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