered, inter alia, that there be equal
implementation and enforcement of said taxes for sales to non-Indian consumers
on and off Indian reservations, and further ordered that, if respondents failed
to comply within 120 days, no tobacco products or motor fuel could be introduced
onto Indian reservations other than for Indian consumption or, alternatively,
the collection and enforcement of such taxes would be suspended statewide.
Respondents appealed to the Appellate Division, Third Department and invoked
CPLR 5519(a)(1), which provides that the taking of the appeal stayed all
proceedings to enforce the orders pending the appeal. Petitioner's motion to
vacate the stay was denied. In a decision entered May 8, 1997, the Third
Department modified the orders by deleting the portion thereof that provided for
the statewide suspension of the enforcement and collection of the sales and
excise taxes on motor fuel and tobacco products. The Third Department held,
inter alia, that petitioners had not sought such relief in their petition and
that it was an error for the Supreme Court to have awarded such undemanded
relief without adequate notice of its intent to do so. On May 22, 1997,
respondents appealed to the Court of Appeals on other grounds, and again invoked
the statutory stay. On October 23, 1997, the Court of Appeals granted
petitioners' motion for leave to cross appeal from the portion of the Third
Department's decision that deleted the statewide suspension of the enforcement
and collection of the sales and excise taxes on motor fuel and tobacco.
EDUCATION LAW
In New York State Association of Counties v. Pataki, et al., commenced May
29, 1996 (Supreme Court, Albany County), plaintiff seeks reimbursement from the
State for certain costs incurred prior to the 1995-96 school year arising out of
the provision of preschool services and programs for children with handicapping
conditions, pursuant to Sections 4410 (10) and (11) of the Education Law.
Chapter 642 of the Laws of 1996 provided that the 1996-97 preschool special
education appropriation would be used first to pay all such prior year costs
approved by the State Education Department as of July 1, 1996. Because the costs
that were the subject of this lawsuit were paid, this case was adjourned on
August 16, 1996.
CLEAN WATER/CLEAN AIR BOND ACT OF 1996
In Robert L. Schulz et al. v. The New York State Executive et al. (Supreme
Court, Albany County, commenced October 16, 1996), plaintiffs challenge the
enactment of the Clean Water/Clean Air Bond Act of 1996 and its implementing
legislation (1996 Laws of New York, Chapters 412 and 413). Plaintiffs claim,
inter alia, that the Bond Act and its implementing legislation violate
provisions of the State Constitution requiring that such debt be authorized by
law for some single work or purpose distinctly specified therein and forbidding
incorporation of other statutes by reference.
CIVIL RIGHTS CLAIMS
In an action commenced in 1980 (United States, et al. v. Yonkers Board of
Education, et al.), the United States District Court for the Southern District
of New York found, in 1985, that Yonkers and its public schools were
intentionally segregated. In 1986, the District Court ordered Yonkers to develop
and comply with a remedial educational improvement plan ("EIPI"). On January 19,
1989, the District Court granted motions by Yonkers and the NAACP to add the
State Education Department, the Yonkers Board of Education, and the State Urban
Development Corporation as defendants, based on allegations that they had
participated in the perpetuation of the segregated school system. On August 30,
1993, the District Court found that vestiges of a dual school system continued
to exist in Yonkers. On March 27, 1995, the District Court made factual findings
regarding the role of the State and other State defendants (the "State") in
connection with the creation and maintenance of the dual school system, but
found no legal basis for imposing liability. On September 3, 1996, the Court of
Appeals, based on the District Court's factual findings, held the State
defendants liable under 42 USC (S) 1983 and the Equal Educational Opportunity
Act, 20 USC (S)(S) 1701, et seq., for the unlawful dual school system, because
the State, inter alia, had taken no action to force the school district to
desegregate despite its actual or constructive knowledge of de jure segregation.
By order dated October 8, 1997, the District Court held that the vestiges of the
prior segregated school system continued to exist and that, based on the State's
conduct in creating and maintaining that system, the State is liable for
eliminating segregation and its vestiges in Yonkers and must find a remedy to
accomplish that goal. Yonkers presented a proposed educational improvement plan
("EIP II") to eradicate these vestiges of segregation. The October 8, 1997 Order
of the District Court ordered that EIP II be implemented and directed that,
within 10 days of the entry of the Order, the State make available to Yonkers
$450,000 to support planning activities to prepare the EIP II budget for 1997-98
and the accompanying capital facilities plan. A final judgment to implement EIP
II was entered on October 14, 1997. The State intends to appeal that judgment.
Additionally, the Court adopted a requirement that the State pay to Yonkers $9
million as its pro rata share of the Funding of EIP I for the 1996-97 school
year. The requirement for State funding of EIP I has not yet been reduced to an
order.
REAL PROPERTY CLAIMS
On March 4, 1985 in Oneida Indian Nation of New York, et al. v. County of
Oneida, the United States Supreme Court affirmed a judgment of the United States
Court of Appeals for the Second Circuit holding that the Oneida Indians have a
common-law right of action against Madison and Oneida Counties for wrongful
possession of 872 acres of land illegally sold to the State in 1795. At the same
time, however, the Court reversed the Second Circuit by holding that a
third-party claim by the counties against the State for indemnification was not
properly before the federal courts. The case was remanded to the District Court
for an assessment of damages, which action is still pending. The counties may
still seek indemnification in the State courts.
Several other actions involving Indian claims to land in upstate New York
are also pending. Included are Cayuga Indian Nation of New York v. Cuomo, et
al., and Canadian St. Regis Band of Mohawk Indians, et al. v. State of New York,
et al., both in the United States District Court for the Northern District of
New York. The Supreme Court's holding in Oneida Indian Nation of New York may
impair or eliminate certain of the State's defenses to these actions but may
enhance others.
CONTRACT AND TORT CLAIMS
In Inter-Power of New York, Inc. v. State of New York, commenced November 16,
1994 in the Court of Claims, plaintiff alleged that by reason of the failure of
the State's Department of Environmental Conservation to provide in a timely
manner accurate and complete data, plaintiff was unable to complete by the
projected completion date a cogeneration facility, and thereby suffered damages.
The parties have agreed to settle this case for $29 million.
<PAGE>
SHAREHOLDER SERVICING AGENTS
FOR CITIBANK RETAIL BANKING AND
BUSINESS AND PROFESSIONAL CUSTOMERS:
Citibank, N.A.
111 Wall Street, New York, NY 10043
(212) 820-2383 or (800) 846-5300
FOR CITIGOLD CUSTOMERS:
Citigold
P.O. Box 5130, New York, NY 10126-5130
Call Your Citigold Executive or, in NY or CT, (800) 285-1701
or for all other states, (800) 285-1707
FOR CITIBANK PRIVATE BANKING CLIENTS:
Citibank, N.A.
The Citibank Private Bank
153 East 53rd Street, New York, NY 10043
Call Your Citibank Private Banking Account Officer,
Investment Specialist or (212) 559-5959
FOR CITIBANK GLOBAL ASSET MANAGEMENT
CLIENTS:
Citibank, N.A.
Citibank Global Asset Management
153 East 53rd Street, New York, NY 10043
(212) 559-7117
FOR CITIBANK NORTH AMERICAN INVESTOR SERVICES CLIENTS:
Citibank, N.A.
Master Trust Accounts
111 Wall Street, New York, NY 10043
Call Your Account Manager or (212) 657-9659
FOR CITICORP INVESTMENT SERVICES CUSTOMERS:
Citicorp Investment Services
One Court Square, Long Island City, NY 11120
Call Your Investment Consultant or (800) 846-5200,
(212) 820-2380 in New York City
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements Included in Part A:
LANDMARK NEW YORK TAX FREE INCOME FUND
Condensed Financial Information - Financial Highlights (for
each of the years in the four-year period ended December 31,
1997, for the four months ended December 31, 1993 and for
each of the years in the seven-year period ended August 31,
1993)
LANDMARK NATIONAL TAX FREE INCOME FUND
Condensed Financial Information - Financial Highlights (for
the years ended December 31, 1997 and 1996 and for the
period from the commencement of operations (August 17, 1995)
to December 31, 1995)
Financial Statements Included in Part B:
LANDMARK NEW YORK TAX FREE INCOME FUND
Portfolio of Investments at December 31, 1997*
Statement of Assets and Liabilities at December 31, 1997*
Statement of Operations for the year ended December 31, 1997*
Statement of Changes in Net Assets for the years ended
December 31, 1996 and 1997*
Financial Highlights for each of the years in the four-year
period ended December 31, 1997, for the four months ended
December 31, 1993 and for each of the years in the two-year
period ended August 31, 1993*
LANDMARK NATIONAL TAX FREE INCOME FUND
Portfolio of Investments at December 31, 1997**
Statement of Assets and Liabilities at December 31, 1997**
Statement of Operations for the year ended December 31, 1997**
Statement of Changes in Net Assets for the years ended December
31, 1996 and 1997**
Financial Highlights for the years ended December 31, 1997 and
1996 and for the period from August 17, 1995 (commencement of
operations) to December 31, 1995**
------------------
* Financial information is included for Landmark New York Tax Free
Income Fund only and is incorporated by reference to the
Registrant's Annual Report to Shareholders of Landmark New York Tax
Free Income Fund for the fiscal year ended December 31, 1997
(Accession Number 0000950156-98-000153).
** Financial information is included for Landmark National Tax Free
Income Fund only and is incorporated by reference to the
Registrant's Annual Report to Shareholders of Landmark National Tax
Free Income Fund for the fiscal year ended December 31, 1997
(Accession Number 0000950156-98-000153).
(b) Exhibits
1(a) Declaration of Trust of Registrant
1(b) Amendments to Registrant's Declaration of
Trust
1(c) Establishment and Designation of Series of
the Registrant
2(a) Amended and Restated By-Laws of Registrant
2(b) Amendments to Amended and Restated By-Laws of
Registrant
5(a) Investment Advisory Agreement between the
Registrant and Citibank, N.A., as adviser to
Landmark New York Tax Free Income Fund
5(b) Investment Advisory Agreement between the
Registrant and Citibank, N.A., as adviser to
Landmark National Tax Free Income Fund
6(a) Amended and Restated Distribution Agreement
between the Registrant and CFBDS, Inc.
(formerly known as The Landmark Funds
Broker-Dealer Services, Inc.) ("CFBDS"), as
distributor, with respect to Class A Shares
of the Funds
6(b) Distribution Agreement between the
Registrant and CFBDS, as distributor, with
respect to Class B Shares of the Funds
8 Custodian Contract between the Registrant and
State Street Bank and Trust Company ("State
Street"), as custodian
9(a) Amended and Restated Administrative Services
Plan of the Registrant
9(b) Administrative Services Agreement between the
Registrant and CFBDS, as administrator
9(c) Sub-Administrative Services Agreement between
Citibank, N.A. and CFBDS
*9(d)(i) Form of Shareholder Servicing Agreement
between the Registrant and Citibank,
N.A., as shareholder servicing agent
*9(d)(ii) Form of Shareholder Servicing Agreement
between the Registrant and a federal savings
bank, as shareholder servicing agent
*9(d)(iii) Form of Shareholder Servicing Agreement
between the Registrant and CFBDS, as
shareholder servicing agent
**9(d)(iv) Form of Shareholder Servicing Agreement
between the Registrant and a national banking
association or subsidiary thereof or state
chartered banking
association, as shareholder servicing agent
9(e) Transfer Agency and Servicing Agreement
between the Registrant and State Street Bank
and Trust Company, as transfer agent
11 Consent of Deloitte & Touche LLP, independent
auditors of the Registrant
15(a) Amended and Restated Distribution Plan of the
Registrant with respect to Class A Shares of
the Funds
15(b) Amended and Restated Distribution Plan of the
Registrant with respect to Class B Shares of
the Funds
*16 Performance Calculations
25 Powers of Attorney for the Registrant
27 Financial Data Schedules
- ---------------------
* Incorporated herein by reference to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A (File No. 33-5819) as filed
with the Securities and Exchange Commission on October 26, 1994.
** Incorporated herein by reference to Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form N-1A (File No. 33-5819) as filed
with the Securities and Exchange Commission on April 29, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
<PAGE>
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
-------------- ------------------------
Shares of Beneficial Interest As of February 2, 1998
(without par value)
Landmark New York Tax Free Income Fund
Class A 7
Class B 0
Landmark National Tax Free Income Fund
Class A 7
Class B 0
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's
Declaration of Trust, filed as an Exhibit to Post-Effective Amendment No. 8 to
its Registration Statement on Form N-1A; (b) Section 4 of the Distribution
Agreement between the Registrant and CFBDS, filed as an Exhibit to
Post-Effective Amendment No. 12; and (c) the undertaking of the Registrant
regarding indemnification set forth in its Registration Statement on Form N-1A.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range
of banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, a
registered bank holding company. Citibank also serves as investment adviser to
the following registered investment companies (or series thereof): Asset
Allocation Portfolios (Large Cap Value Portfolio, Small Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio, Intermediate Income Portfolio
and Short-Term Portfolio), The Premium Portfolios (Growth & Income Portfolio,
Balanced Portfolio, Large Cap Growth Portfolio, Government Income Portfolio,
International Equity Portfolio, Emerging Asian Markets Equity Portfolio and
Small Cap Growth Portfolio), Tax Free Reserves Portfolio, U.S. Treasury Reserves
Portfolio, Cash Reserves Portfolio, CitiFundsSM Multi-State Tax Free Trust
(CitiFundsSM New York Tax Free Reserves, CitiFundsSM Connecticut Tax Free
Reserves and CitiFundsSM California Tax Free Reserves), Landmark Tax Free Income
Funds (Landmark National Tax Free Income Fund and Landmark New York Tax Free
Income Fund), CitiFundsSM Institutional Trust (CitiFundsSM Institutional Cash
Reserves) and Variable Annuity Portfolios (CitiSelect(R) VIP Folio 200,
CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP
Folio 500 and Landmark Small Cap Equity VIP Fund). Citibank and its affiliates
manage assets in excess of $88 billion worldwide. The principal place of
business of Citibank is located at 399 Park Avenue, New York, New York 10043.
John S. Reed is the Chairman of the Board and a Director of Citibank.
The following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins and William R. Rhodes. Other Directors of Citibank are D. Wayne
Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.; John M.
Deutch, Institute Professor, Massachusetts Institute of Technology; Reuben Mark,
Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard D.
Parsons, President, Time Warner, Inc.; Rozanne L. Ridgway, Former Assistant
Secretary of State for Europe and Canada; Robert B. Shapiro, Chairman, President
and Chief Executive Officer, Monsanto Company; Frank A. Shrontz, Chairman
Emeritus, The Boeing Company; and Franklin A. Thomas, former President, The Ford
Foundation.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Retired Chairman and Chief Executive Officer and
Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical Technologies, Inc.
Director, Cummins Engine Company, Inc.
Director, Schlumberger, Ltd.
Reuben Mark Director, Chairman and Chief Executive Officer
Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage Association
Director, Philip Morris Companies Incorporated
Member, Board of Representatives, Time Warner
Entertainment Company, L.P.
Director and President, Time Warner, Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding
Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
Robert B. Shapiro Director, Chairman and Chief Executive
Officer, Monsanto Company
Director, Silicon Graphics
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director and Chairman Emeritus, Boeing Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, PepsiCo, Inc.
Item 29. Principal Underwriters.
(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFundsSM International Growth & Income Portfolio, Landmark International
Equity Fund, Landmark Emerging Asian Markets Equity Fund, CitiFundsSM U.S.
Treasury Reserves, CitiFundsSM Cash Reserves, CitiFundsSM Premium U.S. Treasury
Reserves, CitiFundsSM Premium Liquid Reserves, CitiFundsSM Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid Reserves, CitiFundsSM
Institutional Cash Reserves, CitiFundsSM Tax Free Reserves, CitiFundsSM
Institutional Tax Free Reserves, CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves, CitiFundsSM New York Tax Free
Reserves, Landmark Intermediate Income Fund, Landmark U.S. Government Income
Fund, Landmark Balanced Fund, CitiFundsSM Small Cap Value Portfolio, CitiFundsSM
Growth & Income Portfolio, Landmark Equity Fund, Landmark Small Cap Equity Fund,
CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP
Folio 400, CitiSelect(R) VIP Folio 500, Landmark Small Cap Equity VIP Fund,
CitiSelect(R) Folio 200, CitiSelect(R) Folio 300, CitiSelect(R) Folio 400, and
CitiSelect(R) Folio 500. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Foreign Bond
Portfolio, Intermediate Income Portfolio, Short-Term Portfolio, Growth & Income
Portfolio, Large Cap Growth Portfolio, Small Cap Growth Portfolio, International
Equity Portfolio, Balanced Portfolio, Government Income Portfolio, Emerging
Asian Markets Equity Portfolio, Tax Free Reserves Portfolio, Cash Reserves
Portfolio and U.S. Treasury Reserves Portfolio
(b) The information required by this Item 29 with respect to each
director and officer of CFBDS is incorporated by reference to Schedule A of Form
BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
CFBDS, Inc. 6 St. James Avenue
(administrator and distributor) Boston, MA 02116
State Street Bank and Trust Company 1776 Heritage Drive
(custodian and transfer agent) North Quincy, MA 02171
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
SHAREHOLDER SERVICING AGENTS
Citibank, N.A. 450 West 33rd Street
New York, NY 10001
Citibank, N.A. -- Citigold Citicorp Mortgage Inc. - Citigold
15851 Clayton Road
Ballwin, MO 63011
Citibank, N.A. -- The Citibank 153 East 53rd Street
Private Bank New York, NY 10043
Citibank, N.A. -- Citibank Global 153 East 53rd Street
Asset Management New York, NY 10043
Citibank, N.A. -- North American 111 Wall Street
Investor Services New York, NY 10094
Citicorp Investment Services One Court Square
Long Island City, NY 11120
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes, if requested to do so by the
record holders of not less than 10% of the Registrant's
outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or
trustees, and to assist in communications with other
shareholders as required by Section 16(c) of the Investment
Company Act of 1940. The Registrant further undertakes to
furnish to each person to whom a prospectus of Landmark New
York Tax Free Income Fund and Landmark National Tax Free Income
Fund is delivered with a copy of the appropriate Fund's latest
Annual Report to Shareholders, upon request without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
requirements for effectiveness of this Post-Effective Amendment to this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 17th day of February, 1998.
LANDMARK TAX FREE INCOME FUNDS
By: Philip W. Coolidge
-----------------------------
Philip W. Coolidge, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below by
the following persons in the capacities indicated below February 17, 1998.
Signature Title
--------- -----
Philip W. Coolidge President, Principal Executive Officer and Trustee
- ------------------------
Philip W. Coolidge
John R. Elder Principal Financial Officer and Principal
- ------------------------ Accounting Officer
John R. Elder
Elliott J. Berv* Trustee
- ------------------------
Elliott J. Berv
Mark T. Finn* Trustee
- ------------------------
Mark T. Finn
Riley C. Gilley* Trustee
- ------------------------
Riley C. Gilley
Diana R. Harrington* Trustee
- ------------------------
Diana R. Harrington
Susan B. Kerley* Trustee
- ------------------------
Susan B. Kerley
C. Oscar Morong, Jr.* Trustee
- ------------------------
C. Oscar Morong, Jr.
Walter E. Robb, III* Trustee
- ------------------------
Walter E. Robb, III
E. Kirby Warren* Trustee
- ------------------------
E. Kirby Warren
William S. Woods, Jr.* Trustee
- ------------------------
William S. Woods, Jr.
*By: Philip W. Coolidge
-------------------
Philip W. Coolidge
Executed by Philip W. Coolidge
on behalf of those indicated
pursuant to Powers of Attorney.
<PAGE>
EXHIBIT INDEX
Exhibit
No.: Description:
1(a) Declaration of Trust of Registrant
1(b) Amendments to Registrant's Declaration of Trust
1(c) Establishment and Designation of Series of the Registrant
2(a) Amended and Restated By-Laws of Registrant
2(b) Amendments to Amended and Restated By-Laws of Registrant
5(a) Investment Advisory Agreement between the Registrant and Citibank,
N.A., as adviser to Landmark New York Tax Free Income Fund
5(b) Investment Advisory Agreement between the Registrant and Citibank,
N.A., as adviser to Landmark National Tax Free Income Fund
6(a) Amended and Restated Distribution Agreement between the Registrant
and CFBDS, Inc. (formerly known as The Landmark Funds Broker-Dealer
Services, Inc.) ("CFBDS"), as distributor, with respect to Class A
Shares of the Funds
6(b) Distribution Agreement between the Registrant and CFBDS, as
distributor, with respect to Class B Shares of the Funds
8 Custodian Contract between the Registrant and State Street Bank and
Trust Company ("State Street"), as custodian
9(a) Amended and Restated Administrative Services Plan of the Registrant
9(b) Administrative Services Agreement between the Registrant and CFBDS,
as administrator
9(c) Sub-Administrative Services Agreement between Citibank, N.A. and
CFBDS
9(e) Transfer Agency and Servicing Agreement between the Registrant and
State Street Bank and Trust Company, as transfer agent
11 Consent of Deloitte & Touche LLP, independent auditors of the
Registrant
15(a) Amended and Restated Distribution Plan of the Registrant with respect
to Class A Shares of the Funds
15(b) Amended and Restated Distribution Plan of the Registrant with respect
to Class B Shares of the Funds
25 Powers of Attorney for the Registrant
27 Financial Data Schedules
<PAGE>
Exhibit 1(a)
LANDMARK NEW YORK TAX FREE INCOME FUND
--------------------------------------
DECLARATION OF TRUST
Dated May 27, 1986
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I--Name and Definitions 1
---------------------
Section 1.1 Name
Section 1.2 Definitions
ARTICLE II--Trustees 3
----------
Section 2.1 Number of Trustees
Section 2.2 Term of 0ffice of Trustees
Section 2.3 Resignation and Appointment of Trustees
Section 2.4 Vacancies
Section 2.5 Delegation of Power to Other Trustees
ARTICLE III--Powers of Trustees 4
------------------
Section 3.1 General
Section 3.2 Investments
Section 3.3 Legal Title
Section 3.4 Issuance and Repurchase of Securities
Section 3.5 Borrowing Money; Lending Trust Property
Section 3.6 Delegation; Committees
Section 3.7 Collection and Payment
Section 3.8 Expenses
Section 3.9 Manner of Acting; By-Laws
Section 3.10 Miscellaneous Powers
Section 3.11 Principal Transactions
Section 3.12 Trustees and-Officers as Shareholders
ARTICLE IV--Investment Adviser, Distributor, Administrator 8
Transfer Agent and Shareholder Servicing Agents
-----------------------------------------------
Section 4.1 Investment Adviser
Section 4.2 Distributor
Section 4.3 Administrator
Section 4.4 Transfer Agent and Shareholder Servicing Agents
Section 4.5 Parties to Contract
<PAGE>
ARTICLE V--Limitations of Liability of Shareholders, 10
Trustees and Others
----------------------------------------
Section 5.1 No Personal Liability of Shareholders, Trustees, etc.
Section 5.2 Non-Liability of Trustees, etc.
Section 5.3 Mandatory Indemnification
Section 5.4 No Bond Required of Trustees
Section 5.5 No Duty of Investigation; Notice in Trust Instruments, etc.
Section 5.6 Reliance on Experts, etc.
ARTICLE VI--Shares of Beneficial Interest 13
Section 6.1 Beneficial Interest
Section 6.2 Rights of Shareholders
Section 6.3 Trust Only Section 6.4 Issuance of Shares
Section 6.5 Register of Shares
Section 6.6 Transfer of Shares
Section 6.7 Notices
Section 6.8 Voting Powers
Section 6.9 Series Designation
ARTICLE VII--Redemptions 18
-----------
Section 7.1 Redemptions
Section 7.2 Suspension of Right of Redemption
Section 7.3 Redemption of Shares; Disclosure of Holding
Section 7.4 Redemptions in Kind
ARTICLE VIII--Determination of Net Asset Value, Net Income
and Distributions 20
--------------------------------------------
ARTICLE IX--Duration; Termination of Trust; Amendment; Mergers, Etc. 20
-------------------------------------------------------
Section 9.1 Duration
Section 9.2 Termination of Trust
Section 9.3 Amendment Procedure
Section 9.4 Merger, Consolidation and Sale of Assets
Section 9.5 Incorporation, Reorganization
Section 9.6 Incorporation or Reorganization of Series
ARTICLE X--Reports to Shareholders and Shareholder Communications 23
-------------------------------------------------------
<PAGE>
ARTICLE XI--Miscellaneous 24
-------------
Section 11.1 Filing
Section 11. Governing Law
Section 11.3 Counterparts
Section 11.4 Reliance by Third Parties
Section 11.5 Provisions in Conflict with Law
or Regulations
SIGNATURE PAGE 25
<PAGE>
DECLARATION OF TRUST
OF
LANDMARK NEW YORK TAX FREE INCOME FUND
------------------
Dated May 27, 1986
------------------
DECLARATION OF TRUST, made May 27, 1986, by Richard B. Bailey, A. Keith
Brodkin, Arnold D. Scott and Philip W. Coolidge (the "Trustees"):
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable Shares of Beneficial Interest (without par
value) issued in one or more series as hereinafter provided;
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the Shares of Beneficial
Interest (without par value) issued hereunder and subject to the provisions
hereof.
ARTICLE I
NAME AND DEFINITIONS
--------------------
Section 1.1. Name. The name of the trust created hereby is the "Landmark
New York Tax Free Income Fund".
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.3 hereof.
(b) "By-Laws" means the By-laws referred to in Section 3.9 hereof, as
from time to time amended.
(c) "Commission" has the meaning given that term in the 194O Act.
(d) "Custodian" means a party employed by the Trust to furnish services
as described in Article X of the By-Laws.
(e) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration", "hereof",
"herein)", and "hereunder" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
(f) "Distributor" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.2 hereof.
(g) "Interested Person" has the meaning given that term in the 1940 Act.
(h) "Investment Adviser" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
(i) "Majority Shareholder Vote" has the same meaning as the phrase "vote
of a majority of the outstanding voting securities" as defined in the 1940 Act,
except that such term may be used herein with respect to the Shares of the Trust
as a whole or the Shares of any particular series, as the context may require.
(j) "1940 Act" means the Investment Company Act of 1940 and the Rules
and Regulations thereunder, as amended from time to time.
(k) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof,
whether domestic or foreign.
(l) "Shareholder" means a record owner of outstanding Shares.
(m) "Shares" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time or, when
used in relation to any particular series of Shares established by the Trustees
pursuant to Section 6.9 hereof, equal proportionate transferable units into
which such series of Shares shall be divided from time to time. The term
"Shares" includes fractions of Shares as well as whole Shares.
(n) "Shareholder Servicing Agent" means a party furnishing services to
the Trust pursuant to any shareholder servicing contract described in Section
4.4 hereof.
(o) "Transfer Agent" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.4 hereof.
(p) "Trust" means the trust created hereby.
(q) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including, without limitation, any and all property
allocated or belonging to any series of Shares pursuant to Section 6.9 hereof.
(r) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly elected or appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
--------
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three nor more than 15.
Section 2.2. Term of office of Trustees. Subject to the provisions of
Section 16 a of the 1940 Act, the Trustees shall hold office during the lifetime
of this Trust and until its termination as hereinafter provided; except (a) that
any Trustee may resign his trust (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) that any Trustee may be removed with cause, at any
time by written instrument, signed by at least two-thirds of the remaining
Trustees, specifying the date when such removal shall become effective; (c) that
any Trustee who requests in writing to be retired or who has become
incapacitated by illness or injury may be retired by written instrument signed
by a majority of the other Trustees, specifying the date of his retirement; and
(d) a Trustee may be removed at any meeting of Shareholders by a vote of
two-thirds of the outstanding Shares of each series. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute
and deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust Property
held in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other individual as they in their discretion shall see fit.
Such appointment shall be evidenced by a written instrument signed by a majority
of the Trustees in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. Within twelve months of such appointment, the
Trustees shall cause notice of such appointment to be mailed to each Shareholder
at his address as recorded on the books of the Trustees. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. The power of appointment is subject to the provisions of Section 16
(a) of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the terms
of this Declaration. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.3, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees shall be conclusive evidence of the existence of such
vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six months at
any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two Trustees personally exercise the powers granted to the Trustees
under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
------------------
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as the Trustees deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of the Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. (a) The Trustees shall have the power:
(i) to conduct, operate and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of U.S. and foreign currencies, any form of gold
or other precious metal, commodity contracts, contracts for the future
acquisition or delivery of fixed income or other securities, and securities of
every nature and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or indebtedness, commercial
paper, repurchase agreements, bankers' acceptances, and other securities of any
kind, issued, created, guaranteed or sponsored by any and all Persons,
including, without limitation,
(A) states, territories and possessions of the United States and the
District of Columbia and any political subdivision, agency or instrumentality of
any such Person,
(B) the U. S. Government, any foreign government, any political
subdivision or any agency or instrumentality of the U. S. Government, any
foreign government or any political subdivision of the U. S. Government or any
foreign government,
(C) any international instrumentality,
(D) any bank or savings institution, or
(E) any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, or under any
foreign law;
or in "when issued" contracts for any such securities, to retain Trust assets in
cash and from time to time change the securities or obligations in which the
assets of the Trust are invested; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investments
of every kind and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more Persons to exercise any of said rights, powers and privileges in respect of
any of said investments; and
(iii) to carry on any other business in connection with or incidental to
any of the foregoing powers, to do everything necessary, proper or desirable for
the accomplishment of any purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth, and to do every other act or
thing incidental or appurtenant to or connected with the aforesaid purposes,
objects or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made by
fiduciaries.
Section 3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as Joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person or nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, such Trustee shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 3.4. Issuance and Repurchase of Securities The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds of the Trust or other Trust Property whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Property. The Trustees shall
have power to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the Trust Property, to
endorse, guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust Property.
Section 3.6. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees at which a quorum is
present, including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of all the Trustees.
The Trustees may adopt By-Laws not inconsistent with this Declaration to provide
for the conduct of the business of the Trust and may amend or repeal such
By-Laws to the extent such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, the Administrator, Trustees,
officers, employees, agents, the Investment Adviser, the Distributor, selected
dealers or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person against
such liability; (e) establish pension, profit-sharing, Share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees or
agents of the Trust; (f) to the extent permitted by law, indemnify any. person
with whom the Trust has dealings, including any Investment Adviser,
Administrator, Custodian, Distributor, Transfer Agent, Shareholder Servicing
Agent and any dealer, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year of the Trust and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, provided, that the absence of such
seal shall not impair the validity of any instrument executed on behalf of the
Trust.
Section 3.11. Principal Transactions. Except in transactions permitted
by the 1940 Act, or any order of exemption issued by the Commission, the
Trustees shall not, on behalf of the Trust, buy any securities (other than
Shares) from or sell any securities (other than Shares) to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any Investment Adviser, Administrator, Shareholder Servicing
Agent, Custodian, Distributor or Transfer Agent or with any Interested Person of
such Person; but the Trust may, upon customary terms, employ any such Person, or
firm or company in which such Person is an Interested Person, as broker, legal
counsel, registrar, transfer agent, dividend disbursing agent or custodian.
Section 3.12. Trustees and Officers as Shareholders. Except as
hereinafter provided, no officer, Trustee or Member of the Advisory Board of the
Trust, and no member, partner, officer, director or trustee of the Investment
Adviser, Administrator or of the Distributor, and no Investment Adviser,
Administrator or Distributor of the Trust, shall take long or short positions in
the securities issued by the Trust. The foregoing provision shall not prevent:
(a) The Distributor from purchasing Shares from the Trust if such
purchases are limited (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to purchases for
the purpose of filling orders for Shares received by the Distributor and
provided that orders to purchase from the Trust are entered with the Trust or
the Custodian promptly upon receipt by the Distributor of purchase orders for
Shares, unless the Distributor is otherwise instructed by its customer;
(b) The Distributor from purchasing Shares as agent for the account of
the Trust;
(c) The purchase from the Trust or from the Distributor of Shares by any
officer, Trustee or member of the Advisory Board of the Trust or by any member,
partner, officer, director or trustee of the Investment Adviser or of the
Distributor at a price not lower than the net asset value of the Shares at the
moment of such purchase, provided that any such sales are only to be made
pursuant to a uniform offer described in the Trust's current prospectus or
statement of additional information; or
(d) The Investment Adviser, the Distributor, or any of their officers,
partners, directors or trustees from purchasing Shares prior to the effective
date of the Trust's Registration Statement under the Securities Act of 1933, as
amended, relating to the Shares.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT
AND SHAREHOLDER SERVICING AGENTS
--------------------------------
Section 4.1. Investment Adviser. Subject to a Majority Share holder
Vote of the Shares of each series affected thereby, the Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts whereby the other party to each such contract shall
undertake to furnish the Trust such management, investment advisory, statistical
and research facilities and services, promotional activities, and such other
facilities and services, if any, with respect to one or more series of Shares,
as the Trustees shall from time to time consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provision of the Declaration, the Trustees may delegate to
the Investment Adviser authority (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of assets of the Trust on behalf of the Trustees or
may authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of the Investment Adviser (and
all without further action by the Trustees). Any of such purchases, sales, loans
or exchanges shall be deemed to have been authorized by all the Trustees. Such
services may be provided by one or more Persons.
Section 4.2. Distributor. The Trustees may in their discretion from time
to time enter into one or more distribution contracts providing for the sale of
Shares whereby the Trust may either agree to sell the Shares to the other party
to any such contract or appoint any such other party its sales agent for such
Shares. In either case, any such contract shall be on such terms and conditions
as the Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of the Declaration or the
By-Laws; and such contract may also provide for the repurchase or sale of Shares
by such other party as principal or as agent of the Trust and may provide that
such other party may enter into selected dealer agreements with registered
securities dealers to further the purpose of the distribution or repurchase of
the Shares. Such services may be provided by one or more Persons.
Section 4.3. Administrator. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more persons.
Section 4.4 Transfer Agent and Shareholder Servicing Agents. The
trustees may in their discretion from time to time enter into one or more
transfer agency and shareholder servicing contracts whereby the other party to
each such contract shall undertake to furnish such transfer agency and/or
shareholder services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more Persons.
Section 4.5. Parties to Contract. Any contract of the character
described in Section 4.1, 4.2, 4.3 or 4.4 of this Article IV or any Custodian
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be an officer, partner, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of any such contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of the Article IV or the By-Laws. The same
Person may be the other party to contracts entered into pursuant to Sections
4.1, 4.2, 4.3 and 4.4 above or any Custodian contract, and any individual may be
financially interested or otherwise affiliated with Persons who are parties to
any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
-------------------
Section 5.1. No Personal Lability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, wilful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shalt reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein. Notwithstanding any other provision of this
Declaration to the contrary, no Trust Property shall be used to indemnify or
reimburse any Shareholder of any Shares of any series other than Trust Property
allocated or belonging to such series.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, wilful misfeasance, gross negligence or reckless disregard of
his duties.
Section 5.3. Mandatory Indemnification. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
(ii) the words "claim", "action", "suit", or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, administrative or
other, including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that he engaged in wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicate not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee or
officer or other disposition not involving a final adjudication as provided in
paragraph (b) (i) or (b) (ii) above resulting in a payment by a Trustee or
officer, unless there has been either a determination that such Trustee or
officer did not engage in wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or by a
reasonable determination, based upon a review of readily available facts (as
opposed to a full trial-type inquiry) that he did not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested Trustees then
in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a Person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors and administrators of such
Person. Nothing contained herein shall affect any rights to indemnification to
which personnel other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
Section 5.4. No Bond Required of Trustees. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments, etc.
Ho purchaser, lender, Shareholder Servicing Agent, Transfer Agent or other
Person dealing with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered to
or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under the Declaration, and that the obligations of any such instrument are not
binding upon any of the Trustees or Shareholders individually, but bind only the
trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees or Shareholders individually. The Trustees shall at all times
maintain insurance for the protection of the Trust Property, the Trust's
Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, any Shareholder Servicing Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder may be divided into transferable Shares of Beneficial Interest
(without par value), all of one class, which may be divided into one or more
series as provided in Section 6.9 hereof. The number of Shares authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and non-assessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust Property
of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assess ment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in the Declaration. The Shares
shall not entitle the holder to preference, pre-emptive, appraisal, conversion
or exchange rights, except as the Trustees may determine with respect to any
series of Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection, with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or combine the
Shares of any series into a greater or lesser number without thereby changing
their proportionate beneficial interests in Trust Property allocated or
belonging to such series. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/l,000ths of a Share or
integral multiples thereof.
Section 6.5. Register of Shares. A register or registers shall be kept
at the principal office of the Trust or at an office of the Transfer Agent or
any one or more Shareholder Servicing Agents which register or registers, taken
together, shall contain the names and addresses of the Shareholders and the
number of Shares held by them respectively and a record of all transfers
thereof. Such register or registers shall be conclusive as to who are the
holders of the Shares and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent, the Shareholder
Servicing Agent which is the agent of record for such Shareholder, or such other
officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees, the Transfer Agent or
the Shareholder Servicing Agent which is the agent of record for such
Shareholder, of a duly executed instrument of transfer, together with any
certificate or certificates (if issued) for such Shares and such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent, Shareholder Servicing Agent or
registrar nor any officer, employee or agent of the Trust shall be affected by
any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees, the Transfer
Agent or the Shareholder Servicing Agent which is the agent of record for such
Shareholder; but until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and neither
the Trustees nor any Transfer Agent, Shareholder Servicing Agent or registrar
nor any officer or agent of the Trust shall be affected by any notice of such
death, bankruptcy or incompetence, or other operation of law.
Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the removal of Trustees as provided in Section 2.2 hereof, (ii)
with respect to any investment advisory or management contract as provided in
Section 4.1 hereof, (iii) with respect to termination of the Trust as provided
in Section 9.2 hereof, (iv) with respect to any amendment of this Declaration to
the extent and as provided in Section 9.3 hereof, (v) with respect to any
merger, consolidation or sale of assets as provided in Sections 9.4 and 9.6
hereof, (vi) with respect to incorporation of the Trust or any series to the
extent and as provided in Sections 9.5 and 9.6 hereof, (vii) to the same extent
as the stockholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters relating to the
Trust as may be required by the Declaration, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be-entitled
to one vote as to any matter on which it is entitled to vote and each tractional
Share shall be entitled to a proportionate fractional vote, except that Shares
held in the treasury of the Trust shall not be voted. Shares shall be voted by
individual series on any matter submitted to a vote of the Shareholders of the
Trust except as provided in Section 6.9(g) hereof. There shall be no cumulative
voting in the election of Trustees. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration or the By-Laws to be taken by Shareholders. At any meeting of
shareholders of the Trust or of any series of the Trust, a Shareholder Servicing
Agent may vote any shares as to which such Shareholder Servicing Agent is the
agent of record and which are not otherwise represented in person or by proxy at
the meeting, proportionately in accordance with the votes cast by holders of all
shares otherwise represented at the meeting in person or by proxy as to which
such Shareholder Servicing Agent is the agent of record. Any shares so voted by
a Shareholder Servicing Agent will be deemed represented at the meeting for
quorum purposes. The By-Laws may include further provisions for Shareholder
votes and meetings and related matters.
Section 6.9. Series Designation. Shares of the Trust may be divided into
series, the number and relative rights, privileges and preferences of which
shall be established and designated by the Trustees, in their discretion, in
accordance with the terms of this Section 6.9. The Trustees may from time to
time exercise their power to authorize the division of Shares into one or more
series by establishing and designating one or more series of Shares upon and
subject to the following provisions:
(a) All Shares shall be identical except that there may be such
variations as shall be fixed and determined by the Trustees between different
series as to purchase price, right of redemption and the price, terms and manner
of redemption, and special and relative rights as to dividends and on
liquidation.
(b) The number of authorized Shares and the number of Shares of each
series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any series into one or more series that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any series reacquired by the Trust at their
discretion from time to time.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series, and shall be so recorded upon the books of account
of the Trust. In the event that there are any assets, income, earnings, profits,
and proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular series, the Trustees shall allocate them among any
one or more of the series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all series for all purposes. No holder of Shares of any
particular series shall have any claim on or right to any assets allocated or
belonging to any other series of Shares.
(d) The assets belonging to each particular series shall be charged with
the liabilities of the Trust in respect of that series and all expenses, costs,
charges and reserves attributable to that series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular series shall be allocated and
charged by the Trustees to and among any one or more of the series established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the Shareholders. Under no circumstances shall the assets allocated
or belonging to any particular series be charged with liabilities attributable
to any other series. All Persons who have extended credit which has been
allocated to a particular series, or who have a claim or contract which has been
allocated to any particular series, shall look only to the assets of that
particular series for payment of such credit, claim or contract.
(e) The power of the Trustees to invest and reinvest the Trust Property
allocated or belonging to any particular series shall be governed by Section 3.2
hereof unless otherwise provided in the instrument of the Trustees establishing
such series which is hereinafter described.
(f) Each Share of a series shall represent a beneficial interest in the
net assets allocated or belonging to such series only, and such interest shall
not extend to the assets of the Trust generally. Dividends and distributions on
Shares of a particular series may be paid with such frequency as the Trustees
may determine, which may be monthly or otherwise, pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that series only, from such
of the income and capital gains, accrued or realized, from the assets belonging
to that series, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that series. All dividends and distributions on
Shares of a particular series shall be distributed pro rata to the holders of
that series in proportion to the number of Shares of that series held by such
holders at the date and time of record established for the payment of such
dividends or distributions. Shares of any particular series of the Trust may be
redeemed solely out of Trust Property allocated or belonging to that series.
Upon liquidation or termination of a series of the Trust, Shareholders of such
series shall be entitled to receive a pro rata share of the net assets of such
series only.
(g) Notwithstanding any provision hereof to the contrary, on any matter
submitted to a vote of the Shareholders of the Trust, all Shares then entitled
to vote shall be voted by individual series, except that (i) when required by
the 1940 Act to be voted in the aggregate, Shares shall not be voted by
individual series, and (ii) when the Trustees have determined that the matter
affects only the interests of Shareholders of one or more series, only
Shareholders of such series shall be entitled to vote thereon.
(h) The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular series previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.
ARTICLE VII
REDEMPTIONS
-----------
Section 7.1 Redemptions. In case any Shareholder at any time desires to
dispose of his Shares, he may deposit his certificate or certificates therefor,
duly endorsed in blank or accompanied by an instrument of transfer executed in
blank, or if the Shares are not represented by any certificates, a written
request or other such form of request as the Trustees may from time to time
authorize, at the office of the Transfer Agent, the Shareholder Servicing Agent
which is the agent of record for such Shareholder, or at the office of any bank
or trust company, either in or outside of Massachusetts, which is a member of
the Federal Reserve System and which the said Transfer Agent or the said
Shareholder Servicing Agent has designated in writing for that purpose, together
with an irrevocable offer in writing in a form acceptable to the Trustees to
sell the Shares represented thereby to the Trust at the net asset value thereof
per Share, determined as provided in Section 8.1 hereof, next after such
deposit. Payment for said Shares shall be made to the Shareholder within seven
days after the date on which the deposit is made, unless (i) the date of payment
is postponed pursuant to Section 7.2 hereof, or (ii) the receipt, or
verification of receipt, of the purchase price for the Shares to be redeemed is
delayed, in either of which events payment may be delayed beyond seven days.
Section 7.2 Suspension of Right of Redemption. The Trust may declare a
suspension ot- the right of redemption or postpone the date of payment of the
redemption proceeds for the whole or any part of any period (i) during which the
New York Stock Exchange is closed other than customary week-end and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which disposal
by the Trust of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (iv) during any other period when the Commission may for the
protection of security holders of the Trust by order permit suspension of the
right of redemption or postponement of the date of payment of the redemption
proceeds; provided that applicable rules and regulations of the Commission shall
govern as to whether the conditions prescribed in (ii), (iii) or (iv) exist.
Such suspension shall take effect at such time as the Trust shall specify but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment of the redemption proceeds until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event on
the first day on which said stock exchange shall have reopened or the period
specified in (ii) or (iii) shall have expired (as to which, in the absence of an
official ruling by the Commission, the determination of the Trust shall be
conclusive). In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the net asset value existing after the termination of the suspension.
Section 7.3. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code of 1954, as amended
(the "Code"), then the Trustees shall have the power by lot or other means
deemed equitable by them (i) to call for redemption by any such Person a number,
or principal amount, of Shares or other securities of the Trust sufficient to
maintain or bring . the direct or indirect ownership of shares or other
securities of the Trust into conformity with the requirements for such
qualification, and (ii) to refuse to transfer or issue Shares or other
securities of the Trust to any Person whose acquisition of the Shares or other
securities of the Trust in question would result in such disqualification. The
redemption shall be effected at the redemption price and in the manner provided
in Section 7.1 hereof.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Code, or to comply with the
requirements of any other authority. Upon the failure of a Shareholder to
disclose such information and to comply with such demand of the Trustees, the
Trust shall have the power to redeem such Shares at a redemption price
determined in accordance with Section 7.1 hereof.
Section 7.4 Redemptions of Accounts of Less than $500 The Trustees shall
have the power at any time to redeem Shares of any Shareholder at a redemption
price determined in accordance with Section 7.1 hereof if at such time the
aggregate net asset value of the Shares in such Shareholder's account is less
than $500 A Shareholder shall be notified that the value of his account is less
than $500 and allowed 60 days to make an additional investment before redemption
is processed.
Section 7.5 Redemptions Pursuant to Constant Net Asset Value Formula.
The Trust may also reduce the number of outstanding Shares pursuant to the
provisions of Section 8.3 hereof.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
----------------------------
The Trustee, in their absolute discretion, may prescribe and shall set
forth in the By-laws or in a duly adopted vote of the Trustees such bases and
times for determining the per Share net asset value of the Shares or net income,
or the declaration and payment of dividends and distributions, as they may deem
necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
--------------------------------------------------------
Section 9.1. Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust may be terminated (i)
by a Majority Shareholder Vote of the holders of its Shares, or (ii) by the
Trustees by written notice to the Shareholders. Any series of the Trust may be
terminated (i) by a Majority Shareholder Vote of the holders of Shares of that
series, or (ii) by the Trustees by written notice to the Shareholders of that
series. Upon the termination of the Trust or any series of the Trust:
(i) The Trust or series of the Trust shall carry on no business except
for the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
series of the Trust and all the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust or series of the Trust shall have
been wound up, including the power to fulfill or discharge the contracts of the
Trust or series of the Trust, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining
Trust Property or Trust Property of the series to one or more persons at public
or private sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its liabilities, and
to do all other acts appropriate to liquidate its business; provided, that any
sale, conveyance, assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shareholder approval in
accordance with Section 9.4 hereof, and any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all of the Trust
Property allocated or belonging to any series shall require the approval of the
Shareholders of such series as provided in Section 9.6 hereof; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or Trust Property of the series, in cash
or in kind or partly in cash and partly in kind, among the Shareholders of the
Trust or the series according to their respective rights.
(b) After termination of the Trust or series and distribution to the
Shareholders of the Trust or series as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination, and the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder with
respect to the Trust or series, and the rights and interests of all Shareholders
of the Trust or series shall thereupon cease.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended by
a Majority Shareholder Vote of the Shareholders of the Trust or by any
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than a majority of the Shares of the
Trust. The Trustees may also amend this Declaration without the vote or consent
of Shareholders to designate series in accordance with Section 6.9 hereof, to
change the name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary or advisable to conform this Declaration to the requirements
of applicable federal laws or regulations or the requirements of the regulated
investment company provisions of the Internal Revenue Code of 1954, as amended,
but the Trustees shall not be liable for failing so to do.
(b) No amendment which the Trustees shall have determined shall affect
the rights, privileges or interests of holders of a particular series of Shares,
and which would otherwise require a Majority Shareholder Vote under paragraph
(a) of this Section 9.3, but not the rights, privileges or interests of holders
of Shares of the Trust generally, may be made except with the vote or consent by
a Majority Shareholder Vote of such series.
(c) Notwithstanding any other provision hereof, no amendment may be made
under this Section 9.3 which would change any rights with respect to the Shares,
or any series of Shares, by reducing the amount payable thereon upon liquidation
of the Trust or by diminishing or eliminating any voting rights pertaining
thereto, except with the Majority Shareholder Vote of the Shares or that series
of Shares. Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to permit
assessments upon Shareholders.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
(e) Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be amended in any respect by the affirmative
vote of a majority of the Trustees or by an instrument signed by a majority of
the Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property (or all or substantially all of the Trust Property allocated or
belonging to a particular series of the Trust) including its good will, upon
such terms and conditions and for such consideration when and as authorized at
any meeting of Shareholders called for such purpose by the vote of the holders
of two-thirds of the outstanding shares of all series of the Trust voting as a
single class, or of the affected series of the Trust, as the case may be, or by
an instrument or instruments in writing without a meeting, consented to by the
vote of the holders of two-thirds of the outstanding Shares of all series of the
Trust voting as a single class, or of the affected series of the Trust, as the
case may be; provided, however, that if such merger, consolidation, sale, lease
or exchange is recommended by the Trustees, the vote or written consent by
Majority Shareholder Vote shall be sufficient authorization; and any such
merger, consolidation, sale, lease or exchange shall be deemed for all purposes
to have been accomplished under and pursuant to the statutes of the Commonwealth
of Massachusetts. Nothing contained herein shall be construed as requiring
approval of Shareholders for any sale of assets in the ordinary course of the
business of the Trust.
Section 9.5. Incorporation, Reorganization. With the approval of the
holders of a majority of the Shares outstanding and entitled to vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization to take over
all of the Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. Subject to Section 9.4 hereof, the Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law. Nothing contained in this Section 9.5 shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
Section 9.6. Incorporation or Reorganization of Series. With the
approval of a Majority Shareholder Vote of any series, the Trustees may sell,
lease or exchange all of the Trust Property allocated or belonging to that
series, or cause to be organized or assist in organizing a corporation or
corporations under the laws of any other jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization, to take over
all of the Trust Property allocated or belonging to that series and to sell,
convey and transfer such Trust Property to any such corporation, trust, unit
investment trust, partnership, association, or other organization in exchange
for the shares or securities thereof or otherwise.
ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS
------------------------------------------------------
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
Whenever 10 or more Shareholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate either Shares having a net asset value of at least $25,000 or at least
1% of the Shares outstanding, whichever is less, shall apply to the Trustees in
writing, stating that they wish to communicate with other Shareholders with a
view to obtaining signatures to a request for a meeting of Shareholders for the
purpose of removing one or more Trustees pursuant to Section 2.2 hereof and
accompany such application with a form of communication and request which they
wish to transmit, the Trustees shall within five business days after receipt of
such application either (a) afford to such applicants access to a list of the
names and addresses of all Shareholders as recorded on the books of the Trust;
or (b) inform such applicants as to the approximate number of Shareholders of
record, and the approximate cost of mailing to them the proposed communication
and form of request. If the Trustees elect to follow the course specified in (b)
above, the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record, unless within five business days after such tender the Trustees mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement signed by at least a majority of the
Trustees to the effect that in their opinion either such material contains
untrue statements of fact or omits to state facts necessary to make the
statements contained therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1. Filing. This Declaration, as amended, and any subsequent
amendment hereto shall be filed in the office of the Secretary of the
Commonwealth of Massachusetts and in such other place or places as may be
required under the laws of the Commonwealth of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed and acknowledged
by a Trustee stating that such action was duly taken in a manner provided
herein, and unless such amendment or such certificate sets forth some later time
for the effectiveness of such amendment, such amendment shall be effective upon
its filing. A restated Declaration, integrating into a single instrument all of
the provisions of the Declaration which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall, upon filing
with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu of
this original Declaration and the various amendments thereto.
Section 11.2. Governing Law. This Declaration is executed by the
trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 11.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (i) the number or identity of Trustees or
Shareholders, (ii) the due authorization of the execution of any instrument or
writing, (iii) the form of any vote passed at a meeting of Trustees or
Shareholders, (iv) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (v) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (vi) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 11.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1954, as amended, or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such Jurisdiction and shall not in any manner
affect such provision in any other Jurisdiction or any other provision of the
Declaration in any Jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
27th day of May, 1986.
Richard B. Bailey
-----------------------------------------
Richard B. Bailey
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
<PAGE>
A. Keith Brodkin
------------------------------------------
A. Keith Brodkin
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
Arnold D. Scott
------------------------------------------
Arnold D. Scott
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
Philip W. Coolidge
------------------------------------------
Philip W. Coolidge
as Trustee
and not individually
200 Berkeley Street
Boston, Massachusetts
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS.
May 27, 1986
Then personally appeared the above-named Richard B. Bailey, A. Keith
Brodkin, Arnold D. Scott and Philip W. Coolidge, who severally acknowledged the
foregoing instrument to be their free act and deed.
Before me,
Kathleen M. Tighe
--------------------------------------
Notary Public
My commission expires: 5/30/91
<PAGE>
Exhibit 1(b)
LANDMARK TAX FREE INCOME FUNDS
Certificate of Amendment
to Declaration of Trust
The undersigned, constituting a majority of the Trustees of Landmark Tax
Free Income Funds (the "Trust"), a business trust organized under the laws of
the Commonwealth of Massachusetts pursuant to a Declaration of Trust, dated May
27, 1986, as amended (the "Declaration"), do hereby certify, as provided by the
provisions of Section 9.3(d) of the Declaration, that in accordance with the
provisions of the second sentence of Section 9.3(a), a majority of the Trustees
of the Trust, by vote duly adopted by a majority of the Trustees, amended the
Declaration effective February 10, 1995 as follows:
Section 6.5 is amended to read in its entirety:
Section 6.5 Register of Shares. A register or registers shall be kept at
the principal office of the Trust or at an office of the Transfer Agent or,
upon the vote of a majority of the Trustees of the Trust, at an office of
any one or more Shareholder Servicing Agents, which register or registers,
taken together, shall contain the names and addresses of the Shareholders
and the number of Shares held by them respectively and a record of all
transfers thereof. Such register or registers shall be conclusive as to who
are the holders of the Shares and who shall be entitled to receive
dividends or distributions or otherwise to exercise or enjoy the rights of
Shareholders. Unless the Trustees have authorized a Shareholder Servicing
Agent to keep a register of Shares, that Shareholder Servicing Agent shall
be the holder of record of all outstanding Shares shown on the records of
the Transfer Agent as being held by such Shareholder Servicing Agent. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for
entry thereon, or, if the Trustees have authorized a Shareholder Servicing
Agent to keep the register for the Shares of such Shareholder, such
Shareholder Servicing Agent (as used in this Declaration, such
Shareholder's "agent of record"). It is not contemplated that certificates
will be issued for the Shares; however, the Trustees, in their discretion,
may authorize the issuance of Share certificates and promulgate appropriate
rules and regulations as to their use.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
separate counterparts this 10th day of February, 1995.
H. B. Alvord Susan B. Kerley
H. B. Alvord Susan B. Kerley
Elliott J. Berv C. Oscar Morong, Jr.
Elliott J. Berv C. Oscar Morong, Jr.
Philip W. Coolidge Walter E. Robb, III
Philip W. Coolidge Walter E. Robb, III
Mark T. Finn E. Kirby Warren
Mark, T. Finn E. Kirby Warren
Riley C. Gilley William S. Woods, Jr.
Riley C. Gilley William S. Woods, Jr.
Diana R. Harrington
Diana R. Harrington
<PAGE>
LANDMARK NEW YORK TAX FREE INCOME FUND
CERTIFICATE OF AMENDMENT
TO DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark New
York Tax Free Income Fund (the "Trust"), a business trust organized under the
laws of the Commonwealth of Massachusetts, pursuant to a Declaration of Trust
dated May 27, 1986 (the "Declaration"), as amended, do hereby certify, as
provided by the provisions of Section 9.3(a) of the Declaration, that:
(i) in accordance with the provisions of the first sentence of Section
9.3(a) of the Declaration, pursuant to a vote duly adopted by a majority of
the Trustees of the Trust on October 21, 1993, the Declaration was amended
as follows:
Section 1.1 of the Declaration is amended to read in its entirety as
follows:
Section 1.1 Name The name of the Trust created hereby is "Landmark Tax Free
Income Funds".
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
the 21st day of October, 1993.
H.B. Alvord Diana R. Harrington
H.B. Alvord Diana R. Harrington
Elliott J. Berv Susan B. Kerley
Elliott J. Berv Susan B. Kerley
Philip W. Coolidge C. Oscar Morong, Jr.
Philip W. Coolidge C. Oscar Morong, Jr.
Mark T. Finn Walter E. Robb, III
Mark T. Finn Walter E. Robb, III
Riley C. Gilley E. Kirby Warren
Riley C. Gilley E. Kirby Warren
William S. Woods, Jr.
William S. Woods, Jr.
<PAGE>
LANDMARK NEW YORK TAX FREE INCOME FUND
CERTIFICATE OF AMENDMENT
TO DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark New
York Tax Free Income Fund (the "Trust"), a business trust organized under the
laws of the Commonwealth of Massachusetts, pursuant to a Declaration of Trust
dated May 27, 1986 (the "Declaration"), do hereby certify, as provided by
Section 9.3 (d) of the Declaration, that, in accordance with the provisions of
Section 9.3(a) of the Declaration, a majority of the Shareholders of the Trust,
by vote duly adopted on February 23, 1989, amended the Declaration as follows:
Section 6.9 of the Declaration is amended by adding the following paragraph (i)
immediately following paragraph (h) thereof:
"(i) Notwithstanding anything in this Declaration to the contrary, the Trustees
may, in their discretion, authorize the division of Shares of any series
into Shares of one or more classes or subseries of such series. All Shares
of a class or a subseries shall be identical with each other and with the
shares of each other class or subseries of the same series except for such
variations between classes or subseries as may be approved by the Board of
Trustees and be permitted under the 1940 Act or pursuant to any exemptive
order issued by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
the 16th day of January, 1992.
H.B Alvord C. Oscar Morong, Jr.
H.B Alvord C. Oscar Morong, Jr.
Elliott J. Berv Walter E. Robb, III
Elliott J. Berv Walter E. Robb, III
Philip W. Coolidge E. Kirby Warren
Philip W. Coolidge E. Kirby Warren
Mark T. Finn T. Dean Williams
Mark T. Finn T. Dean Williams
Riley C. Gilley William S. Woods, Jr.
Riley C. Gilley William S. Woods, Jr.
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
AMENDMENT TO
DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of Landmark
Tax Free Income Funds (the "Trust"), a business trust organized under the laws
of the Commonwealth of Massachusetts, pursuant to a Declaration of Trust dated
May 27, 1986, as amended (the "Declaration"), do hereby amend Section 3.2 of the
Declaration by adding the following paragraph (c) immediately after paragraph
(b) of Section 3.2, such amendment to be subject to approval in accordance with
the Declaration of the shareholders of Landmark New York Tax Free Income Fund
and Landmark National Tax Free Income Fund, each a series of the Trust:
(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 each Series of the Trust, or
sell all or a portion of such Trust Property and invest the proceeds of
such sales, in one or more investment companies to the extent not
prohibited by the 1940 Act and exemptive orders granted under such Act.
IN WITNESS WHEREOF, the undersigned have executed this Amendment this
8th day of August, 1997.
Elliott J. Berv Philip W. Coolidge
- -------------------------------- -------------------------------
ELLIOTT J. BERV PHILIP W. COOLIDGE
As Trustee and Not Individually As Trustee and Not Individually
Mark T. Finn Riley C. Gilley
- -------------------------------- -------------------------------
MARK T. FINN RILEY C. GILLEY
As Trustee and Not Individually As Trustee and Not Individually
Diana R. Harrington Susan B. Kerley
- -------------------------------- -------------------------------
DIANA R. HARRINGTON SUSAN B. KERLEY
As Trustee and Not Individually As Trustee and Not Individually
C. Oscar Morong, Jr. Walter E. Robb, III
- -------------------------------- -------------------------------
C. OSCAR MORONG, JR. WALTER E. ROBB, III
As Trustee and Not Individually As Trustee and Not Individually
E. Kirby Warren William S. Woods, Jr.
- -------------------------------- -------------------------------
E. KIRBY WARREN WILLIAM S. WOODS, JR.
As Trustee and Not Individually As Trustee and Not Individually
<PAGE>
Exhibit 1(c)
LANDMARK TAX FREE INCOME FUNDS
ESTABLISHMENT AND
DESIGNATION OF SERIES OF
SHARES OF BENEFICIAL INTEREST (WITHOUT PAR VALUE)
Pursuant to Section 6.9 of the Declaration of Trust, as amended the
"Declaration of Trust"), of Landmark Tax Free Income Funds (the "Trust"), the
Trustees of the Trust hereby establish and designate the following series of
Shares (as defined in the Declaration of Trust) (each, a "Fund") to have the
following special and relative rights:
1. Each Fund shall be designated as follows:
Landmark New York Tax Free Income Fund and
Landmark National Tax Free Income Fund.
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each share of each Fund shall be redeemable, shall be
entitled to one vote (or a fraction thereof in respect of a fractional share) on
matters on which Shares of each Fund shall be entitled to vote, shall represent
a pro rata beneficial interest in the assets allocated or belonging to each
Fund, and shall be entitled to receive its pro rata share of the net assets of
each Fund upon liquidation of each Fund, all as provided in Section 6.9 of the
Declaration of Trust. The proceeds of sales of Shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to each Fund, unless otherwise required by law.
3. Shareholders of each Fund shall vote separately as a class on any matter
to the extent required by, and any matter shall have been deemed effectively
acted upon with respect to such Fund as provided in, Rule 18f-2, as from time to
time in effect, under the Investment Company Act of 1940, as amended, or any
successor rule, and the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Funds as set forth in Section 6.9 of the Declaration of Trust, except that all
existing assets and liabilities of the Trust as of the date of this Designation
of Series shall be deemed to be assets and liabilities of Landmark New York Tax
Free Income Fund and all shares of the Trust outstanding as of the date of this
Designation of Series shall be deemed to be outstanding Shares of Landmark New
York Tax Free Income Fund.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to change the designation of any
Fund now or hereafter created, or to otherwise change the special and relative
rights of any Fund.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
21st day of October, 1993.
H.B Alvord Diana R. Harrington
H.B Alvord Diana R. Harrington
Elliott J. Berv Susan B. Kerley
Elliott J. Berv Susan B. Kerley
Philip W. Coolidge C. Oscar Morong, Jr.
Philip W. Coolidge C. Oscar Morong, Jr.
Mark T. Finn Walter E. Robb
Mark T. Finn Walter E. Robb
Riley C. Gilley E. Kirby Warren
Riley C. Gilley E. Kirby Warren
William S. Woods, Jr.
William S. Woods, Jr.
<PAGE>
Exhibit 2(a)
AMENDED AND RESTATED
BY-LAWS
OF
LANDMARK NEW YORK TAX FREE INCOME FUND
(amended and restated as of July 18, 1991
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration",. "Distributor", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Transfer Agent", "Trust", "Trust Property" and "Trustees" have the respective
meanings given them in the Declaration of Trust of Landmark New York Tax Free
Income Fund, dated May 27, 1986, as amended from time to time.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the principal
office of the Trust in the Commonwealth of Massachusetts shall be in the City of
Boston, County of Suffolk.
Section 2. Other Offices. The Trust may have offices in such other places
without as well as within the Commonwealth of Massachusetts as the Trustees may
from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of Shareholders may be called at any time by
a majority of the Trustees and shall be called by any Trustee upon written
request. which shall specify the purpose or purposes for which such meeting is
to be called, of Shareholders holding in the aggregate not less than 10% of the
outstanding Shares entitled to vote on the matters specified in such written
request. Any such meeting shall be held within or without the Commonwealth of
Massachusetts on such day and at such time as the Trustees shall designate. The
holders of a majority of outstanding Shares entitled to vote present in person
or by proxy shall constitute a quorum at any meeting of Shareholders, except
that where any provision of law, the Declaration or these By-Laws permit or
require that holders of any series shall vote as a series, then a majority of
the aggregate number of Shares of that series entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that series.
In the absence of a quorum, a majority of outstanding Shares entitled to vote
present in person or by proxy may adjourn the meeting from time to time until a
quorum shall be present.
Whenever a matter is required to be voted by Shareholders of the Trust in
the aggregate under Section 6.8 and Section 6.9(g) of the Declaration, the Trust
may either hold a meeting of Shareholders of all series, as defined in Section
6.9 of the Declaration, to vote on such matter, or hold separate meetings for
Shareholders of each of the individual series to vote on such matter, provided
that (i) such separate meetings shall be held within one year of each other,
(ii) a quorum consisting of the holders of the majority of outstanding Shares of
the individual series entitled to vote present in person or by proxy shall be
present at each such separate meeting and (iii) a quorum consisting of the
holders of the majority of all Shares of the Trust entitled to vote present in
person or by proxy shall be present in the aggregate at such separate meetings,
and the votes of Shareholders at all such separate meetings shall be aggregated
in order to determine if sufficient votes have been cast for such matter to be
voted.
Section 2. Notice of Meetings. Notice of all meetings of Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder entitled to vote at such meeting at his
address as recorded on the register of the Trust, mailed at least 10 days and
not more than 60 days before the meeting. Only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned without further notice. No notice need by given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting. Where separate meetings are held for Shareholders of each of the
individual series to vote on a matter required to be voted on by Shareholders of
the trust in the aggregate, as provided in Article III, Section I above, notice
of each such separate meeting shall be provided in the manner described above in
this section 2.
Section 3. Record Date. For the purpose of determining the Shareholders who
are entitled to notice of and to vote at any meeting, or to participate in any
distribution, or for the purpose of any other action, the Trustees may from time
to time close the transfer books for such period, not exceeding 30 days, as the
Trustees may determine; or without closing the transfer books the Trustees may
fix a date not more than 60 days prior to the date of any meeting of
Shareholders or distribution or other action as a record date for the
determination of the persons to be treated as Shareholders of record for such
purpose. Where separate meetings are held for Shareholders of each of the
individual series to vote on a matter required to be voted on by Shareholders of
the Trust in the aggregate, as provided in Article III, Section 1 above, the
record date of each such separate meeting shall be determined in the manner
described above in this Section 3.
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of one or more Trustees or one or more of the officers of the Trust.
Only Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held Jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
such Share may be voted by such guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy.
Section 5. Inspection of Records. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted shareholders of a
Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
untitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the Chairman or by any
Trustee. Notice of the time and place of each meeting other than regular or
stated meetings shall be given by the Secretary or an Assistant Secretary or by
the officer or Trustee calling the meeting and shall be mailed to each Trustee
at least two days before the meeting, or shall be telegraphed, cabled or
wirelessed to each Trustee at his business address, or personally delivered to
him at least one day before the meeting. Such notice may, however, be waived by
any Trustee. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him. A
notice or waiver of notice need not specify the purpose of any meeting. The
Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, which telephone conference meeting shall be deemed
to have been held at a place designated by the Trustees at the meeting.
Participation in a telephone conference meeting shall constitute presence in
person at such meeting. Any action required or permitted to be taken at any
meeting of the Trustees may be taken by the Trustees without a meeting if all
the Trustees consent to the action in writing and the written consents are filed
with the records of the Trustees' meetings. Such consents shall be treated as a
vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees present
in person at any regular or special meeting of the Trustees shall constitute a
quorum for the transaction of business at such meeting and (except as otherwise
required by law, the Declaration or these By-Laws) the act of a majority of the
Trustees present at any such meeting, at which a quorum is present, shall be the
act of the Trustees. In the absence of a quorum, a majority of the Trustees
present may adjourn the meeting from time to time until a quorum shall be
present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES AND ADVISORY BOARD
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
the Executive Committee except those powers which by law, the Declaration or
these By-Laws the Trustees are prohibited from so delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman.
Section 2. Meeting, Quorum and Manner of Acting. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit.
Each Committee shall keep regular minutes of its meetings and records of
decisions taken without a meeting and cause them to be recorded in a book
designated for that purpose and kept in the office of the Trust.
Section 3. Advisory Board. The Trustees may appoint an Advisory Board to
consist in the first instance of not less than three members. Members of such
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written instrument signed by
him which shall take effect upon its delivery to the Trustees. The Advisory
Board shall have no legal powers and shall not perform the functions of Trustees
in any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may be resolution provide.
Section 4. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successor shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as may be assigned to him from time to time by the Trustees.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, and shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Secretaries. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Declaration or these By-Laws, each of the President, the Treasurer
and the Secretary shall be in office until his respective successor shall have
been duly elected and qualified, and all other officers shall hold office at the
pleasure of the Trustees. The Secretary and Treasurer may be the same person. A
Vice President and the Treasurer or a Vice President and the Secretary may be
the same person, but the offices of Vice President, Secretary and Treasurer
shall not be held by the same person. The President shall not hold any other
office. Except as above provided, any two offices may be held by the same
person. Any officer may be, but none need be, a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause by a vote of a majority
of the Trustees. Any officer or agent appointed by any officer or Committee may
be removed with or without cause by such appointing officer or committee.
Section 4. Powers and Duties of the President. The President shall be the
principal executive officer of the Trust. Subject to the control of the Trustees
and any Committee of the Trustees, the President shall at all times exercise a
general supervision and direction over the affairs of the Trust. The President
shall have the power to employ attorneys and counsel for the Trust and to employ
such subordinate officers, agents, clerks and employees as he may find necessary
to transact the business of the Trust. The President shall also have the power
to grant, issue, execute or sign such powers of attorney, proxies or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust. The President shall have such other powers and duties
as, from time to time, may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there is more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall keep the
minutes of all meetings of the Shareholders in proper books provided for that
purpose; shall keep the minutes of all meetings of the Trustees; shall have
custody of the seal of the Trust; and shall have charge of the Share transfer
books, lists and records unless the same are in the charge of the Transfer
Agent. The Secretary shall attend to the giving and serving of all notices by
the Trust in accordance with the provisions of these By-Laws and as required by
law; and subject to these By-Laws, shall in general perform all duties incident
to the office of Secretary and such other duties as from time to time may be
assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all of the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable law or provision of the Declaration,
the compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any committee of officers upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of September in
each year and shall end on the last day of August in the succeeding year,
provided, however, that the Trustees may from time to time change the fiscal
year.
ARTICLE VIII
SEAL
The Trustees shall adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
instruction that it be telegraphed, cabled or wirelessed. Any notice shall be
deemed to be given at the time when the same shall be mailed, telegraphed,
cabled or wirelessed.
ARTICLE X
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall at all times employ a
bank or trust company having a capital, surplus and undivided profits of at
least $5,000,000 as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Declaration, these By-Laws and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the same upon
written order;
(ii) to receive and receipt for any monies due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may
direct;
(iii) to disburse such funds upon orders or vouchers;
(iv) if authorized by the Trustees, to keep the books and accounts of the
Trust and furnish clerical and accounting services; and
(v) if authorized to do so by the Trustees, to compute the net income of
the Trust and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank or trust company organized under
the laws of the United States or one of the states thereof and having capital,
surplus and undivided profits of at least $5,000,000.
Section 2. Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust or its custodian.
Section 3. Acceptance of Receipts in Lieu of Certificates. Subject to such
rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
Section 4. Provisions of Custodian Contract. The following provisions shall
apply to the employment of a custodian pursuant to this Article X and to any
contract entered into with the custodian so employed:
(a) The Trustees shall cause to be delivered to the custodian all
securities owned by the Trust or to which it may become entitled, and
shall order the same to be delivered by the custodian only upon
completion of a sale, exchange, transfer, pledge, or other disposition
thereof, and upon receipt by the custodian of the consideration
therefor or a certificate of deposit or a receipt of an issuer or of
its Transfer Agent, all as the Trustees may generally or from time to
time require or approve, or to a successor custodian; and the Trustees
shall cause all funds owned by the Trust or to which it may become
entitled to be paid to the custodian, and shall order the same
disbursed only for investment against delivery of the securities
acquired, or in payment of expenses, including management
compensation, and liabilities of the Trust, including distributions to
Shareholders. or to a successor custodian; provided, however, that
nothing herein shall prevent delivery of securities for examination to
the broker purchasing the same in accord with the "street delivery"
custom whereby such securities are delivered to such broker in
exchange for a delivery receipt exchanged on the same day for an
uncertified check of such broker to be presented on the same day for
certification.
(b) In case of the resignation, removal or inability to serve of any such
custodian, the Trust shall promptly appoint another bank or trust
company meeting the requirements of this Article X as successor
custodian. The agreement with the custodian shall provide that the
retiring custodian shall, upon receipt of notice of such appointment,
deliver all Trust Property in its possession to and only to such
successor, and that pending appointment of a successor custodian, or a
vote of the Shareholders to function without a custodian, the
custodian shall not deliver any Trust Property to the Trust, but may
deliver all or any part of the Trust Property to a bank or trust
company doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus and undivided profits (as shown
in its last published report) of at least $5,000,000; provided that
arrangements are made for the Trust Property to be held under terms
similar to those on which they were held by the retiring custodian.
ARTICLE XI
SALE OF SHARES OF THE TRUST
The Trustees may from time to time issue and sell or cause to be issued and
sold Shares for cash or other property, which shall in every case be paid or
delivered to the Custodian as agent of the Trust before the delivery of any
certificate for such shares. The Shares, including such shares which may have
been repurchased by the Trust (herein sometimes referred to as "treasury
Shares"), may be sold at a price based on the net asset value thereof (as
defined in Article XII hereof) determined by or on behalf of the Trustee next
after the sale is made or at some later time after such sale.
When a distribution contract is in effect pursuant to Section 4.2 of
Article IV of the Declaration, the time of sale shall be the time when an
unconditional order Is placed with the distributor or with a dealer with whom
the underwriter shall have a sales agreement, whichever first occurs. Such
contract may provide for the sale of Shares either at a price based on the net
asset value determined next after the order is placed with said distributor or
dealer or at a price based on a net asset value to be determined at some later
time. No Shares need be offered to existing Shareholders before being offered to
others. No Shares shall be sold by the Trust (although Shares previously
contracted to be sold may be issued upon payment therefor) during any period
when the determination of net asset value is suspended by declaration of the
Trustees pursuant to the provisions of Article XII hereof. In connection with
the acquisition by merger or otherwise of all or substantially all the assets of
an investment company (whether a regulated or private investment company or a
personal holding company), the Trustees may issue or cause to be issued Shares
and accept in payment therefor such assets at not more than market value in lieu
of cash, notwithstanding that the federal income tax basis to the Trust of any
assets so acquired may be less than the market value, provided that such assets
are of the character in which the Trustees are permitted to invest the funds of
the Trust.
ARTICLE XII
NET ASSET VALUE OF SHARES
Section 1. Time of Determination. The net asset value of each Share
outstanding shall be determined by the Trustees on each business day (which term
shall, whenever it appears in these By-Laws, be deemed to mean each day when
the New York Stock Exchange is open for trading) as of the close of trading on
the New York Stock Exchange. The power and duty to determine net asset value may
be delegated by the Trustees from time to time to one or more of the Trustees or
officers of the Trust, to the other party to any contract entered into pursuant
to Section 4.1 of Article IV of the Declaration, or to the custodian or the
Transfer Agent. The Trustees may also determine or cause to be determined the
net asset value as of any particular time in addition to the closing time of
each business day. Such additional or interim determination may be made either
by appraisal or by calculation or estimate. Any such calculation or estimate
shall be based on changes the market value of representative or selected
securities or on changes in recognized market averages since the last closing
appraisal, and made in a manner which in the opinion of the Trustees will fairly
reflect the changes in the net asset value. At any time when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), the
Trustees may cause the net asset value to be determined by appraising all
securities at last sale prices, or at not more than the current asked nor less
than the current bid prices. in the over-the-counter or other market, and all
other assets at fair value in the best Judgment of the Trustees, and otherwise
proceeding as above stated. For the purposes of Article VII of the Declaration
and Articles Xl and XII hereof, any reference to the time at which a
determination of net asset value is made shall mean the time as of which the
determination is made.
Section 2. Suspension of Determination. The Trustees may declare a
suspension of the determination of net asset value to the extent permitted by
the 1940 Act and rules, regulations and orders promulgated by the Commission
thereunder.
Section 3. Computation. The net asset value of each Share as of any
particular time shall be the quotient (adjusted to the nearer cent) obtained by
dividing the value, as of such time, of the net assets of the Trust (i.e., the
value of the assets of the Trust less its liabilities exclusive of capital and
surplus) by the total number of Shares outstanding (exclusive of treasury
Shares) at such time, all determined and computed as follows:
A. The assets of the Trust shall be deemed to include (i) all cash on
hand, on deposit or on call, including any interest accrued thereon,
(ii) all bonds, debentures, bills and notes and accounts receivable
and other evidences of indebtedness, (iii) all shares of stock,
subscription rights, warrants and other securities, other than its own
Shares, (iv) all stock and cash dividends or distributions receivable
by the Trust which have been declared and are ex-dividend to
Shareholders of record at or before the time as of which the net asset
value is being determined, (v) all interest accrued on any
interest-bearlng securities owned by the Trust, and (vi) all other
property of every kind and nature including prepaid expenses, the
value of such assets to be determined as follows:
(a) The value of any cash on hand, on deposit or on call, bills and
notes and accounts receivable, prepaid expenses, cash dividends
and interest declared or accrued as aforesaid and not yet
received, shall be deemed to be the face amount thereof unless
the Trustees shall have determined that any such item is not
worth the face amount thereof, in which event the value thereof
shall be determined in good faith by or at the direction of the
Trustees;
(b) The value of any security which is listed or dealt in upon the
New York Stock Exchange or upon the American Stock Exchange shall
be determined by taking the latest sale price (or, lacking any
sales, not less than the closing bid price nor more than the
closing asked price therefor) at the time as of which the net
asset value is being determined, all as reported by any report in
common use or authorized by the New York Stock Exchange or the
American Stock Exchange, as the case may be; provided, however,
that prices on such Exchanges need not be used to determine the
value of debt securities owned by the Trust if, in the opinion of
the Trustees, some other method would more accurately reflect the
fair market value of such debt securities;
(c) The value of any security which is not listed or dealt in on
either of such Exchanges shall be determined in the manner
described in the next preceding paragraph if listed or dealt in
on any other Exchange;
(d) The value of any security not listed or dealt in on any Exchange
and for which market quotations are readily available shall be
determined by taking not less than the closing bid price nor more
than the closing asked price therefor on the date as of which the
net asset value is being determined; and
(e) In the case of any security or other property for which no price
quotations are available as above provided, the value thereof
shall be determined from time to time in such manner as is
specified from time to time by vote of the Trustees.
B. The liabilities of the Trust shall be deemed to include (i) all bills,
notes and accounts payable, (ii) all administrative expenses payable
and/or accrued, (iii) all contractual obligations for the payment of
money or property, including the amount of any unpaid dividends upon
the Shares, declared to Shareholders of record at or before the time
as of which the net asset value is being determined, (iv) all reserves
authorized or approved by the Trustees for taxes or contingencies, and
(v) all other liabilities of the Trust of whatsoever kind and nature
except liabilities represented by outstanding Shares and capital
surplus of the Trust.
C. For the purposes of this Article XII
(i) Shares sold shall be deemed to become outstanding immediately
after the close of business on the day on which the contract of
sale is made, and the sale price thereof (less commission, if
any, and less any stamp or other tax payable by the Trust in
connection with the issuance thereof) shall thereupon be deemed
an asset of the Trust.
(ii) Shares tendered for purchase by the Trust under Section 7.1 of
Article VII of the Declaration shall be deemed to be outstanding
at the close of business on the day as of which the purchase
price is determined, and thereafter they shall be deemed treasury
stock and until paid, the price thereof shall be deemed a
liability of the Trust.
(iii) Credits and contractual obligations payable to the Trust in
foreign currency and liabilities and contractual obligations
payable by the Trust in foreign currency shall be taken at the
current cable rate of exchange as nearly as practicable at the
time as of which the net asset value is computed.
(iv) Portfolio securities owned by the Trust which the Trustees or
their delegate shall, pursuant to Section 7.4 of Article VII of
the Declaration, have selected for distribution in redemption or
repurchase of Shares tendered to it pursuant to Section 7.1 of
Article VII of the Declaration at any time shall be Included in
determining the price of such shares, and thereafter neither such
securities nor such Shares shall be included in determinations of
net asset value pursuant to this Article XII.
ARTICLE XIII
DIVIDENDS AND DISTRIBUTIONS
Section 1. Limitations on Distributions. The total of distributions to
Shareholders paid in respect of any one fiscal year, subject to the exceptions
noted below, shall, when and as declared by the Trustees be approximately equal
to the sum of
(A) The net income, exclusive of the profits or losses realized upon the
sale of securities or other property, for such fiscal year, determined
in accordance with generally accepted accounting principles (which, If
the Trustees so determine, may be adjusted for net amounts included as
such accrued net income in the price of Shares issued or repurchased),
but if the net income exceeds the amount distributed by less than one
cent per share outstanding at the record date for the final dividend,
the excess shall be treated as distributable income for the following
fiscal year; and
(B) in the discretion of the Trustees, an additional amount which shall
not substantially exceed the access of profits over losses on sales of
securities or other property for such fiscal year.
The decision of the Trustees as to what, in accordance with generally
accepted accounting principles, is income and what is principal shall be final,
and except as specifically provided herein the decision of the Trustees as to
what expenses and charges of the Trust shall be charged against principal and
what against income shall be final, all subject to any applicable provisions of
the 1940 Act and rules, regulations and orders of the Commission promulgated
thereunder. For the purposes of the limitation imposed by this Section 1, Shares
issued pursuant to Section 2 of this Article XIII shall be valued at the amount
of cash which the Shareholders would have received if they had elected to
receive cash In lieu of such Shares.
Inasmuch as the computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give to the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes. Any payment made to
Shareholders pursuant to clause (B) of this Section l shall be accompanied by a
written statement showing the source or sources of such payment, and the basis
of computation thereof.
Section 2. Distributions Payable in Cash or Shares. The Trustees shall have
power, to the fullest extent permitted by the laws of the Commonwealth of
Massachusetts but subject to the limitation as to cash distributions imposed by
Section l of this Article XIII, at any time or from time to time to declare and
cause to be paid distributions payable at the election of any Shareholder
(whether exercised before or after the declaration of the distribution) either
in cash or in Shares, provided that the sum of (i) the cash distribution
actually paid to any Shareholder and (ii) the net asset value of the Shares
which that Shareholder elects to receive, in effect at such time at or after the
election as the Trustees may specify, shall not exceed the full amount of cash
to which that Shareholder would be entitled if he elected to receive only cash.
In the case of a distribution payable in cash or Shares at the election of a
Shareholder, the Trustees may prescribe whether a Shareholder, failing to
express his election before a given time shall be deemed to have elected to take
Shares rather than cash, or to take cash rather than Shares, or to take Shares
with cash adjustment for fractions.
Section 3. Stock Dividends. Anything in these By-Laws to the contrary
notwithstanding, the Trustees may at any time declare and distribute pro rata
among the Shareholders a "stock dividend" out of either authorized but unissued
Shares or treasury Shares of the Trust or both.
ARTICLE XIV
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or new
By-Laws may be adopted (a) by Majority Shareholder Vote, or (b) by the
Trustees, provided, however, that no By-Law may be amended, adopted or repealed
by the Trustees if such amendment, adoption or repeal requires, pursuant to law,
the Declaration or these By-Laws, a vote of the Shareholders.
<PAGE>
Exhibit 2(b)
Article III, Section 3 of the By-laws has been amended to read in its
entirety as follows:
"Section 3. Record Date. The Trustees may fix a date not more than 60 days
prior to the date of any meeting of Shareholders or distribution or other
action as a record date for the purpose of determining the Shareholders who
are entitled to notice of and to vote at such meeting or any adjournment
thereof or to participate in such distribution or for the purpose of such
other action; or without fixing such record date the Trustees may for any
of such purposes from time to time close the transfer books for such
period, not exceeding 30 days as the Trustees may determine. Where separate
meetings are held for Shareholders of each of the individual series to vote
on a matter required to be voted on by Shareholders of the Trust in the
aggregate, as provided in Article III, Section 1 above, the record date of
each such separate meeting, for purposes of determining the Shareholders
who are entitled to notice of and to vote at such meeting or any
adjournment thereof, shall be determined in the manner described above in
this Section 3."
<PAGE>
AMENDMENT TO THE BY-LAWS OF LANDMARK FUNDS I, LANDMARK FUNDS II, LANDMARK
INTERNATIONAL FUNDS, LANDMARK FIXED INCOME FUNDS, LANDMARK TAX FREE INCOME
FUNDS, LANDMARK FUNDS III, LANDMARK PREMIUM FUNDS, LANDMARK MULTI-STATE TAX FREE
FUNDS, LANDMARK INSTITUTIONAL TRUST, LANDMARK TAX FREE RESERVES AND VARIABLE
ANNUITY PORTFOLIOS - AS ADOPTED BY THE BOARDS OF TRUSTEES ON AUGUST 8, 1997:
VOTED: That Article III, Section 4 of the By-Laws of the Trust be
and hereby is amended in its entirety to read as follows*:
Section 4. Proxies. At any meeting of Shareholders, any holder
of Shares entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on
file with the Secretary, or with such other officer or agent of the
Trust as the Secretary may direct, for verification prior to the time
at which such vote shall be taken. [Any Shareholder may give
authorization through telephonic or telegraphic methods of
communication for another person to execute his or her proxy.] Pursuant
to a vote of a majority of the Trustees, proxies may be solicited in
the name of one or more Trustees or one or more of the officers of the
Trust. Only Shareholders of record shall be entitled to vote. Each full
Share shall be entitled to one vote and fractional Shares shall be
entitled to a vote of such fraction. When any Share is held jointly by
several persons, any one of them may vote at any meeting in person or
by proxy in respect of such Share, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners
or their proxies so present disagree as to any vote to be cast, such
vote shall not be received in respect of such Share. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. If the holder of any
such Share is a minor or a person of unsound mind, and subject to
guardianship or to the legal control of any other person as regards the
charge or management of such Share, such Share may be voted by such
guardian or such other person appointed or having such control, and
such vote may be given in person or by proxy. [Unless otherwise
specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting.]
*New language is bracketed.
<PAGE>
Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of December 2, 1988, by and between
LANDMARK NEW YORK TAX FREE INCOME FUND, a Massachusetts business trust (the
"Fund"), and CITIBANK, N.A., a national banking association ("Citibank" or the
"Adviser").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act"); and
WHEREAS, the Fund wishes to engage the Adviser to provide certain
investment advisory services, and the Adviser is willing to provide such
investment advisory services to the Fund on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the companies hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Adviser. The Adviser shall provide the Fund with such
investment advice and supervision as the latter may from time to time consider
necessary for the proper supervision of its investment assets. Citibank shall
act as the Adviser to 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 Fund's Declaration
of Trust, dated May 27, 1986, and By-laws, as each may be amended from time to
time (respectively, the "Declaration" and the "By-Laws"), to the provisions of
the 1940 Act and to the Fund's then-current Prospectus and Statement of
Additional Information. The Adviser 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 Fund at any time, however, make any definite
determination as to investment policy and notify the Adviser thereof in writing,
the Adviser 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 Adviser 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
portfolio securities for the Fund's account with brokers or dealers selected by
it, and to that end the Adviser is authorized as the agent of the Fund to give
instructions to the custodian 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, the Adviser is
directed to seek for the Fund, in its best judgment, prompt execution in an
effective manner at the most favorable price. Subject to this requirement of
seeking the moat favorable price, securities may be bought from or sold to
broker-dealers who have furnished statistical, research and other information or
services to the Adviser or the Fund, subject to any applicable laws, rules and
regulations. In making purchases or sales of securities or other property for
the account of the Fund the Adviser may deal with itself or with the Trustees of
the Fund or the Fund's principal underwriter or distributor, to the extant such
actions are permitted by the 1940 Act.
2. Allocation of Charges and Expenses. The Adviser shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. It is understood that the Fund will pay
all of its own expenses including, without limitation, compensation of Trustees
not "affiliated" with the Adviser; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, administrator, distributor, shareholder servicing agent, registrar or
dividend disbursing agent of the Fund; expenses of distributing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses, shareholder reports, notices, proxy statements and reports
to governmental officers and commissions and to shareholders of the Fund;
expenses connected with the execution, recording and settlement of portfolio
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 shares of the Fund; expenses of shareholder meetings; and expenses
relating to the issuance, registration and qualification of shares of the Fund.
3. Compensation of the Adviser. For the services to be rendered, the Fund
shall pay to the Adviser an investment advisory tee computed and paid monthly at
an annual rate equal to 0.40% of the Fund's average daily net assets for its
then-current fiscal year. If Citibank serves as Adviser for less than the whole
of any period specified in this Section 3, the compensation to Citibank, as
Adviser, shall be prorated.
4. Covenants of the Adviser. The Adviser agrees that it will not deal with
itself, or with the Trustees of the Fund or the Fund'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 the shares of the Fund except as permitted
by the Fund's Declaration, and will comply with all other provisions of the
Fund's Declaration of Trust and By-Laws and the then-current Prospectus and
Statement of Additional Information of the Fund relative to the Adviser and its
Trustees and officers.
5. Limitation of Liability of the Adviser. The Adviser 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 portfolio transactions
for the Fund, except for wilful 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 "Adviser"
shall include Directors, officers and employees of the Adviser as well as
Citibank itself.
6. Activities of the Adviser. The services of the Adviser to the Fund are
not to be deemed to be exclusive, Citibank being free to render investment
advisory and/or other services to others. It is understood that Trustees,
officers, and shareholders of the Fund are or may be or may become interested in
the Adviser, as Directors, officers, employees, or otherwise and that Directors,
officers and employees of the Adviser are or may become similarly interested in
the Fund and that the Adviser may be or may become interested in the Fund 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 and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until September 30, 1990 on which date it will terminate unless its
continuance after September 30, 1990 is "specifically approved at least
annually" (a) by the vote of a majority of the Trustees of the Fund who are not
"interested parsons" of the Fund or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Fund 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 the Adviser, 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.
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.
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.
<PAGE>
LANDMARK NEW YORK TAX FREE INCOME FUND
By /s/ Philip Coolidge
-----------------------------------
Philip Coolidge
CITIBANK, N.A.
By /s/ Claudia R. Roux
-----------------------------------
Claudia R. Roux
<PAGE>
Exhibit 5(b)
INVESTMENT ADVISORY AGREEMENT
LANDMARK TAX FREE INCOME FUNDS -
LANDMARK NATIONAL TAX FREE INCOME FUND
INVESTMENT ADVISORY AGREEMENT, dated as of October 21, 1993, by and
between Landmark Tax Free Income Funds, a Massachusetts business trust (the
"Trust"), and CITIBANK, N.A., a national banking association ("Citibank" or the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the series of the Trust designated as Landmark
National Tax Free Income Fund (the "Fund"), and the Adviser is willing to
provide such investment advisory 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 the Adviser. The Adviser shall provide the Fund with such
investment advice and supervision as the Trust may from time to time consider
necessary for the proper supervision of the Fund's investment assets. Citibank
shall act as the Adviser 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 May 27, 1986, as amended, and By-laws, as each may
be amended from time to time (respectively, the "Declaration" and the
"By-Laws"), to the provisions of the 1940 Act, and to the then-current
Prospectus and Statement of Additional Information with respect to the Fund. The
Adviser 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 Adviser thereof in writing, the
Adviser 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 Adviser 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
portfolio securities for the Fund's account with the brokers or dealers selected
by it, and to that end the Adviser is authorized as the agent of the Trust to
give instructions to the custodian 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, the Adviser
is directed to seek for the Fund, in its best judgment, prompt execution in an
effective manner at the most favorable price. Subject to this requirement of
seeking the most favorable price, securities may be bought from or sold to
broker-dealers who have furnished statistical, research and other information or
services to the Adviser or the Fund, subject to any applicable laws, rules and
regulations. In making purchases or sales of securities or other property for
the account of the Fund, the Adviser may deal with itself or with the Trustees
of the Trust or the Trust's principal underwriter or distributor, to the extent
such actions are permitted by the 1940 Act.
2. Allocation of Charges and Expenses. The Adviser shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. 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, compensation of Trustees not "affiliated" with
the Adviser; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Fund; fees and expenses of
independent auditors, of legal counsel and of any transfer agent, administrator,
distributor, shareholder servicing agent, registrar or dividend disbursing agent
of the Trust; expenses of distributing and redeeming shares and servicing
shareholder accounts; expenses of preparing, printing and mailing prospectuses,
statements of additional information, shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to
shareholders of the Fund; expenses connected with the execution, recording and
settlement of portfolio 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 shares of the Fund; expenses of shareholder
meetings; and expenses relating to the issuance, registration and qualification
of shares of the Fund.
3. Compensation of the Adviser. For the services to be rendered, the Trust
shall pay to the Adviser from the assets of the Fund an investment advisory fee
computed and paid monthly at an annual rate equal to 0.40% of the Fund's average
daily net assets for the Fund's then-current fiscal year. If Citibank serves as
Adviser for less than the whole of any period specified in this Section 3, the
compensation to Citibank, as Adviser, shall be prorated.
4. Covenants of the Adviser. The Adviser 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 the shares of 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 Prospectus and Statement of
Additional Information applicable to the Fund relative to the Adviser and its
Directors and officers.
5. Limitation of Liability of the Adviser. The Adviser 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 portfolio 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 "Adviser"
shall include Directors, officers and employees of the Adviser as well as
Citibank itself.
6. Activities of the Adviser. The services of the Adviser to the Fund are
not to be deemed to be exclusive, Citibank being free to render investment
advisory 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 the Adviser, as Directors, officers, employees, or otherwise and that
Directors, officers and employees of the Adviser are or may become similarly
interested in the Trust and that the Adviser 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 and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until October 21, 1995, on which date it will terminate unless its
continuance after October 21, 1995 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 the Adviser 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 the Adviser, 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.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
The undersigned Trustee of the Trust has executed this Agreement not
individually, but as Trustee under the Trust's Declaration of Trust, dated May
27, 1986, as amended, and the obligations of this Agreement are not binding upon
any of the Trustees or shareholders of the Trust individually, but bind only the
Trust estate.
LANDMARK TAX FREE INCOME FUNDS CITIBANK, N.A.
By: /s/ Philip Coolidge By: /s/ Andrew B. Shoup
------------------------ ------------------------
Title: Title:
<PAGE>
Exhibit 6(a)
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of June 24, 1986, and amended and restated
as of August 19, 1994 by and between LANDMARK TAX FREE INCOME FUNDS, a
Massachusetts business trust (the "Trust"), and THE LANDMARK FUNDS BROKER-DEALER
SERVICES, INC., a Massachusetts corporation ("LFBDS" or the "Distributor") with
respect to Shares of Beneficial Interest to be designated "Class A".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together will any series which may in the future be
established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted an Amended and
Restated Distribution Plan, dated as of August 19, 1994 (the "Distribution
Plan"), which is incorporated herein by reference and pursuant to which the
Trust desires to enter into this Distribution Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain services with
respect to the distribution of shares designated Class A Shares (the "Shares")
of each Fund, and LFBDS is willing to provide such services to the Trust on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the Trust,
to sell Shares of each Fund upon the terms hereinbelow set forth during the
term of this Agreement. While this Agreement is in force, the Distributor
agrees to use its best efforts to find purchasers for Shares of each Fund.
The Distributor shall have the right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed
(except for clerical errors and errors of transmission), to fill
unconditional orders for Shares of each Fund placed with the Distributor by
any dealer, all such orders to be made in the manner set forth in the
Trust's then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional
information") relating to such Shares. The price which shall be paid to the
Trust for the Shares of each Fund so purchased shall be the net asset value
per Share as determined in accordance with the provisions of the Trust's
Declaration of Trust and By-Laws, as each may from time to time be amended
(collectively, the "Governing Instruments") plus the amount of the
applicable sales charge, as provided in the Trust's currently effective
prospectus relating to the Trust or such Fund. The Distributor shall notify
the Custodian of the Trust, at the end of each business day, or as soon
thereafter as the orders placed with the Distributor have been compiled, of
the number of Shares of each Fund and the prices thereof which have been
ordered through the Distributor since the end of the previous business day.
The right granted to the Distributor to place orders for Shares with the
Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged with and into or consolidated with the Trust or any Fund or in the
event that the Trust or any Fund acquires, by purchase or otherwise, all
(or substantially all) the assets or the outstanding shares of any such
company; nor shall it apply to Shares issued by the Trust as a dividend or
stock split. The exclusive right to place orders for Shares granted to the
Distributor may be waived by the Distributor by notice to the Trust in
writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust
hereby acknowledges that the Distributor may render distribution and other
services to other parties, including other investment companies. In
connection with its duties hereunder, the Distributor shall also arrange
for computation of performance statistics with respect to each Fund and
arrange for publication of current price information in newspapers and
other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust to
or through any dealer having a sales agreement with the Distributor upon
the following terms and conditions:
The public offering price of the Shares, including the Shares of each
Fund, i.e., the price per Share at which the Distributor or dealer
purchasing Shares through the Distributor may sell shares to the public,
shall be the net asset value of such Shares plus the amount of the
applicable sales charge, as provided in the Trust's currently effective
Prospectus relating to the Trust or such Fund. The difference between the
public offering price and net asset value (which amount shall not be in
excess of that set forth in the Prospectus) may be retained by the
Distributor or all or any part thereof may be paid by the Distributor to a
broker-dealer registered as such under the Securities Exchange Act of 1934
in accordance with the Prospectus and the Distribution Plan.
The net asset value of Shares of each Fund shall be determined by the
Trust, or by an agent of the Trust, as of the close of trading on the New
York Stock Exchange on each day on which the New York Stock Exchange is
open for trading (and on such other days as the Trustees deem necessary in
order to comply with Rule 22c-1 under the 1940 Act), in accordance with the
method established pursuant to the Governing Instruments. The Trust shall
have the right to suspend the sale of Shares of any Fund if, because of
some extraordinary condition, the New York Stock Exchange shall be closed,
or if conditions existing during the hours when the Exchange is open render
such action advisable or for any other reason deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval, if any, of its shareholders, take all necessary action
to register such number of Shares of each Fund under the Securities Act of
1933 as amended (the "1933 Act"), as the Distributor may reasonably be
expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its Directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees, officers
and shareholders of the Trust are or may become interested in the
Distributor, as Directors, officers, employees, or otherwise and that
Directors, officers and employees of the Distributor are or may become
similarly interested in the Trust and that the Distributor may be or become
interested in the Trust as a shareholder or otherwise. The Distributor is
responsible for its own conduct and the employment, control and conduct
(but only with respect to the duties and obligations of the Distributor
hereunder) of its agents and employees and for any injury to any of such
agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it will
use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. relating to the sale of
Shares, and will indemnify and hold harmless the Trust and each of its
Trustees and officers and each person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act (the "Indemnified
Parties") against all losses, liabilities, damages or expenses (including
the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) arising from any claim, demand, action or suit
(collectively, "Claims"), arising by reason of any person's acquiring any
of the Shares through the Distributor, which may be based upon the 1933 Act
or any other statute or common law, on account of any wrongful act of the
Distributor or any of its employees (including any failure to conform with
any requirement of any state or federal law or the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. relating to the
sale of Shares) or on the ground that the registration statement under the
1933 Act, including all amendments thereto (the "Registration Statement"),
or Prospectus or previous prospectus or Statement of Additional Information
or previous statement of additional information, with respect to such
Shares, includes or included an untrue statement of a material fact or
omits or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, if and
only if any such act, statement or omission was made in reliance upon
information furnished by the Distributor to the Trust; provided, however,
that in no case (i) is the indemnity of the Distributor in favor of any
Indemnified Party to be deemed to protect any such Indemnified Party
against liability to which such Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its or his duties or by reason of its or his reckless
disregard of its or his obligations and duties under this Agreement, or
(ii) is the Distributor to be liable under its indemnity agreement
contained in this Section 4 with respect to any Claim made against any
Indemnified Party unless such Indemnified Party shall have notified the
Distributor in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the Claim shall
have been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such Claim shall not relieve
it from any liability which it may have to any Indemnified Party otherwise
than on account of its indemnity agreement contained in this Section 4. The
Distributor shall be entitled to participate, at its own expense, in the
defense, or, if it so elects, to assume the defense, of any suit brought to
enforce any such Claim, and, if the Distributor elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to each Indemnified Party. In the event that the Distributor
elects to assume the defense of any such suit and retain such counsel, each
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it but, in case the Distributor does not elect to
assume the defense of any such suit, it shall reimburse the Indemnified
Parties for the reasonable fees and expenses of any counsel retained by
them. Except with the prior written consent of the Distributor, no
Indemnified Party shall confess any Claim or make any compromise in any
case in which the Distributor will be asked to indemnify such Indemnified
Party. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against it in connection with
the issuance and sale of any of the Shares.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf
of the Trust in connection with the sale of Shares of any Fund, other than
those contained in the Registration Statement or Prospectus or Statement of
Additional Information relating to such Fund.
5. The Trust will pay, or cause to be paid--
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and
filing of the Registration Statement, Prospectus and Statement of
Additional Information with respect to Shares of each Fund, and
preparing and mailing to shareholders Prospectuses, Statements of
Additional Information, statements and confirmations and periodic
reports (including the expense of setting in type the Registration
Statement, Prospectus and Statement of Additional Information or any
periodic report with respect to Shares of each Fund);
(ii) the cost of preparing temporary or permanent certificates for
Shares;
(iii) the cost and expenses of delivering to the Distributor at
office in Boston, Massachusetts all Shares purchased through it as
agent hereunder;
(iv) a distribution fee periodically at an annual rate not to
exceed 0.15% of the portion of the average daily net assets of each
Fund (other than National Tax Free Income Fund) that is represented by
Shares for its then-current fiscal year, and in the case of National
Tax Free Income Fund, a distribution fee periodically at an annual
rate not to exceed 0.05% of the portion of the average daily net
assets of such Fund that is represented by shares for its then-current
fiscal year, in each case subject to the Distribution Plan*, and,
under certain circumstances, the Distributor may impose certain
deferred sales charges in connection with the repurchase of Shares of
each Fund and the Distributor may retain (or receive from each Fund,
as the case may be) all such deferred sales charges;
- ----------
*May include additional fee for print and electronic media advertising,
depending upon Distribution Plan
(v) except in the case of New York Tax Free Income Fund, at such
time as may be agreed upon by the Trust and the Distributor, a service
fee from the assets of such Fund to the Distributor at an annual rate
not to exceed 0.25% of the portion of the average daily net assets of
such Fund that is represented by Shares that are owned by investors
for whom a brokcr-dcaler who has performed personal services and/or
account maintenance services under a dealer agreement with the
Distributor is the holder or dealer of record, subject to the
Distribution Plan; and the Distributor shall be entitled to be paid
any fees payable under this paragraph (v) hereof with respect to
Shares for which no broker-dealer of record exists or qualification
standards have not been met as partial consideration for personal
services and/or account maintenance services provided by the
Distributor with respect to the Shares;
(v) all fees and disbursements of the Transfer Agent and Custodian
with respect to each Fund, subject to the Trust's Administrative
Services Plan;
(vi) a fee to each Shareholder Servicing Agent (pursuant to a
shareholder servicing agreement with each such Agent), subject to the
Trust's Administrative Services Plan;
(vii) a fee to the Administrator of the Trust (pursuant to the
Administrative Services Agreement), subject to the Trust's
Administrative Services Plan; and
(viii) a fee to the investment adviser of each Fund, if any
(pursuant to the Investment Advisory Agreement with any such Adviser).
The Distributor agrees that, with respect to the sale of Shares of each
Fund, after the Prospectus and Statement of Additional Information and
periodic reports with respect to such Fund have been set in type, it will
bear the expense (other than the cost of mailing to shareholders of the
Trust) of printing and distributing any copies thereof which are to be used
in connection with the offering or sale of Shares of such Fund to any
dealer or prospective investor. The Distributor further agrees that it
will bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use by any dealer
in connection with the offering of the Shares of such Fund for sale to the
public and any expense of sending confirmations and statements to any
dealer having a sales agreement with the Distributor. Thc Distributor will
also bear the cost of any compensation paid to dealers in connection with
the sale of Shares of such Fund. The Distributor also agrees to bear the
expenses of qualification of Shares of such Fund for sale in the various
states and, if necessary or advisable in connection therewith. of
qualifying the Trust as a broker or dealer in any such state.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any
recommendation or requirement of the Securities and Exchange Commission or
other governmental authority or to obtain any advantage under Massachusetts
or federal tax laws, it shall notify the Distributor of the form of
amendment which it deems necessary or advisable and the reasons therefor.
If the Distributor declines to assent to such amendment (after a
reasonable time), the Trust may terminate this Agreement forthwith by
written notice to the Distributor without payment of any penalty. If, at
any time during the term of this Agreement, the Distributor requests the
Trust to make any change in its Governing Instruments or in its methods of
doing business which are necessary in order to comply with any requirement
of federal law or regulations of the Securities and Exchange Commission or
of a national securities association of which the Distributor is or may
become a member, relating to the sale of Shares, and the Trust fails (after
a reasonable time) to make any such change as requested, the Distributor
may terminate this Agreement forthwith by written notice to the Trust
without payment of any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of any Fund and that, so far as it can control the
situation, it will prevent any of its Directors or officers from taking any
long or short position in the Shares of such Fund, except as permitted by
the Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force indefinitely unless its continuance thereafter is
specifically approved at least annually ( i ) by the vote of a majority of
the Trustees of the Trust who are not "interested persons" of the Trust or
of the Distributor at a meeting specifically called for the purpose of
voting on such approval, and (ii) by the Board of Trustees of the Trust, or
by the "vote of a majority of the outstanding voting securities" of the
Shares of each Fund as to which this Agreement is to continue. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the 1940 Act.
This Agreement may be terminated as to any Fund at any time by either
party without payment of any penalty on not more than 60 days' nor less
than 30 days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment
9. LFBDS may subcontract for the performance of LFBDS' obligations
hereunder with any one or more persons; provided, however, that LFBDS shall
not enter into any such subcontract unless the Trustees of the Trust shall
have found the subcontracting party to be qualified to perform the
obligations sought to be subcontracted; and provided, further, that, unless
the Trust otherwise expressly agrees in writing, LFBDS shall be as fully
responsible to the Trust for the acts and omissions of any subcontractor as
it would be for its own acts or omissions.
10. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least
annually" shall have the respective meanings specified in, and shall be
construed in a manner consistent with, the 1940 Act, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
thereunder, and provided, however, that the term "assignment" shall include
(without limitation) any sale, transfer or conversion of a controlling
interest of any class of voting stock of LFBDS or of any entity which holds
a controlling interest of any class of voting stock of LFBDS or another
such entity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
"thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the Trust's
Declaration of Trust, dated May 27, 1986, as amended, and the obligations of
this Agreement are not binding upon any of the Trustees or shareholders of the
Trust individually, but bind only the Trust estate.
LANDMARK TAX FREE INCOME FUNDS THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: Philip Coolidge By: Philip Coolidge
----------------------- -------------------------
Title: President Title: Chief Executive Officer
----------------------- -------------------------
DA/LTFIF/Class A
<PAGE>
Exhibit 6(b)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of August 19, 1994 by and between
LANDMARK TAX FREE INCOME FUNDS, a Massachusetts business trust (the "Trust"),
and THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a Massachusetts corporation
("LFBDS" or the "Distributor") with respect to Shares of Beneficial Interest to
be designated "Class B".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (collectively with the rules
and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted a Distribution
Plan, dated as of August 19, 1994 (the "Distribution Plan"), which is
incorporated herein by reference and pursuant to which the Trust desires to
enter into this Distribution Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain services with
respect to the distribution of shares designated Class B Shares (the "Shares")
of each Fund, and LFBDS is willing lo provide such services to the Trust on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the Trust,
to sell Shares of each Fund upon the terms hereinbelow set forth during the
term of this Agreement. While this Agreement is in force, the Distributor
agrees to use its best efforts to find purchasers for Shares of each Fund.
The Distributor shall have lee right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed
(except for clerical errors and errors of transmission), to fill
unconditional orders for Shares of each Fund placed with the Distributor by
any dealer, all such orders to be made in the manner set forth in the
Trust's then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional
Information") relating to such Shares. The price which shall be paid to the
Trust for the Shares of each Fund so purchased shall be the net asset value
per Share as determined in accordance with the provisions of the Trust's
Declaration of Trust and By-Laws, as each may from time to time be amended
(collectively, the "Governing Instruments"). The Distributor shall notify
the Custodian of the Trust, at the end of each business day, or as soon
thereafter as the orders placed with the Distributor have been compiled, of
the number of Shares of each Fund and the prices thereof which have been
ordered through the Distributor since the end of the previous business day.
The right granted to the Distributor to place orders for Shares with the
Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged exclusive, and into or consolidated with the Trust or any Fund or in
the event that the Trust or any Fund acquires, by purchase or otherwise,
all (or substantially all) the assets or the outstanding shares of any such
company; nor shall it apply to Shares issued by the Trust as a dividend or
stock split. The exclusive right to place orders for Shares granted to the
Distributor may be waived by the Distributor by notice to the Trust in
writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust
hereby acknowledges that the Distributor may render distribution and other
services to other parties, including other investment companies. In
connection with its duties hereunder, the Distributor shall also arrange
for computation of performance statistics with respect to each Fund and
arrange for publication of current price information in newspapers and
other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust to
or through any dealer having a sales agreement with the Distributor upon
the following terms and conditions:
The public offering price of the Shares, including the Shares of each
Fund, i.e., the price per Share at which the Distributor or dealer
purchasing Shares through the Distributor may sell shares to the public,
shall be the net asset value of such Shares.
The net asset value of Shares of each Fund shall be determined by the
Trust, or by an agent of the Trust, as of the close of trading on the New
York Stock Exchange on each day on which the New York Stock Exchange is
open for trading (and on such other days as the Trustees deem necessary in
order to comply with Rule 22c-l under the 1940 Act), in accordance with the
method established pursuant to the Governing Instruments. The Trust shall
have the right to suspend the sale of Shares of any Fund if, because of
some extraordinary condition, the New York Stock Exchange shall be closed,
or if conditions existing during the hours when the Exchange is open render
such action advisable or for any other reason deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval, if any, of its shareholders, take all necessary action
to register such number of Shares of each Fund under the Securities Act of
1933, as amended (the "1933 Act"), as the Distributor may reasonably be
expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its Directors, officers or employees as such, is or
shall be an employee of the Trust. It is understood that Trustees, officers
and shareholders of the Trust are or may become interested in the
Distributor, as Directors, officers, employees, or otherwise and that
Directors, officers and employees of the Distributor are or may become
similarly interested in the Trust and that the Distributor may be or become
interested in the Trust as a shareholder or otherwise. The Distributor is
responsible for its own conduct and the employment, control and conduct
(but only with respect to the duties and obligations of the Distributor
hereunder) of its agents and employees and for any injury to any of such
agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it will
use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. relating to the sale of
Shares, and will indemnify and hold harmless the Trust and each of its
Trustees and officers and each person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act (the "Indemnified
Parties") against all losses, liabilities, damages or expenses (including
the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) arising from any claim, demand, action or suit
(collectively, "Claims"), arising by reason of any person's acquiring any
of the Shares through the Distributor, which may be based upon the 1933 Act
or any other statute or common law, on account of any wrongful act of the
Distributor or any of its employees (including any failure to conform with
any requirement of any state or Federal law or the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. relating to the
sale of Shares) or on the ground that the registration statement under the
1933 Act, including all amendments thereto (the "Registration Statement"),
or Prospectus or previous prospectus or Statement of Additional Information
or previous statement of additional information, with respect to such
Shares, includes or included an untrue statement of a material fact or
omits or omitted to state a material fact required to be slated therein or
necessary in order to make the statements therein not misleading:, if and
only if any such act, statement or omission was made in reliance upon
information furnished by the Distributor to the Trust; provided, however,
that in no case (i) is the indemnity of the Distributor in favor of any
Indemnified Party to be deemed to protect any such Indemnified Party
against liability to which such Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its or his duties or by reason of its or his reckless
disregard of its or his obligations and duties under this Agreement, or
(ii) is the Distributor lo be liable under its indemnity agreement
contained in this Section 4 with respect lo any Claim made against any
Indemnified Party unless such Indemnified Party shall have notified the
Distributor in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the Claim shall
have been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such Claim shall not relieve
it from any liability which it may have to any Indemnified Party otherwise
than on account of its indemnity agreement contained in this Section 4. The
Distributor shall be entitled to participate, at its own expense, in the
defense, or, if it so elects, to assume the defense, of any suit brought to
enforce any such Claim, and, if the Distributor elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to each Indemnified Party. In the event that the Distributor
elects to assume the defense of any such suit and retain such counsel, each
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it but, in case the Distributor does not elect to
assume the defense of any such suit, it shall reimburse the Indemnified
Parties for the reasonable fees and expenses of any counsel retained by
them. Except with the prior written consent of the Distributor, no
Indemnified Party shall confess any Claim or make any compromise in any
case in which the Distributor will be asked to indemnify such Indemnified
Party. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against it in connection with
the issuance and sale of any of the Shares.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf
of the Trust in connection with the sale of Shares of any Fund, other than
those contained in the Registration Statement or Prospectus or Statement of
Additional Information relating to such Fund.
5. The Trust will pay, or cause IO be paid--
(i) all costs and expenses of the Trust, including fees and
disbursements of its counsel, in connection with the preparation and
filing of the Registration Statement, Prospectus and Statement of
Additional Information with respect to Shares of each Fund, and
preparing and mailing to shareholders Prospectuses, Statements of
Additional Information, statements and confirmations and periodic
reports (including the expense of setting in type the Registration
Statement, Prospectus and Statement of Additional Information or any
periodic report with respect to Shares of each Fund);
(ii) the cost of preparing temporary or permanent certificates for
Shares;
(iii) the cost and expenses of delivering to the Distributor at its
office in Boston, Massachusetts all Shares purchased through it as agent
hereunder;
(iv) a distribution fee periodically at an annual rate equal to 0.75%
of the portion of fee average daily net assets of such Fund that is
represented by Shares for its then-current fiscal year, subject to the
Distribution Plan, and, under certain circumstances, the Distributor may
impose certain deterred sales charges in connection with the repurchase
of Shares of each Fund and the Distributor may retain (or receive from
each Fund, as the case may be) all such deferred sales charges;
(v) at such time as may be agreed upon by the Trust and the
Distributor, a service fee from the assets of such Fund to the
Distributor at an annual rate not to exceed 0.25% of the portion of the
average daily net assets of such Fund that is represented by Shares that
are owned by investors for whom a broker-dealer who has performed
personal services and/or account maintenance services under a dealer
agreement with the Distributor is the holder or dealer of record,
subject to the Distribution Plan; and the Distributor shall be entitled
to be paid any fees payable under this paragraph (v) hereof with respect
to Shares for which no broker-dealer of record exists or qualification
standards have not been met as partial consideration for personal
services and/or account maintenance services provided by the Distributor
with respect to the Shares;
(vi) all fees and disbursements of the Transfer Agent and Custodian
with respect to each Fund, subject to the Trust's Administrative
Services Plan;
(vii) a fee to each Shareholder Servicing Agent (pursuant to a
shareholder servicing agreement with each such Agent), subject to the
Trust's Administrative Services Plan;
(viii) a fee to the Administrator of the Trust (pursuant to the
Administrative Services Agreement), subject to the Trust's
Administrative Services Plan; and
(ix) a fee to the investment adviser of each Fund, if any (pursuant
to the Investment Advisory Agreement with any such Adviser).
The Distributor agrees that, with respect to the sale of Shares of each
Fund, after the Prospectus and Statement of Additional Information and
periodic reports with respect to such Fund have been set in type, it will
bear the expense (other than the cost of mailing to shareholders of the
Trust) of printing and distributing any copies thereof which are to be used
in connection with the offering or sale of Shares of such Fund to any
dealer or prospective investor. The Distributor further agrees that it will
bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnfurnished by it for use by any
dealer in connection with the offering of the Shares of such Fund for sale
to the public and any expense of sending confirmations and statements to
any dealer having a sales agreement with the Distributor. The Distributor
will also bear the cost of any compensation paid to dealers in connection
with the sale of Shares of such Fund. The Distributor also agrees to bear
the expenses of qualification of Shares of such Fund for sale in the
various states and, if necessary or advisable in connection therewith, of
qualifying the Trust as a broker or dealer in any such state.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any
recommendation or requirement of the Securities and Exchange Commission or
other governmental authority or to obtain any advantage under Massachusetts
or federal tax laws, it shall notify the Distributor of the form of
amendment which it deems necessary or advisable and the reasons therefor.
If the Distributor declines to assent to such amendment (after a reasonable
time), the Trust may terminate this Agreement forthwith by written notice
to the Distributor without payment of any penalty. If, at any time during
the term of this Agreement, the Distributor requests the Trust to make any
change in its Governing Instruments or in its methods of doing business
which are necessary in order to comply with any requirement of federal law
or regulations of the Securities and Exchange Commission or of a national
securities association of which the Distributor is or may become a member,
relating to the sale of Shares, and the Trust fails (after a reasonable
time) to make any such change as requested, the Distributor may terminate
this Agreement forthwith by written notice to the Trust without payment of
any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of any Fund and that, so far as it can control the
situation, it will prevent any of its Directors or officers from taking any
long or short position in the Shares of such Fund, except as permitted by
the Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force until August 19, 1996, on which date it will terminate
unless its continuance thereafter is specifically approved at least
annually (i) by the vote of a majority of the Trustees of the Trust who are
not "interested persons" of the Trust or of the Distributor at a meeting
specifically called for the purpose of voting on such approval, and (ii) by
the Board of Trustees of the Trust, or by the "vote of a majority of the
outstanding voting securities" of the Shares of each Fund as to which this
Agreement is to continue. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act.
This Agreement may be terminated as to any Fund at any time by either
party without payment of any penalty on not more than 60 days' nor less than 30
days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
9. LFBDS may subcontract for the performance of LFBDS' obligations
hereunder with any one or more persons; provided, however, that LFBDS shall
not enter into any such subcontract unless the Trustees of the Trust shall
have found the subcontracting party to be qualified to perform the
obligations sought to be subcontracted; and provided, further, that, unless
the Trust otherwise expressly agrees in writing, LFBDS shall be as fully
responsible to the Trust for the acts and omissions of any subcontractor as
it would be for its own acts or omissions.
10. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least
annually" shall have the respective meanings specified in, and shall be
construed in a manner consistent with the 1940 Act, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
thereunder, and provided, however, that the term "assignment" shall include
(without limitation) any sale, transfer or conversion of a controlling
interest of any class of voting stock of LFBDS or of any entity which holds
a controlling interest of any class of voting stock of LFBDS or another
such entity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
"thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned Trustee of the Trust
has executed this Agreement not individually, but as Trustee under the Trust's
Declaration of Trust, dated May 27, 1986, as amended, and the obligations of
this Agreement are not binding upon any of the Trustees or shareholders of the
Trust individually, but bind only the Trust estate.
LANDMARK TAX FREE INCOME FUNDS THE LANDMARK FUNDS BROKER-
DEALER SERVICES, INC.
By: Philip Coolidge By: Philip Coolidge
------------------------- -------------------------
Title: President Title: Chief Executive Officer
------------------------- -------------------------
DA/LTFIF/Class B
<PAGE>
FIRST AMENDMENT TO DISTRIBUTION AGREEMENT
THIS FIRST AMENDMENT TO DISTRIBUTION AGREEMENT, dated as of May 5, 1995
(this "Amendment"), by and between Landmark Tax Free Income Funds, a
Massachusetts business trust (the "Trust"), and THE LANDMARK FUNDS BROKER-DEALER
SERVICES, INC., a Massachusetts corporation (the "Distributor");
WITNESSETH:
WHEREAS, the Shares of Beneficial Interest of the Trust are divided
into one or more separate series (together with any series which may in the
future be established, the "Funds");
WHEREAS, pursuant to that certain Distribution Agreement dated as of
August 19, 1994 (the "Original Agreement") between the Trust and the
Distributor, the Trust has granted the Distributor the right, as agent of the
Trust, to sell Shares of Beneficial Interest of each Fund to be designated
"Class B"; and
WHEREAS, the Trust and the Distributor desire to amend the Original
Agreement to provide for the payment to the Distributor of a service fee on the
terms and conditions specified below;
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual covenants and agreements set forth below,
the parties hereto do hereby amend the Original Agreement as follows:
1. DEFINITIONS.
Capitalized terms used in this Amendment without definition shall have
the respective meanings assigned to them in the Original Agreement.
2. AMENDMENT.
Section 5(v) of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
(v) a service fee from the assets of such Fund to the
Distributor at an annual rate not to exceed 0.25% of the portion of the
average daily net assets of such Fund that is represented by Shares,
such fee to be (A) paid to the Distributor in consideration of personal
services and/or the maintenance of shareholder accounts as provided or
arranged by the Distributor, including the maintenance of a telephone
inquiry service for Fund investors, (B) paid to the Distributor for its
own account subject to
<PAGE>
3. CONFIRMATION OF AGREEMENT.
As amended hereby, the Original Agreement is confirmed and reaffirmed
in every particular.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered in their names and on their behalf by the undersigned
thereunto duly authorized, and their seals to be hereto affixed, all as of the
day and year first above written. The undersigned Trustee of the Trust has
executed this Amendment not individually but as Trustee under the Trust's
Declaration of Trust dated May 27, 1986, and the obligations of this Amendment
or of the Original Agreement, as amended hereby, are not binding upon any of the
Trustees or shareholders of the Trust individually, but bind only the Trust
estate.
LANDMARK TAX FREE INCOME FUNDS
By: /s/ Philip Coolidge
-----------------------
THE LANDMARK FUNDS BROKER-DEALER
SERVICES, INC.
By: /s/ Philip Coolidge
-----------------------
<PAGE>
Exhibit 8
CUSTODIAN CONTRACT
Between
LANDMARK NEW YORK TAX FREE INCOME FUND
and
STATE STREET BANK AND TRUST COMPANY
SCS/B3-MFS 06/87
WP0410c
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
1. Employment of Custodian and Property to be Held By It .................................. 1
2. Duties of the Custodian with Respect to Property of the Trust Held by the Custodian .... 2
2.1 Holding Securities................................................................ 2
2.2 Delivery of Securities............................................................ 3
2.3 Registration of Securities........................................................ 8
2.4 Bank Accounts..................................................................... 9
2.5 Payments for Shares............................................................... 9
2.6 Investment and Availability of Federal Funds...................................... 10
2.7 Collection of Income.............................................................. 10
2.8 Payment of Trust Monies........................................................... ll
2.9 Liability for Payment in Advance of Receipt of Securities Purchased............... 14
2.10 Payments for Repurchases or Redemptions of Shares of the Trust.................... 15
2.11 Appointment of Agents............................................................. 15
2.12 Deposit of Trust Assets in Securities System...................................... 16
2.12A Trust Assets Held in the Custodian's Direct Paper System.......................... 21
2.13 Segregated Account................................................................ 21
2.14 0wnership Certificates for Tax Purposes........................................... 22
2.15 Proxies........................................................................... 22
2.16 Communications Relating to Trust Portfolio Securities............................. 23
2.17 Proper Instructions............................................................... 23
2.18 Actions Permitted Without Express Authority....................................... 24
2.19 Evidence of Authority............................................................. 25
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income ...................................................... 25
4. Records................................................................................. 26
5. Opinion of Trust's Independent Accountants.............................................. 27
6. Reports to Trust by Independent Public Accountants...................................... 27
7. Compensation of Custodian............................................................... 28
8. Responsibility of Custodian............................................................. 28
9. Effective Period, Termination and Amendment............................................. 30
10. Successor Custodian..................................................................... 31
11. Interpretive and Additional Provisions.................................................. 33
12. Additional Funds........................................................................ 33
13. Massachusetts Law to Apply.............................................................. 33
14. Prior Contracts......................................................................... 34
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
This Contract between Landmark New York Tax Free Income Fund, a business
trust organized and existing under the laws of The Commonwealth of
Massachusetts, having its principal place of business at 200 Berkeley Street,
Boston, Massachusetts 02116 hereinafter called the "Trust", and State Street
Bank and Trust Company, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massachusetts, 02110,
hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Trust intends to initially offer shares in one series (Such
series together with all other series subsequently established by the Trust and
made subject to this Contract in accordance with paragraph 12, being herein
referred to as the "Portfolio(s)");
NOW therefor, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Trust pursuant to the provisions of the Declaration of
Trust. The Trust agrees, on behalf of the Portfolios, to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolios from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Trust representing interests in the Portfolios ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.17), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians but only in accordance with an applicable
vote by the Board of Trustees of the Trust on behalf of the applicable
Portfolio(s), and provided that the Custodian shall have no more or less
responsibility or liability to the Trust on account of any actions or omissions
of any subcustodian so employed than any such subcustodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Trust Held By
the Custodian
2.1 Holding Securities. The Custodian shall hold and physically aggregate
for the account of each Portfolio all non-cash property, including all
securities owned by such Portfolio, other than (a) securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.12A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Portfolio held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt
of Proper Instructions from the Trust on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate
by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Portfolio, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Trust on
behalf of the Portfolio, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in
the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Trust on behalf of the Portfolio requiring a pledge of assets by
the Trust on behalf of the Portfolio, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio of the Trust;
13) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market,
or any similar organization or organizations, regarding account
deposits in connection with transactions by the Portfolio of the
Trust;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Trust, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind, as
may be described from time to time in the currently effective
prospectus and statement of additional information of the Trust
related to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions from the Trust on behalf of the
applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an
officer of the Trust and certified by the Secretary or an
Assistant Secretary, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Portfolio or
in the name of any nominee of the Trust on behalf of the Portfolio or of
any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Portfolio's Account or Accounts") in the name
of each Portfolio of the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and shall hold
in such account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio, other than cash
maintained by the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for a Portfolio may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company shall on
behalf of each applicable Portfolio be approved by vote of a maJority of
the Board of Trustees of the Trust. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor
for the Shares or from the Transfer Agent of the Trust and deposit into
the Portfolio's Account such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Trust. The Custodian
will provide timely notification to the Trust on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for
Shares of such Portfolio.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Trust on behalf of each applicable Portfolio and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions
from the Trust on behalf of a Portfolio, 1) invest in such instruments
as may be set forth in such instruments as may be set forth in such
instructions on the same day as received all federal funds received
after a time agreed by upon the Custodian and the Trust; and 2) make
federal funds available to such Portfolio as of specified times agreed
upon from time to time by the Trust and the Custodian in the amount of
checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities are
held by the custodian or its agent thereof and shall credit such income,
as collected, to such Portfolio's custodian account. Without limiting
the generality of the foregoing, the Custodian shall detach and present
for payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Trust. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Trust
with such information or data as may be necessary to assist the Trust in
arranging for the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.
2.8 Payment of Trust Monies. Upon receipt of Proper Instructions from the
Trust on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of securities for the account of the Portfolio
but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under
the Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Portfolio or in
the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; or (c) in the
case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.12A; or (d)
in the case of repurchase agreements entered into between the
Trust on behalf of the Portfolio and the Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or through
an entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Portfolio;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of the Trust whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Trust;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Trust on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Trust signed by an
officer of the Trust and certified by its Secretary or an
Assistant Secretary, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is
to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of securities for the
account of a Portfolio is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written instructions
from the Trust on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Trust for such securities to
the same extent as if the securities had been received by the Custodian
except that in the case of repurchase agreements entered into by the
Trust on behalf of a Portfolio with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to the account
of such bank prior to the receipt of written evidence that the
securities subject to such repurchase agreement have been transferred by
book-entry into a segregated non-propietary account of the Custodian
maintained with the Federal Reserve Bank of Boston or of the safekeeping
receipt, provided that such securities have in fact been so transferred
by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares of the Trust. From
such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the
Board of Trustees of the Trust pursuant thereto, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds
available for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their Shares.
In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions from
the Transfer Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of a Portfolio, the Custodian shall
honor checks drawn on the Custodian by a holder of Shares, which checks
have been furnished by the Trust to the holder of Shares, when presented
to the Custodian in accordance with such procedures and controls as are
mutually agreed upon from time to time between the Trust and the
Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.12 Deposit of Trust Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a Securities
System provided that such securities are represented in an account
("Custodian's Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the account
of the Portfolio upon (i) receipt of advice from the Securities
System that such securities have been transferred to the
Custodian's Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for
the account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i) receipt
of advice from the Securities System that payment for such
securities has been transferred to the Custodian's Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System of
transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Trust at its request. Upon
request, the Custodian shall furnish the Trust on behalf of the
Portfolio confirmation of each transfer to or from the account of
the Portfolio in the form of a written advice or notice and shall
furnish to the Portfolio copies of daily transaction sheets
reflecting each day's transactions in the Securities System for
the account of the Portfolio.
4) The Custodian shall provide the Trust for the Portfolio with any
report obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
5) The Custodian shall have received from the Trust on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 9 hereof;
6) Anything to the contrary "in this Contract notwithstanding, the
Custodian shall be liable to the Trust for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from
use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of the Trust,
it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the Securities System
or any other person which the Custodian may have as a consequence
of any such loss or damage if and to the extent that the Portfolio
has not been made whole for any such loss or damage.
2.12A Fund Assets held in the Custodian's Direct Paper System
The Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to the
following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the
Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which
shall not included any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the account
of the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to
the account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon the making
of an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Trust on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Trust on behalf of the Portfolio copies of dally
transaction sheets reflecting each day's transaction in the
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Trust on behalf of the Portfolio
with any report on its system of internal accounting control as
the Trust may reasonably request from time to time.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Trust on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the Trust on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market),
or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Trust, (ii)
for purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio or commodity
futures contracts or options thereon purchased or sold by the Portfolio,
(iii) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate purposes, but
only, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Trust on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Trust and certified by
the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of each Portfolio held by it and in
connection with transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.16 Communications Relating to Trust Portfolio Securities. The Custodian
shall transmit promptly to the Trust for each Portfolio all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Trust on behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Portfolio shall notify the
Custodian at least three business days prior to the date on which the
Custodian is to take such action.
2.17 Proper Instructionals Proper Instructions as used throughout this
Article 2 means a writing signed or initialled by one or more person or
persons as the Board of Trustees shall have from time to time
authorized. Each such writing shall set forth the specific transaction
or type of transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Trust shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by
the Board of Trustees of the Trust accompanied by a detailed description
of procedures approved by the Board of Trustees, Proper Instructions may
include communications effected directly between electro-mechanical or
electronic devices provided that the Board of Trustees and the Custodian
are satisfied that such procedures afford adequate safeguards for the
Portfolios' assets.
2.18 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Trust on behalf of each
applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Trust on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Portfolio except as otherwise directed by the Board of
Trustees of the Trust.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Trust. The Custodian may
receive and accept a certified copy of a vote of the Board of Trustees
of the Trust as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of
any action by the Board of Trustees pursuant to the Declaration of Trust
as described in such vote, and such vote may be considered as in full
force and effect until receipt by the Custodian of written notice to the
contrary.
3. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Trust to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Trust on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Trust's currently effective prospectus related to such
Portfolio and shall advise the Trust and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Trust to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net asset
value per share and the daily income of each Portfolio shall be made at the time
or times described from time to time in the Trust's currently effective
prospectus related to such Portfolio.
4. Records
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Trust under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder, applicable federal and state tax laws and any other
law or administrative rules or procedures which may be applicable to the Trust.
All such records shall be the property of the Trust and shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Trust and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Trust's request, supply the Trust with a tabulation of securities owned by the
Trust and held by the Custodian and shall, when requested to do so by the Trust
and for such compensation as shall be agreed upon between the Trust and the
Custodian, include certificate numbers in such tabulations.
5. Opinion of Trust's Independent Accountant
The Custodian shall take all reasonable action, as the Trust on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Trust's independent accountants with respect
to its activities hereunder in connection with the preparation of the Trust's
Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants
The Custodian shall provide the Trust, on behalf of each of the
Portfolio at such times as the Trust may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities futures contracts and options
on futures contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian under this
Contract; such reports, shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Trust to provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Trust on behalf of each applicable Portfolio and the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract and shall be indemnified by the Trust for say
action taken or omitted by it in the proper execution of instructions from the
Trust. It shall be entitled to rely on and may act upon advice of counsel for
the Trust on all matters and shall be without lability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into between the
Custodian and the Trust.
The Trust on behalf of a Portfolio agrees to indemnify and hold harmless
the Custodian and its nominee from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees) incurred or
assessed against it or its nominee in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct.
The Custodian is authorized to charge any account of the applicable
Portfolio for such item and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of a Portfolio for any purpose which results in the Portfolio incurring an
overdraft at the end of any business day or for extraordinary or emergency
purposes during any business day, the Trust on behalf of the Portfolio hereby
grants to the Custodian a security interest in and pledges to the Custodian
securities held for it by the Custodian, in an amount not to exceed five percent
of the applicable Portfolio's gross assets, the specific securities to be
designated in writing from time to time by the Trust on behalf of the Portfolio
or its investment adviser (the "Pledged Securities"). Should the Trust on behalf
of the Portfolio fail to repay promptly any advances of cash or securities, the
Custodian shall be entitled to use available cash and to dispose of the Pledged
Securities as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.12 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the Trust have
approved the initial use of a particular Securities System by such Portfolio and
the receipt of an annual certificate of the Secretary or an Assistant Secretary
that the Board of Trustees has reviewed the use by such Portfolio of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not with respect to
a Portfolio act under Section 2.12A hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System by such
Portfolio and the receipt of an annual certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has reviewed the use by such
Portfolio of the Direct Paper System; provided further, however, (a) that the
Trust shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and (b) that the Trust on behalf of one or more of the Portfolios may at
any time by action of its Board of Trustees (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of competent
Jurisdiction.
Upon termination of the Contract, the Trust on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian for the assets, of one or more of the
Portfolios shall be appointed by the Board of Trustees of the Trust, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Trust on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their Joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Trust. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
12. Additional Funds
In the event that the Trust establishes one or more series of Shares in
addition to the initial series with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
13. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
14. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, the
existing custodian contract between the Trust on behalf of each of the
Portfolios and the Custodian. Any reference to the custodian contract between
the Trust and the Custodian in documents executed prior to the date hereof shall
be deemed to refer to this Contract.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 24th day of June, 1986.
ATTEST LANDMARK NEW YORK TAX FREE INCOME FUND
/s/ Philip Coolidge By /s/ A. Keith Brodkin
- -------------------------------------- -----------------------------------
Philip Coolidge A. Keith Brodkin
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Jerry Farrell By /s/ Timothy B. Hagerty
- -------------------------------------- --------------------------------------
Assistant Secretary Vice President
<PAGE>
Exhibit 9(a)
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES PLAN
AMENDED AND RESTATED ADMINISTRATIVE SERVICES PLAN, dated as of June 24,
1986 and amended and restated as of February 9, 1996, of Landmark Tax Free
Income Funds (formerly Landmark New York Tax Free Income Fund), a Massachusetts
business trust (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest (without par value) of the
Trust (the "Shares") are divided into one or more separate series (together with
any series which may in the future be established, the "Funds"); and
WHEREAS, the Trust desires to adopt this Amended and Restated
Administrative Services Plan (the "Plan") in order to provide for certain
administrative services to the Trust and holders of Shares of each Fund; and
WHEREAS, the Trust desires to enter into a transfer agency agreement
(in such form as may from time to time be approved by the Board of Trustees of
the Trust) with a financial institution, as transfer agent for the Trust (the
"Transfer Agent"), whereby the Transfer Agent will provide transfer agency
services to the Trust (the "Transfer Agency Agreement"); and
WHEREAS, the Trust desires to enter into a custodian agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust)
with a financial institution, as custodian for the Trust (the "Custodian"),
whereby the Custodian will provide custodial services to the Trust with respect
to each Fund (the "Custodian Agreement"); and
WHEREAS, the Trust desires to enter into an administrative services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with The Landmark Funds Broker-Dealer Services, Inc., a
Massachusetts corporation, as administrator of the Trust (the "Administrator"),
whereby the Administrator will provide certain administrative and management
services to the Trust (the "Administrative Services Agreement"); and
WHEREAS, the Trust also desires to enter into shareholder servicing
agreements (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with certain financial institutions, as shareholder
servicing agents ("Shareholder Servicing Agents"), whereby each Shareholder
Servicing Agent will perform certain administrative and service functions (the
"Shareholder Servicing Agreements"); and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders.
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, the Transfer Agent shall
act as dividend disbursing agent for the Trust and perform transfer agency
functions for each Fund. The Trust shall pay to the Transfer Agent such
compensation from the assets of each Fund as may from time to time be agreed to
by the Trust and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall safeguard
and control the cash and securities of each Fund, handle receipt and delivery of
securities for each Fund, determine income and collect interest on the
investments of each Fund, maintain books of original entry for Fund and Trust
accounting and other required books and accounts, calculate the daily net asset
value of Shares of each Fund and, in general, act as the custodian of the assets
of the Trust pertaining to each Fund, but the Custodian shall have no power to
determine the investment policies of the Trust or to determine which securities
the Trust will buy or sell on behalf of any Fund. The Trust shall pay to the
Custodian such compensation as may from time to time be agreed to by the Trust
and the Custodian.
3. As specified in the Administrative Services Agreement, the Administrator
shall perform certain administrative and management services on behalf of the
Trust, including: providing office space, equipment and clerical personnel
necessary for maintaining the organization of the Trust and for providing the
administrative and management services to be performed by the Administrator;
arranging, if desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law; supervising the overall administration of
the Trust, including negotiation of contracts and fees with and the monitoring
of performance and billings of the Trust's Transfer Agent, Shareholder Servicing
Agents, Custodian and other independent contractors or agents; preparing and, if
applicable, filing all documents required for compliance by the Trust with
applicable laws and regulations, including registration statements,
prospectuses, statements of additional information, semi-annual and annual
reports to shareholders, proxy statements and tax returns; preparation of
agendas and supporting documents for and minutes of meetings of Trustees,
committees of Trustees and shareholders; arranging for computation of
performance statistics with respect to each Fund and arranging for publication
of current price information in newspapers and other publications; and arranging
for maintenance of books and records of the Trust and each Fund. As
consideration for services performed under the Administrative Services
Agreement, the Trust shall, subject to paragraph 5 hereof, periodically pay to
the Administrator such fee from the assets of each Fund as may from time to time
be agreed to by the Trust and the Administrator.
4. As specified in each Shareholder Servicing Agreement, each Shareholder
Servicing Agent shall, with respect to one or more Funds, perform certain
administrative and service functions, which may include, among others: answering
customer inquiries or inquiries of broker/dealers which have entered into sales
agreements with the Fund's Distributor or of banks or other financial
institutions which have entered into agency agreements with a Fund's Distributor
(such entities collectively referred to herein as "Third Party Firms") regarding
the manner in which purchases and redemptions of Shares may be effected, and
with regard to certain other matters pertaining to the Trust or such Fund;
assisting customers or Third Party Firms in designating and changing dividend
options, account designations and addresses; providing necessary personnel and
facilities to maintain certain shareholder accounts and records, as specified
from time to time by the Trust; assisting in processing purchase and redemption
transactions; assisting in or arranging for the wiring of funds; transmitting
and receiving funds or assisting in connection with customer orders to purchase
and redeem Shares; verifying and guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnishing periodic statements showing customer
account balances, and to the extent practicable, integrating such information
with other client transactions effected with or through the Shareholder
Servicing Agent; furnishing monthly and annual statements and confirmations of
purchases and redemptions of Shares in a customer's account; transmitting or
assisting in the transmission of proxy statements, annual reports, updating
prospectuses, statements of additional information and other communications from
the Trust to shareholders of such Fund; and providing such other related
services as the Trust, a Third Party Firm or a shareholder may request. Each
Shareholder Servicing Agreement shall provide that the Shareholder Servicing
Agent shall provide all personnel and facilities necessary in order for it to
perform the functions described in the applicable Shareholder Servicing
Agreement with respect to its customers who purchase Shares or the services it
has agreed to provide to Third Party Firms, as applicable. As consideration for
services performed under the Shareholder Servicing Agreements, the Trust shall,
subject to paragraph 5 hereof, periodically pay to each Shareholder Servicing
Agent such fee from the assets of each such Fund as may from time to time be
agreed to by the Trust and such Shareholder Servicing Agent. Each Shareholder
Servicing Agent will be permitted to charge its customers direct fees for the
same or similar services as provided pursuant to a Shareholder Servicing
Agreement.
5. Notwithstanding paragraphs 3 and 4 hereof, the aggregate of the fee
payable from a Fund to the Administrator pursuant to the Administrative Services
Agreement, the fees payable from such Fund to the Shareholder Servicing Agents
pursuant to the Shareholder Servicing Agreements and the Basic Distribution Fees
(as defined in the Trust's Distribution Plan) payable from such Fund to the
Distributor pursuant to the Trust's Distribution Plan may not exceed an amount
equal to .65% of such Fund's average daily net assets on an annualized basis for
the Fund's then-current fiscal year.
6. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of the
responsibility for and control of the conduct of the affairs of the Trust.
7. This Plan shall become effective upon (a) approval by a vote of at least
a "majority of the outstanding voting securities" of each Fund, and (b) approval
by a vote of the Board of Trustees of the Trust and vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any of the
agreements related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely, provided that such
continuance is subject to annual approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
date which is 15 months after the date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the amount to be
expended from the assets of any Fund for the services described herein shall be
effective only upon approval by a vote of a "majority of the outstanding voting
securities" of such Fund, and (b) any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of the Trust and
a majority of the Qualified Trustees, such votes to be cast in person at a
meeting called for the purpose of voting on such amendment. This Plan may be
terminated at any time with respect to any Fund by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of such Fund.
10. The Treasurer of the Trust shall provide the Board of Trustees of the
Trust, and the Board of Trustees of the Trust shall review, at least quarterly,
a written report of the amounts expended under the Plan and the purposes for
which such expenditures were made.
11. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are not
"interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the 1940
Act. In addition, for purposes of determining the fees payable to the
Administrator and each Shareholder Servicing Agent, the value of a Fund's net
assets shall be computed in the manner specified in the Trust's then-current
prospectus and statement of additional information applicable to that Fund for
the computation of the net asset value of Shares of that Fund.
13. The Fund shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 10 hereof (collectively the
"Records"), for a period of six years from the end of the fiscal year in which
such Record was made and each such Record shall be kept in an easily accessible
place for the first two years of said record-keeping.
14. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
15. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<PAGE>
Exhibit 9(b)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of April 15, 1993, by and
between Landmark Tax Free Income Funds, a Massachusetts business trust (the
"Trust"), and THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC., a Massachusetts
corporation ("LFBDS" or the "Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the shares of Beneficial Interest of the Trust (the "Shares")
are divided into one or more separate series (together with any series which may
in the future be established, the "Funds");
WHEREAS, the Board of Trustees of the Trust has adopted an
Administrative Services Plan, dated as of June 24, 1986 (as amended and in
effect from time to time, the "Plan"), which is incorporated herein by reference
and pursuant to which the Trust desires to enter into this Administrative
Services Agreement; and
WHEREAS, the Trust wishes to engage LFBDS to provide certain
administrative and management services, and LFBDS is willing to provide such
administrative and management services to the Trust, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Administrator. Subject to the direction and control of
the Board of Trustees of the Trust, the Administrator shall perform such
administrative and management services as may from time to time be
reasonably requested by the Trust, which shall include without limitation:
(a) providing office space, equipment and clerical personnel necessary for
maintaining the organization of the Trust and for performing the
administrative and management functions herein set forth; (b) arranging, if
desired by the Trust, for Directors, officers and employees of the
Administrator to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual
consent and to any limitations imposed by law; (c) supervising the overall
administration of the Trust, including negotiation of contracts and fees
with and the monitoring of performance and billings of the Trust's transfer
agent, shareholder servicing agents, custodian and other independent
contractors or agents; (d) preparing and, if applicable, filing all
documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements
of additional information, semi-annual and annual reports to shareholders,
proxy statements and tax returns; (e) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees
and shareholders; and (f) arranging for maintenance of books and records of
the Trust. Notwithstanding the foregoing, the Administrator shall not be
deemed to have assumed any duties with respect to, and shall not be
responsible for, the management of the Trust's assets or the rendering of
investment advice and supervision with respect thereto or the distribution
of Shares of any Fund, nor shall the Administrator be deemed to have assumed
or have any responsibility with respect to functions specifically assumed by
any transfer agent, custodian or shareholder servicing agent of the Trust.
2. Allocation of Charges and Expenses. LFBDS shall pay the entire
salaries and wages of all of the Trust's Trustees, officers and agents who
devote part or all of their time to the affairs of LFBDS or its affiliates,
and the wages and salaries of such persons shall not be deemed to be
expenses incurred by the Trust for purposes of this Section 2. Except as
provided in the foregoing sentence, the Trust will pay all of its own
expenses including, without limitation, compensation of Trustees not
affiliated with the Administrator; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Trust; fees and expenses of each Fund's investment adviser or advisers; fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of distributing and redeeming Shares
and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses and statements of additional information, reports,
notices, proxy statements and reports to shareholders and governmental
officers and commissions; expenses connected with the execution, recording
and settlement of portfolio security transactions; insurance premiums; fees
and expenses of the Trust's custodian for all services to the Trust,
including safekeeping of funds and securities and maintaining required books
and accounts; expenses of calculating the net asset value of shares of each
Fund; expenses of shareholder meetings; and expenses relating to the
issuance, registration and qualification of shares of each Fund.
3. Compensation of Administrator. Subject to paragraph 5 of the Plan,
for the services to be rendered and the facilities to be provided by the
Administrator hereunder, the Trust shall pay to the Administrator an
administrative fee from the assets of each Fund as may be agreed to from
time to time by the Trust and the Administrator. If LFBDS serves as
Administrator for less than the whole of any period specified in this
Section 3, the compensation to LFBDS, as Administrator, shall be prorated.
For purposes of computing the fees payable to the Administrator hereunder,
the value of the net assets of any Fund shall be computed in the manner
specified in the Trust's then-current prospectus and statement of additional
information.
4. "Landmark Funds" Name. The Trust hereby acknowledges that any and
all rights in or to the names "Landmark" and "Landmark Funds" which exist on
the date of this Agreement or which may arise hereafter are, and under any
and all circumstances shall continue to be, the sole property of LFBDS; that
LFBDS may assign any or all of such rights to another party or parties
without the consent of the Trust; and that LFBDS may permit other parties,
including other investment companies, to use the word "Landmark" or the
words "Landmark Funds" in their names. If LFBDS, or its assignee as the case
may be, ceases to serve as the Administrator of the Trust, the Trust hereby
agrees to take promptly any and all actions which are necessary or desirable
to change its name and the name of each Fund so as to delete the word
"Landmark" or the words "Landmark Funds".
5. Limitation of Liability of the Administrator. The Administrator
shall not be liable for any error of judgment or mistake of law or for any
act or omission in the administration or management of the Trust or the
performance of its duties hereunder, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
the reckless disregard of its obligations and duties hereunder. As used in
this Section 5, the term "Administrator" shall include LFBDS and/or any of
its affiliates and the Directors, officers and employees of LFBDS and/or any
of its affiliates.
6. Activities of the Administrator. The services of the Administrator
to the Trust are not to be deemed to be exclusive, LFBDS being free to
render administrative and/or other services to other parties. It is
understood that Trustees, officers, and shareholders of the Trust are or may
become interested in the Administrator and/or any of its affiliates, as
Directors, officers, employees, or otherwise, and that Directors, officers
and employees of the Administrator and/or any of its affiliates are or may
become similarly interested in the Trust and that the Administrator and/or
any of its affiliates may be or become interested in the Trust as a
shareholder or otherwise.
7. Subcontracting by LFBDS. LFBDS may subcontract for the performance
of LFBDS' obligations hereunder with any one or more persons; provided,
however, that LFBDS shall not enter into any such subcontract unless the
Trustees of the Trust shall have found the subcontracting party to be
qualified to perform the obligations sought to be subcontracted; and
provided, further, that, unless the Trust otherwise expressly agrees in
writing, LFBDS shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it would be for its own acts or omissions.
8. Duration and Termination of this Agreement. This Agreement shall
become effective as of the day and year first above written and shall govern
the relations between the parties hereto thereafter, and shall remain in
force indefinitely, provided that its continuance is "specifically approved
at least annually" (a) by the vote of a majority of the Board of Trustees of
the Trust who are not "interested persons" of the Trust or of the
Administrator at a meeting specifically called for the purpose of voting on
such approval, and (b) by the Board of Trustees of the Trust or by the "vote
of a majority of the outstanding voting securities" of each Fund as to which
this Agreement is to continue, and provided, however, that the term
"assignment" shall include (without limitation) any sale, transfer or
conversion of a controlling interest of any class of voting stock of LFBDS
or of any entity which holds a controlling interest of any class of voting
stock of LFBDS or another such entity.
This Agreement may be terminated as to any Fund at any time, without
the payment of any penalty, by the Board of Trustees of the Trust or by the
"vote of a majority of the outstanding voting securities" of such Fund, or by
the Administrator, in each case on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its "assignment".
The terms "specifically approved at least annually", "vote of a
majority of the outstanding voting securities", "assignment", and "interested
persons", when used in this Agreement, shall have the respective meanings
specified in, and shall be construed in a manner consistent with, the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned Trustee or officer of the Trust has executed this Agreement not
individually, but as Trustee or officer under the Trust's Declaration of Trust,
dated April 13, 1984, as amended, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Trust
individually, but bind only the Trust estate.
LANDMARK TAX FREE INCOME FUNDS THE LANDMARK FUNDS BROKER-DEALER
SERVICES, INC.
By: Philip Coolidge By: Philip Coolidge
----------------------- -------------------------
Title President Title Chief Executive Officer
----------------------- -------------------------
<PAGE>
Exhibit 9(c)
SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT, dated as of July 1, 1989, and
amended and restated as of April 18, 1991 by and between THE LANDMARK FUNDS
BROKER-DEALER SERVICES, INC., a Massachusetts corporation ("LFBDS" or the
"Administrator"), and CITIBANK, N.A., a national banking association ("Citibank"
or the "Sub-Administrator").
WITNESSETH:
WHEREAS, LFBDS has entered into an Administrative Services Agreement as
amended (the "Administrative Agreement") with Landmark New York Tax Free Income
Fund (the "Trust"); and
WHEREAS, as permitted by Section 7 of the Administrative Agreement,
Citibank desires to subcontract some or all of the performance of the
Administrator's obligations thereunder to Citibank, and Citibank desires to
accept such obligations; and
WHEREAS, LFBDS wishes to engage Citibank to provide certain administrative
services on the terms and conditions hereinafter set forth, so long as the
Trustees of the Landmark Funds shall have found Citibank to be qualified to
perform the obligations sought to be subcontracted.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Sub-Administrator. The Sub-Administrator shall perform
such administrative and management services as may from time to time be
agreed to between the Administrator and the Sub-Administrator so long
as the Trustees of the Landmark Funds shall have found the
Sub-Administrator to be qualified to perform the obligations sought to
be subcontracted, which may include (a) providing office space,
equipment and clerical personnel necessary for maintaining the
organization of the Landmark Funds and for performing the
administrative functions herein set forth; (b) participation in the
preparation of documents required for compliance by the Landmark Funds
with applicable laws and regulations, including registration
statements, prospectuses, semi-annual and annual reports to
shareholders, proxy statements and tax returns; (c) preparation of
agendas and supporting documents for and minutes of meetings of the
Trustees, Committees of Trustees and shareholders; (d) arranging for
maintenance of books and records of the Landmark Funds; and (e) any
other functions or obligations permitted to or required by the
Administrator. Notwithstanding the foregoing, the Sub-Administrator
under this Agreement shall not be deemed to have assumed any duties
with respect to, and shall not be responsible for, the management of
the Trust, or the distribution of Shares of Beneficial Interest of the
Trust ("Shares"), nor shall the Sub-Administrator be deemed to have
assumed or have any responsibility with respect to functions
specifically assumed by any transfer agent, custodian or shareholder
servicing agent of the Trust.
2. Compensation of Sub-Administrator. For the services to be rendered and
the facilities to be provided by the Sub-Administrator hereunder, the
Sub-Administrator shall be paid an administrative fee as may from time
to time be agreed to between the Administrator and the
Sub-Administrator.
3. Additional Terms and Conditions. The parties may amend this agreement
and include such other terms and conditions as may from time to time be
agreed to between the Administrator and the Sub-Administrator, so long
as the Trustees of the Trust shall have found the subcontracting party
to be qualified to perform the obligations sought to be subcontracted.
<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.
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By: /s/ Philip Coolidge
------------------------------
Title: Chief Executive Officer
------------------------------
CITIBANK, N.A.
By: Robert P. Wallace
-------------------------------
Title: Vice President
----------------------------
<PAGE>
Exhibit 9(e)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
LANDMARK NEW YORK TAX FREE INCOME FUND
and
STATE STREET BANK AND TRUST COMPANY
SAS2 05/86
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 Terms of Appointment; Duties of the Bank .............. 1
ARTICLE 2 Fees and Expenses ..................................... 7
ARTICLE 3 Representations and Warranties of the Bank ............ 8
ARTICLE 4 Representations and Warranties of the Fund ............ 8
ARTICLE 5 Indemnification. ...................................... 9
ARTICLE 6 Covenants of the Fund and the Bank .................... 12
ARTICLE 7 Termination of Agreement .............................. 13
ARTICLE 8 Assignment ............................................ 14
ARTICLE 9 Amendment ............................................. 15
ARTICLE 10 Massachusetts Law to Apply ............................ 15
ARTICLE 11 Merger of Agreement ................................... 15
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 8th day of September, 1986, by and between
LANDMARK NEW YORK TAX FREE INCOME FUND, a Massachusetts business trust, having
its principal office and place of business at 200 Berkeley Street, Boston,
Massachusetts 02117 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts corporation having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WITNESSETH:
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment Duties of the Bank
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby, employs and appoints the Bank to act as, and the Bank agrees to act
as transfer agent for the Fund's authorized and issued shares of its beneficial
interest ("Shares"), dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
Fund ("Shareholders") and set out in the currently effective prospectus of the
Fund, including without limitation any periodic investment plan or periodic
withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to
the Custodian of the Fund authorized pursuant to the Declaration of
Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of Sharea
and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to the
Custodian;
(iv) At the appropriate time as and when it receives monies paid to it by
the Custodian with respect to any redemption, pay over or cause to
be paid over in the appropriate manner such monies as instructed by
the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund; and
(vii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and maintain pursuant to
SEC Rule 17Ad-10(e) a record of the total number of shares of the
Fund which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. Bank shall also provide the Fund
on a regular basis with the total number of shares which are
authorized and issued and outstanding and shall have no obligation,
when recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to the issue
or sale of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), the Bank shall: (i) perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program); including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on
non-resident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmations forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State. The
Fund shall (i) identify to the Bank in writing those transactions and assets to
be treated as exempt from the blue sky reporting for each State and (ii) verify
the establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration status is
solely limited to the initial establishment of transactions subject to blue sky
compliance by the Fund and the reporting of such transactions to the Fund as
provided above.
(c) Additionally, the Bank shall:
(i) Utilize a system to identify all share transactions which involve
purchase and redemption orders that are processed at a time other than the time
of the computation of net asset value per share next computed after receipt of
such orders, and shall compute the net effect upon the Fund of such transactions
so identified on a daily and cumulative basis.
(ii) If upon any day the cumulative net effect of such transactions upon
the Fund is negative and exceed a dollar amount equivalent to 1/2 of 1 cent per
share, the Bank shall promptly make a payment to the Fund in cash or through the
use of a credit, in the manner described in paragraph (iv) below, in such amount
as may be necessary to reduce the negative cumulative net effect to less than
1/2 of 1 cent per share.
(iii) If on the last business day of any month the cumulative net effect
upon the Fund (adjusted by the amount of all prior payments and credits by the
Bank and the Fund) is negative, the Fund shall be entitled to a reduction in the
fee next payable under the Agreement by an equivalent amount, except as provided
in paragraph (iv) below. If on the last business day in any month the cumulative
net effect upon the Fund (adjusted by the amount of all prior payments and
credits by the Bank and the Fund) is positive, the Bank shall be entitled to
recover certain past payments and reductions in fees, and to credit against all
future payments and fee reductions that may be required under the Agreement as
herein described in paragraph (iv) below.
(iv) At the end of each month, any positive cumulative net effect upon the
Fund shall be deemed to be a credit to the Bank which shall first be applied to
permit the Bank to recover any prior cash payments and fee reductions made by it
to the Fund under paragraphs (ii) and (iii) above during the calendar year, by
increasing the amount of the monthly fee under the Agreement next payable in an
amount equal to prior payments and fee reductions made by the Bank during such
calendar year, but not exceeding the sum of that month's credit and credits
arising in prior months during such calendar year to the extent such prior
credits have not previously been utilized as contemplated by this paragraph. Any
portion of a credit to the Bank not so used by it shall remain as a credit to be
used as payment against the amount of any future negative cumulative net effects
that would otherwise require a cash payment or fee reduction to be made to the
Fund pursuant to paragraphs (ii) or (iii) above (regardless of whether or not
the credit or any portion thereof arose in the same calendar year as that in
which the negative cumulative net effects or any portion thereof arose).
(v) The Bank shall supply to the Fund from time to time, as mutually agreed
upon, reports summarizing the transactions identified pursuant to paragraph (i)
above, and the daily and cumulative net effects of such transactions, and shall
advise the Fund at the end of each month of the net cumulative effect at such
time. The Bank shall promptly advise the Fund if at any time the cumulative net
effect exceeds a dollar amount equivalent to 1/2 of 1 cent per share.
(vi) In the event that this Agreement is terminated for whatever cause, or
this provision 1.02 (c) is terminated pursuant to paragraph (vii) below, the
Fund shall promptly pay to the Bank an amount in cash equal to the amount by
which the cumulative net effect upon the Fund is positive or, if the cumulative
net effect upon the Fund is negative, the Bank shall promptly pay to the Fund an
amount in cash equal to the amount of such cumulative net effect.
(vii) This provision 1.02 (c) of the Agreement may be terminated by the
Bank at any time without cause, effective as of the close of business on the
date written notice (which may be by telex) is received by the Fund.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For performance by the Bank pursuant to this Agreement, the Fund
agrees to pay the Bank an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse the Bank for out-of-pocket expenses or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within five
days following the mailing of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to the Bank by the Fund at least seven (7) days prior
to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its charter and by-lawa
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified investment company registered under
the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all Shares
of the Fund being offered for aale.
Article 5 Indemnification
5.01 The Bank shall not be responsible for and the Fund shall indemnify and
hold the Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Funds' refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records and documents which (i) are received by the Bank or its
agents or subcontractors and furnished to it by or on behalf of the Fund, and
(ii) have been prepared and/or maintained by the Fund or any other person or
firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Bank shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributed to any action or failure or omission
to act by the Bank aa a result of the Bank's lack of good faith, negligence or
willful misconduct.
5.03 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of the
Fund, and the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Trustees of the Fund
authorizing the appointment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
instruction. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable~for the failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge equivalent
to the average of three (3) months' fees.
Article 8 Assignment
8.01 Except as provided in Section 8.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
8.03 The Bank, may without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A (c)(l) of the Securities Exchange Act of
1934 ("Section 17A (c)(l)"), or (ii) a BFDS subsidiary duly registered as a
transfer agent pursuant to Section 17A (c)(l); provided, however, that the Bank
shall be as fully responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 9 Amendment
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Trustees of the Fund.
Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
LANDMARK NEW YORK TAX FREE INCOME FUND
--------------------------------------
By Richard B. Bailey
ATTEST:
Philip Coolidge
- ---------------------------
STATE STREET BANK AND TRUST COMPANY
--------------------------------------
By: Charles R. Whittemore Jr.
Vice President
ATTEST: Kathleen M. Kubit
- ---------------------------
Assistant Secretary
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post Effective Amendment
No. 19 to Registration Statement No. 33-5819 of CitiFunds Tax Free Income Trust
(formerly known as Landmark Tax Free Income Funds) of our reports each dated
January 30, 1998 appearing in the annual reports to shareholders for the year
ended December 31, 1997 of CitiFunds New York Tax Free Income Portfolio
(formerly Landmark National Tax Free Income Fund), and CitiFunds National Tax
Free Income Portfolio (formerly Landmark National Tax Free Income Fund), (each a
separate series of CitiFunds Tax Free Income Trust), and to the references to us
under the headings "Condensed Financial Information" in the Prospectus and
"Independent Accountants and Financial Statements" in the Statement of
Additional Information, both of which are part of such Registration Statement.
Deloitte & Touche LLP
Boston, Massachusetts
February 17, 1998
<PAGE>
Exhibit 15(a)
AMENDED AND RESTATED
DISTRIBUTION PLAN-CLASS A
DISTRIBUTION PLAN, dated as of June 24, 1986 and amended and restated as of
May 5, 1995 of Landmark Tax Free Income Funds, a Massachusetts business trust
(the "Trust") with respect to Shares of Beneficial Interest to be designated
"Class A".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds"); and
WHEREAS, the Trust intends to distribute the shares of each Fund designated
Class A Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act
("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a
plan of distribution pursuant to such Rule; and
WHEREAS, the Trust desires to engage The Landmark Funds Broker-Dealer
Services, Inc., a Massachusetts corporation ("LFBDS"), to provide certain
distribution services for the Trust (the "Distributor"); and
WHEREAS, the Trust desires to enter into an amended and restated
distribution agreement (in such form as may from time to time be approved by the
Board of Trustees of the Trust in the manner specified in Rule 12b-1) with the
Distributor, whereby the Distributor will provide facilities and personnel and
render services to the Trust in connection with the offering and distribution of
the Shares of each Fund (the "Distribution Agreement"); and
WHEREAS, the Trust recognizes and agrees that the Distributor may retain
the services of any one or more broker-dealers registered as such under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), banks and
other financial intermediaries, to act as dealer or agent in connection with the
offering of Shares of a Fund, and the Distributor may make periodic payments,
out of the fee paid to the Distributor, its profits or any other source
available to it, to such broker-dealer, bank or other financial intermediary for
such services; and
WHEREAS, the Distribution Agreement provides that a sales charge may be
paid by investors who purchase Shares and that the Distributor and
broker-dealers, banks and other financial intermediaries, may receive such sales
charge as partial compensation for their services in connection with the sale of
Shares; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as
it deemed necessary to an informed determination as to whether this Plan should
be adopted and implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use assets of each Fund for
such purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan
for the Trust as a plan for distribution in accordance with Rule 12b-1, on the
following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the
offering and sale of Shares of each Fund to customers of financial
institutions which have entered into shareholder servicing agreements
with the Trust applicable to such Fund. Among other things, the
Distributor shall be responsible for all expenses of printing
(excluding typesetting) and distributing prospectuses, and, upon
request, statements of additional information, to prospective
shareholders of each Fund and providing such other related services as
are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses described
in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel,
office expenses (including rent and overhead), equipment, printing,
delivery and mailing costs.
3. It is understood that, under certain circumstances, the Distributor may
impose certain deferred sales charges in connection with the repurchase
of Shares of each Fund and the Distributor may retain (or receive from
each Fund, as the case may be) all such deferred sales charges. As
additional consideration for services performed and expenses incurred
in the performance of its obligations under the Distribution Agreement,
except in connection with print or electronic media advertising, the
Trust shall pay the Distributor from the assets of each Fund a
distribution fee periodically at an annual rate not to exceed 0.10% of
the average daily net assets of such Fund for its then-current fiscal
year attributable to the Shares of that Fund (the "Basic Distribution
Fee"). The Trust shall pay the Distributor an additional fee from the
assets of each Fund at an annual rate not to exceed 0.05% of the
average daily net assets of such Fund for its then-current fiscal year
attributable to the Shares of that Fund in anticipation of, or as
reimbursement for, expenses incurred by the Distributor in connection
with print or electronic media advertising in connection with the sale
of Shares of such Fund.
4. As partial consideration for the personal services and/or account
maintenance services performed by the Distributor and/or each
broker-dealer, bank or other financial intermediary in the performance
of its obligations under its dealer or agency agreement with the
Distributor, each Fund may pay the Distributor and/or each
broker-dealer, bank or other financial intermediary a service fee
periodically at a rate not to exceed in the aggregate 0.25% per annum
of the average daily net assets of such Fund (and provided that any
service fee paid to a broker-dealer, bank or other financial
intermediary will not exceed 0.25% per annum of the portion of the
average daily net assets of such Fund that is represented by Shares
that are owned by investors for whom such broker-dealer, bank or other
financial intermediary is the holder or intermediary of record). That
portion of each such Fund's average daily net assets on which the fees
payable to a broker-dealer, bank or other financial intermediary under
this paragraph 4 hereof are calculated may be subject to certain
minimum amount requirements as may be determined, and additional or
different dealer qualification standards that may be established from
time to time, by the Distributor. The service fee payable to a
broker-dealer, bank or other financial intermediary pursuant to this
paragraph 4 may from time to time be paid by each Fund to the
Distributor and the Distributor will then pay these fees on behalf of
such Fund.
5. The Trust understands that an agreement between the Distributor and any
broker-dealer registered as such under the Exchange Act, bank or other
financial intermediary may provide for a portion (which may be
substantially all) of the fees payable to the Distributor under the
Distribution Agreement to be paid by the Distributor to such
broker-dealer, bank or other financial intermediary in consideration of
services in connection with the sale of the Shares of any Fund. Nothing
in this Plan shall be construed as requiring the Trust to make any
payment to any such broker-dealer, bank or other financial intermediary
or to have any obligation to such broker-dealer, bank or other
financial intermediary in connection with its services. The Distributor
agrees and hereby undertakes that any agreement entered into between
the Distributor and any such broker-dealer, bank or other financial
intermediary shall provide that such broker-dealer, bank or other
financial intermediary shall look solely to the Distributor for
compensation for its services thereunder and that in no event shall
such broker-dealer, bank or other financial intermediary seek any
payment from the Trust or its shareholders.
6. The Trust shall pay all fees and expenses of any independent auditor,
legal counsel, administrator, transfer agent, custodian, shareholder
servicing agent, registrar or dividend disbursing agent of the Trust;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses and
statements of additional information, shareholder reports, notices,
proxy statements and reports to government officers and commissions and
to shareholders of the Trust except that the Distributor shall be
responsible for the expenses of printing (excluding typesetting) and
distributing prospectuses and statements of additional information to
prospective shareholders as provided in paragraphs 1 and 2 hereof;
expenses connected with the execution, recording and settlement of
portfolio security transactions; insurance premiums; expenses of
calculating the net asset value of Shares; expenses of shareholder
meetings; and expenses relating to the issuance, registration and
qualification of Shares.
7. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of Trustees
of the responsibility for and control of the conduct of the affairs of
the Trust.
8. This Plan shall become effective as to any Fund upon (a) approval by a
vote of at least a "majority of the outstanding voting securities" of
the Shares of that Fund, and (b) approval by a vote of the Board of
Trustees and vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at
a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the
Board of Trustees of the Trust and a majority of the Qualified
Trustees, such votes to be cast in person at a meeting called for the
purpose of voting on continuance of this Plan. If such annual approval
is not obtained, this Plan shall expire on the date which is 15 months
after the date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the
amount to be expended from the assets of any Fund attributable to the
Shares for the services described herein shall be effective only upon
approval by a vote of a "majority of the outstanding voting securities"
of the Shares of such Fund, and (b) any material amendment of this Plan
shall be effective only upon approval by a vote of the Board of
Trustees of the Trust and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of
voting on such amendment. This Plan may be terminated at any time with
respect to any Fund by vote of a majority of the Qualified Trustees or
by a vote of a "majority of the outstanding voting securities" of the
Shares of such Fund.
11. The Trust and the Distributor each shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at
least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
12. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons" and
"majority of the outstanding voting securities" are used as defined in
the 1940 Act. In addition, for purposes of determining the fees payable
to the Distributor, the value of the net assets of any Fund shall be
computed in the manner specified in the Trust's then-current prospectus
and statement of additional information applicable to that Fund for
computation of the net asset value applicable to Shares of that Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 11 hereof
(collectively, the "Records") for a period of six years from the end of
the fiscal year in which such Record was made and each such Record
shall be kept in an easily accessible place for the first two years of
said record-keeping.
15. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
Exhibit 15(b)
AMENDED AND RESTATED
DISTRIBUTION PLAN-CLASS B
DISTRIBUTION PLAN, dated as of August 19, 1994, and amended and restated on
May 5, 1995 of Landmark Tax Free Income Funds, a Massachusetts business trust
(the "Trust") with respect to Shares of Beneficial Interest to be designated
"Class B".
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest of the Trust are divided into
one or more separate series (together with any series which may in the future be
established, the "Funds"); and
WHEREAS, the Trust intends to distribute the shares of each Fund designated
Class B Shares (the "Shares") in accordance with Rule 12b-1 under the 1940 Act
("Rule 12b-1"), and desires to adopt this Distribution Plan (the "Plan") as a
plan of distribution pursuant to such Rule; and
WHEREAS, the Trust desires to engage The Landmark Funds Broker-Dealer
Services, Inc., a Massachusetts corporation ("LFBDS"), to provide certain
distribution services for the Trust (the "Distributor"); and
WHEREAS, the Trust desires to enter into a distribution agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust
in the manner specified in Rule 12b-1) with the Distributor, whereby the
Distributor will provide facilities and personnel and render services to the
Trust in connection with the offering and distribution of the Shares of each
Fund (the "Distribution Agreement"); and
WHEREAS, the Trust recognizes and agrees that the Distributor may retain
the services of any one or more broker-dealers registered as such under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), banks and
other financial intermediaries to act as dealer or agent in connection with the
offering of the Shares of a Fund, and the Distributor may make periodic
payments, out of the fee paid to the Distributor, its profits or any other
source available to it, to such broker-dealer, bank or other financial
intermediary for such services; and
WHEREAS, the Trust recognizes and agrees that the Distributor may impose
certain deferred sales charges in connection with the repurchase of Shares by
each Fund and the Distributor may retain (or receive from such Fund, as the case
may be) all such deferred sales charges; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as
it deemed necessary to an informed determination as to whether this Plan should
be adopted and implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use assets of each Fund for
such purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Plan
for the Trust as a plan for distribution in accordance with Rule 12b-1, on the
following terms and conditions:
1. As specified in the Distribution Agreement, the Distributor shall
provide facilities, personnel and a program with respect to the
offering and sale of Shares of each Fund to customers of financial
institutions which have entered into shareholder servicing agreements
with the Trust applicable to such Fund. Among other things, the
Distributor shall be responsible for all expenses of printing
(excluding typesetting) and distributing prospectuses, and, upon
request, statements of additional information, to prospective
shareholders of each Fund and providing such other related services as
are reasonably necessary in connection therewith.
2. The Distributor shall bear all distribution-related expenses described
in paragraph 1, including without limitation, the compensation of
personnel necessary to provide such services and all costs of travel,
office expenses (including rent and overhead), equipment, printing,
delivery and mailing costs.
3. It is understood that, under certain circumstances, the Distributor may
impose certain deferred sales charges in connection with the repurchase
of Shares of each Fund and the Distributor may retain (or receive from
each Fund, as the case may be) all such deferred sales charges. As
additional consideration for services performed and expenses incurred
in the performance of its obligations under the Distribution Agreement,
the Trust shall pay the Distributor from the assets of each Fund a
distribution fee periodically at an annual rate equal to 0.75% of the
average daily net assets of such Fund for its then-current fiscal year
attributable to the Shares of that Fund.
4. As partial consideration for the personal services and/or account
maintenance services performed by the Distributor and/or each
broker-dealer, bank or other financial intermediary in the performance
of its obligations under its dealer or agency agreement with the
Distributor, each Fund may pay the Distributor and/or each
broker-dealer, bank or other financial intermediary a service fee
periodically at a rate not to exceed in the aggregate 0.25% per annum
of the average daily net assets of such Fund (and provided that any
service fee paid to a broker-dealer, bank or other financial
intermediary will not exceed 0.25% per annum of the portion of the
average daily net assets of such Fund that is represented by Shares
that are owned by investors for whom such broker-dealer, bank or other
financial intermediary is the holder or intermediary of record). That
portion of each Fund's average daily net assets on which the fees
payable to a broker-dealer, bank or other financial intermediary under
this paragraph 4 hereof are calculated may be subject to certain
minimum amount requirements as may be determined and additional or
different dealer qualification standards that may be established from
time to time, by the Distributor. The service fee payable to a
broker-dealer, bank or other financial intermediary pursuant to this
paragraph 4 may from time to time be paid by each Fund to the
Distributor and the Distributor will then pay these fees on behalf of
such Fund.
5. The Trust understands that an agreement between the Distributor and any
broker-dealer registered as such under the Exchange Act, bank or other
financial intermediary may provide for a portion (which may be
substantially all) of the fees payable to the Distributor under the
Distribution Agreement to be paid by the Distributor to such
broker-dealer, bank or other financial intermediary in consideration of
services in connection with the sale of the Shares of any Fund. Nothing
in this Plan shall be construed as requiring the Trust to make any
payment to any such broker-dealer, bank or other financial intermediary
or to have any obligation to such broker-dealer, bank or other
financial intermediary in connection with its services. The Distributor
agrees and hereby undertakes that any agreement entered into between
the Distributor and any such broker-dealer, bank or other financial
intermediary shall provide that such broker-dealer shall look solely to
the Distributor for compensation for its services thereunder and that
in no event shall such broker-dealer, bank or other financial
intermediary seek any payment from the Trust or its shareholders.
6. The Trust shall pay all fees and expenses of any independent auditor,
legal counsel, administrator, transfer agent, custodian, shareholder
servicing agent, registrar or dividend disbursing agent of the Trust;
expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses and
statements of additional information, shareholder reports, notices,
proxy statements and reports to government officers and commissions and
to shareholders of the Trust except that the Distributor shall be
responsible for the expenses of printing (excluding typesetting) and
distributing prospectuses and statements of additional information to
prospective shareholders as provided in paragraphs 1 and 2 hereof;
expenses connected with the execution, recording and settlement of
portfolio security transactions; insurance premiums; expenses of
calculating the net asset value of Shares; expenses of shareholder
meetings; and expenses relating to the issuance, registration and
qualification of Shares.
7. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of Trustees
of the responsibility for and control of the conduct of the affairs of
the Trust.
8. This Plan shall become effective as to any Fund upon (a) approval by a
vote of at least a "majority of the outstanding voting securities" of
the Shares of that Fund, and (b) approval by a vote of the Board of
Trustees and vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at
a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect indefinitely; provided, however,
that such continuance is subject to annual approval by a vote of the
Board of Trustees of the Trust and a majority of the Qualified
Trustees, such votes to be cast in person at a meeting called for the
purpose of voting on continuance of this Plan. If such annual approval
is not obtained, this Plan shall expire on the date which is 15 months
after the date of the last approval.
10. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the
amount to be expended from the assets of any Fund attributable to the
Shares for the services described herein shall be effective only upon
approval by a vote of a "majority of the outstanding voting securities"
of the Shares of such Fund, and (b) any material amendment of this Plan
shall be effective only upon approval by a vote of the Board of
Trustees of the Trust and a majority of the Qualified Trustees, such
votes to be cast in person at a meeting called for the purpose of
voting on such amendment. This Plan may be terminated at any time with
respect to any Fund by vote of a majority of the Qualified Trustees or
by a vote of a "majority of the outstanding voting securities" of the
Shares of such Fund.
11. The Trust and the Distributor each shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at
least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
12. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
13. For the purposes of this Plan, the terms "interested persons" and
"majority of the outstanding voting securities" are used as defined in
the 1940 Act. In addition, for purposes of determining the fees payable
to the Distributor, the value of the net assets of any Fund shall be
computed in the manner specified in the Trust's then-current prospectus
and statement of additional information applicable to that Fund for
computation of the net asset value applicable to Shares of that Fund.
14. The Trust shall preserve copies of this Plan, and each agreement
relates hereto and each report referred to in paragraph 11 hereof
(collectively, the "Records") for a period of six years from the end of
the fiscal year in which such Record was made and each such Record
shall be kept in an easily accessible place for the first two years of
said record-keeping.
15. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
16. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
<PAGE>
Exhibit 25
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
William S. Woods, Jr.
- --------------------------
William S. Woods, Jr.
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
E. Kirby Warren
- --------------------------
E. Kirby Warren
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Landmark Tax Free
Income Funds (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
John R. Elder
- --------------------------
John R. Elder
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
C. Oscar Morong, Jr.
- --------------------------
C. Oscar Morong, Jr.
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Riley C. Gilley
- --------------------------
Riley C. Gilley
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Elliott J. Berv
- --------------------------
Elliott J. Berv
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Mark T. Finn
- --------------------------
Mark T. Finn
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Walter E. Robb, III
- --------------------------
Walter E. Robb, III
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Molly S. Mugler and Linda T. Gibson, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by Landmark Tax Free Income
Funds (on behalf of each of its series now or hereinafter created) (the
"Registrant") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and under the Investment Company Act of 1940, as
amended, and any and all other instruments which such attorneys and agents, or
any of them, deem necessary or advisable to enable the Registrant to comply with
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of
February, 1998.
Philip W. Coolidge
- --------------------------
Philip W. Coolidge
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as her true and lawful attorneys and agents to
execute in her name and on her behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
her own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day of
February, 1998.
Diana R. Harrington
- --------------------------
Diana R. Harrington
<PAGE>
LANDMARK TAX FREE INCOME FUNDS
The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as her true and lawful attorneys and agents to
execute in her name and on her behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Landmark
Tax Free Income Funds (on behalf of each of its series now or hereinafter
created) (the "Registrant") with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, and any and all other instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
her own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 6th day of
February, 1998.
Susan B. Kerley
- --------------------------
Susan B. Kerley
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000794047
<NAME> LANDMARK TAX FREE INCOME FUNDS
<SERIES>
<NUMBER>001
<NAME>LANDMARK NEW YORK TAX FREE INCOME FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 71,761,625
<INVESTMENTS-AT-VALUE> 76,394,559
<RECEIVABLES> 1,421,013
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 64,485
<TOTAL-ASSETS> 77,880,057
<PAYABLE-FOR-SECURITIES> 38,199
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 38,199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 78,246,068
<SHARES-COMMON-STOCK> 7,018,224
<SHARES-COMMON-PRIOR> 7,486,395
<ACCUMULATED-NII-CURRENT> 91,060
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,231,066)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,632,934
<NET-ASSETS> 77,738,996
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,450,507
<OTHER-INCOME> 0
<EXPENSES-NET> 314,737
<NET-INVESTMENT-INCOME> 2,135,770
<REALIZED-GAINS-CURRENT> 362,495
<APPREC-INCREASE-CURRENT> 266,197
<NET-CHANGE-FROM-OPS> 2,764,462
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,076,216)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,008,663
<NUMBER-OF-SHARES-REDEEMED> (8,177,838)
<SHARES-REINVESTED> 2,037,919
<NET-CHANGE-IN-ASSETS> (4,443,010)
<ACCUMULATED-NII-PRIOR> 31,506
<ACCUMULATED-GAINS-PRIOR> (5,593,561)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157,359
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 492,559
<AVERAGE-NET-ASSETS> 79,331,346
<PER-SHARE-NAV-BEGIN> 10.98
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.29)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.08
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000794047
<NAME> LANDMARK TAX FREE INCOME FUNDS
<SERIES>
<NUMBER>002
<NAME>LANDMARK NATIONAL TAX FREE INCOME FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,529,902
<INVESTMENTS-AT-VALUE> 1,601,905
<RECEIVABLES> 30,677
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 122,722
<TOTAL-ASSETS> 1,755,304
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,687,776
<SHARES-COMMON-STOCK> 167,289
<SHARES-COMMON-PRIOR> 199,218
<ACCUMULATED-NII-CURRENT> 5,215
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12,011)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (12,011)
<NET-ASSETS> 1,752,983
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 57,194
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 57,194
<REALIZED-GAINS-CURRENT> 5,537
<APPREC-INCREASE-CURRENT> 18,142
<NET-CHANGE-FROM-OPS> 80,873
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (54,070)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 125,778
<NUMBER-OF-SHARES-REDEEMED> (513,575)
<SHARES-REINVESTED> 53,675
<NET-CHANGE-IN-ASSETS> (307,319)
<ACCUMULATED-NII-PRIOR> 2,091
<ACCUMULATED-GAINS-PRIOR> (17,548)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,121
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 78,739
<AVERAGE-NET-ASSETS> 2,077,426
<PER-SHARE-NAV-BEGIN> 10.34
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.27)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.48
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
