SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Landmark Fixed Income Funds - Landmark Intermediate Income Fund
(Name of Registrant as Specified In Its Charter)
Lea Anne Copenhefer
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
______________________________________________________________________
2. Form, Schedule or Registration Statement No.:
______________________________________________________________________
3. Filing Party:
______________________________________________________________________
4. Date Filed:
______________________________________________________________________
<PAGE>
BD&G Draft
8/13/97
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
LANDMARK INTERMEDIATE INCOME FUND
6 St. James Avenue
Boston, Massachusetts 02116
August __, 1997
Dear Shareholder:
The accompanying materials relate to a Special Meeting of Shareholders of
Landmark Intermediate Income Fund. The Meeting will be held on Friday, October
17, 1997 at [ ] [a.m./p.m.] Eastern time.
YOUR PARTICIPATION AT THIS MEETING IS VERY IMPORTANT IN ORDER TO
ACCOMPLISH PROPOSALS WHICH YOUR BOARD OF TRUSTEES HAS DETERMINED ARE FAIR AND
REASONABLE AND IN YOUR BEST INTERESTS.
If you cannot attend the Meeting, you may participate by proxy. As a
shareholder, you cast one vote for each share that you own. Please take a few
moments to read the enclosed materials and then cast your vote on the enclosed
proxy card. If the Fund does not receive your proxy card, our proxy solicitor,
Shareholder Communications Corporation ("SCC"), may contact you to help you
decide how to cast your vote.
VOTING TAKES ONLY A FEW MINUTES. EACH SHAREHOLDER'S VOTE IS IMPORTANT.
YOUR PROMPT RESPONSE WILL BE MUCH APPRECIATED.
At the meeting, you will be asked to vote on proposals that would give
the Fund increased flexibility to invest in other investment companies. This
would allow the Fund to take advantage in the future of recent changes in
federal law without the expense of an additional shareholder meeting. You also
will be asked to vote on several other matters which relate, in large part, to
conforming the service arrangements and investment policies for the Fund to
other open-end funds managed by Citibank, N.A. All of these proposals are
described in the accompanying Notice and Proxy Statement.
After you have voted on the proposals, please be sure to SIGN YOUR PROXY
CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. If you have any
questions regarding the items to be voted on, or need assistance in completing
your proxy, please contact SCC at 1-800-733-8481 ext. 492.
We appreciate your participation in this important meeting. Thank you.
Sincerely,
Philip W. Coolidge
President
<PAGE>
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
LANDMARK INTERMEDIATE INCOME FUND
6 St. James Avenue
Boston, Massachusetts 02116
Telephone: (800) __________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held October 17, 1997
A Special Meeting of Shareholders of Landmark Intermediate Income Fund
will be held at Citicorp Center, 153 East 53rd Street, [ ] Floor, New York, New
York, on Friday, October 17, 1997 at [ ] [a.m./p.m.], Eastern Time, for the
following purposes:
ITEM 1. To vote on an amendment to the Fund's Declaration of Trust to
allow the assets of the Fund to be invested in one or more
investment companies to the extent not prohibited by the
Investment Company Act of 1940, the rules and regulations
thereunder, and exemptive orders granted under such Act
(the "1940 Act").
ITEM 2. To vote on an amendment to the Fund's fundamental investment
policies to allow the assets of the Fund to be invested in one
or more investment companies to the extent not prohibited by
the 1940 Act.
ITEM 3. To vote on an amendment to the Fund's fundamental investment
policies concerning the Fund's ability to pledge its assets to
support borrowings, purchase securities on margin, purchase and
sell put and call options, make loans to other persons, make
short sales of securities and buy or sell futures contracts and
options on futures.
ITEM 4. To vote on a Management Agreement for the Fund with
Citibank, N.A.
ITEM 5. To vote on a Service Plan for the Fund pursuant to Rule
12b-1 under the 1940 Act.
ITEM 6. To vote on the selection of Deloitte & Touche LLP as the
independent certified public accountants for the Fund.
<PAGE>
ITEM 7. To transact such other business as may properly come before
the Special Meeting of Shareholders and any adjournments
thereof.
THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF
ITEMS 1 THROUGH 6.
Only shareholders of record on August 18, 1997 will be entitled to vote
at the Special Meeting of Shareholders and at any adjournments thereof.
Linda T. Gibson, Secretary
August __, 1997
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING
AND RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE
OF A SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE
AND IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
LANDMARK INTERMEDIATE INCOME FUND
6 St. James Avenue
Boston, Massachusetts 02116
Telephone: (800) _________
PROXY STATEMENT
This Proxy Statement and Notice of Special Meeting with accompanying form
of proxy are being furnished in connection with the solicitation of proxies by
the Board of Trustees of Landmark Intermediate Income Fund for use at a Special
Meeting of Shareholders of the Fund, or any adjournment thereof, to be held at
Citicorp Center, 153 East 53rd Street, [ ] Floor, New York, New York, on
Friday, October 17, 1997 at [ ] [a.m./p.m.], Eastern Time. The Meeting is being
held to vote on matters which will give the Fund flexibility to invest in other
investment companies and certain other matters, as described below and in the
accompanying President's Letter and Notice of Special Meeting.
The close of business on August 18, 1997 has been fixed as the Record
Date for the determination of shareholders entitled to notice of and to vote at
the Meeting. [ ] shares of Landmark Intermediate Income Fund, without par
value, were outstanding as of the close of business on the Record Date.
Shareholders of record at the close of business on the Record Date will be
entitled to one vote for each share held.
The Fund's Annual Report for the fiscal year ended December 31, 1996,
including audited financial statements, has previously been sent to
shareholders and is available without charge upon request by calling the Fund
toll free at (800) 625-4554.
This Proxy Statement and Notice of Special Meeting with accompanying form
of proxy are being mailed by the Board of Trustees on or about August __, 1997.
The Fund currently operates on a stand-alone basis; that is, it invests
directly in investment securities. The Fund has the ability to convert to a
master/feeder structure whereby the Fund would invest all of its investable
assets in a single investment company. As described below, the Fund is seeking
the flexibility to invest in more than one investment company, consistent with
its investment objectives. This change has been made possible by a recent
amendment of federal law. Although the Fund currently has no plans to change
its investment structure, the Board believes this flexibility will permit the
Fund to take advantage in the future of these and any further changes in
federal law on investment in other investment companies without the expense of
an additional shareholder meeting. Shareholders are being asked to vote on
certain changes to the Fund's investment restrictions and governing documents,
as well as certain other matters, to permit this change.
Shareholders are also being asked to approve a Service Plan pursuant to
Rule 12b-1 under the federal Investment Company Act of 1940 (the "1940 Act"),
to authorize certain other amendments to the Fund's investment restrictions and
to approve the selection of the Fund's accountants.
<PAGE>
MANNER OF VOTING PROXIES AND VOTE REQUIRED
If the accompanying form of proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. IF NO INSTRUCTIONS ARE SPECIFIED, ALL SHARES OF THE
FUND WILL BE VOTED FOR EACH OF PROPOSED ITEMS 1 THROUGH 6. If the enclosed form
of proxy is executed and returned, it may nevertheless be revoked prior to its
exercise by a signed writing delivered at the Meeting or filed with the
Secretary of the Fund.
If sufficient votes to approve the proposed Items 1 through 6 are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares voted at the
Meeting. When voting on a proposed adjournment, the persons named as proxies
will vote all shares that they are entitled to vote with respect to Items 1
through 6 for the proposed adjournment, unless directed to disapprove the Item,
in which case such shares will be voted against the proposed adjournment.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Fund entitled to vote is required to constitute a
quorum at the Meeting for purposes of voting on Items 1 through 6. For purposes
of determining the presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power) will be treated as shares that are present but which have not been
voted. For this reason, abstentions and broker "non-votes" will have the effect
of a "no" vote for purposes of obtaining the requisite approval of Items 1
through 6.
GENERAL BACKGROUND
The Fund is an open-end management investment company, or mutual fund.
The Fund invests primarily (i.e., at least 65% of its assets under normal
circumstances) in a broad range of fixed income securities, including preferred
stock and debt issued by U.S. and non-U.S. companies and debt of the U.S.
Government and governments of other countries. Under normal market conditions,
the Fund's dollar weighted average portfolio maturity is from three to ten
years.
The Fund currently operates on a stand-alone basis; that is, it invests
directly in investment securities. The Fund has the ability under its
investment restrictions and governing documents to convert to a master/feeder
structure. In the master/feeder structure, the Fund would invest all of its
investable assets in a single investment company with the same investment
objective and policies as the Fund. This underlying investment company would
buy, hold and sell securities in accordance with its objective and policies.
Until recently, mutual funds could not invest their assets in more than
one other registered investment company without obtaining exemptive relief from
the Securities and Exchange Commission (the "SEC"). Recent amendments to the
1940 Act now permit funds to invest their assets in multiple registered
investment companies so long as the investment companies hold themselves out to
investors as related companies for purposes of investment and investor
<PAGE>
services. It is possible that there could be additional amendments to the 1940
Act in the future which affect mutual funds' ability to invest in other funds.
In order to take advantage of this change in law and any future changes
in law on this topic, the Fund is proposing that its Declaration of Trust and
its fundamental investment policies be amended to give it the flexibility to
invest in multiple investment companies to the extent permitted by applicable
law. Although the Fund has no current plan to change its investment structure,
the proposed changes will permit the Fund to change that structure in the
future without the expense of an additional shareholder meeting.
In addition, the Fund is proposing certain amendments to its fundamental
investment policies. These amendments are intended for clarification and for
conforming the policies to those of other Landmark Funds and other mutual funds
advised by Citibank. In addition, certain of these amendments are intended to
eliminate fundamental policies that the Fund considers to be unnecessary or
unduly restrictive.
The Fund currently receives investment advisory services pursuant to an
investment advisory agreement with Citibank. The Fund currently receives
administrative services under administrative services agreement with its
distributor. The distributor, in turn, subcontracts with Citibank so that
Citibank actually provides administrative services to the Fund. The Fund is
proposing to simplify these contractual arrangements. The Fund will enter into
a management agreement with Citibank. This agreement will permit it to obtain
both investment advisory and administrative services directly from Citibank.
This agreement also will enable the Fund to invest in multiple investment
companies, if it chooses to do so. The Fund's existing administrative services
agreement will then be unnecessary, and will be terminated. The aggregate
management fees payable by Fund shareholders under the proposed management
agreement will be higher than the aggregate investment advisory and
administrative service fees currently payable by Fund shareholders.
The Fund also is proposing to replace its existing Rule 12b-1
Distribution Plan with a Service Plan entered into pursuant to Rule 12b-1 under
the 1940 Act. The Service Plan will permit payment of distribution and service
fees which are higher than the maximum fees currently permissible under the
existing Distribution Plan. The Fund is proposing the Service Plan in order to
simplify its existing distribution and service arrangements, and to conform
them to those of other open-end funds managed by Citibank.
IMPORTANTLY, THE FUND'S CONTRACTUAL TOTAL EXPENSE RATIO WILL NOT INCREASE
AS A RESULT OF THE CHANGES DESCRIBED ABOVE. IN FACT, THE FUND'S TOTAL EXPENSE
RATIO, COMPUTED BASED ON CONTRACTUAL FEE LEVELS WITHOUT VOLUNTARY WAIVERS, WILL
DECREASE. IT IS EXPECTED THAT THE SAME PERSONNEL AT CITIBANK WHO CURRENTLY
PROVIDE SERVICES TO THE FUND WILL CONTINUE TO DO SO AFTER GIVING EFFECT TO
THESE CHANGES, AND THE NATURE, LEVEL AND QUALITY OF SERVICES TO THE FUND WILL
NOT BE ADVERSELY AFFECTED.
The following table summarizes current estimated annual operating
expenses for the Fund and for its Portfolio, without any fee waivers or
reimbursements. The following table also summarizes pro forma estimated annual
operating expenses for the Fund after giving effect to the proposals set forth
in Items 4 and 5. The pro forma expenses also do not reflect any fee waivers or
reimbursements.
<PAGE>
Intermediate Income Fund
Current(4) Pro Forma
- ------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES:
Management Fee....................... .35% .70%(1)
12b-1 Fees (2)....................... .20%(3) .25%
Other Expenses
Administrative Services Fees....... .25% See (1)
Shareholder Servicing Agent Fees... .25% None
Other Operating Expenses........... .37% [_____]
Total Fund Operating Expenses........ 1.42% [____%]
(1) A combined fee for investment advisory and administrative services.
(2) 12b-1 distribution fees are asset-based sales charges.
(3) 12b-1 fees assume a .05% charge for print or electronic media advertising
expenses.
(4) After giving effect to fee waivers and reimbursements currently in effect,
management fees, 12b-1 fees, administrative services fees and total fund
operating expenses would be .11%, .05%, .12% and .90%.
EXAMPLE: Based on the table above and without any fee waivers or
reimbursements, a shareholder would pay the following expenses on a $1,000
investment in the Fund, assuming a 5% annual return, that all dividends are
reinvested, and redemption at the end of each period indicated below:
One Year Three Five Ten Years
Years Years
Current (1)(2)... $54 $83 $115 $203
Pro Forma (1).... $__ $__ $___ $___
(1) Assumes deduction at the time of purchase of the maximum 4.75% sales load.
Expenses are based on the Fund's fiscal year ended December 31, 1996.
(2) After giving effect to certain voluntary fee waivers, the amounts in the
example would be $49, $68, $88 and $146.
The assumption of a 5% annual return is required by the Securities and Exchange
Commission for all mutual funds, and is not a prediction of the Fund's future
performance. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OF THE FUND. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
The Fund's Trustees believe that the matters described in this section
are in the best interests of Fund shareholders. In the event that the proposals
in Items 1 through 6 below do not receive the requisite shareholder approval
for the Fund, the Trustees will consider possible alternatives, which might
include resubmission of the proposals for approval by shareholders of the Fund.
ITEM 1. TO VOTE ON AN AMENDMENT TO THE FUND'S DECLARATION OF TRUST
TO ALLOW THE ASSETS OF THE FUND TO BE INVESTED IN ONE OR MORE
INVESTMENT COMPANIES TO THE EXTENT NOT PROHIBITED BY THE 1940
ACT.
<PAGE>
It is proposed that the Fund's Declaration of Trust be amended to permit
the Fund to invest in other investment companies to the extent not prohibited
by the 1940 Act.
The Fund's Declaration of Trust presently permits the Fund to invest all
of its investable assets in a single investment company that is registered
under the 1940 Act. As described above, the Fund is not currently using the
master/feeder structure. Also as described above, recent amendments to the 1940
Act permit mutual funds to invest their investable assets in multiple
registered investment companies so long as certain conditions are met. It is
possible that there could be additional amendments to the 1940 Act in the
future which affect mutual funds' ability to invest in other funds.
The proposed amendment to the Fund's Declaration of Trust which appears
below will allow the Fund to take advantage of the recent changes in law, as
well as future changes in law or regulation on this topic. The Fund's Board of
Trustees believes that this amendment will be to the Fund's advantage and is in
the best interests of Fund shareholders. It is proposed that Section 3.2(c) of
the Declaration of Trust be amended by deleting the words below that have been
bracketed and adding the double bracketed words:
(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 [any] [[each]] Series of the Trust other
than Landmark U.S. Government Income Fund, or sell all or a portion of
such Trust Property and invest the proceeds of such sales, in [another
investment company that is registered under the 1940 Act] [[one or more
investment companies to the extent not prohibited by the 1940 Act and
exemptive orders granted under such Act.]]
Under the Declaration of Trust, the 1940 Act is defined to include both
that Act itself and the rules and regulations under that Act; the amendment
would be based on that definition.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
shares of the Fund is required for approval of the amendment to the Declaration
of Trust. This requires approval by the holders of 67% or more of the
outstanding shares of the Fund which are present at the Meeting if the holders
of more than 50% of such shares are present in person or by proxy, or more than
50% of the outstanding shares of the Fund, whichever is less (a "Majority
Shareholder Vote").
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
DECLARATION OF TRUST.
ITEM 2. TO VOTE ON AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICIES TO ALLOW THE ASSETS OF THE FUND TO BE INVESTED IN ONE
OR MORE INVESTMENT COMPANIES TO THE EXTENT NOT PROHIBITED BY
THE 1940 ACT.
<PAGE>
The Fund has adopted certain fundamental investment restrictions which,
as a matter of law, cannot be changed without shareholder approval. Certain of
these fundamental investment restrictions currently permit the Fund to invest
its investable assets in a single investment company having the same investment
objectives and policies and substantially the same investment restrictions as
the Fund. As noted above, recent amendments to the 1940 Act permit mutual funds
to invest their investable assets in multiple investment companies so long as
certain conditions are met. There also may be future amendments to the 1940 Act
affecting mutual funds' ability to invest in other funds.
In order to take advantage of the flexibility of current and future
applicable law and regulation, it is proposed that each of the fundamental
investment restrictions listed in Exhibit A be amended as indicated in that
Exhibit. Shareholders also should review Item 3 for additional proposed changes
to the Fund's investment restrictions.
The Trustees believe that these proposed amendments to the fundamental
investment policies are in the best interests of Fund shareholders.
VOTE REQUIRED
Because the investment restrictions in Exhibit A are fundamental policies
of the Fund, approval of this proposal will require a Majority Shareholder
Vote.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES TO ALLOW THE ASSETS OF THE FUND TO BE
INVESTED IN ONE OR MORE INVESTMENT COMPANIES TO THE EXTENT
NOT PROHIBITED BY THE 1940 ACT.
ITEM 3. TO VOTE ON AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT
POLICIES CONCERNING THE FUND'S ABILITY TO PLEDGE ITS ASSETS TO
SUPPORT BORROWINGS, PURCHASE SECURITIES ON MARGIN, PURCHASE AND
SELL PUT AND CALL OPTIONS, MAKE LOANS TO OTHER PERSONS, MAKE
SHORT SALES OF SECURITIES AND BUY OR SELL FUTURES CONTRACTS AND
OPTIONS OF FUTURES.
As noted above in Item 2, the Fund has adopted certain fundamental
investment restrictions which, as a matter of law, cannot be changed without
shareholder approval. Fundamental restriction (1) limits the amount of money
that the Fund may borrow to 1/3 of the current value of the Fund's net assets,
including the amount borrowed. This restriction also limits the amount of
assets that the Fund may pledge to secure these borrowings to 1/3 of such
assets. The limitation on borrowing tracks the requirements of the 1940 Act.
However, the 1940 Act does not require that mutual funds limit the amount of
assets they may pledge to secure their borrowings. The Fund wishes to have the
full flexibility permitted by applicable law to pledge its assets. It is
possible that the existing restriction could prevent the Fund from obtaining
credit when it is in its shareholders' best interests to do so. As a result,
the Fund proposes to delete the limitation on pledging of assets.
<PAGE>
Fundamental restriction (2) prevents the Fund from purchasing any
security on margin, except that deposits of initial and variation margin may be
made in connection with futures contracts. The 1940 Act prohibits mutual funds
from purchasing securities on margin except in accordance with rules and
regulations promulgated by the SEC. The Fund's investment restriction is more
restrictive than the 1940 Act because it does not permit the Fund to purchase
securities on margin in accordance with SEC rules in effect from time to time.
The Fund wishes to have the full flexibility permitted by applicable law, and
any future changes in law, on this topic without the expense of an additional
shareholder meeting. As a result, the Fund is proposing to delete this
restriction in its entirety.
Fundamental restriction (3) prevents the Fund from purchasing and selling
put and call options, other than those with respect to futures contracts. This
restriction is not required by applicable law, and the Fund believes it is
unduly restrictive. The Fund wishes to have the flexibility to purchase and
sell options if its investment adviser believes that utilizing this investment
technique is appropriate. Of course, the Fund's prospectus will disclose to
shareholders the Fund's ability to engage in options transactions.
Fundamental restriction (5) concerns the Fund's ability to make loans to
other persons. The Fund is proposing a technical amendment to this restriction
to clarify that the purchase of fixed time deposits would not be a violation of
this restriction. The Fund also is proposing to delete from this restriction
the limitation that not more than 15% of the total assets of the Fund be
invested in repurchase agreements maturing in more than seven days.
The Staff of the Securities and Exchange Commission has taken the
position that if a mutual fund holds a material percentage (i.e., 15% of its
net assets in most cases) of its assets in illiquid securities, or securities
that may not be sold or disposed of in the ordinary course of business at the
price at which the fund values the securities, there may be a question as to
the fund's ability to pay redemption proceeds on shares redeemed within seven
days of the redemption request. The Staff also has taken the position that a
fund's ability to invest in these types of securities should be disclosed in
its prospectus. The Fund wishes to have the full flexibility permitted by
applicable law and policy positions, and any future changes in law and policy,
on this topic without the expense of an additional shareholder meeting. The
Fund's prospectus discloses, and will continue to disclose, the Fund's ability
to invest in these types of securities.
The Fund is proposing technical amendments to fundamental restriction (6)
clarifying the Fund's ability to buy and sell futures contracts and options on
futures. The proposed amendments clarify that the Fund's ability to buy or sell
futures contracts and options on futures is consistent with that described in
the Fund's prospectus.
Fundamental restriction (9) prevents the Fund from making short sales of
securities. The 1940 Act prohibits mutual funds from making short sales of
securities except in accordance with rules and regulations promulgated by the
Securities and Exchange Commission. The Fund's investment restriction is more
restrictive than the 1940 Act because it does not permit the Fund to make short
sales in accordance with SEC rules in effect from time to time. The Fund wishes
to have the full flexibility permitted by applicable law, and any future
changes in law, on this topic without the expense of an additional shareholder
meeting. As a result, the Fund is proposing to delete this restriction in its
entirety.
<PAGE>
The Fund is proposing to delete from fundamental restriction (11),
concerning the issuance of senior securities, language concerning collateral
arrangements with respect to futures contracts. The Fund believes that this
language is not required as a matter of law, and adds nothing to the investment
restriction which does not already appear therein. Even though the language
will be deleted from the investment restriction, the Fund will continue to
provide collateral with respect to options, futures contracts and options on
futures contracts to the extent required by applicable rules and regulations.
To give effect to these amendments, it is proposed that each of the
fundamental investment restrictions listed in Exhibit B be amended as indicated
in that Exhibit.
The Trustees believe that these proposed amendments to the fundamental
investment policies are in the best interests of Fund shareholders.
VOTE REQUIRED
Because the investment restrictions in Exhibit B are fundamental policies
of the Fund, approval of this proposal will require a Majority Shareholder
Vote.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF THE PROPOSED AMENDMENTS TO THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES DESCRIBED ABOVE IN THIS ITEM.
ITEM 4. TO VOTE ON A MANAGEMENT AGREEMENT FOR THE FUND WITH
CITIBANK, N.A.
The Fund currently receives investment advisory services pursuant to an
investment advisory agreement with Citibank. The Fund currently receives
administrative services under an administrative services agreement with its
distributor. The distributor, in turn, subcontracts with Citibank so that
Citibank actually provides administrative services to the Fund.
The Fund is proposing to enter into a management agreement with Citibank
(the "Proposed Fund Management Agreement"). Under the Proposed Fund Management
Agreement, Citibank will be responsible for the overall management of the
Fund's business affairs, and will provide investment advisory as well as
administrative services to the Fund, including the provision of general office
facilities and supervising the overall administration of the Fund. The Proposed
Fund Management Agreement will enable the Fund to invest in the future in
multiple investment companies, if it chooses to do so. See "General
Background."
The Proposed Fund Management Agreement will render the Fund's existing
administrative services agreement unnecessary, and it will be terminated. The
same personnel at Citibank who currently provide administrative and investment
advisory services to the Fund are expected to continue to do so after the
Proposed Fund Management Agreement is entered into, and the nature, level and
quality of services to the Fund will not be adversely effected.
<PAGE>
The management fee payable by Fund shareholders under the Proposed Fund
Management Agreement will be higher than the aggregate investment advisory and
administrative services fees currently payable by Fund shareholders.
A copy of the Proposed Fund Management Agreement for the Fund is attached
hereto as Exhibit C. Shareholders should refer to Exhibit C for the complete
terms of the Proposed Fund Management Agreement, and the description of the
Proposed Fund Management Agreement set forth herein is qualified in its
entirety by the provisions of the Proposed Fund Management Agreement as set
forth in Exhibit C.
THE PROPOSED FUND MANAGEMENT AGREEMENT
If the Proposed Fund Management Agreement is approved by the Fund's
shareholders, Citibank will continue to provide investment advisory services
directly to the Fund. A description of the management fees payable under the
Proposed Fund Management Agreement is set forth below. See "Management Fees."
Under the Proposed Fund Management Agreement, Citibank as investment
manager will furnish continuously an investment program for the Fund and will
determine from time to time what securities are purchased, sold or exchanged,
and what portion of the assets of the Fund are held uninvested, subject always
to the restrictions of the Fund's Declaration of Trust and By-laws, as each may
be amended from time to time, the provisions of the 1940 Act and the Fund's
prospectus. Citibank will also make recommendations as to the manner in which
proxies, voting rights, rights to consent to corporate action and any other
rights pertaining to portfolio securities will be exercised; and will take all
actions which Citibank deems necessary to implement Fund investment policies.
Under the Proposed Fund Management Agreement, Citibank also will perform
such administrative and management services as may from time to time be
reasonably requested, including: (i) providing office space, equipment and
clerical personnel necessary for maintaining the organization of the Fund and
for performing administrative and management functions; (ii) supervising the
overall administration of the Fund, including negotiation of contracts and fees
with and the monitoring of performance and billings of the Fund's transfer
agent, shareholder servicing agents, custodian and other independent
contractors or agents; (iii) preparing and, if applicable, filing all documents
required for compliance by the Fund with applicable laws and regulations,
including registration statements, prospectuses and statements of additional
information, semi-annual and annual reports to shareholders, proxy statements
and tax returns; (iv) preparing agendas and supporting documents for and
minutes of meetings of Trustees, committees of Trustees and shareholders; and
(v) arranging for maintenance of the books and records of the Fund.
The Proposed Fund Management Agreement, if approved by a Majority
Shareholder Vote, will continue in effect for a two-year period, and thereafter
from year to year, subject to approval annually in accordance with the 1940
Act. The Proposed Fund Management Agreement may be terminated at any time
without the payment of any penalty by the Fund's Board of Trustees or by
Majority Shareholder Vote, or by Citibank, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. The Proposed
Fund Management Agreement will also terminate automatically in the event of its
"assignment" (as defined in the 1940 Act).
<PAGE>
Under the Proposed Fund Management Agreement, Citibank will not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the matters to which the Proposed Fund Management
Agreement relates, except a loss resulting from Citibank's willful misfeasance,
or its bad faith or gross negligence in the performance of its obligations and
duties, or by reason of Citibank's reckless disregard of its obligations and
duties under such agreement.
MANAGEMENT FEES
Under the Proposed Fund Management Agreement, the Fund will pay Citibank
management fees equal on an annual basis to 0.70% of the Fund's average daily
net assets for the Fund's then-current fiscal year. Fees will be accrued daily
and payable monthly. The investment advisory fees and administrative services
fees that are currently payable by the Fund are 0.35% and 0.25%, respectively,
of the Fund's average daily net assets for its then current year.
Investment advisory and administrative fees accrued under the existing
administrative services agreement for the last two fiscal years of the Fund
were [$__________] and [$__________] for the fiscal years ended December 31,
1996 and 1995, respectively (of which $278,615 and $269,049, respectively,
accrued to Citibank). Had the proposed management fees for the Fund been in
effect for these periods, the fees payable for the last two fiscal years of the
Fund would have been $325,050 and $342,426 for the fiscal years ended December
31, 1996 and 1995, respectively, which is a ___% and ___% increase from the net
investment advisory and administrative fees accrued under the existing
administrative services agreement for such period.
The management fees payable to Citibank by the Fund under the Proposed
Fund Management Agreement will be higher than the investment advisory and
administrative services fees currently payable to Citibank by the Fund. See
"General Background" for a table showing the effect of this transaction on the
Fund's estimated annual operating expenses.
Except as set forth above with respect to administrative services and
investment advisory fees and under the caption "Other Services Provided by
Citibank" below, neither Citibank nor any affiliated person of Citibank, nor
any affiliated person of such person, received any other fees from the Fund for
services provided to the Fund during its last two fiscal years. There were no
other material payments by the Fund to Citibank, any affiliated person of
Citibank, or any affiliated person of such person, during such period.
As of June 30, 1997, the Fund had net assets of $38,846,645.
For the last two fiscal years of the Fund, no brokerage commissions were
paid by the Fund to any broker during the same period that (i) is an affiliated
person of the Fund, or (ii) is affiliated with any person described in clause
(i) of this paragraph, or (iii) an affiliated person of which is an affiliated
person of the Fund, Citibank or the distributor of the Fund.
DESCRIPTION OF THE MANAGER
Citibank offers a wide range of banking and investment services to
customers across the United States and throughout the world, and has been
managing money since 1822. Its portfolio managers are responsible for investing
<PAGE>
in money market, equity and fixed income securities. Citibank and its
affiliates manage more than $81 billion in assets worldwide. Citibank is a
wholly-owned subsidiary of Citicorp. Citibank's address is 153 East 53rd
Street, New York, New York 10043.
Mark Lindbloom, a Vice President of Citibank, has managed the Fund since
June 1993. Mr. Lindbloom has more than 12 years of investment management
experience. Prior to joining Citibank in 1986, Mr. Lindbloom was a fixed income
portfolio manager with Brown Brothers Harriman & Co., where he managed fixed
income assets for discretionary institutional portfolios.
John S. Reed is the Chairman of the Board and a Director of Citibank. The
following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins, William R. Rhodes and H. Onno Ruding. Other Directors of Citibank are
Alain J.P. Belda, President and Chief Operating Officer, Alcoa Corporation; D.
Wayne Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.,
Purchase, New York; Kenneth T. Derr, Chairman and Chief Executive Officer,
Chevron Corporation; John M. Deutch, Director, CMS Energy; Reuben Mark,
Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard D.
Parsons, Member, Board of Representatives; Rozanne L. Ridgway, President, The
Atlantic Council of the United States; Robert B. Shapiro, President and Chief
Operating Officer, Monsanto Company; Frank A. Shrontz, Chairman and Chief
Executive Officer, The Boeing Company, Seattle, Washington; Roger B. Smith,
Former Chairman and Chief Executive Officer, General Motors Corporation;
Franklin A. Thomas, President, The Ford Foundation, New York, New York; and
Edgar S. Woolard, Jr., Chairman and Chief Executive Officer, E.I. DuPont De
Nemours & Company.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
Kenneth T. Derr Director, American Telephone and Telegraph, Co.
Director, Chevron Corporation
Director, Potlatch Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical Technologies, Inc.
Reuben Mark Director, Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage Association
Director, Philip Morris Companies Incorporated
Member, Board of Representatives, Time Warner
Entertainment Company, L.P.
Director and President, Time Warner, Inc.
<PAGE>
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding
Corporation
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, The Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
H. Onno Ruding Member, Board of Supervisory Directors,
Amsterdam Trustee's Kantoor
Board Member, Corning Incorporated
Advisor, Intercena (C&A) (Netherlands)
Director, Pechiney S.A.
Member, Board of Advisers, Robeco N.V.
Advisory Director, Unilever N.V.
Advisory Director, Unilever PLC
Robert B. Shapiro Director, G.D. Searle & Co.
Director, Silicon Graphics
Director, Monsanto Company
Director, The Nutrasweet Company
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director, The Boeing Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, Pepsico, Inc.
Edgar S. Woolard, Jr. Director, E.I. DuPont De Nemours &
Company
Director, Apple Computer, Inc.
Director, Zurich Holding Company of America, Inc.
Advisory Director, Zurich Insurance Corporation
Banking Relationships. Citibank and its affiliates may have deposit, loan
and other relationships with the issuers of securities purchased on behalf of
<PAGE>
the Fund, including outstanding loans to such issuers which may be repaid in
whole or in part with the proceeds of securities so purchased. Citibank has
informed the Fund that, in making its investment decisions, it does not obtain
or use material inside information in the possession of any division or
department of Citibank or in the possession of any affiliate of Citibank.
Bank Regulatory Matters. The Glass-Steagall Act prohibits certain
financial institutions, such as Citibank, from underwriting securities of
open-end investment companies, such as the Fund. Citibank believes that its
services under the Proposed Fund Management Agreement and the activities
performed by it or its affiliates as Shareholder Servicing Agents (see "Other
Services Provided by Citibank" below) are not underwriting and are consistent
with the Glass-Steagall Act and other relevant federal and state laws. However,
there is no controlling precedent regarding the performance of the combination
of investment advisory, shareholder servicing and administrative activities by
banks. State laws on this issue may differ from applicable federal law, and
banks and financial institutions may be required to register as dealers
pursuant to state securities laws. Changes in either federal or state statutes
or regulations, or in their interpretations, could prevent Citibank or its
affiliates from continuing to perform these services. If Citibank or its
affiliates were to be prevented from acting as the investment manager or a
Shareholder Servicing Agent, the Fund would seek alternative means for
obtaining these services. The Fund does not expect that shareholders would
suffer any adverse financial consequences as a result of any such occurrence.
Citibank furnishes at its own expense all services, facilities and
personnel necessary in connection with managing the Fund's investments and
effecting securities transactions for the Fund. Citibank also provides other
services to the Fund. See "Other Services Provided by Citibank" below.
Citibank also serves as adviser or subadviser to other registered
investment companies with similar investment objectives. Those companies are
identified in Exhibit D hereto, along with their asset size and the rates of
compensation paid by those companies to Citibank for advisory or subadvisory
services.
OTHER SERVICES PROVIDED BY CITIBANK
Citibank and Its Affiliates as Shareholder Servicing Agents. The Fund has
entered into separate shareholder servicing agreements with each Shareholder
Servicing Agent pursuant to which that Shareholder Servicing Agent provides
shareholder services, including answering customer inquiries, assisting in
processing purchase, exchange and redemption transactions and furnishing Fund
communications to shareholders. For these services, each Shareholder Servicing
Agent receives a fee from the Fund at an annual rate of 0.25% of the average
daily net assets of the Fund represented by shares owned by investors for whom
such Shareholder Servicing Agent maintains a servicing relationship.
Net fees accrued to Citibank and its affiliates for services provided as
Shareholder Servicing Agent of the Fund for the last two fiscal years of the
Fund were $116,090 and $195,673 for the fiscal years ended December 31, 1996
and 1995, respectively.
<PAGE>
THE EVALUATION BY THE BOARD OF TRUSTEES
The Fund's Board of Trustees has determined that approving the Proposed
Fund Management Agreement is in the best interests of the Fund and its
shareholders.
At a meeting on August 8, 1997, the Trustees considered information
concerning the Proposed Fund Management Agreement. The Trustees considered,
among other factors, representations by Citibank that the proposed agreement
would not materially affect the nature, level and quality of services now
provided to the Fund and proposed to be provided to the Fund. The Trustees also
considered that, subject to the required approval of shareholders of the Fund,
the same personnel at Citibank who provide investment advisory and
administrative services to the Fund would continue to do so under the Proposed
Fund Management Agreement. The Trustees noted that the management fee under the
Proposed Fund Management Agreement was higher than the aggregate investment
advisory and administrative services fees currently payable by the Fund. They
reviewed comparative fee data for comparable funds and found that the proposed
management fee was in line with the industry standards and with the fees of
comparable funds. The Trustees also considered the nature and quality of
services expected to be provided by Citibank to the Fund, and information
regarding fees, expense ratios and performance. In evaluating Citibank's
ability to provide services to the Fund, the Trustees considered information as
to Citibank's business organization, financial resources and personnel.
Based upon its review, the Trustees concluded that the Proposed Fund
Management Agreement is reasonable, fair and in the best interests of the Fund
and its shareholders, and that the fees provided in the Proposed Fund
Management Agreement are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and quality.
Accordingly, after consideration of the above factors, and such other factors
and information as were deemed relevant, the Trustees, including all of the
Independent Trustees, unanimously approved the Proposed Fund Management
Agreement for the Fund and voted to recommend its approval by Fund
shareholders.
VOTE REQUIRED
Approval of the Proposed Fund Management Agreement will require a
Majority Shareholder Vote.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF THE MANAGEMENT AGREEMENT.
ITEM 5. TO VOTE ON A SERVICE PLAN FOR THE FUND PURSUANT TO RULE
12B-1 UNDER THE 1940 ACT.
The Fund currently has a Distribution Plan which has been adopted in
accordance with Rule 12b-1 under the 1940 Act. The Fund is proposing to replace
the existing Distribution Plan with a Service Plan, which also will be adopted
in accordance with Rule 12b-1. The Service Plan will permit payment of
distribution and shareholder service fees which are higher than the maximum
fees currently permissible under the existing Distribution Plan.
<PAGE>
A copy of the proposed Service Plan is attached hereto as Exhibit E.
Shareholders should refer to Exhibit E for the complete terms of the proposed
Service Plan, and the description of the Service Plan set forth herein is
qualified in its entirety by the provisions of the Service Plan as set forth in
Exhibit E.
The Fund's existing Distribution Plan was most recently approved by the
Fund's Board of Trustees in accordance with the 1940 Act on May 9, 1997.
COMPARISON OF EXISTING DISTRIBUTION PLAN AND PROPOSED SERVICE PLAN
The Fund's existing Distribution Plan provides that the Fund 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 Plan also
permits the Fund to pay the distributor an additional fee (not to exceed 0.05%
of average daily net assets) in anticipation of or as reimbursement for print
or electronic media advertising expenses incurred in connection with the sale
of Fund shares. The Fund did not pay anything under this provision during 1996,
and does not anticipate doing so during the current fiscal year. Under the
Distribution Plan, the distributor uses the distribution fees to offset the
Fund's marketing costs, such as preparation of sales literature, advertising,
and printing and distributing prospectuses and other shareholder materials to
prospective investors. In addition, the distributor may use the distribution
fees to pay costs related to distribution activities, including employee
salaries, bonuses and other overhead expenses.
The proposed Service Plan provides that the Fund may pay monthly fees in
an amount not to exceed 0.25% per annum of the Fund's average daily net assets.
The proposed Service Plan contemplates one aggregate fee which may be used for
distribution and service matters. These fees may be used to make payments to
the distributor for distribution services, and to service agents and others as
compensation for the sale of shares of the Funds, and to make payments for
advertising, marketing or other promotional activity, and payments for
preparation, printing, and distribution of prospectuses, statements of
additional information and reports for recipients other than regulators and
existing shareholders. The Fund also may make payments to the distributor,
service agents and others for providing personal service or the maintenance of
shareholder accounts. See "General Background" for a table showing the effect
of this transaction on the Fund's estimated annual operating expenses.
Under the proposed Service Plan, as under the existing Distribution Plan,
for so long as the Service Plan is in effect the Fund is obligated to pay fees
to the distributor, service agents and others as compensation for their
services, not as reimbursement for specific expenses incurred. Thus, even if
their expenses exceed the fees provided for under the Service Plan, the Fund
will not be obligated to pay more than those fees and, if their expenses are
less than the fees paid to them, they will realize a profit. The Fund will pay
the fees to the distributor, service agents and others until the Service Plan
or related distribution agreement is terminated or not renewed. In that event,
the distributor's or service agent's expenses in excess of fees received or
accrued through the termination date will be the distributor's or service
agent's sole responsibility and not obligations of the Fund.
Like the existing Distribution Plan, the proposed Service Plan provides
that its continuance must be specifically approved at least annually by a vote
of both a majority of the Trustees who are not "interested persons" of the Fund
and who have no direct or indirect financial interest in the operation of the
<PAGE>
Plan or in any agreement related to the Plan ("Qualified Trustees"). The
Service Plan and the Distribution Plan further provide that the selection and
nomination of the Qualified Trustees is committed to the discretion of the
disinterested Trustees (as defined in the 1940 Act) then in office.
The proposed Service Plan, like the existing Distribution Plan, may be
terminated at any time by a vote of a majority of the Qualified Trustees or by
a vote of a majority of the outstanding shares of the Fund and may not be
materially amended in any case without a vote of the majority of both the
Trustees and the Qualified Trustees. Under the proposed Service Plan, as under
the existing Distribution Plan, shareholders of the Fund must approve any
amendments to the Plan which increase materially the amount of the Fund's
permitted expenses thereunder.
Under both the proposed Service Plan and the existing Distribution Plan
the distributor is required to preserve copies of any plan, agreement or report
made pursuant to the Plan for a period of not less than six years from the date
of the Plan, and for the first two years the distributor will preserve such
copies in an easily accessible place.
For the fiscal year ended December 31, 1996 the fees paid to the
distributor by the Fund under the Distribution Plan were $69,654 which
constituted ___% of the average net assets of the Fund for such period.
The maximum allowable expense under the Distribution Plan is 0.20% of the
Fund's average daily net assets. Under the Service Plan, the maximum allowable
expense would be 0.25% of the Fund's average daily net assets.
THE EVALUATION BY THE BOARD OF TRUSTEES
The Fund's Board of Trustees has determined that approval of the Service
Plan is in the best interests of the Fund and its shareholders. At a meeting on
August 8, 1997, the Trustees considered, among other factors, the services
covered by the Service Plan. The Trustees believe that the proposed Service
Plan will enable the Fund to promote sales of its shares and provide personal
service and maintenance with respect to shareholder accounts. The Trustees
noted that the aggregate distribution and service fees payable by Fund
shareholders would increase as a result of the adoption of the Service Plan.
The Trustees concluded that the fees provided in the Service Plan are fair and
reasonable and in line with industry standards. As a result of these and other
factors, the Trustees believe that the Service Plan is reasonably likely to
benefit the Fund and its shareholders, and recommend that it be approved by
Fund shareholders.
VOTE REQUIRED
Approval of this proposal will require a Majority Shareholder Vote.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF A SERVICE PLAN FOR THE FUND
PURSUANT TO RULE 12B-1 UNDER THE 1940 ACT.
ITEM 6. TO VOTE ON THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FUND.
<PAGE>
It is intended that proxies cast by the Fund's shareholders not limited
to the contrary will be voted in favor of ratifying the selection, by a
majority of the Trustees of the Fund who are not "interested persons" (as that
term is defined in the 1940 Act) of the Fund, of Deloitte & Touche LLP under
Section 32(a) of the 1940 Act as independent public accountants, to certify
every financial statement of the Fund required by any law or regulation to be
certified by independent public accountants and filed with the Securities and
Exchange Commission in respect of all or any part of the fiscal year of the
Fund ending December 31, 1997. Deloitte & Touche LLP has no direct or material
indirect interest in the Fund.
Deloitte & Touche LLP has served as the independent certified public
accountants of the Fund since its commencement of operations, providing audit
services and consultation with respect to the preparation of filings with the
Securities and Exchange Commission.
Representatives of Deloitte & Touche LLP are expected to be present at
the Meeting and are expected to be available to respond to appropriate
questions. Representatives of Deloitte & Touche LLP are expected to have the
opportunity to make a statement if they desire to do so.
VOTE REQUIRED
Approval of this proposal will require approval by the holders of a
majority of the outstanding shares of the Fund which are present at the Meeting
in person or by proxy.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF DELOITTE & TOUCHE LLP AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FUND.
ITEM 7. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE SPECIAL MEETING OF SHAREHOLDERS AND ANY ADJOURNMENTS
THEREOF.
The management of the Fund knows of no other business to be presented at
the Meeting. If any additional matters should be properly presented, it is
intended that the enclosed proxy (if not limited to the contrary) will be voted
in accordance with the judgment of the persons named in the enclosed form of
proxy.
INTERESTS OF CERTAIN PERSONS
As of August 1, 1997, the Trustees and officers of the Fund, individually
and as a group, owned beneficially or had the right to vote the following
outstanding shares of the Fund.
<PAGE>
Amount of
Name and Address Beneficial Percent
of Beneficial Owner Ownership of Shares
Trustees of the Fund
[names].......................... ------- -----%
Officers of the Fund
[names].......................... ------- -----%
All Trustees and officers of
the Fund as a group........ _______ -----%
As of August 1, 1997, to the best knowledge of the Fund, the following
persons beneficially owned 5% or more of the outstanding shares of the Fund:
Amount of
Name and Address Beneficial Percent
of Beneficial Owner Ownership of Shares
[LIST SHAREHOLDERS].............. ------- -----%
ADDITIONAL INFORMATION
The Fund is a series of Landmark Fixed Income Funds (the "Trust"), a
diversified, open-end registered investment company organized as a
Massachusetts business trust under a Declaration of Trust dated June 23, 1986
as amended. Prior to June 11, 1992, the Trust was known as Landmark U.S.
Government Fund. The Fund was designated as a separate series of the Trust on
June 11, 1992. The mailing address of the Trust is 6 St. James Avenue, Boston,
Massachusetts 02116.
Fund shareholders may have purchased their shares through banks or other
financial institutions, securities dealers or others (called Shareholder
Servicing Agents) that have entered into shareholder servicing agreements
concerning the Fund. In these cases, the Shareholder Servicing Agents are the
shareholders of record of the Fund. At any meeting of Fund shareholders, a
Shareholder Servicing Agent may vote any shares of which it is the holder of
record and for which it does not receive voting instructions proportionately in
accordance with the instructions it receives for all other shares of which that
Shareholder Servicing Agent is the holder of record.
The cost of soliciting proxies in the accompanying form, which is
expected to be about $[ ], including the fees of a proxy soliciting agent, will
be borne by Citibank. In addition to solicitation by mail, proxies may be
solicited by the Board of Trustees, officers, and regular employees and agents
of the Fund without compensation therefor. Citibank may reimburse brokerage
firms and others for their expenses in forwarding proxy materials to the
beneficial owners and soliciting them to execute the proxies.
The Fund's distributor is The Landmark Funds Broker-Dealer Services,
Inc., 6 St. James Avenue, Boston, MA 02116. State Street Bank and Trust Company
<PAGE>
acts as transfer agent, dividend disbursing agent and custodian for each Fund.
The principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110.
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a Massachusetts business trust and as such is not required
to hold annual meetings of shareholders, although special meetings may be
called for the Fund, or for the Trust as a whole, for purposes such as electing
Trustees or removing Trustees, changing fundamental policies, or approving an
advisory contract. Shareholder proposals to be presented at any subsequent
meeting of shareholders must be received by the Trust at the Trust's office
within a reasonable time before the proxy solicitation is made.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Linda T. Gibson, Secretary
August __, 1997
<PAGE>
EXHIBIT A
Deleted text is bracketed and added text appears in double brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE AMENDED UNDER ITEM 2.
(4) Underwrite securities issued by other persons, except [[that all or
any portion of the assets of the Fund may be invested in one or more
investment companies, to the extent not prohibited by the 1940 Act, the
rules and regulations thereunder, and exemptive orders granted under such
Act, and except]] insofar as the [Trust] [[Fund]] may technically be
deemed an underwriter under the Securities Act of 1933 in selling a
portfolio security [(provided, however, that the 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"))].
(7) [With respect to 75% of the assets of the Fund, 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 for the Fund,
except that all of the assets of the Fund may be invested in a Qualifying
Portfolio.] [[Purchase securities of any issuer if such purchase at the
time thereof would cause with respect to 75% of the total assets of the
Fund more than 10% of the voting securities of such issuer to be held by
the Fund; provided that, for purposes of this restriction, the issuer of
an option or futures contract shall not be deemed to be the issuer of the
security or securities underlying such contract; and provided further
that the Fund may invest all or any portion of its assets in one or more
investment companies, to the extent not prohibited by the 1940 Act, the
rules and regulations thereunder, and exemptive orders granted under such
Act.]]
(8) [With respect to 75% of the assets of the Fund, purchase securities
of any issuer if such purchase at the time thereof would cause more than
5% of the assets of the Fund (taken at market value) to be invested in
the securities of such issuer (other than securities or obligations
issued or guaranteed by the United States, any state or any political
subdivision of the United States or any state, or any agency or
instrumentality of the United States or of any state or of any political
subdivision of any state or the United States); provided that for
purposes of this restriction the issuer of a futures contract shall not
be deemed to be the issuer of the security or securities underlying such
contract; and further provided that all of the assets of the Fund may be
invested in a Qualifying Portfolio.] [[Purchase securities of any issuer
if such purchase at the time thereof would cause as to 75% of the Fund's
total assets more than 5% of the Fund's assets (taken at market value) to
be invested in the securities of such issuer (other than securities or
obligations issued or guaranteed by the United States, any state or
political subdivision thereof, or any political subdivision of any such
state, or any agency or instrumentality of the United States or of any
state or of any political subdivision of any state); provided that, for
purposes of this restriction, the issuer of an option or futures contract
shall not be deemed to be the issuer of the security or securities
underlying such contract; and provided further that the Fund may invest
all or any portion of its assets in one or more investment companies, to
<PAGE>
the extent not prohibited by the 1940 Act, the rules and regulations
thereunder, and exemptive orders granted under such Act.]]
(10) Concentrate its investments in any particular industry, but if it is
deemed appropriate for the achievement of the Fund's investment objective
[of the Fund], up to 25% of its 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 Fund may be invested in a
Qualifying Portfolio].
<PAGE>
EXHIBIT B
Deleted text is bracketed and added text appears in double brackets.
FUNDAMENTAL INVESTMENT RESTRICTIONS PROPOSED TO BE AMENDED UNDER ITEM 3.
(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]
[[its]] net assets, including the amount borrowed; [[or purchase any securities
at any time at which borrowings exceed 5% of the total assets of the Fund, taken
at market value.]] [and may pledge, mortgage or hypothecate not more than 1/3
of such assets to secure such borrowings (it] [[It]] is intended that [money
would be borrowed for the Fund] [[the Fund would borrow money]] only from banks
and only to accommodate requests for the repurchase of shares of the Fund while
effecting an orderly liquidation of portfolio securities[), 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].
[(2) Purchase any security or evidence of interest therein on margin,
except that such short-term credit may be obtained 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.]
(5) Make loans to other persons except (a) through the lending of [[its]]
[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 fixed time deposits]] or the purchase of short-term
obligations[and provided that not more than 15% of the Fund's total assets will
be invested in repurchase agreements maturing in more than seven days], or (c)
by purchasing [[all or]] a portion of an issue of debt securities of types
commonly distributed privately to financial institutions[, for which
purposes the]. [[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) 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]
[[(the foregoing shall not be deemed to preclude the Fund from purchasing or
selling futures contracts or options thereon, and the Fund]] reserves the
freedom of action to hold and to sell real estate required as a result of the
ownership of securities by the Fund).
<PAGE>
(9) [Make short sales of securities or maintain a short position, unless
at all times when a short position is open 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 net
assets of the Fund (taken at market value), is held as collateral for such
sales at any one time.]
(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].
<PAGE>
EXHIBIT C
MANAGEMENT AGREEMENT
LANDMARK FIXED INCOME FUNDS
Landmark Intermediate Income Fund
MANAGEMENT AGREEMENT, dated as of __________ ___, 199__, by and between
Landmark Fixed Income Funds, a Massachusetts business trust (the "Trust"), and
Citibank, N.A., a national banking association ("Citibank" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage Citibank to provide certain
investment advisory and administrative services for the series of the Trust
designated as Landmark Intermediate Income Fund (the "Fund"), and Citibank is
willing to provide such investment advisory and administrative services for the
Fund on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Citibank. (a) Citibank shall act as the Manager for the Fund
and as such shall furnish continuously an investment program and shall
determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held uninvested,
subject always to the restrictions of the Trust's Declaration of Trust, dated
as of June 23, 1986, and By-laws, as each may be amended from time to time
(respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940
Act, and the then-current Registration Statement of the Trust with respect to
the Fund. The Manager shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities shall be exercised. Should the
Board of Trustees of the Trust at any time, however, make any definite
determination as to investment policy applicable to the Fund and notify the
Manager thereof in writing, the Manager shall be bound by such determination
for the period, if any, specified in such notice or until similarly notified
that such determination has been revoked. The Manager shall take, on behalf of
the Fund, all actions which it deems necessary to implement the investment
policies determined as provided above, and in particular to place all orders
for the purchase or sale of securities for the Fund's account with the brokers
or dealers selected by it, and to that end the Manager is authorized as the
agent of the Trust to give instructions to the custodian or any subcustodian of
<PAGE>
the Fund as to deliveries of securities and payments of cash for the account of
the Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which the Manager or its affiliates exercise investment discretion. The Manager
is authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Manager determines in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Manager and its affiliates have with
respect to accounts over which they exercise investment discretion. In making
purchases or sales of securities or other property for the account of the Fund,
the Manager may deal with itself or with the Trustees of the Trust or the
Trust's underwriter or distributor, to the extent such actions are permitted by
the 1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at the Fund's expense, one or more subadvisers; provided that in
each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any
agreement between the Trust on behalf of the Fund and a subadviser may be
terminated by the Manager at any time on not more than 60 days' nor less than
30 days' written notice to the Trust and the subadviser.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, Citibank shall perform such administrative and management services as
may from time to time be reasonably requested by the Trust, which shall include
without limitation: (i) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
performing the administrative and management functions herein set forth; (ii)
supervising the overall administration of the Trust, including negotiation of
contracts and fees with and the monitoring of performance and billings of the
Trust's transfer agent, shareholder servicing agents, custodian and other
independent contractors or agents; (iii) preparing and, if applicable, filing
all documents required for compliance by the Trust with applicable laws and
regulations, including registration statements, prospectuses and statements of
additional information, semi-annual and annual reports to shareholders, proxy
statements and tax returns; (iv) preparation of agendas and supporting
documents for and minutes of meetings of Trustees, committees of Trustees and
shareholders; and (v) arranging for maintenance of books and records of the
Trust. Notwithstanding the foregoing, Citibank shall not be deemed to have
assumed any duties with respect to, and shall not be responsible for, the
distribution of shares of beneficial interest in the Fund, nor shall Citibank
be deemed to have assumed or have any responsibility with respect to functions
specifically assumed by any transfer agent, fund accounting agent, custodian or
shareholder servicing agent of the Trust or the Fund. In providing
administrative and management services as set forth herein, Citibank may, at
its own expense, employ one or more subadministrators; provided that Citibank
shall remain fully responsible for the performance of all administrative and
management duties set forth herein and shall supervise the activities of each
subadministrator.
2. Allocation of Charges and Expenses. Citibank shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the Fund
all of its own expenses allocable to the Fund including, without limitation,
<PAGE>
organization costs of the Fund; compensation of Trustees who are not
"affiliated persons" of Citibank; governmental fees; interest charges; loan
commitment fees; taxes; membership dues in industry associations allocable to
the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, shareholder servicing agent, registrar or dividend
disbursing agent of the Trust; expenses of issuing and redeeming shares of
beneficial interest and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to existing shareholders of the Fund;
expenses connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Fund (including but not limited to the fees of independent pricing
services); expenses of meetings of the Fund's shareholders; expenses relating
to the registration and qualification of shares of the Fund; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust on behalf of the Fund may
be a party and the legal obligation which the Trust may have to indemnify its
Trustees and officers with respect thereto.
3. Compensation of Citibank. For the services to be rendered and the
facilities to be provided by Citibank hereunder, the Trust shall pay to
Citibank from the assets of the Fund a management fee computed daily and paid
monthly at an annual rate equal to 0.70% of the Fund's average daily net assets
for the Fund's then-current fiscal year. If Citibank provides services
hereunder for less than the whole of any period specified in this Section 3,
the compensation to Citibank shall be accordingly adjusted and prorated.
4. Covenants of Citibank. Citibank agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, as principals in making purchases or sales of securities or
other property for the account of the Fund, except as permitted by the 1940
Act, will not take a long or short position in shares of beneficial interest in
the Fund except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current Registration
Statement applicable to the Fund relative to Citibank and its directors and
officers.
5. Limitation of Liability of Citibank. Citibank shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Section 5, the term
"Citibank" shall include directors, officers and employees of Citibank as well
as Citibank itself.
6. Activities of Citibank. The services of Citibank to the Fund are not
to be deemed to be exclusive, Citibank being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in Citibank, as directors, officers, employees, or otherwise and
that directors, officers and employees of Citibank are or may become similarly
interested in the Trust and that Citibank may be or may become interested in
the Trust as a shareholder or otherwise.
<PAGE>
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
until August 8, 1998, on which date it will terminate unless its continuance
after August 8, 1998 is "specifically approved at least annually" (a) by the
vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of Citibank at a meeting specifically called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by "vote of a majority of the outstanding voting securities" of the
Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Fund, or by Citibank, in each case on not more than 60 days'
nor less than 30 days' written notice to the other party. This Agreement shall
automatically terminate in the event of its "assignment."
This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Fund (except
for any such amendment as may be effected in the absence of such approval
without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Fund; and that no other series of the Trust shall be liable with respect to
this Agreement or in connection with the transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust individually.
8. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
9. Use of Name. The Trust hereby acknowledges that any and all rights in
or to the name "Citi" which exist on the date of this Agreement or which may
arise hereafter are, and under any and all circumstances shall continue to be,
the sole property of Citibank; that Citibank may assign any or all of such
rights to another party or parties without the consent of the Trust; and that
Citibank may permit other parties, including other investment companies, to use
the word "Citi" in their names. If Citibank, or its assignee as the case may
be, ceases to serve as the adviser to and administrator of the Trust, the Trust
hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name so as to delete the word "Citi."
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
LANDMARK FIXED INCOME FUNDS CITIBANK, N.A.
By:________________________ By:________________________
Title:_____________________ Title:_____________________
<PAGE>
EXHIBIT D
OTHER INVESTMENT COMPANIES WITH SIMILAR INVESTMENT OBJECTIVES TO THE FUND FOR
WHICH CITIBANK IS AN INVESTMENT ADVISER OR SUBADVISER
Annual Fee (as a Percentage of Assets as of
Name of Fund Average Net Assets) [**____________**]
<PAGE>
EXHIBIT E
SERVICE PLAN
SERVICE PLAN of Landmark Fixed Income Funds, a Massachusetts business
trust (the "Trust"), with respect to shares of beneficial interest ("Shares")
of its series Landmark Intermediate Income Fund and any other series of the
Trust adopting this plan (the "Series").
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series representing interests in separate funds of securities and
other assets;
WHEREAS, the Trust intends to distribute Shares in accordance with Rule
12b-1 under the 1940 Act, and wishes to adopt this Plan as a plan of
distribution pursuant to Rule 12b-1;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of this Plan or in
any agreement relating hereto (the "Non-Interested Trustees"), having
determined, in the exercise of reasonable business judgment and in light of
their fiduciary duties under state law and under Section 36(a) and (b) of the
1940 Act, that there is a reasonable likelihood that this Plan will benefit the
Trust and the shareholders of the Series, have approved this Plan by votes cast
at a meeting called for the purpose of voting hereon and on any agreements
related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan as a plan of
distribution in accordance with Rule 12b-1 under the 1940 Act, with the terms
of the Plan being as follows:
1. Distribution and Servicing Activities. Subject to the supervision of
the Trustees of the Trust, the Trust may:
(a) engage, directly or indirectly, in any activities primarily
intended to result in the sale of Shares of the Series, which activities
may include, but are not limited to (i) payments to the Trust's
Distributor for distribution services, (ii) payments to securities
dealers, financial institutions (which may include banks) and others in
respect of the sale of Shares of the Series, (iii) payments for
advertising, marketing or other promotional activity, and (iv) payments
for preparation, printing, and distribution of prospectuses and
statements of additional information and reports of the Trust for
recipients other than regulators and existing shareholders of the Trust;
and
(b) make payments, directly or indirectly, to the Trust's
Distributor, securities dealers, financial institutions (which may
include banks) and others for providing personal service and/or the
maintenance of shareholder accounts.
The Trust is authorized to engage in the activities listed above either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
<PAGE>
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan shall be determined by the Trustees of the Trust, but in
no event may such expenditures exceed an amount calculated at the rate of 0.25%
per annum of the average daily net assets of each Series attributable to Shares
of that Series. Payments pursuant to this Plan may be made directly by the
Trust or to other persons with which the Trust has entered into agreements
related to this Plan. For purposes of determining the fees payable under this
Plan, the value of each Series' average daily net assets attributable to Shares
shall be computed in the manner specified in the applicable Series'
then-current prospectus and statement of additional information.
3. Trust's Expenses. The Trust shall pay all expenses of its operations,
including the following, and such expenses shall not constitute expenditures
under this Plan: organization costs of each series; compensation of Trustees;
governmental fees; interest charges; loan commitment fees; taxes; membership
dues in industry associations allocable to the Trust; fees and expenses of
independent auditors, legal counsel and any transfer agent, distributor,
shareholder servicing agent, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming shares of beneficial interest and
servicing shareholder accounts; expenses of preparing, typesetting, printing
and mailing prospectuses, statements of additional information, shareholder
reports, notices, proxy statements and reports to governmental officers and
commissions and to existing shareholders of the Series; expenses connected with
the execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Series,
including safekeeping of funds and securities and maintaining required books
and accounts; expenses of calculating the net asset value of the Series
(including but not limited to the fees of independent pricing services);
expenses of meetings of shareholders; expenses relating to the issuance,
registration and qualification of shares; and such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust may be a party and the legal obligation which
the Trust may have to indemnify its Trustees and officers with respect thereto.
4. Term and Termination. (a) This Plan shall become effective as to a
Series on _________ __, 199_, provided that the following have occurred: (i)
approval by a vote of at least a majority of the outstanding voting securities
(as defined in the 1940 Act) of Shares of the particular Series, and (ii)
approval by a majority of the Trustees of the Trust and a majority of the
Non-Interested Trustees cast in person at a meeting called for the purpose of
voting on this Plan. Unless terminated as herein provided, this Plan shall
continue until August 8, 1998, and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both the Trustees of the Trust
and the Non-Interested Trustees, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to any Series by
a vote of a majority of the Non-Interested Trustees or by a vote of a majority
of the outstanding voting securities, as defined in the 1940 Act, of Shares of
the applicable Series.
5. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities, as
defined in the 1940 Act, of Shares of the applicable Series, and no material
<PAGE>
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 4(a) hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Non-Interested Trustees of the Trust shall
be committed to the discretion of such Non-Interested Trustees.
7. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
9. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and the
provisions of the 1940 Act.
<PAGE>
PRELIMINARY PROXY MATERIALS
NOT FOR DISTRIBUTION
PROXY CARD PROXY CARD
LANDMARK INTERMEDIATE INCOME FUND
A PROXY FOR A SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD OCTOBER 17, 1997
The undersigned, revoking all Proxies heretofore given, hereby appoints
each of [ ] and [ ], or any of them, as Proxies of the undersigned with full
power of substitution, to vote on behalf of all of the undersigned all shares
in Landmark Intermediate Income Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Funds to be held at Citicorp
Center, 153 East 53rd Street, [ ] Floor, New York, New York, on Friday, October
17, 1997 at [ ] [a.m./p.m.], Eastern Time, and at any adjournment thereof, as
fully as the undersigned would be entitled to vote if personally present, as
follows:
PROXY SOLICITED ON BEHALF OF THE FUNDS' BOARD OF TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS.
1. An amendment to the Fund's Declaration of Trust to allow the assets of
the Fund to be invested in one or more investment companies to the extent
not prohibited by the 1940 Act.
I vote my shares in Landmark Intermediate Income Fund:
______FOR ______AGAINST ______ABSTAIN
2. An amendment to the Fund's fundamental investment policies to allow the
assets of the Fund to be invested in one or more investment companies to
the extent not prohibited by the 1940 Act.
I vote my shares in Landmark Intermediate Income Fund:
______FOR ______AGAINST ______ABSTAIN
3. An amendment to the fundamental investment policies of the Fund
concerning the Fund's ability to pledge its assets to support borrowings,
purchase securities on margin, purchase and sell put and call options,
make loans to other persons, make short sales of securities and buy or
sell futures contracts and options on futures.
I vote my shares in Landmark Intermediate Income Fund:
______FOR ______AGAINST ______ABSTAIN
<PAGE>
4. A Management Agreement for the Fund with Citibank, N.A.
I vote my shares in Landmark Intermediate Income Fund:
______FOR ______AGAINST ______ABSTAIN
5. A Service Plan for the Fund pursuant to Rule 12b-1 under the 1940 Act.
I vote my shares in Landmark Intermediate Income Fund:
______FOR ______AGAINST ______ABSTAIN
6. The selection of Deloitte & Touche LLP as the independent certified
public accountants for the Fund.
I vote my shares in Landmark Intermediate Income Fund:
______FOR ______AGAINST ______ABSTAIN
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR ANY PROPOSALS
FOR WHICH NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Date:_______________
-----------------------------------
Signature
-----------------------------------
Signature of joint owner, if any
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD
When signing as attorney, executor, administrator, trustee, guardian or as
custodian for a minor, please sign your name and give your full title as such.
If signing on behalf of a corporation, please sign the full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners
should each sign this proxy. Please sign, date and return in the enclosed
envelope.
